Apparel production contributes 2-8% of global carbon emissions, and these emissions are continuing to rise. Without urgent action, GHG emissions could reach 1.266 Gt by 2030. To meet the Paris Agreement’s 1.5°C target, emissions need to be cut by 45% by 2030. This urgency is driving many companies to set science-based targets. Meanwhile, climate risks such as flooding and heatwaves are already threatening both production and operating profits across the fashion value chain.

Scope 3 emissions, or the emissions along the value chain, are the biggest source of GHG emissions from the sector. For fashion brands with approved science-based targets, on average 96% of emissions stem from Scope 3. This means that finding ways to collaborate across actors within the apparel value chain is crucial to address the bulk of the sector’s emissions.

The Value Change Initiative (VCI) is leading efforts to address these challenges by creating harmonized guidance and solutions for Scope 3 emissions accounting, focusing on raw materials and production. Read on to learn about the key challenges facing the sector and how the upcoming VCI Apparel & Footwear Working Group aims to address them.

Challenges to Scope 3 action

With multiple steps in the production of goods, and value chains divided into four tiers from raw material production to final product assembly, accounting the GHG emissions across the value chain is no small task. Companies are struggling with the implementation of existing guidance, lack of alignment across actors and the sheer variety of interventions and business models that they can pursue.

Existing guidance on how to account, report, and claim interventions to reduce or remove emissions in the value chain often remains too high level. Standards may assume perfect traceability, data quality and avoidance of double claiming – mechanisms that aren´t there yet fully in reality. Meanwhile, ongoing updates to standards like the GHG Protocol and SBTi Corporate Net Zero Standard are creating uncertainties, impacting investments in the sector. This can lead to confusion or skepticism as companies try to operationalize guidance, and a variety of approaches across actors can make comparisons difficult. Challenges in claiming the impact can also make it difficult to justify investments. There is little guidance on how to account for and report interventions that addresses challenges such as imperfect traceability, crop rotation in raw material production, and dealing with interventions involving different types of contractual agreements.

The variety of processes undertaken by actors from tiers 1-4 can lead to fragmentation and lack of alignment between actors. This complexity can make it challenging to identify collaboration opportunities and ensure emission reductions are reflected for downstream companies. Making claims can be challenging when physical traceability cannot be established under the Land Sector and Removals Guidance (LSRG) interim traceability guidance, or when goods are impacted by an organization’s investments but are not directly sourced. For example, an intervention may impact 100% of the goods from a supplier’s facility or within a land management unit, but the organization driving the intervention may only source 10% of the goods. In such cases, reporting and claiming remain unclear, and are currently discussed particularly in the context of the review of the Science Based Targets initiative (SBTi) Net Zero Corporate Standard.

These interventions are crucial for systemic decarbonization across the sector, yet they remain underacknowledged in conventional reporting frameworks, limiting their potential to drive broader net-zero transitions. Brands should keep in mind that initiatives don’t always have claimable progress towards climate targets, but they may be necessary in the overall fashion landscape before being able to claim emission reductions and removals in the future.

Finally, the diversity of trends, interventions and business models requires adaptable and responsive approaches. Companies need to 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. Moreover, regulations towards circularity and waste management for textiles and other materials will be enforced in the near future in certain markets. Companies can aim to identify co-benefits between climate and other environmental targets like biodiversity or soil health to address multiple challenges at once.

Value chain interventions in the apparel and footwear sector

To drive meaningful climate action, it is critical to define interventions and establish how their impacts can be credibly reported and claimed. There is an urgent need for effective and scalable solutions that enhance investment. 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.

VCI’s recent Apparel and Footwear working group common definitions for interventions, and proposed intervention types for both land-based and manufacturing process interventions. According to the Value Chain Intervention Guidance 1.1, an intervention is an umbrella term for any action that introduces a change to a Scope 3 activity. This could include a new technology, practice, or supply change (e.g., a different product input) to reduce or remove emissions.

Open questions still remain to fully operationalize Scope 3 guidance. For example, how to make use of the SBTi’s Corporate Net Zero Standard and Environmental Attribute Certificates, how to deal with traceability in natural fibers and blends, or how market-based mechanisms and co-investment mechanisms can support companies in both funding their interventions and claiming their impacts.

Why join the Apparel & Footwear Working Group?

By joining the Apparel & Footwear working group you will:

– Co-develop guidance to key challenges with other actors in the sector

– Influence standards and future policy

– Learn how to improve your decarbonization strategy

– Achieve greater impact from value chain operations and interventions

– Credibly claim and share impact

Get in touch to learn more about our upcoming working group and join leading organizations to decarbonize the Apparel and Footwear sector.