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Study: Resale can help fashion brands cut carbon emissions by 15-16% in 2040
A study highlighted that resale initiatives have the potential to help fashion brands lower annual carbon emissions for fashion brands by 15-16% in 2040.
The ground breaking study – entitled “Where Are Circular Models Effective Sustainability Strategies
for Fashion Brands?” – was conducted by Trove, the leader in branded resale, and Worldly, the most comprehensive impact intelligence platform for the apparel industry.
The study reveals how circular models are essential for brands working to reduce their emissions when combined with upstream supply chain interventions.
The study shows how circular strategies can help fashion brands grow while reducing carbon emissions. It offers practical advice to brand leaders on navigating the challenges of growth and environmental progress so they can succeed while making the fashion industry more sustainable.
The study came up with three key insights; Insight 1: Resale is a meaningful decarbonization strategy for Premium Apparel and Outdoor Brands, Insight 2: Brands maximize emissions benefits by increasing the value of their products in the resale market, Insight 3: Brands can maximize resale GHG accounting by maximizing operational control and used product revenue.
The study said that all brands can decarbonize their products through supply chain interventions such as updating designs to eliminate production waste, sourcing more recycled materials, and working with their partners to install lower energy machinery (e.g. new boilers and energy-efficient motors) throughout their manufacturing facilities. Except for Fast Fashion, all brand archetypes can further decarbonize their businesses through circular models such as resale, with the largest reductions available to Premium Apparel and Outdoor brands. This shift in business models allows them to grow revenues while effectively reducing emissions.
A scenario analysis was conducted to determine which model parameters impact brand decarbonization efforts most. The most sensitive parameters maximize the value of products beyond the first sale, as shown in higher resale prices and sell-through. The importance of demand, durability, timeless style, and low rejection rates (percent of items not eligible for resale) underscores the significance of product durability, design, and craftsmanship.
Resale program parameters, such as resale packaging, shipping, and trade-in incentives (e.g. gift cards), have less impact on carbon emissions. Focusing on the most sensitive parameters can have sizable benefits for brands. For example, moderate improvements in the resale price and sell-through for Outdoor brands can reduce emissions by 5.5% and decrease overall emissions from 2023 to 2040.
In addition to growing their resale channel, brands that optimize key parameters such as resale price and sellthrough will see the greatest emissions benefit. The ability to adjust less sensitive parameters, such as gift card trade-in values, can also decarbonize the overall business. Products with strong resale market demand (i.e. maintain their value through high resale prices and sell-through rates) are the best candidates for brand resale decarbonization. While specific parameters like packaging, transportation, and incentives had a minor impact on carbon emissions in the resale model, this will not always be the case for other circular models. For example, the emissions from transportation will matter to circular models such as rental and subscription services that rely more on extensive transportation.
Used products have lower carbon footprints than new products. Brands that receive the revenue from used product sales (operational control) can count the carbon associated with these sales in their Scope 3 corporate carbon footprint. Brands that receive a commission on resale items cannot include these products in their Scope 3 emissions.
Brands that adeptly capture revenue from used products can replace revenue from new product sales as part of their growth objectives to efficiently move from linear to circular models as they decouple revenue growth from production growth. While displacement isn’t included in corporate carbon footprints today, brands can calculate and communicate the displacement of resold products in marketing materials. Over time, accounting standards may also evolve to incentivize brand-led peer-to-peer models.
Circular models such as resale are necessary investments for brands to reduce carbon emissions as they grow. Understanding where and how circular models effectively reduce carbon is an essential first step for brands.
This study illuminated areas where circular strategies can combine with supply chain interventions to accelerate brand and industry decarbonization.
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