STICA PROGRESS REPORT 2022

Stakeholder Voices

STICA PROGRESS REPORT 2022

Stakeholder Voices

Alice Bah Kuhnke, Vice-President, Greens/EFA; Co-Chair, The European Parliament’s Intergroup on the Green New Deal

1. What responsibility does the EU have in ensuring the apparel and textiles industry reduces its emissions in line with what science says is required (1,5°C)?

Climate justice must be at the heart of global transition to climate neutrality, this means that the EU with high historical emissions must take a greater responsibility. Textiles are on average the fifth biggest contributor to climate change from an EU consumption perspective. At the same time the EU is one of the biggest global markets for textiles and home to many of the sector’s most powerful companies. Not only does the EU therefore have a strong responsibility to act but also great possibility to seize the opportunity to future-proof the industry by making it truly sustainable.

2. What do politicians and policy makers need to do to make it realistically possible for companies and the industry to reduce their emissions at the pace and scale required?

We need to make sure that there is a paradigm shift for business models. Sustainable circular business models need to completely replace linear ones, and this is no small task. However, industry representatives have made it clear to me that many actors in the industry want to change and want to be part of the solution. It is our role as policy makers to show leadership by implementing policy that rewards the frontrunners and incentivizes and pushes all actors to follow. This will require binding harmonized legislation for all EU companies. Voluntary initiatives put the concept of a level playing field at risk and delay progress.

Sigrid Barnekow, Executive Chairman, Swedish Fashion Association

1. What is your organisation currently doing to enable apparel and textile companies, as well as the entire industry, to reduce greenhouse gas emissions in line with what is required to limit warming to a 1.5°C temperature increase?

Overall, as the industry organization representing Swedish fashion brands, we strive to promote a long-term positive development of the Swedish fashion industry and highlight collective and individual efforts in industry to transform. This is primarily about showcasing good examples by our members, engaging stakeholders and media into specific agenda discussions and supporting our knowledge partners’ work such as STICA.

2. What significant challenges or opportunities do you foresee for companies and the industry as they aim to reduce their emissions during the coming years?

A more user/customer centric focus as well as new policy and regulatory making will both have a huge effect on current existing businesses. The opportunities lie in realizing this early enough and adapting and designing its operations accordingly. This will fundamentally influence companies’ business models, operations, and customer promise in future.

3. What more can or will your organisation do to accelerate progress in climate action in the apparel and textiles industry? What will be your focus during the coming year?

Climate action can be done in many ways, where measuring and following up impact is an important fundamental step in gaining knowledge and the transparency needed to advance. For us as an industry organization it is also about looking ahead, understanding how future business models and value propositions to users/customers proactively are designed to address impact, as well as other emerging developments in the industry or in other industries that will likely change the game. These might even not necessarily be sustainability driven per se but provide tools that can enable it.

4. What do politicians and policy makers – and even other stakeholders, like financial institutions and investors – need to do to make it realistically possible for companies and the industry to reduce their emissions at the pace and scale required?

To scale up we need to unlock the opportunities that lie in the User phase of the value chain. It is about capturing the value of existing products by circulating and activating, thereby commercializing new value for products beyond first purchase. Policy-wise there is a need for a new regulatory framework that is designed deliberately to stimulate trade of existing products and sharing and upcycling services. In terms of investments, for both private as well as governmental, the system of today should be reviewed regarding how we measure results, how we define purchase, how we nudge certain types of purchases, etc. Today’s funding focusses on innovation, and technology development could ideally be expanded with generous test and learn terms in company context and with use of old business models, like circularity of existing products.

David Ekelund, Board Chair, Scandinavian Outdoor Group

1. What is your organisation currently doing to enable outdoor companies, as well as the entire industry, to reduce greenhouse gas emissions in line with what is required to limit warming to a 1.5°C temperature increase?

Not nearly enough. Our membership is diverse in terms of how far companies have progressed, as well as in which product groups they work. We’re avoiding duplicating good projects already happening but try to help our members by steering them towards suitable paths for commitment and practical work. We also share knowledge and best practices in the SOG sustainability network.

