Salient events such as the UN Biodiversity Conference (COP15) and the G20 summit held in late 2022 have underlined the critical role that nature plays in supporting the private sector and the need for nature-based solutions that can protect biodiversity.
The World Economic Forum pinned biodiversity loss and ecosystem collapse as one of the top four global risks over the next 10 years. Yet, players in the fashion and textile industry have been slow to adopt ambitious goals and develop clear roadmaps to mitigate this. Biodiversity isn’t just on the global policy agenda, it’s on the minds of investors too and is ‘the fastest developing ESG theme in global capital markets’.
Whilst brands and retailers write their net zero playbooks to reduce emissions across their supply chains, it seems that biodiversity, regeneration and nature-based solutions are not receiving the consideration they deserve.
Biodiversity loss is a physical and transitional risk for fashion
The apparel and textile industry faces multi-dimensional physical and transitional risks related to biodiversity, both now and in the future. With a complex value chain highly dependent on land for fibres like cotton and man-made cellulosic fibres (MMCFs) and water for dying and chemical treatment, it’s surprising ecosystem services are often not accounted for in sustainability strategies. For example, extreme weather events exacerbated by climate change create volatility in the conditions needed for the production and harvesting of key crops, such as cotton. Fashion’s dependencies on natural capital interconnect with its significant contribution to biodiversity loss be that through water pollution and microfibre shedding, deforestation and emissions created by energy-intensive production processes including the production of synthetic plastic fibres.
Similarly, regulatory risks of inaction to protect and restore nature could have irreversible consequences if left unaddressed. The signing of the Kunming-Montreal Global Biodiversity Framework in December 2022 at COP15 is one example. Here, signatories agreed to 23 specific targets, including protecting 30% of the planet for nature by the end of the decade as well as restoring 30% of Earth’s degraded terrestrial and marine ecosystems. These goals hold up a beacon for all industries but could also guide the fashion industry towards mitigating risks, especially those related to farming and deforestation. Whilst not legally binding, targets set out at COP15 will encourage nations to create national biodiversity plans, similar to those of Nationally Determined Contributions (NDC)s required to outline and communicate steps to achieve the 2015 Paris Agreement.
COP15 underlined the need for businesses to make nature-related disclosures on their dependencies and impacts on biodiversity and developments such as the Corporate Sustainability Reporting Directive mean that fashion stakeholders are waking up to new reporting realities. The directive, approved by the European Commission in November 2022 will require companies to report on how external sustainability factors, like human rights, climate change and biodiversity influence their activities. For large fashion companies with a global footprint like Inditex and H&M Group, this will be a priority.
To guide businesses, there are a mounting number of tools and frameworks, like the Taskforce on Nature-Related Financial Disclosures (TNFD). The TNFD’s disclosure framework helps organisations report and act on their evolving relationship with nature. Elsewhere, the Science Based Targets initiative (SBTi) cites that activities associated with ‘business as usual’ are fuelling the loss of nature and have subsequently published guidelines following wide consultation last autumn.
Official recognition of nature-based solutions both in a COP27 cover decision as well as in a G20 communique published in November should only encourage fashion leaders to treat biodiversity management as a strategic priority, especially for those who measure progress across the framework of Sustainable Development Goals, including Goal #15 - Life on Land.
What are fashion’s latest biodiversity commitments?
It is often touted that the fashion industry is one of the most pollutive, but most lightly regulated industries in the world. Commitments to protect natural capital, unlike pledges to achieve net zero, have been slow to materialise, despite the sustainability narratives pushed forward by global brands in their green marketing and reports that 48% of fashion’s supply chains are linked to deforestation.
At a global level, the UNFCC Fashion Charter updated its targets at COP26 in 2021 to become more ambitious in line with phasing out coal and encouraging the use of ‘environmentally preferred’ materials. However, at COP27 fashion barely made the agenda.
