Looking to Reduce Emissions, Apparel Makers Turn to Their Factories in the Developing World

Sometime in the coming month, a South Korean clothing manufacturer plans to flip the switch on a pair of solar power projects on the rooftops of two of its factories in southern Vietnam. The $5.6 million project won’t cost Hansoll Textile, the manufacturer, a penny.

In fact, Hansoll, a company that makes clothing for dozens of well-known brands including Under Armor, Walmart and Victoria’s Secret, anticipates saving more than $250,000 in the coming year. The anticipated savings would come from a combination of reduced electricity demand and the ability to sell a portion of the solar power back to the grid.

The project is expected to decrease the company’s emissions by 3,260 metric tons of carbon dioxide equivalent per year. That’s an annual reduction in greenhouse gas emissions equal to taking 700 automobiles off the road.

The project is significant because it will curb emissions from a key and, until recently, largely ignored segment of the apparel industry—the vast network of clothing factories in developing countries.

While fashion brands have made great strides in reducing emissions from their stores, offices and distribution centers in the US and other developed countries, these emissions make up only a tiny fraction of the fashion industry’s overall emissions, emissions that by some accounts rival that of global shipping and aviation combined.

The solar projects are also significant because they are happening in an industry with outsized and rapidly growing emissions that is struggling to rein in its pollution. Emissions from the industry are increasing each year despite ambitious pledges by brands and retailers to reduce them. At the same time, consumers and environmental advocacy groups are increasingly vocal about the need for these companies to clean up their acts.

Hansoll’s solar projects also illustrate how far the company, a leader in sustainable apparel manufacturing, and the industry, which produces over 100 billion garments per year, still have to go.

The $5.6 million solar investment will provide 21 percent of the total electricity needs for two of Hansoll’s clothing factories. The remaining electricity for these two facilities, as well as the power required for Hansoll’s four other factories in Vietnam, will come from an electricity grid powered largely by coal.

Curbing emissions industry-wide to a level compliant with the Paris climate agreement will cost just over $1 trillion between now and 2050, according to a recent study published by the Apparel Impact Institute and Fashion for Good, industry organizations seeking to increase the sustainability of apparel and footwear.

There are likely dozens or perhaps even hundreds of clothing manufacturers around the world that are now installing renewable energy projects similar to what Hansoll has done in Vietnam, Lewis Perkins, president of the Apparel Impact Institute said, adding: “But there are hundreds of thousands of facilities that all need to switch to renewable electricity.”

Apparel’s Emissions: Eclipsing Shipping and Aviation?

Perhaps fashion’s biggest issue as it seeks to curb emissions is a clear understanding of the scope of the problem. Roughly 2 percent of global greenhouse gas emissions come from the apparel industry, according to a report published in November by the Apparel Impact Institute and the World Resources Institute.

However, the emissions estimate is simply a best guess from an industry with a complex supply chain as well as additional end-of-life emissions when clothing is incinerated. Other recent reports have put the apparel industry’s share of global greenhouse gas emissions as high as 8 percent, a level of climate pollution that would eclipse the annual greenhouse gas emissions of shipping and aviation combined, which account for approximately 4 to 5 percent of greenhouse gas broadcasts.

While the exact figures remain unclear, one thing is coming into focus; for apparel brands that have done a thorough accounting of their emissions, 96 percent of their climate pollution comes from outside their own operations, according to the Apparel Impact Institute and World Resources Institute report. These so-called “scope 3” emissions are driven largely by a brand’s supply chain, which includes everything from the cotton farms and chemical plants that provide the raw materials for natural and synthetic fibers to factories such as Hansoll’s that weave and dye fabric and then cut and sew it into apparel.

The measures that fashion companies often take to reduce their own emissions, such as using renewable energy to power their offices, stores and delivery fleets, impacts only 4 percent of their products’ emissions, according to the report.

To stay within the Paris climate agreement’s pledge to limit warming to 1.5 degrees Celsius, emissions from the apparel industry would have to decrease by 45 percent by 2030, yet the industry’s emissions are set to grow by 55 percent over the same time period, the World Resources Institute and Apparel Impact Institute report found.

The report identified six measures the industry could take to slash emissions from its supply chain and bring the industry most—but not all—of the way towards compliance with a 1.5 degree Celsius target. The measures include increasing energy efficiency in manufacturing, using more sustainable materials, eliminating the direct use of coal for thermal energy and shifting to 100 percent renewable electricity.

“We know where the hotspots of emissions are, and we know what to do to reduce those emissions,” said Michael Sadowski, a WRI research consultant and the report’s lead author.

