The Apparel and Footwear sector faces growing pressure to act on climate change. With over 100 billion garments produced annually, the sector accounts for 3-8% of global carbon emissions. Most of these emissions fall under Scope 3—those originating from the extended value chain.

Without significant action, the sector is on track to exceed the 45% emissions reduction needed by 2030 to align with the Paris Agreement. Transforming apparel value chains requires scalable solutions and unprecedented collaboration.

At the same time, evolving regulations and standards are reshaping expectations around GHG emissions accounting, reporting, and claiming. The complex, fragmented nature of apparel value chains makes collaboration and investment difficult, highlighting the need to overcome these barriers for scalable decarbonization.

So, what are the options do companies have to claim the outcomes of their interventions in the apparel value chain? This blog outlines pathways developed by the VCI Apparel and Footwear Working Group to help organizations navigate this evolving landscape.

What are value chain interventions?

According to the Value Chain Interventions Guidance 1.1, a value chain intervention is an umbrella term for any action that introduces a change to a Scope 3 activity —such as adopting new technologies, practices, or supply models to reduce or remove emissions.

Interventions in the Apparel and Footwear sector can be divided into:

– Land-based interventions (Tier 4): focused on raw material productions, e.g., regenerative cotton farming.

– Manufacturing interventions (Tiers 1-3): related to yarn, fabric, or final garments production.

A clear definition helps organizations understand the benefits of their interventions —whether that’s making credible claims, securing low-GHG assets, or securing long term commercial relationships with suppliers.

The Theory of Change

VCI’s Theory of Change lays out how specific actions lead to decarbonizing. It fosters a shared vision for collaboration and coordination across the sector while recognizing the diversity of interventions. It emphasizes:

– Pre-intervention activities: technical or financial assistance to enable change.

– Post-intervention activities: Mechanisms like carbon pricing, supplier contracts, and incentives that support continued low-emission production.

– Monitoring, Reporting, and Verification (MRV) systems: Critical for tracking emissions reductions and verifying improvements.

– “Beyond physicality” measures: Broader industry action like policy advocacy, standards development, and sector-wide collaboration.

Including interventions in the Scope 3 inventory

Whether the reductions and/or sequestration of emissions can be included in Scope 3 inventory depends on two main factors:

1. Physical traceability to the purchased goods.

2. The chosen accounting approach (inventory vs. project-based).

With physical traceability and an association with the purchased goods, reductions and removals can be reflected in the Scope 3 inventory.

Without physical traceability, or if there is unclear association with the purchased goods, changes in emissions and removals can accounted for through project accounting or by reflecting improved emissions through market-based mechanisms (MBMs) such as emission factor (EF) certificates, following inventory accounting methods.

The choice affects how reductions are reported and the types of claims that can be made, depending on frameworks like abatement, neutralization, or Beyond Value Chain Mitigation (BVCM). These concepts are explained in the Science Based Targets initiative glossary.

Claiming Land-Based Interventions

Traceability challenges

It is often challenging for companies in the apparel value chain to see the results of their interventions reflected in their GHG reporting. Land-based interventions —like regenerative agricultural practices at the cotton farm level —often lack full traceability. Brands may not source all their commodities from a specific farm.

Still, there are multiple pathways to capture emissions reductions in Scope 3 inventories, or through a Market-Based Mechanism (MBM) reporting sheet. These vary based on whether brands are investing in supporting producers to transition to low-GHG practices or procurement of low-emission goods from suppliers already implementing such practices. In both cases, the impact enables organizations to report a lower EF for the given commodity.

The level of physical traceability that can be achieved has implications for Scope 3 reporting. Where traceability and segregation are possible, the post-intervention EF can be leveraged. When traceability is not possible, the impact could be accounted for via MBMs such as certificates or credits.

Value chains in transition: Three pathways based on traceability

Brands may want to invest in implementing interventions upstream in their value chain, supporting suppliers’ transition to low-carbon practices or technologies. This helps suppliers who may not have the knowledge or funding to reduce emissions on their own and helps ensure demand for low-carbon goods.

There are three pathways for claims under this scenario, depending on the level of traceability.

1. High level of traceability and segregation: Using the post-Intervention EF in the GHG inventory.

2. Only traceability to Supply Shed: Use the Supply Shed EF or stratified EF for accounting, which aligns with the GHG Protocol’s Land Sector and Removals Guidance (LSRG) and can be accounted for in the GHG inventory.

3. No traceability: The intervention can generate credits or certificates. This might be in line with the Environmental Attribute Certificates requirements from SBTi and must be declared in an MBM reporting sheet, not accounted for in the GHG inventory.

Sourcing low-GHG commodities

Brands can also source from suppliers who have already implemented interventions to reduce their emissions. In this case, they may pay a premium for low-carbon goods to contribute to the expenses of implementing the intervention.

Brands can leverage commodities certified under a voluntary sustainability standard, or account according to the level of traceability that is possible. When complying with the LSRG requirements on traceability, this can be accounted for in the GHG inventory, otherwise it falls under the MBM reporting sheet.

Claiming Manufacturing Process Interventions

Manufacturing processes across Tiers 1-3 remain significant contributors to the Apparel and Footwear sector’s emissions due to energy intensity. Traceability is often easier here, allowing for more direct collaboration and investment to drive decarbonization efforts, especially in Tiers 1-2 of the apparel value chain.

VCI’s recent Apparel and Footwear guidance introduces the possibility to recognize reductions not directly tied to a buyer’s sourced goods but occurring “adjacent to the value chain” at facility and landscape levels. By differentiating these investments from broader Beyond Value Chain Mitigation (BVCM) efforts, the proposed solutions aim to incentivize investments, foster collaboration, and drive scalable climate action within the sector.

Emission reductions from interventions can be captured in the Scope 3 inventory abatement line when there is physical traceability. However, interventions impacting non-sourced but impacted products require leveraging the MBM reporting sheet. The VCI Working Group recommended that these contributions should be recognized in the “beyond physicality” space.

Transparency in reporting is achieved by distinguishing physically traceable Scope 3 (for sourced products) from MBM (for non-sourced impacted products). This approach avoids double counting within the same reporting sheet, while allowing permissible overcounting across different reporting lines.

Leveraging the value chain adjacency reporting line can bring value to companies by differentiating investments that impact the facility from where an investing brand is sourcing, from the broader BVCM investments that fall across other sectors in the landscape.

Policy and regulations heavily influence the extent to which brands can account, report and claim their renewable energy investments at landscape level. Regulatory reforms enabling market instruments are needed in regulated markets reliant on location-based EFs, for brands investing in renewable energy landscape projects to better capture reductions in their Scope 3 inventories.

Accelerating Net Zero in the Apparel sector

Want to dive deeper? Read the full guidance for the Apparel & Footwear sector or join our Apparel & Footwear Working Group co-create solutions for decarbonizing the sector.