Fashion supply chains
Fashion supply chains

Fashion supply chains

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TL;DR

In order to meet the world's 1.5° target, the fashion industry must reduce its annual emissions by about half (or around 1 billion tons of CO2). The fashion supply chain is extremely fragmented and carbon-intensive, with the majority of emissions (70%) coming from the production and processing of materials. There is a lot of potential in shifting away from energy-intensive production methods and reducing overproduction, with the greatest potential GHG emissions savings in the decarbonization of material production and processing.

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A single item of clothing can contain parts from over 100 suppliers.

Emissions from fashion

Fashion emissions account for 4% of the global total (clocking in at 2.1 billion tonnes in 2018), with 70% of that coming from materials production and processing. In order to meet the 1.5 deg target, the fashion industry needs to cut carbon emissions by about 1 billion tonnes by 2030. As of 2020, the current rate of decarbonization will leave emissions at 50% more than they need to be.

Source:
Source: Fashion on Climate (2020)

With a goal to make the fashion industry net-zero by 2050, a Fashion Industry Charter for Climate Action was launched at COP24 in 2018 and renewed at COP26 in 2021. By signing, 131 companies agree to secure 100% renewable electricity and to source all materials from a list of "priority materials" by 2030, they also agree to publicly report annual GHG emissions. Since the majority of emissions come from the supply chain and not brand operations, the charter encourages brands to work with suppliers to reduce emissions—particularly those tied to energy-intensive tier 1 (production assembly) and tier 2 (material production).

Consumer opinions

In a survey of 10,000 shoppers across six countries:

  • 42% have changed consumption habits due to environmental issues
  • 45% believe businesses should be improving responsible supply chains and resource usage
  • The 18-24 age group is 3x more likely to make a value-based brand switch than those 65+
  • Climate change was ranked as the top priority across all countries

The fashion supply chain

The World Economic Forum has identified fashion as one of the eight supply chains that account for more than 50% of global emissions. Fashion comes in at number three, just below food and construction. Higher and more specific demands and the desire to reduce costs, mean fashion brands outsource many aspects of garment production rather than doing everything in-house. This means one jacket can end up being made of parts from over 100 suppliers.

Source:
Source: Science Based Targets

According to the World Economic Forum, about 45% of emissions can be cut from the fashion supply chain by switching to renewable power during production. The recent Fashion on Climate report from McKinsey & Company and the Global Fashion Agenda places 61% of abatement potential in decarbonizing upstream operations.

Source:
Source: Fashion on Climate (2020)

Covid-19 and supply chains

The onset of the Covid-19 pandemic has highlighted the fragility of our global supply chains. Lockdowns restricted the movement of people and goods, and fashion production was largely shut down as it is a non-essential business. In particular, the closing of Chinese factories and restrictions on raw materials exports from the country had a cascading negative effect on garment manufacturing around the world.

Materials

There are pros and cons to all materials in textile production and the figure below shows the relative impact for the manufacturing of 1 kg of woven fabric from five popular materials. When it comes to actual impact, production volume is important. For example, in terms of climate change, nylon has a higher impact per kg than polyester, but polyester is produced in much higher volumes so its overall impact is higher.

Source:
Source: European Environment Agency

The following lists are not comprehensive.

Synthetic

60% of all clothing is made from synthetic fibers, which are cheap and fast to produce. That translates into 48 million tonnes of crude oil going into synthetic fiber production every year. Besides the fossil fuels needed for the material itself, large amounts of energy go into powering the production process of synthetic fabrics.

Synthetic materials can take hundreds of years to decompose and release up to 500,000 tonnes of microplastic fibers into marine environments annually. Most dyes today are also synthetic petroleum derivatives that require high temperatures and chemical additives to process.

Natural

Natural is not necessarily better for the climate than synthetic in terms of production and manufacturing (largely because of the impacts of agriculture), but these fabrics are biodegradable when untreated.

  • Plant-based
    • Cotton: 27% of textiles. Requires large amounts of land, water, and pesticides. Can be recycled physically into more cotton products (quality is an issue) or chemically into viscose. Organic cotton does not rely on pesticides or intensive irrigation but is grown at much smaller scales.
    • Viscose/Rayon: Toxic solvents are used to produce fibers from wood pulp and the extraction process only uses about 30% of the tree (the rest is waste material). Viscose was developed to replace silk, but is most often used as a cotton substitute because it is cheaper to produce when labor costs are low.
    • Bast: Durable materials including linen, hemp, and jute. Can grow on land that isn't usable for food crops because they require little water and pesticides, but bast fibers are more expensive than others and spinning the fibers is energy-intensive.
  • Animal-based

Recycled

  • 85% of companies (from a survey of 46) say they will use "recycled" polyester to be more sustainable, but that material comes from recycled PET bottles rather than old clothing.
    • PET bottles can be recycled into PET bottles many times, but once turned into clothes can be "considered a one-way ticket to landfill."
    • Textile to textile recycling is less than 1% and not possible with blended materials (i.e. anything with elastane).

Material Sourcing

Traditionally, material sourcing is done in person and involves extensive travel to international trade shows.

  • Première Vision: Started in Paris in 1973, now hosts 12 events per year (mostly in Paris and New York). The primary Paris show has two annual events (spring/summer and fall/winter) that attract around 2,000 vendors and over 50,000 attendees; 70% international.
  • MAGIC: Largest N American trade show, typically held in Las Vegas but adding a New York show in 2021. 5,000 vendors and between 70-80,000 attendees from over 120 countries. (free to attend)

Large B2B platforms (i.e. Alibaba) are gaining popularity for the wholesale of raw materials and manufactured goods. Buyers need to purchase large quantities (high upfront cost) and may not be able to find very specific material needs (will need to work directly with a fabric mill instead).

Brand operations and sales

Brands are producing more clothes than the world needs. We have seen a trend, led by fast fashion, of dramatically increased clothing consumption and decreased clothing utilization. The rise of fast fashion means that the average consumer is wearing individual items of clothing for 50% less time, and purchasing 60% more than they were 20 years ago.

Currently, 40% of all clothing sold is done so at a markdown. Within a brand's operations, reducing overproduction doesn't just make business sense, it has the most potential to reduce emissions (158 million tonnes by 2030).

Digitalization to the rescue

This is a small snapshot of some of the alternatives available. They don't necessarily address the climate impact we've outlined above and it is not a comprehensive list or a suggested list of solutions. If you've come across any great alternative solutions that aren't listed here, and are addressing the climate impact explored above, please feel free to get in touch.

  • Virtual sampling can lead to 50% fewer physical samples needed; saving time, money, and the environmental footprint of production.
  • Assortment planning (to predict demand) has been ranked as very important to sourcing executives. Besides being wasteful, overproduction is now leading to financial losses when up to 40% of all clothing produced is sold at discounted prices.
  • Platforms providing material tracking have the potential to mitigate emissions in the shipping and transportation of goods. Being able to track items from end to end may also facilitate recycling and reuse initiatives.
  • Material analysis and intelligence will allow brands to source priority materials and ensure they are scaling their impact.

Resources

Last updated: Nov 2022