3 challenges for a Net Zero Apparel & Footwear sector and how to address them

Apparel and Footwear companies are responsible for 3-8% of total greenhouse gas emissions. Much of this takes place in the value chains, such as in raw material production or weaving, otherwise known as Scope 3 emissions.

Reducing these emissions to stay in line with a Net Zero target is a huge challenge for Apparel & Footwear companies in a sector with such dynamic and fragmented value chains. So what are the biggest challenges that the sector is dealing with today, and what can companies do today to take action?

1. Existing guidance to account for interventions is difficult to implement and does not always incentivise investment

Existing guidance on how to account, report, and claim interventions to reduce or remove emissions in the value chain is often too high level compared to reality on the ground. Standards often assume perfect traceability, data quality and avoidance of double claiming (and the mechanisms to make that possible) that aren´t there in reality. This can lead to confusion or scepticism as companies try to operationalise guidance, and a variety of approaches across actors can make comparisons difficult. Furthermore, the limited and ambiguous guidance in accounting approaches also leads to difficulties in attributing impacts. Meanwhile, apparel companies need to respond to changes quickly in a context where sector guidance is still nascent and emerging. Furthermore, amidst this uncertainty and push for action, even for brands that are willing to invest in interventions, it’s not always possible to claim mitigation outcomes or account for the impact in a way that justifies the investments.

Interventions, which can include any action that introduces a change to a Scope 3 activity to reduce or remove emissions, are the main way companies can tackle their value chain emissions. However, considering the multiple tiers of a value chain from raw material production to product manufacture and distribution, it’s not always easy to know in what kind of interventions to invest. There is little guidance on how to account and report interventions that addresses challenges such as imperfect traceability, crop rotation in raw material production, and dealing with renewable energy through different type of contractual agreements. This can raise a question of credibility in accounting and reporting the emission reductions and removals in company inventories.

2. Lack of alignment between tiers and actors in the sector

Apparel and Footwear value chains are highly complex, dynamic and often operating in a global setting. The variety of activities undertaken by actors from tiers 1-4 from raw material production to final product manufacture can lead to fragmentation and lack of alignment between actors. This complexity can make it difficult for downstream companies to access mitigation outcomes and to identify collaboration opportunities, leading to confusion on expectations.

For example, raw material suppliers may not understand what brands are looking for in the realm of sustainability. Brands prioritising Net Zero targets may not be looking for certified materials (e.g., cotton), as this can’t be accounted for emission reductions or removals as such. In addition, suppliers don’t always have direct contact with brands to ensure that they have access to what they want to claim due to imperfect traceability. This can result in stranded assets. Meanwhile, brands should keep in mind that initiatives don’t always have claimable results, but they may be necessary in the overall fashion landscape before being able to claim emission reductions and removals in the future.

Misalignment on incentives and mechanisms for co-investing in value chains, as well as unclarity on joint claims and returns, is also hindering collaboration across value chain actors.

3. The diversity of trends, interventions and business models requires adaptable and responsive approaches

With emerging materials, technologies and methods, interventions are also becoming more diverse. Brands have different business models, and therefore their approach to suppliers – and with that their access to data – varies greatly.

Companies need to stay on top of trends and adapt their approaches as the sector develops new solutions to reach Net Zero. Circular, nature-based and other approaches are currently being tested at scale. Understanding how they work is crucial to propose effective solutions to accounting and reporting. Moreover, regulations towards circularity and waste management for textiles and other materials will be enforced in the near future in certain markets. However, current methodologies and data frameworks might not be enough to effectively account and report interventions in these areas. Consumer trends also dictate demand for materials and/or practices such as certifications or regenerative cotton. However, that doesn’t mean that these trends are always aligned to a Net Zero pathway. With this in mind, companies can aim to identify co-benefits  between climate and other environmental targets like biodiversity or soil health.

How can Apparel and Footwear companies address these challenges?

Making Scope 3 emission reductions and increasing resilience is imperative for the sector, as Apparel and Footwear value chains will be directly impacted by changing climate conditions.

There is an urgent need for effective and scalable solutions that enhance investment in interventions. Solutions need to be practical so companies can make use of them today, rather than wait for perfect traceability and data. Guidance to support actors in the sector is needed to translate climate targets into real emission reductions and removals.

Alignment between actors is currently emerging, and more initiatives are bringing actors in the Apparel and Footwear sector together. Enhancing collaboration can help build resilience and allow companies to identify best practices, as well as collectively define criteria for credibility and underlying principles for action.

Apparel and Footwear companies need to come together to set the agenda for action and ensure we are on the right path to reach Net Zero by 2050. The VCI contributes by bringing together companies in the sector and facilitating dialogue and sharing of knowledge and best practices. Members co-develop guidance and concepts at implementation level, making standards actionable on the ground. Through collective climate action, the Apparel and Footwear sector can take a step towards a more sustainable future.

Ready to tackle Scope 3 challenges in the Apparel and Footwear sector?

Join the VCI Apparel and Footwear Working Group to develop actionable solutions for decarbonising your value chain.