The Fashion Industry's Net Zero Carbon Footprint Analysis for 2024

Thank you for visiting this page. Our team regularly publishes industry-specific carbon reduction pathway research and insights here. Focused on vertical industries and the current demands of brand manufacturers, our content emphasizes not only policy requirements but also the voluntary carbon reduction goals driven by consumer brands throughout the entire supply chain. Today, we'll explore a series of carbon reduction requirements and industry highlights, particularly in the fashion OEM industry. Feel free to reach out via email or our website for any inquiries or collaboration opportunities!

1. Target Comparison and Selection Rationale

When selecting comparison targets, we typically prioritize companies with comprehensive sustainability reports, avoiding large conglomerates and opting for companies with simpler product lines and revenue distributions that make it easier to compare with similar product categories. During comparison, we categorize companies with more complete carbon reduction data disclosure into three levels: well-implemented carbon reduction measures, moderately implemented, and poorly implemented. We select 1-2 companies for each category to represent the scope of information disclosure. Given the unique characteristics of the fashion industry, most brands do not engage in manufacturing-related activities as part of their daily operations, and the majority of carbon emissions fall under Scope 3. It is evident that in terms of carbon reduction goals for 2030, everyone aims for an overall reduction of 30% or more. However, due to rapid business growth, Lululemon faces significantly increased production pressure compared to other companies, thus focusing more on carbon reduction efficiency. We also recommend that supply chain partners pay more attention to AEO. Although there are fewer Taiwanese suppliers on their vendor list, their initiatives, including label replacement, packaging material adjustments, and textile material adjustments, are considered superior among brands in overall comparison.

2. The unique carbon emission distribution in the fashion industry

From the first section, it's evident that the majority of carbon emissions occur in Scope 3, particularly in the category of non-direct transportation. Among these, the left side of Scope 3 content is particularly noteworthy for supply chain partners to observe. Most brands indicate that over 80-90% of Scope 3 emissions come from purchased goods and services, as well as capital goods. Of these, attention should be paid to two main areas: PG&S and capital goods.

Purchased Goods and Services (PG&S): This aspect is regulated directly by UN agencies under the fashion industry, defining the roles of production suppliers in the supply chain and categorizing them into four levels of subcontractors. Different responsibilities in the finished product stages correspond to different carbon calculation methodologies, requiring special attention.

Capital Goods: Most capital goods procurement involves durable assets, which often have high carbon emissions. The investment in such assets adds pressure to the company's carbon reduction goals. A significant challenge in capital goods arises from brands' initiatives to set future substitution plans for raw materials. Some of these materials could significantly influence the direction of capital goods investments.

3. Capital investment direction from brand owners

Continuing from the carbon emission issues stemming from supply chain procurement and capital investments, the fashion industry today is placing increasingly stringent demands on the production side to achieve low carbon emissions. One key focus area is the selection and use of materials, typically following Preferred Material measures. Many brands now require suppliers to use sustainably sourced materials such as organic cotton, recycled polyester, and plant-based dyes to reduce environmental impact. Simultaneously, suppliers are required to provide traceability for materials, ensuring that the entire production process from raw material sourcing to final product can be traced.

In addition to material processes, brands typically require manufacturing factories to adopt more environmentally friendly production methods. This includes improving energy efficiency, reducing emissions, and increasing waste recycling and reuse rates. Manufacturing facilities are often required to replace boilers using coal or other high-carbon energy sources with clean energy sources such as natural gas, biomass energy, or solar power. Furthermore, factories are also required to implement more effective energy management measures, such as installing energy-saving equipment, improving production processes, and increasing equipment utilization rates, to reduce energy consumption and carbon emissions during production.

In packaging, efforts are underway to seek more environmentally friendly solutions actively. Brands are demanding the use of packaging made from recyclable materials certified by FSC, reducing the use of plastics and other disposable materials, and promoting packaging designs to reduce material waste and carbon emissions. Additionally, some brands are actively seeking alternative packaging materials, such as biodegradable materials or short-fiber regenerated paper materials sourced from fast-growing crops such as bamboo and sugarcane, to further reduce environmental impact.