2. What significant challenges or opportunities do you foresee for companies and the industry as they aim to reduce their emissions during the coming years?

The power of business as usual, and the lack of will to do the right thing.
The Apparel Impact Initiative recently released a report that basically stated that we can cut emissions by more than 50% with existing technology and solutions. What’s holding us back? Yes, there will be inconvenience and costs, but what’s that in relation to the picture that the latest IPCC report paints? Still, when there are supply chain delays many brands even use air freight. So, at one end you probably have a sustainablity team working hard to try and decrease 7% per year to reach the halve by 2030, while somewhere else in the organisation you decide to fly products to catch the season and increase the transport emissions by at least 20 times. We must start by avoiding the avoidable emissions. We will need to get owners, boards and management behind the idea that this transformation will not be for free but is necessary to do. And to solve some things we will definitely need to come together as an industry and as societies. Energy is the core of the climate crisis, and that’s true for our industry as well. Rooftop solar is a great opportunity and there’s financing available to make it an immediate cost saving for the factory, but it will only cover a part of the need. There will have to be green electricity available from the grid as well.

3. What more can or will your organisation do to accelerate progress in climate action in the apparel and textiles industry? What will be your focus during the coming year?

Get more practical. This is the time to move from commitment to action. Focusing on projects for clean energy in production.

Put a proper price on carbon. Starting at €100/ton, going up to €200/ton by 2030.

Lars Fogh Mortensen, Circular Economy, Consumption and Production Expert, European Environmental Agency

1. What significant challenges or opportunities do you foresee for companies and the industry as they aim to reduce their emissions during the coming year?

In the European Environment Agency, we have found that textiles have the fifth largest impacts on climate change from an EU consumption perspective. To reduce these, companies in Europe have an important role to play in reducing emissions, not only from activities in Europe, but equally so for reducing emissions through the value chain of their products and services. A first step could be to get an overview of emissions through the life cycle of products and services. Another one is to take steps to ensure reductions, through efficiency, better design etc. for all elements of the value chain.

2. Based on your analysis, what more can and should our industry do to reduce its emissions?

Our analyses show that by far the biggest share of the emissions related to textile products sold in Europe happens outside Europe. In fact, 73% of greenhouse gas emissions related to textiles consumption occur outside the EU, while only 27% happen inside the EU. This shows that in addition to the activities many companies are already taking to reduce emissions from activities within the EU, emissions outside the EU also have to be tackled. This is best done in dialogue with and through requirements to all elements of the value chain for each product or service.

3. What do politicians and policy makers – and even other stakeholders, like financial institutions and investors – need to do to make it realistically possible for companies and the industry to reduce their emissions at the pace and scale required?

From a policy perspective, it is really important to look at the brand new EU strategy for sustainable and circular textiles. This is where the European Commission points to planned changes in legislation to better cover impacts from textiles as well as how the industry can be best supported in reducing environment and climate impacts. Reducing impacts cannot be done by companies alone, but needs to be done with the support of policy makers and financial institutions, providing the necessary regulatory and financial framework and support, as well as the consumers and public authorities being willing to purchase those products and services causing the least emissions over their life cycle.

Source: Textiles and the environment: the role of design in Europe’s circular economy – European Environment Agency (europa.eu).

David Gunnarsson, Head of Unit, Bra Miljöval Chemistry, Swedish Society for Nature Conservation

The Swedish Society for Nature Conservation (SSNC) works with several methods for influencing textile companies to lower their impact on the environment and offer better products/services. With consumer campaigns such as Miljövänliga Veckan, we encourage consumers to buy vintage clothing instead of new clothes, to care and repair and to use sharing concepts such as rental services (e.g. klädbibliotek). SSNC is also engaged in public procurement, where we act to get a more stringent legislation in place, as well as influence local authorities and regions to set ambitious environmental criteria when purchasing goods and services. An increased demand from both private and public buyers will give textile companies incentives to develop products and concepts/services with less negative environmental impact. SSNC also has its own ecolabel, Bra Miljöval. Ecolabelling provides companies selling textiles that fulfill strict environmental criteria with a trustworthy instrument, easily recognized by consumers, for communicating their environmental work. In the context of climate change, extending the lifespan of products is particularly important, and Bra Miljöval include vintage clothing as well as re-designed textiles.
In more general terms, SSNC is satisified that the Swedish Cross-Party Committee on Environmental Objectives (Miljömålsberedningen) has now reached an agreement on a national goal for reducing consumption-based emissions. SSNC has worked a long time get such a goal in place.

