WASHINGTON – Decarbonising global fashion supply chains to achieve a net-zero fashion industry by 2050 will cost more than one trillion dollars, claims new analysis by the Apparel Impact Institute and Fashion for Good. Their report suggests 61 per cent of the financing is required to implement existing solutions, with the remaining 39 per cent will be required to further develop, scale and implement new innovations. “However, given that each decarbonisation solution has a unique risk-return, the funder type differs across the board,” claims the report.
Investments need to focus on areas such as renewable electricity and the reduction of coal-dependence in supply chains, the use of sustainable materials by fashion and extended use/recycling options.
The report suggests current levels of commitment and financing are insufficient to succeed in adequately decarbonising the industry before 2050.
“It is unlikely that the industry will achieve the necessary transformation without a significant change in financing flows to accelerate the adoption of a wide range of efficiency and emissions reduction solutions,” the report says. “Structural barriers to achieving sufficient levels of financing to support the required transformation exist, which are different for existing solutions than for innovative solutions. To reach net-zero, solutions to decarbonise Scope 3 emissions are imperative.”
The report claims net-zero “can be achieved,” however it requires an “aggressive acceleration in the implementation of currently existing solutions and a substantially higher focus on driving innovative solutions, together triggering a US$1 trillion financing opportunity across financing types.”
It is claimed that to raise US$1 trillion and overcome barriers, a concerted effort is needed by five key stakeholder groups, these being financiers (debt and equity), manufacturers, brands, philanthropy and governments.
It adds: “The recommendations to stakeholders are centred around the conditions required to enable a larger flow of financing towards these projects — it is critical to create an environment where investors are presented with projects that are attractive from a risk-return perspective, impactful and understandable.”
Editor’s Note: This is a comprehensive report and offers a snapshot of the scale of the challenge faced by fashion in moving to ‘net-zero’. It also offers a list of recommendations for industry to plug the financing gap.
However, like so many reports before it, much of what this paper is telling us we already know. A bit like the microplastics issue, the time for outlining the problem is long-gone – we need actions now.
It is also hard to buy into the report’s message that sustainable supply chains represent an investment opportunity. Investors would have flooded this space long before now if there were easy returns to be made. The more sobering truth is that fashion retailers need to stop squeezing their suppliers and support them in the shift to renewable energy and cleaner production techniques.