With 96% of the fashion industry’s emissions coming from its supply chain, to decarbonise and prevent global temperatures exceeding 1.5°C (a threshold set out by the IPCC to prevent wide-scale irreversible damage) there is a pressing need for increased supply chain scrutiny to identify emission hotspots and reduction opportunities. With highly opaque, fragmented and complex supply chains, fashion players are operating with very limited visibility. If fashion brands are to achieve sustainability objectives, end-to-end supply chain visibility is paramount. This article will outline the necessity for supply chain transparency in fashion and unravel the challenges as well as the opportunities in pursuing transparency and traceability.
The fashion industry accounts for 4% of the world’s greenhouse gas emissions (GHGs) and 10% of the world’s CO2 emissions. If the industry continues to incrementally decarbonise at its current pace, and grow at the forecasted CAGR of 2% year on year until 2030, it is on a trajectory to exceed the 1.5° pathway outlined by the IPCC by a shocking 50% (McKinsey).
With 96% of a fashion brand’s emissions attributable to Scope 3 emissions (indirect emissions that occur in a company’s value chain) according to research by the World Resources Institute, the industry’s decarbonisation efforts need to be focused on its supply chains. To accelerate Scope 3 decarbonisation efforts you first need to understand the impact of your supply chain. Blind spots and information gaps mean emissions often go undetected. Gaining end-to-end visibility will enable enterprises to increase the accuracy and breadth of their emission understanding. This can in turn help to identify and prioritise impact reduction initiatives.
With one of the most globalised and fragmented supply chains in the world, untangling fashion’s sprawling supply chain to identify emissions is a costly and time-consuming data headache. It is particularly complicated because supply chains are:
A typical fashion supply chain, demonstrating the extent of supply chain fragmentation
Having aligned and committed to the Transparency Pledge, H&M was one of the first global fashion retailers to disclose supplier details including the name, location, product type produced, and number of workers employed by each supplier. Engaging in business with over 602 commercial product suppliers who manufacture products for brands in over 1500 tier-one factories across Europe, Asia and Africa, supply chain disclosure and visibility is a priority area for H&M Group to achieve a more sustainable value chain.
Brands that lead on supply chain transparency can secure a competitive advantage and win a large market share. Five key opportunities that supply chain transparency presents:
Digital emissions management solutions like Altruistiq will be critical for fashion companies to overcome the complexity and fragmentation of supply chains and compile accurate, reliable data from across the supply chain.
Altruistiq’s platform accelerates reaching accurate supply chain transparency in four key ways:
Putting collaboration into practice through easy-to-use platforms and extending access to these tools to suppliers will be key to building a more transparent industry.
Whilst transparency isn’t itself an end goal, it is a vital enabler for brands to target improvements, collaborate across the industry and invest in long-term change. To accelerate progress towards supply chain transparency, companies should look to digital solutions to enable automated data gathering, processing, consolidation and supplier engagement.
Altruistiq is an impact management platform, enabling large enterprise companies to automate sustainability data measurement, management and exchange - with unparalleled accuracy and ease.
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