2. What significant challenges or opportunities do you foresee for companies and the industry as they aim to reduce their emissions during the coming years?

Although the apparel industry has been severely affected by the pandemic, we believe that there is now a window of opportunity for the industry to make a “green” restart, which reinforces the transition from linear to more circular business models. Such a structural transformation is ideally accompanied by both publicly funded programs and investments by the industry itself, in order to e.g. ensure that the competences of the workforce match new demands.

3. What more can or will your organisation do to accelerate progress in climate action in the apparel and textiles industry? What will be your focus during the coming year?

We are planning to revise our ecolabel criteria for textiles, in order to focus more on circular and sustainable business models.

We have not analyzed what measures are needed to reduce emissions from the textile industry at a necessary scale. However, there are a number of measures that can be taken to facilitate the transition (see below). We would also like to emphasize that this transition should not only take climate into consideration but also other crucial environmental aspects, such as biodiversity and chemical pollution. In this context, reducing the number of newly produced textiles, and in turn the use of raw materials, are of high relevance.
A number of policy instruments can be used to initiate and support the transition to more sustainable production and business models. Such instrument may, for example, include reduced VAT on more sustainable products and services, various bonus-malus systems, quota obligations (e.g. requiring a certain proportion of recycled material), taxation of virgin raw materials, further restrictions of hazardous chemicals to facilitate recycling, etc. It is important that such measures are evaluated some years after they have been introduced in order to conclude whether they have had the desired effects, and in case they haven’t, to adjust accordingly.
It may also be necessary for policy makers to further analyze the current legislation and if relevant make necessary adaptations for new business models in the circular economy, for example to ensure a high level of consumer protection. Likewise, financial institutions may need to revise and update their policies and routines for e.g. business loans. It is crucial that legislation and policies within the finance sector do not hinder the transition to more sustainable business models.

Kajsa Guterstam, Project Manager, The Swedish Institute

The Swedish Institute is a public agency that builds interest and trust in Sweden around the world. We bring to life the narrative about contemporary Sweden and its numerous achievements in the fields of innovation, sustainability and creativity. If the world around us has a high level of trust in Sweden, it improves conditions for trade, investment, tourism and cultural exchange. It also makes it easier to attract international talent and contribute to global sustainable development and in this way contribute to the global climate goals.

2. What significant challenges or opportunities do you foresee for companies and the industry as they aim to reduce their emissions during the coming years?

We act in dialogue with the opinion and decision makers and talents of today and tomorrow. This dialogue is an integral aspect of all our work and takes the form of programmes, projects and digital communication. Continuing the collaboration and co-creation across borders is crucial today and will be so in the near future as well. The work that STICA does to create an arena for actors to work together is incredibly important and we see that the very way of working together, the willingness to collaborate between Swedish actors and the insight into the strength of it is unique if you look at the world.

3. What more can or will your organisation do to accelerate progress in climate action in the apparel and textiles industry? What will be your focus during the coming year?

Continuing the work mentioned above, as well as supporting projects that encourage democratic development in our partner countries. Establishing relations between Swedish partners and the decision makers of tomorrow around the world.

Elin Larsson, Program director, Re:source

RE:Source is a strategic innovation program with the mission to create material use within the planetary boundaries. Climate and use of resources are closely connected and go hand in hand most of the time. We support and finance innovations and projects that contribute to a more sustainable world.

2. What significant challenges or opportunities do you foresee for companies and the industry as they aim to reduce their emissions during the coming years?

