Top fashion companies are woefully lagging behind on renewable energy. Standard-setters provide limited incentives and sometimes even barriers to increase ambition.
- The assertion has been made in the study Navigating the nuances of corporate renewable electricity procurement: Spotlight on fashion and tech by NewClimate Institute.
- The study assessed the renewable electricity strategies of Gap, H&M Group, Inditex, Lululemon and Nike. The other five companies studied were from the tech sector.
- The assessment of major fashion companies in this report considers only their renewable electricity procurement strategies. This does not necessarily correlate with the quality of companies’ overall climate strategies.
The markings: The brands were assessed on counts of transparency and integrity for both their own operations as well as the respective supply chains.
- Transparency for own operations: Nike, Gap, H&M Group and Lululemon scored 'Moderate' while Inditex was marked 'Shallow'.
- Integrity for own operations: Nike and Gap scored 'Moderate' while H&M Group, Lululemon and Inditex were marked 'Shallow'.
- Transparency for supply chain: Lululemon and H&M Group scored 'Moderate' while Nike, Inditex and Gap were marked 'Shallow'.
- Integrity for supply chain: Lululemon scored 'Moderate' while H&M Group, Nike, Inditex and Gap were marked 'Shallow'.
The highlights: The study sought to understand the nuances of corporate renewable electricity strategies, uncover reliable good practices and identify possible sticking points and their potential solutions.
- The real GHG emission reduction impact of companies’ renewable electricity claims is often far less than implied.
- There is growing momentum for matching renewable electricity generation with consumption on an hourly basis.
- Highly influential initiatives, such as the GHG protocol, RE100 and SBTi, currently provide limited incentives and potentially even barriers for companies to strive for higher quality renewable electricity strategies
- Increasing the share of renewable electricity in the supply chain remains a blind spot for most of the 10 companies assessed.
The fashion context: The analysis considered strategies for both operational electricity use and electricity in the supply chain.
- Supply chain emissions associated with the production of materials and products (scope 3 category 1) account for about 80% of fashion brands’ total GHG footprint.
- Operational emissions associated with procured energy (scope 2 emissions) account for just 3% of the GHG footprint of fashion companies on average.
- But while the supply chain is by far the most significant contributor to GHG emissions for the fashion sector, major fashion companies’ own operational renewable electricity strategies are also relevant for the signal that they send to their suppliers, and to other companies
- Downstream emissions, mostly from the use of products (scope 3 category 11) also account for a highly significant proportion of some companies’ reported emission footprints.
- Methodologies for calculating downstream emissions for the fashion sector are broadly inconsistent, depending on whether companies account for indirect product use-phase emissions, such as emissions associated with the use of washing machines for washing clothes sold. It did not consider downstream energy and emissions in the analysis.
How the brands fared: The rate of electrification is still low for some of the major energy demand sources in the fashion sector. Direct fuel consumption is used for various processes in garment production, including textile production, spinning and weaving, dyeing and printing and garment assembly, although these processes can be electrified in modern manufacturing facilities.
- Gap procures renewable electricity through high quality constructs, but the coverage of its procurement is unclear, and the researchers could not identify clear details on plans to achieve 100% renewable electricity in own operations by 2030. Despite the significance of electricity use in the supply chain, Gap has not set a renewable electricity or emission reduction target for scope 3
- H&M Group committed to using 100% renewable electricity in its own operations and in the supply chain by 2030. Although the company currently procures standalone RECs (renewable energy certificates) to annually match its own electricity consumption, it has recently signed a number of PPAs (power purchase agreements) that jointly cover about a quarter of H&M Group’s electricity consumption. H&M Group reports various measures to support suppliers in switching to renewables, but the significance of the company’s supply chain renewable electricity target may be undermined by the lack of commitment to electrify manufacturing processes
- Inditex’s renewable electricity strategy for its operations is based on lower quality renewable electricity procurement constructs and accounting methods, which undermine the company’s 100% renewable electricity claim. Information and targets related to renewable electricity in the supply chain are very limited, although this should be a key emissions source to be addressed under Inditex’s 2040 net-zero emissions pledge which covers the full value chain
- Lululemon claims to have already achieved its 100% renewable electricity target for its owned and operated facilities, although this claim is mostly based on the purchase of standalone RECs that are unlikely to have a significant impact on grid decarbonisation. While the company has recently signed two PPAs, there is no commitment to rule out the use of standalone RECs in the future. Lululemon has no renewable electricity target for its supply chain. Although Lululemon presents some promising measures to increase renewables in the supply chain, more information is needed to understand the potential impact of those
- Nike has a headline electricity pledge to reach 100% renewable electricity by 2025, which covers own operations but it remains unclear whether Nike’s electricity procurement methods are adequate to substantiate its claim. Although Nike advocates for more renewable capacity in its suppliers’ countries, the company has not set renewable electricity targets for its supply chain.
