What could a circular fashion industry look like in 2050?

The need for urgent action is clear: While the lifespan of individual garments dwindles, the environmental footprint of the apparel industry continues to grow. But where there’s inefficiency, there’s often opportunity. From renewable and recycled inputs to new business models such as repair, rental and recommerce to end of life management and more — like enabling technologies, policies and partnerships — the apparel industry is ripe for a makeover. Part one of this two-part session explores what the circular fashion industry of 2050 has in store. Experts and innovators share their aspirations for the future of manufacturing, traceability, and fabric innovation.

Speakers

• Cory Skuldt, Associate Director, Corporate Citizenship
• Beth Esponnette, Cofounder, Unspun
• Beth Rattner, Executive Director, Biomimicry Institute
• Debbie Shakespeare, Senior Director Sustainability, Compliance & Core PLM, Avery Dennison

Putting a price on carbon should reduce emissions, because it makes dirty production processes more expensive than clean ones, right?

That’s the economic theory. Stated baldly, it’s obvious; however, there is perhaps a tiny chance that what happens in practice might be something else. In a newly published paper, we set out the results of the largest study of what happens to emissions from fuel combustion when they attract a charge.

We analyzed data for 142 countries over more than two decades, 43 of which had a carbon price of some form by the end of the study period.

The results show that countries with carbon prices on average have annual carbon dioxide emissions growth rates that are about two percentage points lower than countries without a carbon price, after taking many other factors into account.

By way of context, the average annual emissions growth rate for the 142 countries was about 2 percent per year. This size of effect adds up to very large differences over time. It is often enough to make the difference between a country having a rising or a declining emissions trajectory.

Emissions tend to fall in countries with carbon prices

A quick look at the data gives a first clue. The figure below shows countries that had a carbon price in 2007 as a black triangle and countries that did not as a green circle.

On average, carbon dioxide emissions fell by 2 percent per year from 2007 to 2017 in countries with a carbon price in 2007 and increased by 3 percent per year in the others.

The difference between an increase of 3 percent per year and a decrease of 2 percent per year is five percentage points. Our study finds that about two percentage points of that are due to the carbon price, with the remainder due to other factors.

The higher the price, the greater the benefit

The challenge was pinning down the extent to which the change was due to the implementation of a carbon price and the extent to which it was due to a raft of other things happening at the same time, including improving technologies, population and economic growth, economic shocks, measures to support renewables and differences in fuel tax rates.

We controlled for a long list of other factors, including the use of other policy instruments. It would be reasonable to expect a higher carbon price to have bigger effects, and this is indeed what we found. On average, an extra euro per tonne of carbon dioxide price is associated with a lowering in the annual emissions growth rate of about 0.3 percentage points in the sectors it covers.

Avoid the politics if possible

The message to governments is that carbon pricing almost certainly works, and typically, to great effect.

While a well-designed approach to reducing emissions would include other complementary policies, such as regulations in some sectors and support for low-carbon research and development, carbon pricing ideally should be the centerpiece of the effort.

Unfortunately, the politics of carbon pricing have been highly poisoned in Australia, despite its popularity in a number of countries with conservative governments, including Britain and Germany. Even Australia’s Labor opposition seems to have given up.

Nevertheless, it should be remembered that Australia’s two-year experiment with carbon pricing delivered emissions reductions as the economy grew. It was working as designed. Groups such as the Business Council of Australia that welcomed the abolition of the carbon price back in 2014 are calling for an effective climate policy with a price signal at its heart.

Carbon pricing elsewhere

The results of our study are highly relevant to many governments, especially those in industrializing and developing countries, that are weighing their options. The world’s top economics organizations, including the International Monetary Fund, the World Bank and the Organization for Economic Co-operation and Development, continue to call for expanded use of carbon pricing.

If countries are keen on a low-carbon development model, the evidence suggests that putting an appropriate price on carbon is a very effective way of achieving it.

As corporate interest in carbon removal options grows, Puro.earth, a startup from Finland, is offering a twist on carbon marketplaces. Instead of selling and trading credits related to nature-based solutions, its exchange features industrial businesses that store carbon dioxide in products such as biochar, timber construction and other building materials.

