The plan throws down the gauntlet for an industry scrambling to manage mounting consumer and regulatory pressure to operate in a more climate-friendly manner. It’s also likely to spawn imitators; when Gucci — the conglomerate's biggest brand — scorned fur as “a little bit outdated” in 2017, a suite of companies stopped using the material; over the summer Kering Chief Executive François-Henri Pinault galvanised roughly a third of the industry to sign onto a new sustainability pact.
How the owner of Gucci, Saint Laurent and other brands plans to achieve its goal is more complicated. In addition to reducing emissions where it can, Kering will fund projects to protect critical forests that suck carbon out of the atmosphere, effectively zeroing out the company’s contribution to climate change. The company says it’s just a first step in a longer-term effort to resolve the environmental impact of its supply chain, a much more complex issue that entails tackling a host of political, technological and business challenges.
“In the meantime translating these leftover emissions from the supply chain that we all have as businesses into investing in forest and biodiversity conservation creates a positive impact right now,” Marie-Claire Daveu, Kering’s chief sustainability officer said.
Everyone wants a quick fix … but saying you’re carbon neutral puts a sticking plaster over the issues.
That practice, known as carbon offsets, is a popular solution among global corporations like Google. In addition to planting and protecting trees, carbon offset programmes often include green-energy projects, methane capture or funding organisations that replace items like coal-burning stoves with cleaner alternatives in developing countries.
However, the practice has its critics, who say offsets effectively allow companies to pay to pollute, rather than addressing the underlying problem. The quality of projects can vary and some have faced accusations of failing to achieve the emissions reductions they claim.
“Everyone wants a quick fix … but saying you’re carbon neutral puts a sticking plaster over the issues,” said Amy Powney, creative director of sustainable and ethical luxury womenswear brand Mother of Pearl. Powney has spent a substantial amount of time and money digging into her own company’s supply chain to find more sustainable ways of operating. She argues that uncomfortable choices that challenge established business practises are the only way to reach a long-term solution to fashion’s climate problem.
Kering and others in the industry acknowledge that offsetting is an imperfect option to be used as a last resort for emissions that can’t be avoided. But in those instances, they argue, certified offsets that demonstrably remove carbon from the atmosphere are necessary to tackle the current climate crisis.
The French luxury giant has reduced its overall climate impact by 14 percent relative to growth since 2015 — meaning its emissions are lower than they otherwise would have been, even if the overall total has continued to rise. Last year, Kering produced 2.4 million tons of carbon dioxide equivalent that it now plans to offset.
Everyone’s talking about carbon neutrality, with targets for 2025 and 2030; it’s too little too late.
“We still consider the best option is always to reduce the impact, but at the moment it’s impossible to achieve in the time necessary to make sure the planet is not going to burn,” Gucci Chief Executive Marco Bizzarri told The Business of Fashion earlier this month. “The planet is warming much, much faster than our technology is advancing.”
Kering’s headline-grabbing announcement to offset emissions across its entire supply chain adds to mounting pressure across the industry from governments and consumers.
On Monday, 16-year-old Swedish activist Greta Thunberg condemned world leaders in an emotional speech at the United Nations.
“You all come to us young people for hope. How dare you! You have stolen my dreams and my childhood with your empty words,” Thunberg said in a clip that was later broadcast across television screens and social media platforms.
Her words reflect the views of millions of young people globally who protested against the climate crisis last Friday. These are fashion brands’ current and future customers. The industry has also been targeted by climate activists, who exert pressure on politicians to regulate fashion brands and their suppliers.
Meanwhile, the environmental challenge is becoming more acute. According to the UN, the last four years were the hottest on record, and winter temperatures in the Arctic have risen by 3 degrees Celsius since 1990. In a June web post, the United Nations Environment Programme warned that “carbon offsets are not our get-out-of-jail-free card.” To avoid catastrophic climate change, the world needs to reduce emissions by 45 percent by 2030, not just offset existing and rising emissions.
The industry isn’t ready. Few so far have gone even as far as Kering. Many aren’t in a position to do so.
“This is an industry late to the party,” said Thomas Popple, senior manager for climate change and sustainability at Natural Capital Partners, which helps companies invest in initiatives to manage their climate impact.
Burberry Group PLC has been vocal in its support for climate action, but is only expecting to reach carbon neutrality for energy use within its own operations by 2022. The company said it's not going slow, but focusing on reducing its impact over a realistic timeframe. On Wednesday, LVMH Moët Hennessy Louis Vuitton Chief Executive Bernard Arnault will provide an update on the conglomerate’s efforts. The brands who signed the fashion pact wrangled together by Pinault and presented to world leaders last month have yet to provide details of what they actually plan to do.
Putting in place an effective offsetting program isn’t simple or cheap. To be taken seriously, companies need to first show that they are taking steps to reduce their carbon footprint. That also means measuring their emissions, an expensive and challenging prospect for an industry known for its opacity.
Eco-friendly shoe brand Allbirds went carbon neutral in April, paying about $10 a ton to offset its emissions, which amount to 10 kilograms of carbon per pair of shoes. “It was harder than it should have been to estimate the impact of a shoe,” Co-Founder Joey Zwillinger said. “It’s really expensive to get an accurate count.” Over the next couple of years, the company's working to cut the cut the carbon impact of a pair of shoes in half.
The planet is warming much, much faster than our technology is advancing.
When Tina Bhojwani launched vegan shoe line AERA, she relied on a third-party consulting firm to help her establish a program that would offset 110 percent of the company’s climate impact. “It was quite an arduous process because we had to share every bit of information from start to finish,” Bhojwani said. “I don’t think we would have known how to go through this alone.”
There’s also a question around price. Some argue that offsets should serve a dual purpose, both mitigating unavoidable emissions and providing a financial incentive for companies to push their carbon footprint lower. Once offsets become a line item on a profit and loss account, there’s an economic drive to bring down that expense by cutting emissions further. It’s not clear that the current price of carbon credits performs that function.
Gucci, which announced its plans to go carbon neutral earlier this month, is paying $6 per ton to offset its emissions. Parent company Kering has yet to confirm the price it will pay, but assuming a similar level the conglomerate’s overall offsets would cost about $15 million. That’s a fraction of the €3.7 billion ($4.1 billion) the company generated in profit in 2018.
On the other hand, that's a big expense for a smaller brand, particularly in a challenging retail market. Eco-conscious brand Reformation spends a few hundred thousand dollars a year on offsets.
“It’s not an insignificant amount of money for our brand and our budget,” said Kathleen Talbot, Reformation’s vice president of operations and sustainability. “I would think that for other brands our size, it’s enough to create some pause and meaningful conversations with stakeholders who aren’t as inherently motivated by a sustainability mission.”
Some brands are beginning to advocate for the industry to go beyond carbon neutrality to become carbon negative.
“Everyone’s talking about carbon neutrality, with targets for 2025 and 2030; it’s too little too late,” said Edzard van der Wyck, chief executive and co-founder of Sheep Inc., a climate-focused producer of merino-wool sweaters with a carbon negative approach. It offsets the emissions produced by each jumper ten times over. “Even if the big players radically shift their behaviour, it still won’t make up for the fact that the rest of the industry is drastically dragging behind.”