The Apparel and Footwear sector continues to face mounting pressure to demonstrate measurable progress on decarbonization, as expectations for transparency, accountability, and credible climate claims intensify. The majority of the sector’s emissions come from Scope 3, emphasizing the key role that action and collaboration in the value chain has to reduce emissions. This is made challenging by the sector’s complexity, characterized by fragmented value chains, diverse production contexts, and limited data. To achieve net-zero by 2050, the sector has to take decisive action and invest in collective innovation now.

To address the challenges facing Scope 3 action in the sector, the VCI has published a new guidance exploring the landscape of climate reporting and claims, drawing on insights from Manufacturing and the Apparel sector. The guidance provides practical approaches to advance Scope 3 accounting and reporting, clarify the integrity and traceability of claims, and respond to evolving standards such as the GHG Protocol updates, SBTi Corporate Net-Zero Standard (v2.0), and the recently released Land Sector and Removals Standard (LSRS).

This blog outlines the key topics addressed in the guidance, namely:

– Framing the landscape of climate and environmental claims

– Abatement within the value chain

– Navigating the grey zone between value chain and beyond

– Planning for the last step toward net zero

Framing the landscape of climate and environmental claims

The landscape of environmental and climate claims is quickly evolving under emerging regulatory and voluntary frameworks. To define what a green claim is, we refer to the European Commission’s proposed Green Claims Directive, which aims to ensure the accuracy and credibility of environmental claims made by companies. Here, an environmental claim is defined as any message that implies that a product or trader has a positive or no impact on the environment or is less damaging to the environment than other products or traders, or has improved their impact over time.

It is crucial to align corporate reporting, disclosure, and public communication to ensure transparency and comparability between different companies and products.

Abatement within the value chain

The SBTi’s Corporate Net-Zero Standard (V1.2) defines three pillars of corporate climate action: value chain abatement, beyond value chain mitigation (BVCM), and neutralization of residual emissions. Companies are expected to prioritize abatement within their own operations and value chains, then complement these efforts with BVCM actions outside their value chain, and finally neutralize any remaining emissions.

Abatement within the value chain requires mitigation outcomes to be linked to the value chain through physical traceability. Chain of Custody (CoC) models can establish the necessary physical connection between Interventions and sourced products. Such models include Identity Preservation, Segregation, Controlled Blending, and Mass Balance.

The guidance also explores the concept of activity pool, which provides a pragmatic aggregation approach for managing emissions in complex multi-tier value chains where full traceability to individual emission sources is rarely feasible. It is explored across four sectors: supply, factory, energy, and transport sheds, each reflecting different types of value chain interventions.

Navigating the grey zone between value chain and beyond

The distinction between direct and indirect mitigation is currently emerging, and the role of Market-Based Instruments (MBIs) is evolving through standard updates. In practice, the boundary between what qualifies as abatement within the value chain and what lies beyond it is not always clear-cut. Instead, these actions exist along a continuum, from Interventions that meet all requirements for direct mitigation to those that remain only partially connected to a company’s value chain. Many actions, such as regional-level programs, jurisdictional agricultural programs, or shared infrastructure initiatives, generate measurable climate benefits that extend across multiple actors and regions, blurring the boundaries of direct responsibility.

Recognizing this gradient is essential: even when actions do not fully meet the criteria for physical traceability or direct attribution, they may still maintain a credible, though less direct, link to the value chain. MBIs are examined as complementary tools for driving decarbonization along this continuum, with emphasis on transparency, attribution, and credible claiming practices that prevent overstatement while allowing companies to gain recognition for legitimate contributions to sectoral transformation.

Planning for the last step toward net zero

Residual emissions, meaning emissions that remain after implementing all technically and economically feasible abatement measures, will still persist. Therefore, it is important to plan early for neutralization, permanently counterbalancing residual emissions with removals from the atmosphere. According to the SBTi 90/10 framework, at least 90% of a company’s emissions are to be abated before neutralization. While most apparel companies have yet to integrate such strategies, doing so will be critical to ensure long-term credibility and alignment with a 1.5°C pathway.

Recommendations and call to action

To advance credible Scope 3 mitigation and traceability, the Apparel and Footwear Working Group IV calls for collective action to:

– Strengthen the integrity of climate and environmental claims.

– Scale interoperable Chain of Custody and traceability systems.

– Develop greater coherence around the activity pool concept as a tool to accelerate decarbonization.

– Clarify the use of MBIs to complement, not replace, physical abatement.

– Begin planning for neutralization of residual emissions.

Download the full guidance for more insights