Puro.earth co-founder Antti Vihavainen said that unlike other carbon markets that focus on one primary method of storing carbon, Puro.earth “[represents] a broad scope of carbon capture and storage methodologies.” The model is entirely voluntary versus “marketplaces such as the EU emissions trading system (ETS) [that are] compliance-based,” allowing companies to take initiative on their own terms when it comes to achieving carbon removal goals. 

The fight against greenhouse emissions is still a challenge facing our world today. Scientists across the world agree that carbon removal coupled with strategies such as emissions reduction and carbon offsetting are necessary to keep global warming within manageable limits.  

Puro.earth supports this initiative by gathering suppliers that remove carbon from the atmosphere using various methods. The removed carbon is measured and verified by an independent third party; the removed carbon is then turned into CO2 Removal Certifications, also known as CORCs. These CORCs are bought by companies seeking to offset the impact of their own operations. Buyers can cancel CORCs so they cannot be resold, and reference them in sustainability reporting or when creating carbon-neutral products. 

Vihavainen pitched the idea of Puro.earth to Fortum, a leading clean energy company in the Nordics; following the pitch, Fortum set up a team led by Puro.earth’s other co-founder, Marianne Tikkanen. Following dozens of iterations, the business model of matching carbon removal properties with environmentally conscious companies was created and named Puro.earth. 

“We initially worked with 22 companies that helped us develop and test our carbon removal marketplace, thus helping us create our minimum viable product,” Vihavainen commented. “Now that we are entering the scale-up phase, we have a funnel of over 100 supplier candidates.”

Examples of those supplier candidates include Ekovilla, a company that provides carbon-neutral Finnish insulation, and the Finnish Log House Industry. Prices are show in euros on the Puro.earth web site. As an example, it costs €2,060 ($2,452 based on current exchange rates) to purchase CORCs to offset 100 tonnes of carbon dioxide.

The growth of Puro.earth has been attributed to a growing environmental consciousness among companies, many of which are interested in reaching a net-zero carbon output. 

One early customer of the marketplace is Swiss Re, one of the world’s leading providers of insurance, reinsurance and other forms of insurance based risk transfer. Swiss Re has committed its operations to be carbon-zero by 2030 and its business to be carbon zero by 2050. 

“As an insurer, we are very concerned about risks and one of the major risks is the climate risk, which is slowly becoming bigger and bigger,” said Vincent Eckert, head of internal environmental management. “One of the issues is that if the climate risk is too big, it will make normal risks that we insure like drought or flooding too big or too often occurring, thus uninsurable.”

To meet sustainability goals of net-zero emissions, Swiss Re has implemented a number of solutions, including supporting carbon removal projects such as Puro.earth. 

“When we learned about Puro.earth … we immediately thought, ‘Well, this is interesting.’ People are starting to develop marketplaces for these products, a commodity that doesn’t exist that’s supposed to be common,” Eckert said. “We wanted to learn more about it. We immediately contacted them and decided that we wanted to participate in their first auction ever.”

Since that first auction, Eckert said Swiss Re has decided to continue purchasing CORCs with Puro.earth. “We have been in contact with Puro. We’re a part of their network … we will continue to work on our carbon removal purchasing strategy that has several elements. Puro is definitely in the picture, and this is one of the options that we have.”

In the face of more businesses participating, Puro.earth continues to innovate, including new forms of carbon removal as a part of its program. “These carbon removal methods will be added in the coming months and will include, for example, bioenergy with carbon capture and storage and other methods based on mineralization,” Vihavainen said. 

Looking towards the future, Puro.earth has several plans to expand the presence of its business and reach more companies interested in carbon removal. 

Vihavainen is confident in Puro.earth’s ability to expand by improving the marketplace to attract interested businesses. “Looking ahead, we work on a ‘if we build it they will come’ approach, and expect more suppliers to join us as customer demand to decarbonize businesses increases, and carbon net negative businesses attract greater government support and investment.”

With Congress gearing up for another trillion-dollar round of economic relief that will set the strategic direction of the U.S. economy for years to come, it’s time for corporate America to stand up and be clear about the economy it wants and needs to prosper. 

That means getting serious about advocating for a recovery plan that helps us build back better from the current pandemic, while tackling another global systemic threat: climate change. 

