The trillion dollar question: How to improve the fashion industry

In 2018, fashion stakeholders come together with UNFCCC to identify ways in which the wider textile, clothing and fashion industries can “move towards a holistic commitment to climate action”. What they created was Fashion Industry Charter for Climate Action, contains a vision to achieve net zero emissions by 2050.

‘Unlocking Trillion Dollar Fashion Decarbonization Opportunities’, co-written by Fashion for Kindness and Apparel Impact Institute (Aii) and sponsored by HSBC, is a new report outlining it. It “charts a trajectory for the industry to meet clean zero ambitions, mapping integral levers across existing solutions, such as renewable energy, and innovative solutions, such as next generation materials”.

The fashion industry’s carbon footprint is globally significant, evidenced by a growing body of research, most recently World Resources Institute (WRI) and Aii (2021). The report estimates that the industry’s share comprises 2 percent (1,025 gigatons CO2eq) of annual global greenhouse gas (GHG) emissions, with most of the impact occurring in raw materials and supply chain processing steps.

But we are past the days of the fashion industry fretting about its role in the climate crisis. So there’s no point in listing all the ways that contribute to international waste crisis, NS disposal of chemicals in rivers and the sea or human rights degradation in the Global South.

We know what the problem is, what we want now is to see a solution.

Where is the money to finance the green transition?

The report focuses on “$1 trillion investment opportunities” to finance the transition. It breaks down the funding needed by solution category and identifies the types of funders that are best placed to take advantage of the opportunities and benefit from positive returns. The solution categories covered by this report appear to be enabling the net-zero industry to be achieved by 2050.

On the first Monday since police 26, investors offloaded mining stocks on the first day of trading 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 Investment), the prospect of investing in the decarbonization of one of the most destructive industries on Earth can be tantalizing.

“Reducing carbon emissions will be one of, if not, the defining challenges for our generation and of course the fashion industry. The good news is that a robust set of solutions – both disruptive and ready to implement – ​​can drastically remove carbon in the industry,” said Katrin Ley of Fashion for Good. “This report highlights that not only is the opportunity abundant and financially attractive, but it is also the key to getting us to a clean zero circular industry.”

Anyone who has worked 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 to the extent that a transition of any scale would require enormous capital, most of which would have to come from the private sector.

This is because governments in the Global South cannot afford a project of this magnitude, nor are they responsible for financing it.

But what is the real cost?

“Unlocking Trillion Dollar Fashion Decarbonization Opportunities” estimates that 47 percent of CO2 reductions come from implementing existing solutions, while 39 percent comes from scaling innovative solutions, and 14 percent from other solutions.

These solutions include:

• reduce overproduction
• material efficiency improvement
• circular business model scaling

The report evaluates seven solutions to achieving net zero in the fashion industry by 2050, including a shift to renewable energy, sustainable materials and processes, accelerated development of next-generation materials, and the elimination of coal, among others. The total cost to implement this solution and achieve net-zero was $1.04 trillion (€928 billion), including $639 billion (€570 billion) for existing solutions, 61 percent, and $405 billion (€361 billion) for innovative solutions – 39 percent.

Philanthropy and government grants represent $50 billion (€45 billion) – just 5 per cent of the total – but according to the report they are critical to catalyzing “industrial and financial capital”. This report includes insights, key actions and recommendations for unlocking $1 trillion financing opportunities – but is this really the right amount of money?

fashion industry not known poorIn fact, its value is predicted to reach $1.5 trillion by 2020, according to previous estimates.

“The fashion industry is becoming increasingly aware of its environmental impact and the need to quickly go to zero…Collective action is critical. The financial system must play its part by providing investment to fund net-zero solutions at scale,” said Zoë Knight, Managing Director and Group Head of the HSBC Center of Sustainable Finance.

But some of the manufacturers that dominate the industry are the highest-earning companies in the world. So why haven’t they started investigating where the unsustainability lies in the supply chain? Simply put, it’s because that’s what makes money.

“The problem is not a lack of financing – the industry continues to make huge profits during the pandemic,” said a supply chain and regulatory expert, who is close to pushing for legislation to regulate the industry in the UK. “The problem is that the fashion industry is unwilling to move away from a low-cost, high-volume, and endless growth business model that is not only damaging our environment, but also exploiting workers around the world.”

The hypocrisy of the fashion industry

“The people who make our clothes – mostly women – are at a disproportionate risk from the impacts of climate change because of their location in vulnerable areas of the Global South,” said Ruth Maglip of Fashion Revolution.

“The fashion industry’s downward race to find the lowest labor costs from its suppliers, combined with its significant climate impact, has now created a paradox where the most profitable fashion supply chains are threatened by the business models that underpin them.”

Sure the report calls for “reducing overproduction” but until we see a full-scale shift away from the dropshipping model, where more clothes are produced than needed and then mass-marketed to consumers. just to burn or dumped in landfills, we will continue to face the same problems as before.

Make no mistake, renewable energy, next generation materials, cessation of fossil fuels, and green investments are critical to fighting the climate crisis and this report makes an excellent case for financing this in the fashion industry. But there’s an overarching issue missing here, the golden thread of how to truly “decarbonise” an industry that’s been ignored or intentionally ignored.

In 50 years time, if you stand on one of the growth pile of used clothes in the Ghana or Chile, which pollutes local water and soil sources, would it make a difference if half of the clothes in the pile were made using renewable energy? No, it won’t.

Will workers in Leicester, Britain, written as a modern slave by human rights groups, feel better about paying for their poverty if they are part of a ‘low emission supply chain’? It doesn’t seem like it.

Production methods are an important part of solving the fashion crisis, which is not disputed, but this report is an expensive paper to address those gaps. One trillion dollars.

Sources working on statutory efforts in the UK provide incriminating indictments the “solutions” presented… “This report gives the green light for “business as usual” and is far from what we need to prevent a climate catastrophe. What we need is urgent regulatory action by the government to address the abuses of the fashion industry and prompt a shift away from the current exploitative economic model.”

There is no “green” solution here, no silver financial bullet to make the problem go away.

It couldn’t be simpler, if the fashion industry is to address its role in the climate crisis, it needs to enforce mass industry reform laws. So-called ‘post-growth’ means moving beyond just producing less, to reach a point where the concept of a successful industry is not based on the endless pursuit of growth and profit.

Any effort to improve this industry must embrace the idea that there is value in conserving valuable resources and restoring the environment, and where a culture of transparency and accountability is at the core.