More sustainable use of resources and less emissions often go hand in hand with financial benefits, at least in the long run. Companies addressing and working with these issues will be better prepared to meet their competition when the upcoming legislations and frameworks, both on EU and national levels, are implemented. Still, a lot more needs to be done, for instance most of the circular solutions out there are on a small scale and very few have managed to engage the whole value chain. CEOs and decision makers need more knowledge to be able to make the bold decisions needed to scale up new business models, production processes or organisational structures.

3. What more can or will your organisation do to accelerate progress in climate action in the apparel and textiles industry? What will be your focus during the coming year?

We will keep funding innovations and solutions that contribute to a more sustainable future, where we live and do business within the planetary boundaries. We will have an extra focus on sharing knowledge and learnings from the projects we fund, to create more awareness and to inspire many more to join the transition on a large scale.

Business opportunities and competitiveness are key drivers for creating the change. We can and should make demands on private companies and the public sector to drive the transition, but we should also acknowledge that policy instruments, regulations and financial incentives will be needed whenever market forces do not suffice. A stable political situation combined with predictable rules and legislation are what makes organisations willing to invest in innovation and transformation. Only then can we reach a critical mass that takes us beyond the tipping point needed to bring about a system change.

Johanna Myrman Kristoffersen, Climate Business Director/Deputy Director for Food, Climate and Energy Department, WWF Sweden

This is just an example of what we do: In WWF’s global Climate Business Network, we engage with companies across diverse sectors and at different stages in their climate action journey to rapidly advance their climate ambition, cut emissions from their own operations and throughout their supply chain, and add their voice to drive strong climate policy. The goal of the Climate Business Network is to broaden corporate participation in the effort to tackle climate change: it aims to encourage and support companies at every stage of their climate change mitigation journey, demonstrating that climate action is vital, achievable, practical and compatible with corporate growth. In this network we currently have four fashion retailers.
In WWF Sweden we also have a bilateral multiyear partnership with H&M group and IKEA where we support for example with developing their climate strategy according to the latest science and guidance (e.g. SBTi Net-Zero). We are also supporting H&M with several supplier engagement projects, and to a lesser extent working on policy engagement activities.

2. What significant challenges or opportunities do you foresee for companies and the industry as they aim to reduce their emissions during the coming years?

To achieve the necessary emissions reduction throughout the value chain in line with what science expects to limit the average global temperature increase to 1.5°C (or, if not possible, well below 2°C). This will require, amongst other things, collaboration, innovation, new business models, significant investments, and favourable policy environment.

World leaders must listen to these warnings from the IPCC and strengthen their support to address climate impacts and build resilience and while fulfilling the Global Goal on Adaptation objectives as a matter of urgency.
Two elements of implementation will be especially important. Firstly, channelling significantly scaled-up public and private finance for implementation of NDCs and National Adaptation Plans (NAPs), including the conditional elements of NDCs; and secondly, developing and implementing strategies for sectoral transformation towards achieving decarbonization and building climate resilience through global, regional and local initiatives.

Susanne Nejderås, Textile Strategist, Science Park Borås and Platform Manager, Textile & Fashion 2030

Textile & Fashion 2030 is a neutral arena and dynamic innovation environment that unites actors for a sustainable textile and fashion industry. We challenge, educate and offer tools in the transition. Together with partners such as STICA, the work is consolidated in a strong community and thus becomes effective support for the companies.

2. What significant challenges or opportunities do you foresee for companies and the industry as they aim to reduce their emissions during the coming years?

Companies in the textile and fashion industry are faced with great challenges, as there are many small and medium-sized enterprises in an extremely price and business cycle sensitive industry. Many companies have a great need for support – especially after the pandemic, which has taken up a lot of resources and left many companies struggling to survive. Upcoming laws and policies require a lot of effort and it is an industry transformation that must be made.

3. What more can or will your organisation do to accelerate progress in climate action in the apparel and textiles industry? What will be your focus during the coming year?

We will continue our work and further develop the national platform as a unifying force for the Swedish textile and fashion industry, where we develop the networks and consolidate the Swedish actors in collaboration and strong community to achieve this vision. We will continue supporting companies in the transition from today’s linear model to a circular one to develop sustainable products and services that are right from the start designed for circular use. In cooperation with other authorities, actors and initiatives, we will assist with knowledge and concrete actions to reduce consumption-based emissions.

