Designers love to talk about their obsession with the latest eco-friendly fabric, and brands tout their certified green stores. But the biggest opportunities to reduce fashion’s impact on the planet are found in far less glamorous places.
Take your typical cotton T-shirt. The cotton is grown on a farm and spun into yarn, which is then woven into a textile, dyed and chemically treated, then cut and sewn into a garment for sale in stores.
Each of those steps is referred to in the industry as a “tier,” with the cotton farm at the beginning — Tier 4 — and the workers that produce the finished product at the end — Tier 1. It’s the step just before the garment factory, Tier 2, where fabric is dyed and treated, that tends to be the dirtiest. About 45 percent of a garment’s emissions come from this segment in the supply chain, compared with 16 percent in Tier 1, according to the Apparel Impact Institute (Aii), an industry group that works with suppliers on sustainability.
“Tier 2 of the supply chain is where a lot of the negative environmental impact happens,” said Lewis Perkins, the group’s president. This is because facilities use vast amounts of water, heat and chemicals to dye and treat garments, often using equipment powered by coal.
Climate activists say weaning Tier 2 suppliers off of coal is a must if the fashion industry is to meet emissions targets in line with The Paris Agreement, the international accord meant to keep global temperatures from rising more than 2 degrees.
Yet these facilities are rarely mentioned when brands embark on sustainability drives. One problem: fashion companies rarely interact directly with Tier 2 suppliers, and have less influence over what sort of equipment they use, or how they source their power.
“We typically work directly with our Tier 1 suppliers” said Agata Smeets, director of global sustainability at Gap, Inc. “We don’t write purchase orders to our Tier 2s, but we know that water, energy and chemicals are a much bigger issue there, especially in our dye houses.”
To rectify this, Gap is among the several brands and retailers to partner with the Aii to engage some of its Tier 2 suppliers in making sustainable changes to its factories. Gap says it has sponsored on-the-ground assessments at 30 percent of its strategic Tier 2 suppliers, representing more than 40 percent of the company’s total business at this stage of the supply chain.
It’s also harder to wow shoppers with tales of a dye factory that switched from coal to natural gas.
“It’s fun to talk about mushrooms being used for synthetic leather... but if you follow the [numbers], it’s just a lot less exciting for your carbon commitments,” said Linda Greer, who founded the Clean by Design programme in 2010, which has since been rolled into the Aii.
Turning a roll of undyed cotton red or neon green is a resource-intensive process.
“It is not natural for a dye or a finish to affix to a material, and so it takes enormous amounts of steam and energy to make that happen,” said Maxine Bédat, founder and director of sustainability think tank The New Standard Institute.
There are ways to reduce those costs. The Aii’s Clean by Design programme recommends 10 steps such as stepping up leak detection, recovering heat from hot water and exhaust gas and improving pipe insulation. She said some energy efficiency measures pay for themselves, sometimes in under a year.
It is not natural for a dye or a finish to affix to a material, and so it takes enormous amounts of steam and energy to make that happen.
The Aii says the average supplier spend on energy, water and carbon improvements amounts to $200,000. But within 12 to 18 months, participating mills see as much as a 10 percent reduction in carbon dioxide output, 20 percent less water used and an average of $440,000 in annual savings, the organisation found.
Funding Substantial Change
As Greer and Perkins see it, the easy fixes are a “gateway drug” for facilities to take bigger steps towards more substantial operational changes, such as coal-free boilers, dyeing processes that require less water, or solar panels.
These next steps are neither cheap nor easy, requiring investments of upwards of $1 million, says Perkins. The Aii is currently working with HSBC to put a number on the total investment needed to eliminate coal and adopt renewable energy sources in the apparel supply chain.
While brands will often hire an expert to assess how a facility can become more efficient, the suppliers must typically pay for the changes themselves.
Some mechanisms exist for suppliers to take action on their own. In Vietnam, China and India, some garment manufacturers use power purchase agreements, long-term contracts to buy renewable energy, which can encourage suppliers to build more clean energy capacity. Brands, which often have higher credit ratings than their suppliers, could help this process along by backing these agreements, the Global Fashion Agenda and McKinsey said in a 2020 report.
The fastest way to convince suppliers to reduce emissions would be for brands to pay for it, experts say.
“If brands were to ... truly partner financially, by sharing some of the gross profit margin that they receive with the supply chain, the supply chain can then innovate,” said Dio Kurazawa, co-founder of sustainable supply chain consultancy Bear Scouts. “They don’t have to be pushed to innovate, or pushed to do something that is more green.”
Short of profit sharing, brands can publicise when suppliers adopt energy efficient techniques, which could drum up additional business and create incentives for competitors to make similar changes.
When the Apparel Impact Institute first incorporated Clean by Design in 2019, the plan was to engage a total of 1,000 facilities in the programme within the first five years. As of now, the number stands at over 200, and the Institute’s programmes as a whole have saved 380,000 tonnes of greenhouse gas emissions and 12 million cubic metres of water to date, it said.
Despite counting fashion and retail heavyweights (including Target, PVH, Puma, Levi’s, Stella McCartney, Gap, Burberry, Lululemon and VF Corp.) among its programme partners, uptake has been slow. Some experts pin this down to the industry’s competitive mindset.
“Brands are competitors, and there’s a lack of cooperation,” said Tyler Chaffo, sustainability manager at RFID labelling and supply chain solution company Avery Dennison.
The money that’s really in this for these factories — the real money — is in more orders.
The pandemic has further slowed progress — the Institute only reached 40 new facilities through the Clean by Design programme last year, and a further 49 through a separate decarbonisation project, compared to its baseline target of 120.
But there is optimism that the tides are turning, as industry players become more accustomed to the idea of supply chain traceability, collaborative target-setting and a growing sense of urgency to meet ambitious emissions targets within this decade.
The Aii’s funding (a mix of corporate partner payments and philanthropic grants) has remained steady in 2020. The organisation tentatively expects increased engagement from corporate partners and faster rollout of the programme in the supply chain over the coming year. It has also launched a new initiative with Kering, Burberry and Stella McCartney to help Italy-based manufacturers coordinate, fund and scale more sustainable processes.
The Incentive Gap
Funding is a key barrier for suppliers to successfully engage in sustainability programmes, but it is not the only one. While easy fixes laid out by Clean by Design can promise six-figure savings within as little as 12 months, it is not enough to make a strong business case, argues Greer.
“The money that’s really in this for these factories — the real money — is in more orders,” she said. “The business value is in getting a larger market share, becoming a more strategic supplier to that brand. And until brands ... [recognise] that, I just don’t see how any of these programmes are really going to succeed.”
The lack of self-reporting, transparency, or even positive publicity from brands about how exactly they incentivise more sustainable suppliers is also part of the problem, said Bédat. “We have heard that directly from facilities, with great frustration ... saying, ‘We have made these upgrades, it was costly to us, and we’ve gotten nothing out of it.’”
From easy wins like insulating pipes and recovering wastewater, to purchasing electric boilers and renewable energy, the infrastructure for cleaning up the most polluting stage of the supply chain is already established, but the onus has fallen on suppliers — not the brands they serve — to find the cash and business case for their implementation, which Bédat believes has got to change. “These technologies are there,” she said. “It’s just a matter of doing the work.”