The climate crisis is worsening, and it is playing out in real time as we grapple with COVID-19. Despite the temporary decline in greenhouse gas emissions, carbon dioxide levels in the atmosphere hit an all-time high in May. Triple-digit temperatures in June in the Arctic Circle led to another warmest month on record, tying with June 2019. The dry spring and hot summer has unleashed more raging fires in California this month, while residents across the American West are bracing for the worst megadrought in 1,200 years. 

Climate change is a systemic risk, and its impacts are felt across corporate America. In a survey last year, 215 of the world’s largest publicly listed companies reported nearly $1 trillion at risk from climate impacts — most of it in the next five years. The severity of these intensifying risks requires a response of proportional ambition. 

You may have heard of science-based targets. Today, we are calling for science-based climate advocacy. This moment calls for bold leadership. Companies must take action and ensure that all of their actions, especially their direct and indirect advocacy, are in lockstep with the latest climate science. 

So what does science-based climate advocacy mean? 

Companies must take action and ensure that all of their actions, especially their direct and indirect advocacy, are in lockstep with the latest climate science.

A new blueprint from Ceres, the Blueprint for Responsible Policy Engagement on Climate Change, lays out a science-based action agenda for companies in the U.S. that comes down to two basic steps. 

First, advocate for science-based climate policy. Business voices are influential in policy debates, and companies must use their voices to advocate for targets and policies that will limit global temperature rise to no more than 1.5 degrees Celsius and ensure we reach net-zero emissions by 2050 or sooner. 

Right now is a prime opportunity. We can build back better. Other countries are already opting for climate-smart recoveries, seeing their pandemic aid as a chance to gain competitive advantage and economic stability. Through our actions to tackle one crisis, we can avert another. We can invest in a resilient and inclusive economy that builds jobs, infrastructure, growth and stability for the long term.

More companies are speaking up. In May, executives from 330 companies, including Microsoft, Mars Inc. and Nike, descended virtually on Capitol Hill, dialing into video calls with congressional leaders to ask for climate-smart policies as a part of the economic recovery. Globally, more than 1,200 companies have called on governments to ensure recovery efforts address COVID-19 and climate together. 

Second, ensure that indirect advocacy and influence is also aligned with science. This includes ensuring trade associations a company may belong to are not promoting policies that are not based on science. While large trade associations represent companies on a number of issues, many have had a poor record in advocating for science-based climate policy. 

Companies must keep in mind the risk they face from a fractured policy environment that exacerbates risk. They should ask themselves: “Is my association engaging in my best interest?” Often, the answer is “no.”

Mars, Nestle and Unilever helped put a stake in the Grocery Manufacturers Association, the food industry’s largest lobbying group, after they left over differences on climate change to form the new Sustainable Food Policy Alliance. Meanwhile, UPS disclosed that it doesn’t support the U.S. Chamber of Commerce’s opposition to the regulation of greenhouse gas emissions and joined one of the Chamber’s committees to assert its position on climate.

Turning taxpayer dollars into stranded fossil fuel assets is no way to fuel a real economic recovery.

Why do more companies need to step up on science-based climate advocacy?

New research shows that the oil and gas sector’s lobbying has dominated climate-related policy battles during the pandemic, notching twice as many wins as climate advocates. 

Even if many fossil fuel companies struggled financially for years before the pandemic, they are getting billions in federal aid. Supported by strong lobbying, oil companies reaped a stealth bailout of more than $1.9 billion inserted into the CARES Act. Turning taxpayer dollars into stranded fossil fuel assets is no way to fuel a real economic recovery. Taxpayer money should be invested in the future economy, one that is powered by renewable energy — one that creates more jobs, one that makes our economies more resilient. 

Companies are recognizing the strategic imperative to take action on the climate crisis. In the face of COVID-19, corporations’ commitment to climate action has not waivered — it has increased. Their actions are reducing emissions, reducing costs and driving job creation, innovation and competitiveness. 

However, to enable change at the pace and scale required to avoid the worst impacts of climate change, the whole economy must shift, and the economic stimulus, which represents some of the largest government spending in a generation, must support that shift. If it doesn’t, we risk further damaging the economy and public health rather than improving them — and making the climate crisis even worse. 

It’s time for the rest of corporate America to be bold about its ambitions and demonstrate the science-based climate leadership that this time demands.