Despite this, a roster of brands including Stella McCartney, Inditex, H&M and Kering Group signed up to a Canopy pledge; a commitment to purchase at least 550,000 tonnes of alternative fibres made from textile waste and agricultural residues instead of virgin forest fibres. At COP27, The Global Fashion Agenda and UNEP launched another industry initiative called the ‘Fashion Industry Target Consultation’ that ‘will call on fashion stakeholders to define holistic and concrete targets for a net-positive industry.’ Critics would argue that without global regulation, more voluntary initiatives are simply a delay tactic preventing the industry from making real progress on environmental management. The collaboration claims it will encourage organisations to share KPIs and milestones that the industry should strive to meet, but it was not clear how many of these targets and assessments will consider biodiversity indicators and metrics or make the introduction of nature-based solutions mandatory.
Away from the political stage, industry players are making incremental steps towards biodiversity management and understanding the reality of their impact. The Textile Exchange and its Biodiversity Benchmark are helping its members identify which biodiversity risks are a priority, be that related to material sourcing, deforestation or microfibre pollution.
The University of Cambridge Institute for Sustainability Leadership has published an 8-step blueprint in association with Kering outlining actions for managers to develop a corporate biodiversity strategy. These include setting the scope, understanding impacts and dependencies, as well as agreeing on a portfolio of actions and targets.
A wave of initiatives, commitments and funding has been put in place by some of the biggest brands in the market, some of whom have received backlash for their sustainability strategy in lieu of meaningful change to reduce production levels. For example, H&M plans to double its sales by 2030, yet has a public-facing biodiversity strategy, which includes membership of the TNFD, and advocacy work through the Intergovernmental Science-Policy Platform on Biodiversity and Ecosystem Services (IPBES). The group states it has signed ‘landscape scale regeneration practices’ to increase their impact. Most recently it has joined Burberry, Kering, Loccitaine and Inditex to back the Climate Nature Fund aimed at generating €300 million to finance nature protection and restoration projects.
The momentum from COP15 spurred luxury group LVMH to embark on a number of actions. This included joining the Circular Bioeconomy Alliance (CBA) to launch region-specific action plans and announcing a new programme to restore forest cover in the Amazon with the non-profit Reforest’Action.
For Hélène Valade, environmental development director at LVMH, the rationale for the latest string of commitments is the strong interdependence that their brands have on biodiversity, especially for fibres like cotton. Biodiversity has become a central pillar of the group’s LIFE360 environmental strategy for its Fashion & Leather Goods division.
“Our goal is to limit our impact on biodiversity by banning the sourcing of raw materials from regions at high risk of deforestation or water stress. To do this, we are putting in place tools and strategies that allow us to trace our supply chains and know precisely the origin of our products.” stated Valade. To support this, LVMH has set the target to have 100% of their strategic supply chains certified by 2026, with the rate in 2022 standing at 71%.
On measurement and reporting, Alexandre Capelli, LVMH group environmental deputy director commented that they are taking action at both a corporate and product level. The group reports on the progress on biodiversity within the framework of LIFE360 at their shareholder meetings. Capelli shared that “LVMH has measured the biodiversity footprint of its entire value chain using two methodologies, the Global Biodiversity Score and Impact World +. The results have been used to define our strategy and, when updated, to monitor our progress.“
LVMH is in the process of testing the Nature standard being developed by the SBTI and has joined the TNFD forum, whose risk management framework will enable members to map positive and negative actions related to nature to guide their strategic planning.
“The assessment tools for Maisons have indicators directly related to nature and biodiversity such as land use and water pollution. We want to support and accelerate eco-design processes and to communicate the environmental performance of products to customers,” noted Capelli.
Have investors underestimated the impact of the textile supply chain on biodiversity?
Industry collaboration, the mobilisation of funds, incremental measurement and reporting and target setting on biodiversity should not go unpraised. However, the value that biodiversity brings to the fashion and textile industry more broadly, warrants an approach that identifies and acts on quick wins. It also warrants widespread advocacy for regulation to encourage the scalability of solutions like filtration for microfibres and divergence away from traditional materials that are reliant on plastics or deforestation.
Think tank Planet Tracker has conducted extensive research on textile supply chains. Their report Underdressed, found that only 2% of nearly 1200 ESG proposals submitted to the annual shareholder meetings of retailers since 2015 were on environmental issues. Notably, issues like fibre mix as a topic did not appear at annual shareholder meetings. Material composition and fibre mix are inextricably linked to the biodiversity performance of a company and given the impact of raw material selection on natural capital, it’s hard to understand why this hasn’t been widely addressed to date.
