Twenty years ago the Business Roundtable awakened to the benefits of stakeholder capitalism, I was fortunate enough to join the management team of Timberland, a purpose-driven company. The company’s mission included “Commerce and Justice” to enable innovative sustainability actions and outcomes. As a result, the company has been recognized by various organizations. business ethics Magazine to the White House.
Still, despite awareness, I have no idea how much the company’s carbon footprint increased during my tenure as Chief Operating Officer. (purchased power) impact decreased by double digits each year, while 96% of the company’s carbon emissions were in ‘Scope 3’ (upstream and downstream emissions). These emissions are from a rancher in Brazil, a sole manufacturer in the Dominican Republic and a finished goods factory in China. Despite the company’s intention to remediate its climate impact, Timberland lacked the tools and know-how to comprehensively measure its environmental impact.
It’s been over ten years since I graduated from Timberland. A lot has changed. The company was acquired by his VF Corp. Climate change is no longer theoretical. It has contributed to burning houses and flooding subway stations. Consumers and investors are starting to vote on their values. Also, better tools exist to estimate and measure emissions.
As a result, responsible companies are stepping up their efforts to combat climate change. For example, The Fashion Pact, an industry-led initiative launched ahead of her G7 summit in 2019, aims to protect our oceans, advance biodiversity and achieve carbon neutrality by 2050. has made a commitment to 70 companies. At the same time, dozens of fashion companies (including VF Corp) have committed to achieving science-based targets with aggressive Scope 1, 2 and 3 targets by 2030 and 2050. did.
All this sounds promising.
Unfortunately, it looks better on paper than in reality. why? First of all, pledges should not be confused with progress. Consider past unfulfilled corporate commitments to stop deforestation, reduce plastic use and reduce the company’s carbon footprint. This is because the system’s incentives continue to prioritize short-term gain over long-term planetary health. After all, companies’ investment horizons are expanding while investor horizons are shrinking. Moreover, most externalities, including carbon emissions, remain unpriced. As a result, companies that pay the true cost of carbon, for example, fall victim to the free-riding problem.
Despite the passage of time, the emergence of tools, and the supposed business case for sustainability, even those most committed to remediation and action fall short. My analysis shows that less than half of the fashion pact signatories include scope 3 emissions in their target setting. At the same time, many large fashion companies that have signed up to Science Based Targets have already fallen short of their targets and do not have legitimate plans to deliver on their promises.
After 25 years of trying, it’s time to admit that our voluntary corporate actions to address social and environmental challenges are not working. Volume has increased by 50%. At the same time, social justice in factories abroad remains elusive. A different approach is required.
One solution is to change the system rules. That’s what the proposed fashion sustainability and social accountability legislation does. In short, the Fashion Act was put forward in New York state this week by a law on the Fashion Coalition. This coalition includes the New Standards Institute, Stella McCartney, NRDC, Uprose, and the South Asia Foundation for Education Scholarships and Training. The law requires both finished goods and raw material suppliers to adhere to basic transparency, disclosure of risk mitigation strategies, and targets set in conjunction with science-based target initiatives. All brands with more than $100 million in revenue transacted in New York state are subject to this law. This means practically every major fashion brand, from Louis Vuitton to his H&M.
Passage and compliance with fashion laws ensures that the footwear, apparel, and accessories that New York consumers buy are made with respect for global boundaries. Since we are aggressively reducing volumes, it also serves as a signal to investors that carbon will be less susceptible to rising costs when it is finally priced. For workers, the law represents a step towards leveling the playing field, thereby creating opportunities for domestic industry to grow. Finally, it will spur pre-competitive cooperation among companies and foster innovation to reduce overall carbon emissions.
In most cases, companies reflexively oppose regulation. In this case, brands may worry about the breadth of their complex supply chain and their inability to directly manage distant partners (Scope 3 emissions sources). These concerns are reminiscent of concerns expressed by automakers when forced to comply with increased fuel efficiency standards. Still, looking back, I think most car companies wish they had acted sooner to develop electric vehicles. Likewise, I hope my colleagues in the fashion industry will think twice about the opportunities presented to them.
Fashion law acts as an invitation to innovative companies to bring down the true cost of production. It also serves as a mandate for fast fashion companies to redress social and environmental exploitation in order to sell in New York State. Unlike the rhetoric of the Business Roundtable and the well-meaning voluntary actions of companies such as Stella McCartney, Eileen Fisher, Timberland and Patagonia, this law will put the entire fashion industry under its rightful control. Fashion companies have a history of cultural leadership and engagement. This is a significant opportunity to extend that legacy.
Kenneth P. Pucker is a Senior Lecturer at Tufts Fletcher School and Director of Advisory at Berkshire Partners. Ken worked for Timberland for 15 years, from 2000 until 2007 he served as Chief Operating Officer.
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