In order to enable companies to to make the necessary transition, create ideal conditions through investments in initiatives, projects and programs. Consolidate the work through established actors for an efficient process. This is crucial for Sweden to continue to be a pioneer in sustainable textiles and sustainable fashion.

Magnus Nikkarinen, Senior Policy Director – Sustainability, Swedish Trade Federation

The challenge to reduce greenhouse gas emissions in every part of the supply chain is one of the most important priorities for our member companies. Swedish Trade Federation is supporting their work both through general initiatives, which benefit the whole retail sector, as well as initiatives targeting the apparel and textile sector more specifically. This includes a commitment to reduce transport, logistics and facility emissions in the supply chain. In order to succeed, close cooperation with other stakeholders in the transport and real estate sectors is crucial as they are providing textile companies with their services. For the retail sector, emissions from production of virgin material are a major contributor. Swedish Trade Federation is therefore proactively working towards further closing the loop and ensure that more textiles are recycled and made available again as new production material.

2. What significant challenges or opportunities do you foresee for companies and the industry as they aim to reduce their emissions during the coming years?

The major challenge is to create business models in the fashion and textile industry that take both social, environmental and economic perspectives into account. In many cases, you can contribute to two of them, but if a business model is to live over time, all three must be included. The pandemic has increased the challenge, as many companies in this sector have been hit hard by a closed society. It is gratifying, however, that sustainability is increasingly being promoted by both consumers and legislators. It is a great opportunity for our Swedish companies to take advantage of.

3. What more can or will your organisation do to accelerate progress in climate action in the apparel and textiles industry? What will be your focus during the coming year?

Many of the larger Swedish companies have done a lot in recent years to reduce the climate impact in their own operations. As a retail organisation, we will support smaller companies to get started with their climate work, as well as help all types of companies to reduce the impact in other parts of the supply chain. This mainly applies to transport and production. One focus this year, in order to accelerate the reduction in the production stage, will be to promote a climate tool which our trading companies’ suppliers will be able to use to start or further develop their internal climate reduction efforts.

An important measure for legislators to take is to ensure that competition is not distorted for Swedish companies striving for more sustainable business models. This poses a risk if the private import of clothing and textiles is not more clearly regulated. Individual national and political initiatives seldom work well – the focus should instead be on developing broad EU legislation that encourages and steers towards reduced emissions without drastically reducing trade. But trade in textiles and apparel needs to take place in a different way, and political instruments that encourage new business models and access to sustainable raw material are welcome. The speed to achieve reduction of greenhouse gases is important, but it is at least as important that legislation is reaching its aim. There are far too many examples of decisions that have had the opposite effect.

Lewis Perkins, President, Apparel Impact Institute

1. How much money is needed to ensure the apparel industry can reduce its greenhouse gas emissions in line with what science is requiring? And what should this money be spent on?

Our recent report with Fashion for Good identified that it will take $1 trillion for the industry to reach net zero by 2050. Our work with WRI pointed to several large solutions that are ready to go and can have an immediate impact. They mostly center around transitioning to clean energy and they include Renewable Energy, Phasing out Coal and Energy Efficiency Improvements. Together, these solutions account for 45% of the total emissions reduction potential and are ready to be scaled today. Other solutions, including Next Generation Materials and Switching to Dry Processing are extremely important and require additional innovation before they are ready to reach scale.

2. What do politicians and policy makers, and even other stakeholders, like financial institutions and investors, need to do to make it possible for companies and the industry to reduce their emissions at the pace and scale required?

Right now, our programs in energy efficiency and renewable energy are being funded by brands, manufacturers, and philanthropy, but less than 1% of facilities are being reached each year, so we need to bring in other forms of capital to accelerate the pace. These are large, capital intensive investments, so the facilities themselves don’t often have enough funds available to make the investment. There is still an important role for brands and philanthropy to help de-risk the projects and potentially fund some of the aggregation and certification activities that would make these projects easier for investors to find and participate in, but investors are going to fund the majority of the work. Additional regulations and incentives can help accelerate that even further.

