The trillion dollar question: how to fix the fashion industry
In 2018, fashion players got together with the UNFCCC identify ways in which the entire textile, clothing and fashion industry can ‘evolve towards a holistic commitment to climate action’. What they created was the Fashion Industry Charter for Climate Action, containing the vision of achieving zero net emissions by 2050.
âUnlocking the Trillion Dollar Fashion Decarbonization Opportunity,â co-authored by Fashion for good and Garment Impact Institute (Aii) and sponsored by HSBC, is a new report that breaks it down. It âtraces a trajectory allowing the industry to reach the ambition of net zero, by mapping the integral levers of existing solutions, such as renewable energies, and innovative solutions, such as new generation materialsâ.
The fashion industry‘s carbon footprint is significant globally, as evidenced by a growing number of studies, including the most recent World Resources Institute (WRI) and Aii (2021). This report estimates that industry’s share accounts for 2% (1.025 gigatons of CO2 equivalent) of annual global greenhouse gas (GHG) emissions, with most of the impacts occurring in raw materials and processing steps. of the supply chain.
But we are past the days when the fashion industry struggled with its role in the climate crisis. It is therefore pointless to list all the ways in which it contributes to the international waste crisis, the discharge of chemicals into rivers and the seas or the degradation of human rights in the Global South.
We know what the problems are, what we want now is to see solutions.
Where is the money to finance the green transition?
The report focuses on a “$ 1 trillion investment opportunity” to finance the transition. It breaks down the funding needed by solution category and identifies the types of funders best positioned to take advantage of the opportunity and benefit from the positive feedback. The categories of solutions under this report apparently achieve a net zero industry by 2050.
The first Monday since COP26, investors abandoned mining shares in the first day of listing on the London Stock Exchange since the Glasgow deal was finalized. For investors who prioritize environmental, social, and corporate governance (known as ESG or green investing), the prospect of investing in decarbonizing one of the world’s most destructive industries the planet would be enticing.
âReducing carbon emissions will be one of, if not the defining challenge of our generation and the fashion industry. The good news is that a strong pipeline of solutions – both disruptive and ready to go – can dramatically decarbonize the industry, âsays Katrin Ley of Fashion for Good. “This report highlights that not only are the opportunities plentiful and financially attractive, but they are essential in moving us towards a net zero circular industry.”
Anyone who works on climate change knows that for the most part what is needed for any kind of systematic change is willpower and a lot of money. So the report is correct as any kind of transition of this magnitude will require an enormous amount of capital, much of which must come from the private sector.
Indeed, governments in the South simply cannot afford a project of this magnitude, nor should they be responsible for funding it.
But what is the real cost?
âUnlocking the Trillion-Dollar Fashion Decarbonization Opportunityâ estimates that 47% of CO2 reductions come from implementing existing solutions, while 39% come from scaling innovative solutions and 14% from other solutions .
These solutions include:
- reduce overproduction
- improved material efficiency
- scale circular business models
The report assesses seven solutions to achieve net zero in the fashion industry by 2050, including a transition to renewable energy, sustainable materials and processes, accelerating the development of next-generation materials, and phasing out of coal, among others. The total cost of implementing these solutions and the net zero goal is $ 1.04 trillion (â¬ 928 billion), of which $ 639 billion (â¬ 570 billion) is for existing solutions. , 61%, and $ 405 billion (361 billion euros) for innovative solutions – 39 percent.
Philanthropic and government grants account for $ 50 billion (45 billion euros) – only 5% of the total – but according to the report, they are essential to catalyze “industrial and financial capital”. The report covers ideas, key actions and recommendations to unlock the $ 1 trillion funding opportunity – but is it really the right amount?
The fashion industry is not known to be poor, in fact, its value is expected to reach $ 1.5 trillion in 2020, according to previous estimates.
âThe fashion industry is increasingly aware of its environmental impact and the need to move quickly to zero netâ¦ Collective action is essential. The financial system must play its part in providing the investment needed to finance large-scale net zero solutions, âsays ZoÃ« Knight, Managing Director and Group Head of the HSBC Center of Sustainable Finance.
But some of the industry’s dominant manufacturers are the highest paying companies in the world. So why haven’t they already started to research where unsustainability lies in the supply chain? Simply put, it’s because that’s what makes money.
“The problem is not the lack of funding – the industry continued to make huge profits during the pandemic,” says a supply chain and regulatory expert, close to efforts to push through legislation to regulate the industry in the UK. The problem is, the fashion industry doesn’t want to move away from a low cost, high volume, endless growth business model that not only harms our environment, but also exploits workers around the world. . “
The hypocrisy of the fashion industry
âThe people who make our clothes – mainly women – are at a disproportionate risk of the impacts of climate change due to their location in vulnerable regions of the Global South,â says Ruth Maglip of Fashion revolution.
âThe fashion industry’s race to find the lowest labor costs from its suppliers, combined with its significant climate impacts, has now created a paradox where supply chains most profitable fashion companies are threatened by the very business model that supports them. “
Sure, the report calls for ‘reducing overproduction’, but until we see a large-scale shift in dropshipping models, where a lot more clothes are produced than needed and then marketed en masse to consumers only to be burned or thrown into a landfill, we will continue to face the same problems as before.
Make no mistake about it, renewables, next-generation materials, phasing out fossil fuels and green investments are key to tackling the climate crisis and this report presents an excellent case for funding them within the fashion industry. But what is missing here is a fundamental problem, a golden thread on how to truly âdecarbonizeâ the industry that is neglected or deliberately ignored.
In 50 years, if you stand on one of the mountains of discarded clothes in Ghana Where Chile, which pollute local water sources and the soil, would it make a difference if half of the clothes in this pile were made from renewable energy? No, it won’t.
Will workers in Leicester, UK, herded as modern slaves by human rights groups, feel better about their poverty wages if they are part of a âlow emission supply chainâ? Unlikely.
Production methods are a crucial part of solving the fashion crisis, which is not for debate, but this report is an expensive cover for the cracks. A trillion dollars.
Source working on UK legislative efforts damning condemns ‘solutions’ presented … “This report gives the green light to” business as usual “and falls short of what we need to prevent climate catastrophe What we need is urgent regulatory action from governments to tackle abuse in the fashion industry and push away from the current operating business model. “
There is no “green” solution here, no silver bullet to make the problems go away.
It couldn’t be simpler, if the fashion industry is to tackle its role in the climate crisis, it needs a legal enforcement of mass industrial reform. What is called “post-growth” means going beyond simply producing less, to a point where the concept of a successful industry is not based on the endless pursuit of growth and of profit.
Any attempt to improve this industry must embrace the idea that there is value in conserving precious resources and restoring the environment, and where the culture of transparency and accountability is at the heart.