Exclusive: Nike and H&M are among firms whose environmental scores suggest progress. But how are these calculated?
By Rachel Donald, April 9, 2022
Fashion accounts for 10% of the world’s carbon emissions and is the second-most polluting industry in the world. But in an increasingly climate-conscious society, it is increasingly trying to present itself as sustainable to appeal to customers.
One big target is reducing greenhouse gas emissions and for the past two decades many brands have signed up to a scheme called the Carbon Disclosure Project (CDP), an independent body that awards grades for environmental performance.
However, the Guardian can exclusively reveal how the fashion industry’s impact on the planet is being hidden. Thanks to the way the scores are calculated, household names such as H&M and Nike can claim an overall decrease in annual carbon dioxide emissions – and receive high scores from the CDP – despite their actual emissions increasing.
It’s all about the fine print. These fashion brands do report their gross global emissions, but these are calculated against total revenue. This means that as long as their emissions increase less than their revenue increases each year, the total emissions are scored as a decrease. In Nike’s 2020 climate change report, it describes how “emissions increased 1% year over year, which was offset by 7% year-on-year revenue growth, resulting in over a 5% drop in emissions per revenue in [financial year 2019]”.
Despite the rise in emissions, the CDP scored Nike A-. H&M also self-reported “gross global emissions” increases in 2017 and 2018, but because those emissions increased less than revenue did, it reported an overall decrease and was also awarded an A- each year.
Linking emissions and revenue is only one of the tools provided by the Greenhouse Gas Protocol, which sets the scheme for emissions reporting. How emissions are broken down, into Scope 1, 2 and 3, is also critical to understanding how brands can appear to decrease their total emissions.
Scope 1 emissions are those that stem directly from the company burning fossil fuels. Scope 2 emissions are those which come from energy bought from utility providers. Scope 3 emissions are all the other indirect emissions that occur along the value chain. For the CDP report, companies provide “gross global combined Scope 1 and 2 emissions”, and self-report whether these have increased or decreased against revenue increase.
Nike’s Scope 1 emissions – the metric tonnes of CO2 produced by the company’s burning of fossil fuels – have increased every year since 2016. It includes retail, distribution and offices, among other things. The sportswear manufacturer self-reported emitting 17,975 metric tonnes of CO2 in 2015, jumping to 47,398 in 2021 – a 163% increase. H&M’s have increased from 10,723 in 2015 to 11,973 in 2021, which is down from a high of 13,380 in 2020.
Critically, many companies exclude Scope 3 emissions, which are categorised as upstream or downstream, meaning they do not account for the pollution produced by their supply chain. Although Nike tracks these emissions, it does not provide a gross total. Business travel is calculated as Scope 3 upstream emissions, meaning the impact of its employees’ flights is not included in its “gross global emissions”. Nike did not respond to a request for comment, but has previously stated that Scope 3 emissions such as business travel are not included in its future sustainability targets.
H&M is accounting for and targeting its Scope 3 emissions. In a statement to the Guardian, the company said: “Scope 1 and 2 emissions stand for less than 1% of our reported emissions and while they are important, they are not our focus of work towards reaching our 56% reduction goal. This will not be enough. Our main focus is Scope 3. We see significant opportunities to grow in a way that respects planetary boundaries.” The company made a profit of €1.36bn (£1.14bn) in 2021.
Experts are dismayed at the industry’s self-proclaimed progress, warning that focusing on increasing efficiency rather than reducing absolute emissions – known as relative decoupling – puts the planet at risk.
“Celebrating the success of this sort of relative decoupling is a recipe for disaster,” said James Dyke, an associate professor in Earth system science at the University of Exeter. “Global warming will stop when we stop pumping greenhouse gases into the atmosphere. Nike having a few million more in the bank doesn’t change that.”
To read the article in The Guardian click here.