Michael Sadowski, Research Consultant to World Resources Institute

1. What things should companies and the industry do to reduce their emissions at the pace and scale required by science?

In the Roadmap to Net Zero, WRI and AII presented six key actions that the apparel sector should take to reduce GHG-emissions in line with climate science (i.e. 45% by 2030, net zero by 2050). These include significantly increasing the use of low-carbon materials, shifting away from coal for thermal energy, and moving to 100% renewable energy across the value chain. To give the sector a chance to meet this ambition, companies will need to fully integrate these actions into how they run their businesses, for example incentivizing and supporting manufacturers that invest in energy efficiency and renewable energy.

2. What are the biggest challenges or roadblocks to achieving this?

Over the last number of decades, the apparel industry has evolved to a model in which brands and retailers design and market products, and outsource the manufacturing of them – the latter of which entails most of the GHG-emissions (and other sustainability impacts). This has resulted in a dynamic in which a brand’s impacts occur far from its headquarters, thus reducing visibility and accountability. In setting science-based climate change targets, brands are committing to share accountability with their value chain partners to reduce emissions. This is a major challenge, but also an enormous opportunity to drive collective action.

3. What does the industry need from policy makers, investors and other stakeholders to enable it to reduce its greenhouse gas emissions at the pace and scale required?

While some companies may not want to hear this, policy makers should set clear and consistent regulations that support sector decarbonization. This could include requirements to reduce emissions in line with 1.5°C, as well as supportive policies for efforts such as renewable energy. The transition to net zero will require massive investment – up to $1 trillion according to AII and Fashion for Good – and investments of different flavors will be needed, for example low interest loans for efficient machinery, R&D for new materials, and more. We also need healthy civil society and media to hold apparel companies accountability for their progress.

Lindita Xhaferi-Salihu, Lead, Sectoral Engagement in Climate Action, UN Climate Change

1. What significant challenges or opportunities do you foresee for companies and the industry as they aim to reduce their emissions during the coming years?

Every industry and every company have unique challenges and opportunities when it comes to reducing their emissions and building a net zero future. Main challenges include uncertainty on where to begin and how to build the business case, lack of data, and clear plans for action as well as budgetary issues. A significant challenge is also support from appropriate stakeholders – both internal and external – policy environments, and availability of solutions in some geographies. This transition requires huge leaps in energy efficiency, renewable electricity generation and the creation of cutting-edge technologies. Solutions are on the rise and opportunities exist now for companies to save energy and materials costs, serve new customer needs, enhance their reputations and better attract and retain talent. It is certain that transition must happen urgently and science says that the cost of inaction will significantly outweigh the cost and effort needed to transition to a net zero future.

2. What more can or will your organization do to accelerate progress in climate action in the apparel and textiles industry? What will be your focus during the coming year?

In the Fashion Industry Charter, we have been focusing on setting a higher ambition level for fashion industry and rallying different stakeholders around those goals as much as possible. Our work ahead focuses on turning pledges into near term action plans and enhancing accountability for delivering on commitments through better tracking of progress and impact. For example, signatories are asked to submit plans indicating how will they achieve 50% reduction by 2030, what opportunities and dependencies they have identified in this process and how they plan to address those. We are encouraged that several companies are willing to collectively move ahead in some of the key action areas such as phasing out coal, for example.

It is important to bear in mind that achieving net-zero goals will not happen in isolation. So, we need to inevitably think about systems level and build partnerships to drive change across that system. It is critical that governments introduce the right policy instruments that give sufficient predictability, so that technologies can develop, mature, become commercialized and deployed at scale, and economic actors can move faster towards a low-emission and sustainable future. Finance is another key part in implementing climate action plans, and public finance can provide the right conditions for private financing to reach the scale needed by, for example, reducing investment risk. Bottom line: Synergies across these actors needs to happen and businesses, stakeholders and governments must find opportunities to integrate each other into their processes in this transition. This means radical collaboration, information sharing and cooperation that is far from business as usual.