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November 2021

Unlocking the Trillion-Dollar Fashion Decarbonisation Opportunity

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1

Executive Summary

The carbon footprint of the fashion industry is globally significant, evidenced by a growing number of studies, most recently World Resources Institute (WRI) and Aii (2021). The report estimates that the industry’s share comprises 2% (1.025 gigatons CO2eq) of annual global greenhouse gas (GHG) emissions, with most impact taking place in the raw material and processing steps of the supply chain.

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The Urgency to Decarbonise the Fashion Industry

THE FASHION INDUSTRY’S GREENHOUSE GAS CHALLENGE

The global fashion industry is a multi-trillion dollar industry, producing over 100 billion garments annually. Given its size and nature, the industry faces a number of social and environmental challenges. The key environmental challenges are complex and interrelated, but most broadly fall under: land use, water use, chemical use, biodiversity loss and greenhouse gas (GHG) emissions. This paper focuses on the latter — GHG emissions.

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Mapping the Solutions to Reduce Scope 3 Emissions

The recently published WRI and Aii (2021) report identifies six solutions the fashion industry can adopt to deliver the GHG reductions needed to stay within the 1.5°C pathway by 2030.21

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Size of the Prize: The Trillion-Dollar Fashion Decarbonisation Opportunity

For each existing and innovative solution category in the
scope of this report, the total funding requirement across all stakeholders is estimated as outlined below.

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The Role of Finance in Decarbonising The Fashion Supply Chain

“When it comes to a complete change in energy use or a new way of manufacturing, the manufacturer cannot take on the entire cost burden and project risk. There needs to be additional stakeholders to co-invest alongside the manufacturer to implement disruptive and sustainable technologies.” – Punit Lalbhai, Executive Director, Arvind Limited

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Barriers to Financing the Low-Carbon Transition of the Fashion Supply Chain

Based on interviews with manufacturers, investors, and key industry stakeholders, nine key factors that contribute to a lack of financing availability have been identified (see Figure 30).

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Key Industry Actions and Recommendations

To mobilise $1 trillion through overcoming the aforementioned barriers, a concerted and collaborative effort is needed by key stakeholder groups inside and outside of the industry.