Consumer demand for high-end handbags, logo-heavy designer items, and luxurious streetwear soared, according to Gucci owner Kering, whose revenues topped about €18 billion ($20 billion) in 2021. That was good news for the firm and its investors, but the swift return of large fashion labels to pre-pandemic sales levels presents a difficult task in terms of reducing the industry’s climate effect putting into question the industry’s climate commitments.
Kering is a sustainability leader in the sector, announcing that it would become carbon neutral in 2019 and aiming for net-zero emissions by 2030. Its goal is to almost eliminate emissions from its own operations by the end of the decade, and its commitments have been approved by the Science Based Targets initiative (SBTi), widely regarded as the gold standard for corporate target setting, as being in line with efforts to cap global warming at levels that could stave off the worst effects of climate change.
Despite this, the delicate balance between profit and purpose must be preserved. Kering’s major environmental impact, like that of other fashion houses, is in its supply chain, despite the fact that the company’s target to decrease indirect or Scope 3 emissions (which include that part of its business) is tied to sales. As a result, if Kering keeps growing, so will its emissions.
While the company has yet to submit environmental statistics for the year, its Scope 3 emissions have historically tracked sales trends. As a result of the pandemic, Kering’s revenue plummeted by around 20% in 2020, and its supply chain’s emissions fell by a similar amount. Revenue and Scope 3 emissions both climbed by 16 percent over the previous year.
According to environmentalists, this trend indicates how lowering emissions in proportion to production or economic expansion undercuts companies’ aspirational climate goals.
“What really is critical for net-zero ambitions to be meaningful and effective is a clear and transparent pathway to cut absolute emissions — and the word absolute is very important here — by half by the end of the [decade],”Muhannad Malas, a senior climate activist at the US-based advocacy group Stand.Earth, agreed.
While corporations across industries are making more ambitious commitments to reduce their carbon footprint, industry observers say that beneath the surface, they are frequently less progressive and concrete than they look.
This was the conclusion of a survey released earlier this month that looked at the net-zero objectives of 25 of the world’s major corporations. Unilever, Ikea, and Walmart, for example, were found to have established objectives with “poor integrity.” (The businesses said that they are dedicated to reaching and exceeding their emission reduction goals.) Walmart said that the study misrepresented its objectives.)
Many of the organisations’ goals have been approved by well-known environmentalists, but the report by European non-governmental organisations NewClimate Institute and Carbon Market Watch found that they still lack specifics that would create true accountability and demonstrate a path to change.
“Many corporations’ Net Zero and carbon neutrality goals are far less ambitious than they appear,” said Gilles Dufrasne, policy officer at Carbon Market Watch.
While the bulk of the fashion industry’s largest names, such as LVMH, Kering, Nike, and Inditex, the owner of Zara, has committed to a “net-zero” objective, just half have set concrete, time-bound goals to reduce Scope 3 emissions. Anta, the parent company of Urban Outfitters, Urbn, and Abercrombie & Fitch are among the firms that have yet to set any specific Scope 3 goals.
“If you don’t do Scope 3, you don’t do anything, really,” Diana Mangalagiu, professor of strategy and sustainability at France’s NEOMA School, said of businesses tackling their emissions. “In my opinion, the fashion sector is still doing quite badly overall.”
A&F has said that it is attempting to better understand its Scope 3 emissions in order to set reduction targets. Anta mentioned its efforts to minimise carbon intensity and its goal of becoming carbon neutral by 2050. Urbn did not respond to a request for comment.
Around a quarter of the firms studied by BoF, such as LVMH, Hermès, and Kering, have established intensity-based Scope 3 objectives, implying that their emissions may continue to rise in tandem with their revenues. The boldness of Kering’s climate goals has been recognised by environmental disclosure NGO CDP and SBTi, according to the brand.
LVMH stated that its goal is based on income rather than manufacturing volume, and that it is taking initiatives to reduce the environmental effect of the products it sells. Requests for comment were not returned by Hermès. SBTi has certified all three firms’ aims as being in compliance with the most aggressive global warming goals.
As time runs out to avoid catastrophic levels of climate change, such limitations in accepted global climate standards are coming under increased scrutiny. Climate scientists have warned that global emissions must fall by 45 percent by 2030 to stay on track with efforts to limit global warming to no more than 1.5 degrees Celsius, an internationally agreed cap intended to stave off the worst effects of climate change.
To account for the reality that measuring and regulating indirect emissions remains difficult, SBTi claims it adopts a “flexible” approach to Scope 3 target-setting while still needing a commitment to deep decarbonisation. In a response to the NewClimate Institute and Carbon Market Watch research, the organisation claimed it is actively assessing its procedures and seeks to continually develop its framework.
According to a survey issued in October by Textile Exchange and consultancy The Climate Board, as many as two-thirds of brands and retailers who have stated Scope 3 commitments are not on track to meet absolute reductions.
High-profile promises risk becoming “just another sort of greenwashing” without genuine action, according to Stand.
“At the end of the day, we need to be paying careful attention to how brands aim to reach net zero.”