Not all net zeros are created equal

Climate has finally gone mainstream. It has barged its way into boardrooms, loomed over risk committees and fired up customers to demand action. As investors and policy apply the pressure, we have seen a step change particularly in large fashion brands in terms of their public commitments on climate change action.

It is hailed the race to zero. It feels exciting – a head-to-head on one of the most important issues of our time. Yet when we see target dates of 2050 it feels more like a gentle ramble in the Cotswolds on Sunday afternoon. Indeed, as we look at the market, we are seeing a general commitment to zero carbon of some kind, but that they vary vastly in terms of what the commitment entails. The trend is clear: it is no longer a question of whether brands are setting net zero goals but rather how hard are they are pursuing this goal.

 When it comes to net zero brands must answer the following questions:

  • How far? How far does our net zero goal reach? What are we including in scope and who are we including in our goals?
  • How hard? How quickly can we feasibly decarbonise?  How much are we willing to invest now?
  • How bold? When will we hit net zero? To what standard will we offset and what will we invest in?

How far does your net zero goal reach?

For most brands 90%+ of their impact sits outside of their direct operations and in their supply network as well as with their customers. As such, a climate commitment that focuses on direct operations only (typically offices, distribution hubs, and stores) is nice but misses the point.

Fashion brands should therefore have operational commitments, such as renewable energy and efficiency targets but with an ambitious supply network programme of work. For example, Asics have set a 55% carbon reduction target per product manufactured by 2030 from a 2015 baseline year. Their focus is more sustainable material sourcing (switching from virgin to recycled polyester) and engaging with their tier 1 suppliers to switch to renewable energy. H&M are following a similar path but are going beyond their tier 1 suppliers to their suppliers’ suppliers (fabric mills, fibre processors, spinners, or tanneries) to drive climate action.

Going a step further we are also seeing brands, such as Reformation, invest in renewable energy projects in their supply chain such as installing on-site solar projects in their supplier’s factories. The brand has taken this even a set further and has set regenerative fibre targets which means they source natural fibres from farms that use regenerative farming and land management practices.

If a brand limits itself to only scope 1 & 2 then these can only ever be carbon neutrality targets – not net zero.

How hard are you prepared to go to get to net zero?   

The pace of a brand’s efforts needs to align with climate science to be meaningful and must include commitments to decarbonise. If this is not included, then again it can only qualify as carbon neutrality not net zero.  The Science-based Target Initiative (SBTi) provides the guidance on how much and how quickly brands must reduce their emissions to align with the different reduction pathways. The 1.5-degree pathway is our best chance at limiting the worst climate change impacts but is also the most aggressive pathway: Brands committing to this pathway must achieve a 4.2% annual reduction year on year.

The UN Framework Convention on Climate Change has done an excellent job at rallying up fashion brands to sign the UN fashion Industry Charter for Climate Change which requires brands to set science-based target amongst other requirements. A total of 128 brands including VF Corporation, Inditex (Zara) and Primark have committed to the charter at the time of writing. Yet as the large, global corporates make their commitments, those of medium sized brands are almost non-existent.

Brands seeking to skip the reduction efforts and skip to offsetting are playing a risky game. Reaching for offsets without a reduction commitment risks being framed as greenwashing – paying for the problem to go away rather than doing something about it. Furthermore, this approach may even turn out to be extremely costly in the long run. Offsets are currently valued around $3-15 /tonne but they are expected to increase 10-fold what they are now ~£100/tonne.

How bold do you need to be to reach net zero?

The UK government pledges to be net zero by 2050, which is the latest date we need to reach net zero to avoid the worst impacts of climate change. Many countries are also aligning with this target date brands should not hang around for the 11th hour as policy levers like carbon taxes and product requirements are very likely to come into force in the next decade penalising brands not taking in action.

Industry initiatives have been accelerating these timelines as we have seen with the British Retail Consortium (BRC) who have a 2040 target year with interim 2030 and 2035 targets. The B-corp cohort of over 500 B-Corp members, including All Birds and Patagonia, have made pledges to be net zero by 2030. Indeed, increasingly we are seeing more on more brands bringing their target dates forward.

Not only are target dates coming forward but brands wanting to claim net zero status should also expect to set interim targets should their net zero goal be 10 -15 years from now as per the draft SBTI’ net zero guidance.

Brands must also carefully consider the type of neutralisation they opt for. Not all offsets are equal in standard or cost. Indeed, to again meet net zero status brands must opt for projects that physically remove carbon the atmosphere like reforestation or carbon capture storage projects.

A good example of this is  Burberry’s Regeneration Fund to support carbon insetting (offset projects happening in the supply network) starting with its wool producers in Australia. The projects are looking to create regenerative agriculture practices by improving carbon capture in soils, improve watershed and soil health amongst other benefits.

We are now at a turning point in climate history and now is not the time to be neutral. It is time to be bold; to be brave and embrace the net zero challenge. Brands must carefully consider how far, how hard and how bold they are ready to be.

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We get that change is not easy. But we must be brave, challenge old ways, set new habits, embrace new thinking.

sustain-ability.
more than a word.

We get that change is not easy. But we must be brave, challenge old ways, set new habits, embrace new thinking.