The fashion industry can reduce emissions across the entire value chain

If the fashion industry proceeds with its current greenhouse gas emissions trajectory, estimated in 2018 to equal 4 percent of the world’s total, it will miss its 1.5-degree Celsius pathway by 50 percent. Most of the fashion industry’s emissions came from upstream activities—such as materials production, preparation, and processing—while the remainder were associated with downstream retail operations, the use-phase, and end-of-use activities. The industry’s extensive emissions, however, can still be curbed.

Reducing emissions in order to align with the 1.5-degree pathway outlined by the Paris Agreement would require players from the entire fashion value chain to collaborate and embrace new ways of working together. We estimate that the industry can reduce its annual emissions to around 1.1 billion tons—or around half of today’s figure—but it will require significant additional effort beyond current decarbonization activities. This ‘accelerated abatement’ requires fashion industry stakeholders to reduce emissions across the entire value chain, from upstream production and processing, through retail operations, to the consumers themselves. In new research we conducted with the Global Fashion Agenda, we outline a roadmap for how the industry could do it:

  1. Reducing emissions in upstream operations. More than 70 percent of the fashion industry’s GHG emissions come from upstream activities, such as energy-intensive raw material production, preparation, and processing. Reducing emissions from upstream operations has the potential to deliver 61 percent of the accelerated abatement potential, but requires the fashion industry to decarbonize material production, material processing, and garment manufacturing, while minimizing production and manufacturing waste.

    Fashion brands can support their suppliers and manufacturers by publicly supporting the transition to cleaner energy sources for upstream operations. Corporate groups, such as the RE100, are committing publicly to switching over to 100 percent renewable electricity in their upstream operations.

  2. Decarbonizing a brand’s own operations. Further, brands would need to reduce emissions from their own operations, a commitment that could deliver 18 percent of accelerated abatement potential. Brands can also improve packaging, minimize returns, reduce overproduction, and decarbonize global retail operations. Brands also have an opportunity to create an equal partnership with value chain stakeholders, particularly by assessing purchasing practices and incentivizing value chain players to decarbonize their own activities.

    Critical over the coming years will be the ability of industry players to scale-up their use of sustainable materials and foster changes in designer mindset to promote sustainable materials—all while driving down costs in comparison to traditional materials.

  3. Encouraging sustainable consumer behavior. Consumers can also have a sizable impact on the fashion industry’s emissions trajectory and can change their behaviors to promote more sustainable practices – in fact, 20% of potential accelerated abatement identified in our report is in the use phase. When consumers reduce washing and drying by skipping one in six washing loads, washing half of loads at below 30 degrees, and substituting every sixth dryer use with open air drying, we see a surprisingly substantial impact on emissions.

    In addition, consumers can also be more conscious about recycling or trading their clothes: For the industry to reach the 1.5-degree pathway by 2030, one in five garments will need to be traded in a circular model. These circular business models are key decarbonization levers because of their ability to extend product life, enable recycling, and reduce the need for new and finite resources in production. We expect this model will need to continue to expand beyond 2030.

Fortunately, these recommended actions are aligned with the latest customer survey research. A McKinsey survey conducted in April 2020 shows more than 60 percent of respondents go out of their way to recycle and purchase products in environmentally friendly packaging. However, to successfully proceed, brands will need to encourage participation even further by transparently communicating with their customers about best practices for sustainable fashion.

Players across fashion’s value chain must continue to drive their own sustainability efforts while collaborating on new strategies to keep the industry on the 1.5-degree pathway beyond 2030. Without these partnerships between key players, the fashion industry will not successfully reach its sustainability goal.

The good news for the industry is that more than half of the levers required to achieve our accelerated abatement scenario actually generate savings on an industry-wide basis. Compared to other industries, this approach is financially achievable—89 percent of abatement can be achieved at a cost of less than $50 per ton of GHG emissions. While around 60 percent of these actions require upfront investment, 55 percent of them will lead to net cost savings for the industry overall.

The COVID-19 pandemic has shown us that consumers expect more from their brands in times of crisis. In fact, 63 percent consider a brand’s promotion of sustainability to be an important purchasing factor. The public’s demand for brands to take responsibility, understand their own emissions and abatement levers, collaborate with partners to decarbonize the value chain, and work with stakeholders to build a less emissions-intensive product lifecycle is a critical catalyst for accelerated abatement. Now is the time for the industry to think radically and embrace business model transformations to deliver sustainable outcomes.

Read more in our research “Fashion on climate,” a collaboration between McKinsey and the Global Fashion Agenda.

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