Bringing fashion industry emissions to net-zero by 2050 'a $1trn investment opportunity', report finds
The global fashion industry is currently on a 3C temperature pathway and bringing it down to 1.5C, a new report has revealed, will take $1.04trn of investment in low-carbon solutions and moves to dramatically improve resource efficiency.
The report, co-authored by Fashion for Good and the Apparel Impact Institute, takes into account that the fashion industry accounted for 2-3% of global emissions in 2020 – and that this proportion could rise rapidly post-Covid-19 as the sector expands, without concerted decarbonisation efforts.
It estimates that more than $639bn will need to be invested across the value chain, by 2050, in low-carbon solutions that already exist. These include renewable electricity generation and procurement, energy-efficient heating and lighting, low-emission and zero-emission transportation, battery energy storage and improvements to building energy efficiency, as well as measures to reduce emissions on farms.
A further $405bn, the report states, will need to be invested in emerging solutions, such as low-carbon fabric processing innovations, material innovations, chemical recycling and agricultural technologies.
The report foresees a scenario in which existing decarbonisation solutions will deliver around half (47%) of the emissions reductions needed, with a further 39% driven by emerging decarbonisation solutions.
The remaining 14% of the emissions reductions needed can be delivered by addressing fashion’s resource consumption and waste problem; brands will need to slash overproduction, reduce waste throughout the supply chain and scale circular business models like repair. This is crucial for preventing pollution as well as lowering emissions; the Ellen MacArthur Foundation claims that a bin lorry of fashion is landfilled or burned every second, and that less than 2% of all garments produced annually by weight are properly recycled without downcycling.
As for the sources of the $1.04trn of investment, the report forecasts that only 5% of the total ($50bn) will be provided by government grants and by philanthropic organisations. The rest will predominantly come from the private sector, with only a small segment accounted for by government loans.
The report puts forward a string of policy recommendations to help catalyse this investment. It argues that more than $35trn of private capital is already committed to ESG investments, with this figure set to exceed $50trn by the end of 2025, but that “critical barriers” remain to the allocation of this finance.
Recommendations include properly pricing carbon; tax incentives for circular business models and low-carbon materials; measures to group investments so they are large enough for most investors; increasing green loan availability and ensuring trade deals are conducive to sustainable fashion.
There is also a communications piece; the report argues that more must be done to highlight the strong business case for low-carbon investments in the sector.
“This report reframes decarbonisation as an investment opportunity rather than a cost,” said the Apparel Impact Institute’s president Lewis Perkins.
“These proven, investable solutions require a tremendous amount of capital, and we now need to create the pathways for all forms of financial capital in order to bring them to scale.”
A high-carbon sector
According to a recent analysis from non-profit Stand.earth, most fashion brands are failing to decarbonise their supply chains in line with their net-zero targets.
Many brands have set targets on their own, or are members of initiatives such as WRAP’s Textiles 2030 scheme, the Fashion Pact, coordinated by Kering, or the UN Fashion Charter, which had its targets updated in line with net-zero by 2050 and 1.5C at COP26.
Nonetheless, the analysis found evidence that dozens of large brands are failing to develop supply-chain-specific emissions targets, or to support suppliers to invest in energy efficiency, renewable energy and fossil-free fabrics. To this latter point, global virgin polyester production has doubled since 2000 and is on course to double again, with significant implications for emissions, according to the Changing Markets Foundation.