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Report calls for actions across the whole supply chain to help reduce negative environmental impacts

Jul 3, 2023 World

According to a report by the non-profit financial think tank Planet Tracker, retailers and fashion brands have limited direct control of most negative environmental impacts in the textile industry

The report «Following The Thread» found that there is a significant disparity between the location of environmental impacts and the distribution of capital within the textile industry. “While sales, profits and capital are concentrated in the apparel retailers (the fashion brands), the majority of the environmental impact occurs upstream in the supply chain”, states the report, which conducted a comparative analysis between the location of value and capital and the location of major environmental impacts among 3 897 companies.

The results indicate that companies in the fabric manufacturing and fibre production sectors alone are responsible for a large part of the textile supply's chain environmental impact, contributing to 76% of climate change impact, 74% of resource consumption and 61% of water use. However, these sectors only generate 18% of revenues and 7% of market capitalization, while retail accounts for 54% of revenue and 63% of market capitalization, meaning it only contributes marginally to the environmental impact caused throughout the supply chain.

“To move to a truly sustainable industry, fashion retailers and brands must pivot to invest in their supply chain partners, and we call for investors to pressure corporates to do this. We believe these investments can be profitable in and of themselves, as well as improving the industry's environmental footprint”, urges the report, underlining they will be better positioned to “substantiate green claims about their collections, at a time when regulators appear to be taking a keener interest in potential greenwashing”.

Just this year, the European Commission proposed a directive focused on the regulation of green claims and the European Parliament adopted its position on the directive on corporate sustainability due diligence. In light of this, companies will have to perform due diligence on their operations and those in their supply chain to prevent or mitigate negative impacts on human rights and the environment.

Image Credits: Ben White on Unsplash

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