Environmental think tank Planet Tracker is calling on fashion firms to tackle the “dirty problem” contained in their supply chains, as a new report reveals gap between high street retailers’ green claims and the huge environmental impact of their raw materials and manufacturing practices.
The think tank published a major new report late last week, “Following the Thread,” which argues there is an urgent need for fashion retailers and brands to work more closely with their supply chains to substantiate their green credentials.
“The fashion industry has a dirty problem,” said the report. “The challenge for the brands is that much of the negative environmental impact of the apparel they retail occurs further back up the supply chain and thus often outside of their direct control.
“To move to a truly sustainable industry, fashion retailers and brands must pivot to invest in their supply chain partners and we call for investors to pressure corporates to do this.”
Planet Tracker’s research, based on an analysis of 3,897 companies, found textile production causes around three-quarters of the fashion industry’s climate impact and resource consumption, as well as two-thirds of the waste generated by the sector.
Yet textile production makes up only 7 percent of the industry’s market capitalization and 18 percent of its sector’s revenues, meaning many textile firms lack the financial resources to invest in more sustainable practices.
In contrast, clothing retail represents over half of the sector’s revenues and 63 percent of market capitalization but contributes relatively minimally to environmental impacts, the report found.
The discrepancy is exacerbated by the industry standard of outsourcing textile production, as fashion retailers often have limited transparency when it comes to the sources of their fabrics.
Consequently, the report alleges that many brands continue to make claims about the sustainability credentials of the materials they source without sufficient oversight over how clothes are actually produced nor the ability to accurately calculate the full extent of any environmental damage.
As regulators take “increasingly aggressive approaches to ‘green’ claims” to crackdown on greenwashing claims, Planet Tracker warned that retailers will need to take a more active role in ensuring transparency throughout their supply chain if they want to continue to attach green labels to their garments.
Richard Wielechowski, senior investment analyst at Planet Tracker, said investors should be calling on fashion retailers to get a tighter grip on the environmental impact of their supply chains.
“While retailers themselves produce relatively few emissions, green claims among brands are meaningless when the clothing they sell contributes to accelerating global warming and polluting water supplies with toxic chemicals,” he said. “That’s why Planet Tracker is calling on investors to pressure retailers to work with their supply chains as they look to reduce their negative environmental impacts. Brands can, for example, help via direct funding or order guarantees and together with their suppliers drive meaningful action across the whole value chain.”
Planet Tracker warned that retailers will need to take a more active role in ensuring transparency throughout their supply chain if they want to continue to attach green labels to their garments.
He added that retailers could take proven steps to help reduce the impact of their supply chains. “Previous Planet Tracker work showed that investment in the supply chain to improve environmental impact, such as through heat recovery or water reuse, will not only help retailers substantiate green claims and meet pressing Net Zero commitments, but will generate positive returns quickly,” he said.
The textile industry is estimated to emit between 3 and 10 percent of global greenhouse gas emissions, according to UN statistics. It also requires large amounts of water and routinely uses toxic chemicals that can harm the environment.
Moreover, three-quarters of clothing bought winds up in landfill or is incinerated — a trend further exacerbated by “fast fashion” items designed to have short lifespans.
However, regulatory bodies around the world are starting to raise expectations that corporate responsibility should extend throughout a product’s lifecycle. Last year, the EU introduced a ban on greenwashing and planned obsolescence, and passed a regulation requiring businesses “to address adverse impacts of their actions, including in their value chains inside and outside of Europe.”
This year, the bloc is working on a directive that will require more robust and accredited proof for companies making green claims.
A crackdown on greenwashing has been visible in the U.K., too. The Advertising Standards Authority recently banned Anglian Water for a spurious claim that it was “protecting nature” after being involved in the sewage spills controversy. Meanwhile, Shell pulled a series of adverts after it was called out for making “misleading” green claims.
However, Planet Tracker argued that tackling emissions throughout the fashion industry’s full value chains was about more than escaping the increased scrutiny of regulatory bodies. “If brands want to chase sustainably-minded consumers, they must be able to show that their claims can be substantiated,” the report concluded. “And if the industry is to meet its net zero commitment, then significant change is needed now, in the near-term and this can only come from direct involvement by brands and retailers to improve the supply chain.”