Nature provides a number of natural resources that the fashion industry relies upon, in particular natural fibres and water. Fashion and sustainability can be interwoven, especially by measuring wider environmental impacts through an Environmental Profit and Loss account (EP&L).
Currently, many natural resources are overexploited because their full costs are not accounted for. A cotton grower may not consider how the withdrawal of water affects industries and ecosystems downstream (irrigation for cotton is contributing to the shrinking of the Aral Sea, affecting not only fisheries but also human health). In order to be regarded as sustainable, fashion and textile companies need to consider how to tackle these indirect impacts.
Environmental Profit & Loss Accounts – What are they?
One of the emerging ways which can help companies account for environmental impact is EP&L. The method can help companies gain visibility about their own reliance on environmental services and understand the financial implications of environmentally damaging practices as well as consider the ‘true’ value of goods and services received from nature.
EP&L assigns monetary values to environmental impacts. For example, the impact of GHGs can be estimated by using a social cost of carbon which takes into account damage from climate change caused by each tonne of GHGs. PUMA used this system to estimate the impact of water use, GHG emissions, land use, air pollution and waste throughout its operations, including supply chain.
This approach can help the textile industry in a number of ways. It can identify the main impact areas and help with managing risks and making good business decisions. For example, future legislation may be stricter and inputs more costly (carbon taxes will increase the cost of manufacturing and shipping), with supply chains being disrupted due to overexploitation of natural resources (drought can jeopardize procurement of cotton from an area where water resources are overexploited). Understanding that raw materials (cotton, leather, rubber) are responsible for the biggest impact can stimulate the use of more sustainable materials (e.g. recycled polyester, recycled cotton), more efficient production methods that use less material and produce less waste.
Environmental P&Ls support better business
The EP&L process can reduce cost, spur innovation, encourage development of more environmentally sustainable products and foster greater collaboration with suppliers along the whole supply chain. As a result businesses can strengthen their competitive advantage while simultaneously safeguarding the environment. Despite this positive contribution, one has to be aware of limitations and a certain amount of caution is required when interpreting results.
At the moment only the ‘big guys’ can afford this exercise; however, over time we will witness the same story as with carbon reporting, which became more accessible and therefore more widespread in recent years. EP&L may even form part of regular company reporting and monetizing the environmental impact, and will encourage CEOs to integrate environmental issues into strategic decision making. After all, to achieve the long-term business viability, the sustainability of ecosystems must be ensured.
About Best Foot Forward:
Best Foot Forward (BFF) has helped several hundred organisations to manage and reduce their environmental impact. BFF helps businesses and government to cut greenhouse gas emissions and save money and to understand their opportunities and risks in a world of limited resources. Having calculated thousands of footprints for everything from carrots to county councils, from wine bottles to Wimbledon, BFF is seen as experts and thought leaders in the sustainability and footprinting sector.
About Gregor Pecnik, Sustainability Consultant:
As an environmental economist Gregor looks at environmental issues from the economic viewpoint and is focused on providing a business case for sustainability. In addition to footprinting knowledge, Gregor has a good knowledge of economic appraisal, (environmental) cost benefit analysis and environmental valuation methods. He has completed training for providing CEMARS (Certified Emissions Measurement and Reduction Scheme) certification services to clients.