Fashion’s Renewable Electricity Targets Need More ‘Ambition, Credibility’
The “actual” emissions reductions of fashion companies’ renewable electricity claims are often “far less” than implied, a new study by a German think tank said last week.
While transitioning to renewable electricity is a critical measure for companies that seek to decarbonize their supply chains, said the NewClimate Institute for Climate Policy and Global Sustainability, where and how they achieve their targets can spell the difference between meaningful action and “greenwashing.”
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“It’s very easy for any company to make quite bold claims about renewable electricity, while not being on track to do much at all, especially for the fashion sector, [which] uses a huge amount of energy in the manufacturing process,” said Thomas Day, a climate policy analyst and co-author of the report.
Coal, in particular, has been a difficult habit for textile suppliers to kick. Largely powered by fossil fuels, yarn spinning and textile dyeing and processing alone make up more than half of the fashion industry’s emissions, creating what some environmentalists have dubbed one of the biggest “elephants in the room” regarding climate action.
One of the sticking points is that brands in the global North tend to produce in the global South, where emerging economies often aren’t wired for cleaner sources of electricity. Some companies have tried to circumvent those issues. Bestseller and H&M Group, for instance, are backing the construction of Bangladesh’s first utility-scale offshore wind farm. Ferragamo, Ralph Lauren and other signatories of The Fashion Pact have inked a collective virtual power purchase agreement to increase their access to solar power. Adidas, Gap Inc., Calvin Klein owner PVH Corp. and The North Face parent VF Corp. have lobbied the governments of Cambodia and Vietnam to prioritize green infrastructure over new coal plants.
But companies need to be doing more, including within their organizations, where the ambition and credibility of their targets can fall short, Day said. Are those goals aligned with the 1.5-degree Celsius threshold? Is progress being tracked and measured transparently and with integrity? Do their renewable energy procurement plans extend beyond owned and operated facilities?
“What’s common for all of the companies is that they’re not putting the supply chain sufficiently on their radar,” he said. “H&M is the only company we looked at that has a target for the supply chain, which is a good start, but even that target has a huge caveat.”
Besides H&M, NewClimate scrutinized Gap, Nike, Lululemon and Zara owner Inditex. Most are members of voluntary initiatives such as RE100 and the Science Based Targets Initiative that Day says don’t “strive for higher quality renewable electricity strategies” relevant to their broader supply chains “rather than how they’re powering their offices.”
Each retailer demonstrated both pros and cons. While H&M’s claim of using more than 90 percent of renewable electricity in its own operations is currently based on stand-alone RECs, an acronym for renewable energy certificates that are a form of carbon offsets, the company is moving its focus to PPAs, or power purchase agreements, i.e., long-term contracts between an energy supplier and a buyer. The Swedish purveyor has also pledged to use 100 percent renewable electricity in its supply chain by 2030, but the target’s significance may be “undermined” by a lack of commitment to electrify its manufacturing processes.
Nike’s promise to reach 100 percent renewable electricity by 2025 covers its own operations and it “remains unclear” if its electricity procurement methods can sufficiently substantiate its claim, Day said. Despite a target to reduce Scope 3 emissions by 30 percent by 2030, it does not have a renewable electricity target for its supply chain. The sportswear Goliath also supports the development of renewable electricity capacity at both owned and suppliers’ facilities, yet the scale and expected impact of these efforts remain murky.
Lululemon’s claims to have already achieved its 100 percent renewable electricity target for its owned and operated facilities is mostly based on the purchase of stand-alone RECs, Day said. It recently signed PPAs to improve its renewable electricity procurement strategy, but how it will move forward isn’t obvious. One upside: The asana-friendly brand provides a high level of detail in its disclosures on the energy use and emissions of its own operations, including a breakdown of emissions and energy demand by fuel type and geography. “It’s one step ahead of the others in that regard,” he added.
In Gap’s case, its renewable electricity consumption is based on high-quality PPAs, but it’s difficult to tell what proportion of electricity consumption these cover, the report noted. The Athleta and Old Navy parent also hasn’t established a renewable electricity or emissions reduction target for scope 3. Day referred to Gap’s public call to the Vietnamese government for clean energy investments, but “we could not identify whether Gap systematically engages with policymakers in manufacturing countries.”
More than 99 percent of Inditex’s operational electricity consumption in 2022 was matched by “unbundled renewable energy certificates of unspecified vintages,” the report said. At the same time, its 2022 sustainability report said that it is in the process of establishing PPAs in “key operational centers.” Inditex reports capacity-building measures for supply chain stakeholders, including assisting suppliers with understanding local procurement options for renewable electricity and setting renewable energy targets, Day said, yet does not mention any requirements, preferential treatment or other incentives for suppliers that opt for renewable alternatives.
Only H&M responded to a request for comment.
“Finding renewable and sustainable energy sources to substitute fossil fuels such as coal and natural gas is increasingly important for the garment sector, especially in production countries that still rely heavily on fossil fuels,” a spokesperson said. “Our priority when phasing out coal is electrification paired with the deployment of renewable electricity. This also includes adding new renewable electricity generation to grids through PPAs.”
Altogether, the Cos and Monki operator has secured 200 megawatts of renewable energy that will result in an indicative annual output of 300 gigawatt-hours when fully operational, which would “cover almost a quarter of our electricity needs for own operations.” Decarbonizing supply chains, the spokesperson added, is a “shared challenge” that can only be tackled with “strong shared commitments and collaborative financing,” examples of which are the wind power project in Bangladesh and its green loan program for suppliers with DBS.
Still, Day characterized the report as a “snapshot…a description of the status quo,” one that shows that none of the companies are “going far enough,” though he allowed that the fashion sector is a “difficult supply chain to work out.”
But all this needs to be “on the radar,” he said. “That’s essentially the problem.” Right now there’s little to incentivize brands to “go about it in a better way.”
“We don’t want to see companies making 100 percent renewable electricity claims when there’s no electricity there or when it’s in very short supply and it’s basically a competition of who gets there first; that’s not a constructive way of dealing with the issue,” Day said. “We’d much rather see credible plans for improving the situation and that’s that’s the real added value of the role of corporates in the renewable electricity space. They’re in most places. They’re the biggest off-takers of renewable electricity. And if they do things in a constructive and positive way, then they can really accelerate the energy transition in the countries they are in.”
NewClimate also analyzed technology companies, among them Apple, Google and Samsung. Fashion firms are overall less transparent than their tech counterparts, Day said, because there’s so much “movement” in terms of jumping from one supplier to another or even one geography to another.
“I think it’s much easier for a company like Apple, where 50 percent of the components come from Foxconn and it’s the same every single year for the last decade. Then they can say, ‘O.K., we’re focused on this one country and we want to do that every single year for the next decade,’” he said. “For fashion brands…they might have most of their suppliers in Bangladesh this year, but in five years time, they might be within Vietnam. So that’s a more complex situation.”
Day said that brands need to offer suppliers more security in the long run. That may be challenging, but it’s going to be a “key measure for climate more broadly,” he said.
“It’s very difficult for the companies to request things from suppliers and to say that they need to be developing their own renewable energy ESG strategies and their own climate strategies if they’re then going to dump them next year and go to a different supplier,” Day said. “You need to have a bit more of a long term plan.”
The same goes with lobbying governments. Investment, he noted, is leverage.
“If you’re going to be in Bangladesh for another five years [and] it carries on over 10 years, it carries much more weight to go to the government and say, ‘We need this to continue otherwise we’re going to go to another country,’” Day said. “These are issues that will need to be resolved in the sector to fix various climate issues.”
