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To meet its climate goals, fashion has been asking suppliers to go into debt to help them transition to renewable energy while taking on other initiatives. The approach may be backfiring.
Over 40 suppliers for some of the largest fashion brands — including Mango, H&M and Levi’s — have failed to meet their commitments to set science-based targets, and it’s largely because they don’t have the means to follow through. This signals fundamental flaws in how the industry has positioned its emissions reductions efforts and is threatening to compromise progress on emissions reductions across the industry.
When companies pledge to set emissions reduction targets with the Science Based Targets initiative (SBTi), the de facto governing body of corporate climate goals, they have 24 months to submit their plans to the organisation for final approval. If they miss that deadline, they are publicly listed as “commitment removed”.
Twenty-four months often isn’t a realistic timeline for manufacturers, says Saqib Sohail, head of responsible business projects at denim manufacturer Artistic Milliners. Their removal is not a reflection of suppliers’ lack of interest or dedication, but a reflection of them not being set up to succeed and of the underlying dynamics between brands and suppliers. “We feel like this was set up for Western service providers or retailers so they have enough time to do their own mapping.”
Some stakeholders see sustainable financing as the path to climate progress. Will suppliers be able to handle it?
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Alberto Carrillo Pineda, SBTi’s chief technical officer, recognises the time needed to submit plans will vary from one company to another. “Different companies are in different stages of maturity, so how they manage target setting and change more broadly varies,” he says. “For some companies, 24 months is too long, for others it’s too short. The commitment is an optional step. We have it because many companies find it useful to publicly commit to setting a target to use it as an opportunity to leverage the momentum to make progress.”
The suppliers that have had their commitments removed by SBTi, based largely in Asia, include some of the most progressive and proactive suppliers when it comes to reducing the impacts of their operations, often despite a lack of assistance from brands — Artistic Milliners, Arvind Limited and Crescent Bahuman, for example.
The rollback of these commitments underscores the challenges manufacturers face when it comes to measuring their carbon footprints and investing in renewable energy. It also adds to the problems brands themselves confront when trying to cut emissions generated by their supply chains, which make up the majority of their environmental impact. Two-thirds of brands are behind on their climate goals, and 40 per cent have seen their emissions output increase since making sustainability commitments, according to a March report from McKinsey.
Pakistan-based Artistic Milliners has been at the forefront of environmental initiatives for decades, including the adoption of solar energy, the reduction of water use, and textile recycling. But near-term projects like investing in regenerative agriculture and testing waterless dyeing methods mean target setting isn’t always at the forefront of internal priorities, Sohail says. “The manufacturer’s voice was missing at the beginning. For us, it can get really overwhelming when there’s so much to do and there’s only so much financing available. You have to choose top priorities.”
Swimming upstream
Despite missing the initial deadline, Artistic Milliners recently submitted a target to SBTi and is waiting for it to be evaluated for approval. Other fashion suppliers who haven’t already been investing in sustainability initiatives, however, might have a harder time setting and meeting climate targets.
“Because of fashion’s business model, manufacturers get many, many different requests, especially from a sustainability side,” says Philipp Meister, global fashion lead for fashion and chemicals at Quantis, an environmental sustainability consultancy. “Science-based targets, therefore, might be deprioritised versus an audit, which might be a requirement for the next shipment.”
When manufacturers don’t meet their commitments to set targets, brands are directly impacted, Meister says. That’s because the majority of their emissions come from the supply chain, which they don’t have direct control over. While many of the brands that Quantis works with are communicating directly with suppliers to help them set targets, others in the industry are simply not aware of whether or not their manufacturers have made climate commitments at all, he says.
The implications could be significant. “Companies are, and will continue to, step away from science-based targets. Suppliers are pulling away because it costs money, and brands on a bigger corporate level are moving away because they also see that this isn’t a win-win,” says Maxine Bédat, executive director of think tank the New Standard Institute. “This costs money, and on a brand level no company wants to make those investments. This is why we need law.”
Suppliers that had their commitments removed over the last year work with some of the largest global brands, all of which have their own ambitious science-based targets. Pakistan-based Sarena Textile Industries supplies fabrics for Hugo Boss, Mango and Boohoo, while Jordan-based Classic Fashion Apparel Industry Ltd does final product assembly for Adidas and Gap. Sarena and Classic Fashion did not respond to requests for comment.
When asked about suppliers dropping their commitments with SBTi, H&M and Bestseller both said they don’t require suppliers to set science-based targets, but that they help with capacity-building and training around emissions reductions. Gap and Mango didn’t respond to requests for comment, while Levi’s declined to comment.
At Kontoor Brands, owner of Wrangler and Lee jeans, “setting and validating targets is an important step in measuring reduction”, says Jeff Frye, VP of sustainability, innovation, product development and procurement. But “a focus on emissions reductions must not be sidelined by the recent removal of some supplier targets from the Science Based Targets initiative.”
A balancing act
To set a science-based target, suppliers need detailed data on their carbon emissions. Collecting that data requires time, technology and know-how, which most suppliers — who operate on razor-thin margins — don’t have. And even when suppliers do manage to set targets, meeting climate goals requires additional investment in technologies like solar panels or biofuels, adding to their overall costs.
“It appeared technically impossible to reach the targets with the available set of interventions, even if we invested millions of dollars into our supplier base,” says Willy Gallia, group sustainability manager at The Schneider Group, a global wool supplier that recently had its SBTi commitment removed. Gallia added that science-based target methodologies don’t take into account things like the durability of wool and the fact that sheep raising can benefit biodiversity and soil, which means the carbon emissions of wool production are often overstated and sequestration is not accounted for.
Given the complexities of the apparel industry, SBTi is now working on setting sector-specific standards that will take into account things like durability and circularity, in addition to emissions intensity, says Carrillo Pineda. That standard-setting process will commence in the next few months, and will involve input from stakeholders across the supply chain, he says.
The challenges facing suppliers extend beyond access to financing. Apparel manufacturing hubs still rely heavily on coal or other fossil fuels, says Lewis Perkins, president of the Apparel Impact Institute. Grids in places like Bangladesh aren’t stable enough to handle large-scale renewable energy projects, and securing funding for those projects can be tough for suppliers in regions where interest rates are high, Perkins says; some of this can only be solved with local government policy, which some brands are trying to advocate for through the UN Fashion Industry Charter.
Meaningful progress will require collaboration — including active engagement and concrete commitments — both between brands and between brands and their suppliers.
“We want brands and suppliers to have really strong credible emissions reductions targets,” says Ruth MacGilp, fashion campaign manager at Action Speaks Louder. “But those need to be backed up by strategies that work country by country. So far, even the bare minimum isn’t being done. It’s essentially just been wishful thinking.”
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