SB'24 San Diego is open for registration. Register early and save!

Supply Chain
Fashion’s Supply Chain Visibility Comes Into Focus

It remains to be seen whether the SEC’s proposed climate-disclosure rules will go into effect; but with the EU bringing in sustainable textile regulations and states passing laws on supply chain due diligence, increased scrutiny over the climate impacts of brands and retailers will continue to grow.

As the global focus on climate change increases, so has the attention of governments and regulators on efforts to decrease global greenhouse gas, or GHG, emissions. In March, the Securities and Exchange Commission proposed rule changes that would require publicly traded corporations in the United States to include certain climate-related disclosures in their registration statements and periodic reports — including information about climate-related risks that are reasonably likely to have a material impact on their business. The rules would also require companies to provide data on their Scope 1 and Scope 2 emissions — direct GHG emissions from operations and from the energy they use. In some cases, the rule change will also apply to Scope 3 emissions — those generated up and down companies’ value chains.

Many brands and retailers have made progress when it comes to decreasing their Scope 1 and 2 emissions; however, due to the nature of Scope 3 emissions, they have been more difficult to measure and manage. According to McKinsey, Scope 3 emissions can account for as much as 98 percent of the total carbon footprint of home and fashion retailers. And while some brands and retailers have voluntarily reported their Scope 3 emissions, many do not have the resources to do so.

Scope 3 emissions are generated across a company’s value chain — often at farms, fabric mills and manufacturers — so, it’s important to have visibility on emissions generated at each step of the process to understand where those emissions are generated to enable accurate reporting and targeted efforts to mitigate. One program, the U.S. Cotton Trust Protocol, aims to help brands and retailers have visibility of the Scope 3 emissions related to cotton production.

Launched in 2020, the program brings quantifiable and verifiable goals and measurement of the key sustainability metrics of US cotton production with a vision to set a new standard in sustainable cotton production where full transparency is a reality and continuous improvement to reduce our environmental footprint is the central goal.

Last November, the Trust Protocol published its inaugural Annual Report that highlighted aggregate farm-level data from its pilot year — which included 300 grower members in 16 states and 147 counties. This involved the weighted average from harvested acres for the six individual environmental metrics outlined in the 2025 national goals for continuous improvement. The report also benchmarked against the 2015 ag districts across the cotton-growing states, which were chosen as they represent actual crop management practices.

A focus on sustainable agricultural practices can reduce emissions related to climate change by decreasing GHG emissions and sequestering carbon in soil. In cotton production, GHG emissions come from two main sources: energy use and nitrogen fertilizer. According to data, in 2020/21 Trust Protocol grower member energy use aggregate showed a 15 percent improvement against the 2025 sustainability goal.

“U.S. Cotton Trust Protocol grower members are using more fuel-efficient equipment and implementing practices such as reduced tillage and planting cover crops, which increases biodiversity and naturally reduces fertilizer use,” says Trust Protocol President Dr. Gary Adams. “Our 2021 data shows grower members’ work is having a positive impact — already cutting carbon dioxide by 25 percent relative to the 2015 baseline, keeping us on track to hit our goal of a 39 percent decrease by 2025.”

Implementing regenerative agriculture practices also enhances the bio sequestration and the storing of carbon. In our pilot year, 45 percent of Trust Protocol growers already incorporated windbreaks for erosion control, 79 percent maintained erosion control structures for minimizing soil loss, and 93 percent practiced conservation tillage operations — all sustainable growing practices that help to reduce greenhouse gas emissions. In addition, they influence soil nutrient availability, water holding capacity, biodiversity, ecotoxicity, and the overall ecosystem.

By signing up for the Trust Protocol, brands and retailers gain access to US cotton with sustainability credentials proven via Field to Market: The Alliance for Sustainable Agriculture, measured via the Fieldprint Calculator and verified with Control Union Certifications.

Adams says he is encouraged by this new era of disclosure: “The Trust Protocol sees the value in increased transparency. If the SEC climate disclosure rules go into effect, the Trust Protocol can be a good resource for many brands and retailers in the fashion and textile industries to provide some of the data they need.”

On May 9th, the SEC announced that it had extended the deadline to June 17th for public comments regarding the proposed rules. It remains to be seen if these rules will go into effect; but with the EU soon bringing in sustainable textile regulations and individual states passing laws on supply chain due diligence, one thing is for certain: Increased scrutiny over the environmental footprint of brands and retailers will continue to grow.