Of the different measures, transitioning to renewable energy as Hansoll is now doing, and ditching coal heat, would yield the largest emissions reductions by far. Taken together, the two measures would provide 81 percent of all potential emissions reductions identified in the report.

Empty Pledges

Apparel brands have made ambitious pledges in recent years to curb their supply chain emissions through the “science-based targets initiative,” a program established by WRI and others in 2015.

However, the companies’ actual emissions reductions have not lived up to their pledges, according to a report published in October by the Climate Board, a for-profit company that works with other companies to hasten action on climate change.

The report, which included a detailed look at 16 apparel companies that made science-based target initiative pledges, found two-thirds of the brands and retailers that had announced scope 3 targets were not on track to achieve them.

“Many of the companies that made these big audacious goals are not actually following up with the rhetoric,” said Ken Bruder, co-founder and managing director at The Climate Board.

Dirty Supply Chains

Further, 80 percent of the industry has not even committed to science-based targets for emission reductions.

“While you have a few leaders that are doing some really phenomenal things, and many of them making significant progress, we have a long way to go in order to get everyone on board,” Bruder said.

Decarbonizing by Mid-Century: $1.05 Trillion

Perhaps the biggest thing holding the apparel industry back from emission reductions is money. The industry will have to spend $1.05 trillion over the next 30 years to reach net zero emissions by mid-century, a requirement to remain in alignment with limiting warming to 1.5 degrees Celsius, the Apparel Impact Institute and Fashion for Good concluded in a report published in November.

“Given these large investment amounts, current levels of commitment and financing are insufficient to succeed in adequately decarbonizing the industry before 2050,” the report concluded. “It is unlikely that the industry will achieve the necessary transformation without a significant change in financing flows to accelerate the adoption of a wide range of efficiency and emissions reduction solutions.”

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That said, there is a business case to be made for many of the emission reduction efforts required by the industry, Rogier van Mazijk, Fashion for Good’s finance director, said.

More than one third of the $1 trillion required to overhaul the apparel industry would go to installing renewable energy, according to the report. But investments in low cost solar and wind power quickly pay for themselves, van Mazijk said. That repayment, or what the business community calls “return on investment,” attracts new funding sources, including green bonds and private capital, taking a lot of the financial burden off of individual brands and manufacturers.

To see how this works, one need look no further than the Hansoll rooftop solar projects in Vietnam. In that case, the project’s entire $5.6 million cost was paid by a private renewable energy company, Berkeley Energy Commercial Industrial Solutions. In exchange, Hansoll agreed to purchase the electricity generated by the solar panels for the next 15 years. The relative low cost of solar power compared to the cost of electricity sold by local utility companies in Vietnam means that Berkeley and Hansoll stand to make money on the deal.

Hansoll is now planning additional solar “power purchase agreements” at four, smaller factories in Indonesia and is either working on or hopes to complete similar deals for its four other factories in Vietnam.

The Clean Energy Investment Accelerator, a US based public-private partnership working to hasten the installation of renewable energy in developing countries, helped Hansoll with its initial rooftop solar project. In November, the group announced it is now working with six apparel brands, including Lululemon, a company that a climate advocacy group recently called out for its supply chain emissions, to help as many as 20 additional manufacturers in Vietnam transition to renewable energy.

For Hansoll, a company that has pledged to reduce its greenhouse gas emissions by 59 percent by 2030 and is a member of the UN’s Fashion Industry Charter for Climate Action, the solar investments are a no-brainer. The company stands to save money and gain a competitive edge over other manufacturers as fashion brands look to reduce their supply chain emissions.

The company’s efforts could be part of a growing trend.

“We’re starting to see that supply chain manufacturers themselves are recognizing the imperative to establish their own climate targets,” said Evan Scandling of the Clean Energy Investment Accelerator and Allotrope Partners, a clean energy advisory and investment firm. “So there’s certainly a set of forward thinking supply chain manufacturers that are starting to undertake this on their own without being pushed or pulled by brands.”

But Hansoll’s efforts on sustainability may also be driven by the company’s first-hand knowledge of the impacts of climate change.

In 2019, the company shelved plans to build an additional factory near the two factories that now have solar panels.

“This was due to climate change quickly reshaping the Mekong delta,” company officials wrote in a 2021 report published by CDP (formerly the Carbon Disclosure Project), a non-profit organization that works with companies to report their environmental impact. “The area near the Mekong delta had a low elevation level, while the sea level was rising quickly.”

Going forward, their other nearby facilities, as well as buildings in coastal communities worldwide, will face increasing risks. Rising seas “will engulf almost all of southern Vietnam,” company officials concluded in their CDP report.

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