Leading fashion brands are way off track to meet the Paris Agreement goal of limiting climate change to 1.5°C, according to a new study. Not a single company has been able to secure a “High” on counts of either transparency or integrity of its climate pledges and actions.
- The 2024 Corporate Climate Responsibility Monitor (CCRM) by NewClimate Institute in collaboration with Carbon Market Watch analysed the climate strategies of 51 major global companies, critically assessing the extent to which they demonstrate corporate climate leadership.
- Among the 51, the fashion companies assessed were Adidas, Fast Retailing, H&M Group, Inditex and Nike.
THE BROAD FINDINGS: The 2024 study, in its third iteration, made the following observations about the fashion sector:
- The extent to which companies’ seemingly ambitious targets are credible will largely depend on the integrity of their strategies for renewable energy in the supply chain. Despite limited details on supply chain measures, there were signs of high reliance on bioenergy and renewable energy certificates to claim emission reductions. This could significantly undermine the real ambition of these companies’ targets.
- It remains unclear to what extent companies’ measures will contribute to and be sufficient for achieving their targets. All the companies assessed mostly demonstrate awareness of what the key decarbonisation measures for the sector are. However, they presented their planned measures in quite ambiguous terms.
- There are no clear references to more fundamental business-model transitions, although most companies reflect on the need for the fashion sector to become more sustainable in terms of resource use and GHG emissions. This is especially important as a shift towards a sustainable fashion industry will necessarily mean producing and selling fewer products, which can be at odds with the fast fashion business-model.
Adidas performance: About 90% of its emissions stem from the production and processing of raw materials and assembly of clothes and shoes (all scope 3, category 1). Adidas implements several promising measures for the decarbonisation of its supply chain, including to phase out coal and increase the use of renewables. However, the company’s 2030 target is insufficient to be aligned with 1.5°C-compatible benchmarks for the sector, and its climate neutrality target for 2050 is not yet substantiated with a clear commitment to reduce emissions across the value chain. Adidas’s 2025 climate neutrality target for its own operations has the potential to mislead consumers, while the 2050 climate neutrality target for all emissions is not substantiated with an emission reduction target.
- Adidas’s 2030 target may be partially aligned with 1.5°C compatible benchmarks, but Adidas has not yet made progress towards the target since 2017, and its significance is not entirely clear due to highly variable emissions reported in recent years.
- Adidas’s ‘Decarbonization Manifesto’ combines a range of promising support measures, incentives, and requirements for its suppliers to move away from using coal in the production process.
- Adidas’s plans for “sustainable articles” are unsubstantiated and may not result in significant GHG emission reductions.
Fast Retailing performance: Most of its emissions stem from materials sourcing and manufacturing in the supply chain (~95%). To tackle these emissions, the company facilitates suppliers to develop emission reduction plans, but it discloses few details on the goals and ambitions of these plans. The company’s 2030 emission reduction targets fall far short of what is needed to limit global warming to 1.5°C.
- Fast Retailing’s 2030 targets collectively amount to a reduction of 19% of the company’s emissions footprint compared to 2019, which is not aligned with global efforts to limit global warming to 1.5°C.
- Fast Retailing has expressed the aim to reach net-zero emissions by 2050, but it has not disclosed a concrete plan for emission reductions between 2030 and 2050.
- Fast Retailing’s emission reduction measures focus on emission reduction plans for supplying factories, but details on how the company engages with suppliers—the company’s main source of emissions—remain limited.
- Fast Retailing aims to use 100% renewable electricity by 2030, but it does not commit to procurement options that would likely result in additional renewable electricity capacity.
H&M Group performance: The majority of H&M Group’s emissions stem from fabric production, garment manufacturing and raw materials (~92%). Although H&M Group has ambitious emission reduction targets for 2030 and 2040, those may be undermined by the lack of a clear plan for implementing measures to achieve those targets.
- H&M Group plans to reduce emissions across its value chain by 56% by 2030 and by 90% by 2040 below 2019. These may be ambitious targets that signal the need for immediate climate action, as long as they are not undermined by reliance on standalone RECs and biomass to claim decarbonisation of the supply chain.
- H&M Group committed to a target of 100% renewable electricity in the supply chain by 2030, but the significance of the target may be undermined by the lack of commitment to electrify key manufacturing processes.
- H&M Group covers most key emission reduction measures; however, more detailed information is needed to understand their likely reduction impact.
- H&M Group commits to 100% renewable energy in its own operations, but this target will only result in real emission reduction if the renewable energy is sourced from high-quality constructs.
Inditex performance: Most of its emissions stem from its supply chain, especially those related to the sourcing and processing of raw materials. Inditex’s pledge for net-zero emissions by 2040 implies an ambitious 89% emission reduction below 2019 levels, which is aligned with 1.5°C benchmarks for the sector. However, the sufficiency of Inditex’s emission reduction measures to meet the company’s ambitious targets remains unclear.
- Inditex’s net zero pledge is now substantiated by a deep emission reduction target across the value chain. The company’s interim 2030 targets amount to a 46% emissions reduction below 2019 levels, which is also likely aligned with global efforts to limit global warming to 1.5°C.
- Inditex’s current approach to procuring renewable electricity has significant limitations that undermine its 100% renewables claim.
- Inditex’s emission reduction measures cover most key areas but are not detailed enough to understand their potential significance.
- Inditex plans to phase out coal from its supply chain, but is encouraging suppliers to move to bioenergy, which would have negative climate and environmental consequences.
- Information on electricity use and renewable electricity targets in the supply chain is very limited, despite the high relevance of this emission source in Inditex’s overall value chain.
Nike performance: Like other large fashion retailers, Nike’s emissions stem mostly from its supply chain, especially from sourcing materials and manufacturing. Nike’s most prominent emission reduction targets imply a ~41% reduction by 2030 below 2019 levels, which is almost aligned with 1.5°C compatible benchmarks for the fashion sector. It remains unclear to what extent Nike’s proposed measures will be sufficient to achieve its targets.
- Nike’s 2030 targets imply a 41% reduction in total value chain emissions below 2019 levels, which is aligned with 1.5°C compatible benchmarks for the fashion sector.
- Nike’s strategy covers most of the key decarbonisation measures identified for the sector but lacks sufficient detail to understand their expected GHG impact.
- Nike also set out a series of 2025 targets to reduce emissions in its own operations and to address some emission sources in its value chain.
- Nike claims that its operational electricity consumption derives 96% from renewable sources today, and aims for 100% by 2025, but the quality of procurement constructs remains unclear.