Richard Wielechowski, senior investment analyst at Planet Tracker commented that “The environmental impact of the textile supply chain has been underappreciated by investors. As brands don’t typically own their supply chain, it has been a case of out of sight, out of mind.” Planet Tracker identified that the majority of environmental proposals voted upon revolved around climate change and sustainability reporting, with no proposals identified for biodiversity or deforestation.
Wielechowski is hopeful that in the wake of COP15, things may change and that businesses introduce targets and start thinking about it as a key risk. “We see the conference as a key driver for biodiversity rising up agendas for investors and corporates. Investors have shied away from it before because of its complexity and difficulty to model..”, he adds.
Emerging solutions that account for natural capital
Effective management of biodiversity requires solutions that consider geographical nuances of land use across a global supply chain, both up and downstream. This is particularly relevant for an industry where garments may travel across numerous continents from India, to China and Europe during the production phase. For the apparel ecosystem, there is no single agreed-upon blueprint, be that the Textile Exchange Biodiversity Framework, Kering’s Environmental Profit and Loss Methodology or the broader UN Encore tool created by the UNEP FI and Global Canopy which helps financial institutions align their portfolios with global biodiversity targets. This makes it hard to know where to begin.
However, emerging technologies paired with consulting services are coming to fruition to help brands and retailers navigate this space. natcap is a platform providing geo-spatial enabled impact and dependency assessments from which the fashion and textile industries could reap immense benefits.
With a team made up of highly respected scientists, natcap has been named a data catalyst for the TNFD. CEO Sebastian Leape shared their mission, “By building a nature intelligence platform for enterprise, we want to provide a view across the supply chain at the aggregate and site level of the impacts and dependencies on nature.”
What would this look like in practice for the fashion industry? natcap blends sophisticated quantitative assessment layers of geographically sensitive data with management practices. Leape commented that “If apparel companies want to do something about nature and need a starting point, we can help measure what’s going on within their immediate supply chain operations using Tier 1 data. Then, based on what we find, we consider how an organisation can embed this in decision making, i.e. through product development, operations or in external reporting.” This information would enable companies to build a roadmap aligned with many of the global biodiversity targets and frameworks being put in place.
Missing data is a problem when it comes to natural capital accounting, but that shouldn’t slow down businesses, Leape argues. “No one will have the right data yet at the asset level needed to do it as well. Our job at natcap is to guide and help teams strategize on how to collect that data in the future.”, he adds.
Building a roadmap for biodiversity
Nature loss is a significant material risk for the fashion industry. Understanding the interconnectivity of operations with biodiversity and pursuing a strategy of restoration and regeneration will be imperative for long-term business resilience. Undoubtedly, it must be more than a simple box-ticking exercise to gain a credible ESG rating. With the knowledge that 1 million species are set to be extinct by 2050 if business as usual continues, there is no time to waste. As Marco Lambertini, then Director General of WFF stated in his final press briefing at COP15, "Halting and reversing biodiversity loss by 2030 is the equivalent of 1.5C and has the ability and power to inspire and unite the whole of society."
Through stronger on-the-ground interventions, the scaling up of material alternatives and adopting more aggressive stances in advocating for change at a policy level, there can be hope. Managers can focus on supplier engagement and embedding biodiversity policies into codes of conduct, as well as investing in tools and services like natcap. Collaboration and open-sourcing successful practices could contribute to progress too. Equally, empowering citizens through education on how to handle garments across the laundering and disposal lifecycle phases will make a tangible impact.
As retailers and brands make progress towards their GHG emissions and social sustainability goals, they could apply the same playbook to tackling the industry’s impact on nature. As Sebastian Leape from natcap sees it, inaction on biodiversity undermines climate commitments. He believes that “Companies should go beyond the bare minimum of some of the regulations on reporting. Instead, they should realise that biodiversity and nature happen everywhere and acknowledge the connectivity and importance of species and the contribution of land.”
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