How Product Environmental Footprint Can Improve Emissions Accounting in the Apparel Industry

This blog was coauthored by Wiktoria Beckmann and Jeroen Scheepmaker.

The amount of clothing bought per person in the European Union (EU) has risen by 40% since the 1990s, namely due to lower prices and faster delivery of fashion to consumers. Globally, greenhouse gas (GHG) emissions attributed to the apparel industry are estimated at up to 8% of the world’s annual emissions. While emissions can be measured at the level of a single facility, this transparency vanishes at the product level, diminishing consumers’ ability to make informed decisions. The European Commission’s Product Environmental Footprint (PEF) method has the potential to both improve transparency and mitigate emissions growth in the European apparel industry.

The Apparel Industry’s GHG Problem

Around 70% of GHG emissions from the apparel industry are attributed to upstream supply chain processes, according to McKinsey’s 2020 Fashion on Climate report. Based on proximity to the final product, supply chains can be broken into a system of tiers: finishing (Tier 1), fabric production (Tier 2), yarn production (Tier 3), and raw materials extraction (Tier 4). Tier 2, which includes energy-intensive wet processing of materials, represents 52% of upstream emissions.

While mandatory carbon disclosure is becoming more common, emissions reporting in the apparel industry often relies on statistical data, especially for Tier 4, and consumers typically only have access to aggregated company-level information rather than product-level information. A transparent, reliable, and comparable product-specific GHG footprint measure would increase corporate accountability and enable consumers to make conscious purchasing decisions.

The Potential of PEF

The PEF method, with its upcoming product category for clothing and footwear, is one possible tool for such a measure. Harmonizing existing lifecycle assessment approaches and accompanied by a communication framework, the method relies on 20 specific product category rules and 16 impact categories (e.g., climate change, ocean depletion, human toxicity) meant to provide detailed guidance and comparability.

The PEF method has the potential to improve internal and external accountability, contributing to a level playing field for fashion brands. Once publicly disclosed, data tracing a product’s emissions can provide a fair comparison to consumers, NGOs, and competitors, allowing them to hold a company accountable for taking internal actions.

Furthermore, the method has the potential to inspire the following policy options:

• Mandatory GHG product labels
• Regulated GHG emissions per clothing item
• Integration of PEF into the EU Emissions Trading System
• Punishment for poor performers (e.g., taxation-based model)
• Rating system (e.g., classification of products based on PEF results)

The PEF method is not without its shortcomings and obstacles. There have been delays in improving the methodology and communication framework, the product category rules have been criticized for reducing flexibility and not guaranteeing improved comparability, and it is still unclear how the results from the different impact categories will be explained to consumers. Implementation will also require a level of supply chain visibility and data that does not yet exist—though past experience has shown that mandatory and standardized carbon reporting requirements can improve the available data for assessing GHG performance. In addition, adoption is hindered by the complicated process of getting parliamentary groups to agree on a problem framing and the degree of required regulation. Current recommendations for overcoming these challenges involve focusing methodologically on the climate change impact category for the apparel sector and testing its potential by applying a stepping stone approach to implementing policy options.

If successful, the PEF method could enable apparel companies to pursue key drivers of competitiveness and public legitimacy—enhancing companies’ leadership, responsibility, sales, and innovation; aligning them with regulations; and improving their reputation.