Climate Action Now: TCFD and Fashion Industry’s Impact

The United Nations Katowice Climate Change Conference (COP 24) in Poland launched the Fashion Industry Charter for Climate Action in Dec 2018. Forty-three fashion industry leaders backed the initiative to address fashion’s climate impact throughout its value chain. These organizations became proactive leaders by becoming the Charter’s initial signatories.

The Charter’s mission is to steer the fashion industry towards net-zero greenhouse gas emissions by 2050, in line with limiting global warming to 1.5 degrees.

The 2022 S&P Global Corporate Sustainability Assessment reveals that only a few companies in the fashion industry have committed to circular fashion practices, which could lower their environmental impact and greenhouse gas emissions. Less than 10% of textile and textile retailing companies publicly promised to avoid overstated sustainability claims even though consumer scepticism about the industry’s environmental assertions grows.

Circular clothing production can begin at various stages of a garment’s life cycle, such as the design phase. Designers can choose recycled or eco-friendly materials. Make design choices that enable garment repair or recycling. Manufacturers can reduce waste by repurposing unsold or defective inventory. Recycle scraps during production. Companies can offer garment rental or repair services during use to extend the garment’s life. In the post-consumer stage, companies can provide take-back programs for recycling old clothes. Stock them for second-hand resale.

Growing consumer awareness and emerging regulations demand that brands be cautious when discussing their sustainability initiatives and achievements to avoid greenwashing in the fashion industry’s contribution to the climate crisis. Failure to do so could result in reputational damage or hefty fines.

The fashion industry is one of the most unsustainable industries globally, accounting for 3% to 5% of worldwide carbon emissions.

Source: S&P

The fashion industry has a linear approach, leading to billions of discarded clothing items in landfills or incinerators when unsold or no longer helpful. Polyester, made from oil, accounts for approximately 50% of fibre production, while cotton, which needs intensive use of water, land, fertilizer, and pesticides, accounts for another 25%.

TCFD reporting promotes transparency, accountability, and sustainable innovation while identifying climate-related financial risks. Companies must disclose these risks and opportunities in financial statements to enable informed stakeholder decisions. This reporting endorses sustainable practices in fashion, reducing environmental impact and mitigating climate change risks.

Real-world Example: JD Sports Fashion’s Metrics and Targets on Climate Action

JD Sports Fashion is committed to reducing its environmental impact and addressing climate change. A recent report details their TCFD-aligned efforts, reflecting the company’s dedication to sustainable growth and transparency. This article summarizes JD Sports’ strategies following TCFD guidelines.

Governance: JD Sports has established strong governance structures to oversee climate-related risks and opportunities. The Board of Directors is responsible for risk management, while a designated Sustainability Director guarantees that climate change issues receive appropriate attention. Additionally, the Sustainability Steering Group is responsible for implementing JD Sports’ Environmental, Social, and Governance (ESG) strategy.

Strategy: JD Sports has integrated climate considerations into its overall business strategy, focused on mitigating potential risks and capitalizing on opportunities. Key strategic areas include optimizing energy consumption, sourcing 100% renewable electricity, and exploring circular economy initiatives to reduce waste.

Risk Management: JD Sports has developed a robust risk management process to effectively manage climate-related risks, including identifying, assessing, and managing risks across the organization, with a focus on both physical and transition risks.

Metrics and Targets: JD Sports is committed to measuring and reporting its progress in addressing climate-related issues. The company has set targets to reduce absolute greenhouse gas (GHG) emissions and established key performance indicators (KPIs) to track its progress.

By prioritizing sustainability and taking meaningful steps to reduce its environmental impact, JD Sports is setting an example for other companies to follow.

In the fashion and textile industry, TCFD reporting is crucial in fostering sustainable practices and addressing climate-related challenges.

By increasing transparency, encouraging innovation, identifying financial risks, enhancing investor confidence, and supporting the low-carbon economy transition, TCFD reporting paves the way for the industry’s more sustainable and environmentally responsible future. It is essential for companies in this sector.

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