In this extract from Ragtrader's latest Sustainability Report: 2024, the former Kmart sustainability lead turned industry advisor Rick Lambell says Australian fashion businesses have a lot of catching up to do when it comes to reporting their green credentials.
It’s time to talk about the Australian apparel industry’s lack of progress on climate change and Scope 3 greenhouse gas (GHG) emissions.
The global apparel sector is a significant contributor to GHG and climate impacts. According to the Apparel Impact Institute, an estimated 897 million tonnes of carbon dioxide equivalent (CO2e) was generated by the apparel sector in 2021 — roughly 1.8 percent of global GHG emissions.
Scope 3 emissions are indirect GHG emissions that are generated in a company’s value chain. This includes both upstream (purchased goods and services) and downstream (sold goods and services) emissions. For a typical apparel retailer, Scope 3 emissions will account for around 96% of the company’s total carbon footprint, with many of these emissions tied to material choices and manufacturing processes.
Over the past five years, we have seen significant momentum regarding Scope 3 emissions in the apparel sector. This momentum is driven by government action and increasing scrutiny from investors, media, and non-government organisations.
Starting in 2025, mandatory sustainability reporting will require Australia’s largest apparel retailers to disclose their material climate-related financial risks and opportunities, including Scope 3 emissions. Inevitably, disclosure will create pressure on companies to demonstrate meaningful action.
Additionally, Net Zero climate targets, including those approved by the Science-Based Targets Initiative (SBTi), have become increasingly common across the industry. Targets are considered ‘science based’ if they are aligned with the Paris Agreement to hold global temperatures to 1.5 deg above pre-industrial levels. Globally nearly 300 apparel and textile companies have set SBTi targets, including nearly half (47%) of the world’s largest fashion brands (source: Fashion Revolution: What Fuels Fashion?)
However, compared to their global counterparts, many Australian apparel retailers are just beginning their Scope 3 and Net Zero journey. A recent analysis by Beyond Sustainable Retail Group examined public disclosures from 83 of the largest Australian and New Zealand-owned apparel and textile retailers. The findings revealed that:
- 16% have measured and published a Scope 3 emissions baseline.
- 14% have published a target to reduce Scope 3 emissions, with 5% aligning their targets with SBTi guidelines.
- More than two-thirds (69%) of companies have no published information on their actions to measure and reduce Scope 3 emissions.
Furthermore, the analysis identified limited evidence of quantifiable actions to reduce Scope 3 emissions, even among leading brands. So why the lack of action? Several factors come into play:
- Australian and New Zealand apparel retailers haven’t faced the same public pressure as their global peers - until now. Mandatory financial disclosures are likely to change this.
- Many brands and retailers have, to date, focused on Scope 1 and 2 emissions within their direct operational control - for example, improving energy efficiency in stores and transitioning to renewable energy - rather than on Scope 3 emissions.
- Measuring and addressing Scope 3 emissions is challenging due to imperfect data and the complexity of global supply chains. Influencing suppliers to act, especially beyond tier 1, presents additional obstacles.
For these reasons, many companies seem to have deprioritised action on Scope 3 until now.
However, despite the challenges, progress remains achievable for companies of all sizes. Over the past five years, prominent global brands have made significant strides, revealing a blueprint for effective action. This typically includes:
- Mapping the supply chain beyond tier 1 factories to identify GHG hot spots, including fabric mills, dying facilities and laundries, which account for a large proportion of Scope 3 emissions in the apparel industry.
- Working in partnership with suppliers to set targets and identify commercially viable solutions at the factory-level, such as elimination of coal fired boilers, maximising savings from energy efficiency, and investing in on and off-site renewable energy.
- Preferencing sourcing volumes to committed suppliers and lower GHG emitting factories.
- Drawing on partnerships, such as Cascale and the Apparel Impact Institute Climate Leadership Program, to increase scale and leverage through collective action.
- Aggressive scale-up of more sustainable materials, including those with lower GHG emission profile.
By drawing on these proven strategies, Australian brands and retailers can quickly accelerate and catch-up with their global peers. All that remains is the will to get started.
Get your free PDF copy of Ragtrader's Sustainability Report: 2024 HERE.