To cut CO2 emissions, let’s tackle over-production
Recently, a video from a factory of Chinese omnichannel brand Temu went viral. It showed mountains of Temu packages being piled on top of one another, with employees forlornly attempting to sort them. The video was described on social media as a dystopian nightmare.
Such videos are not rare. We have known for a long time that the world is producing too much. Overproduction is a significant global issue with wide-ranging economic, environmental, and social impacts. This problem is particularly evident in industries like fashion, food, and electronics. Overproduction contributes to increased waste and pollution. It leads to the depletion of natural resources.
There is an environmental impact. Unsold goods often end up in landfills, contributing to environmental degradation. There is also an economic impact as financial losses for companies due to unsold inventory. Meanwhile, price reductions and markdowns to clear excess stock can erode profit margins. Overproduction can lead to labour exploitation and poor working conditions, especially in industries like fast fashion.
It can also cause market saturation, negatively affecting small- and medium-sized enterprises.
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Quantifying the exact financial impact of overproduction globally is challenging due to the vastness and diversity of industries. However, there are notable examples and estimates.
The fashion industry is a major culprit, with some estimates suggesting that 30 percent of clothes produced each season are never sold. In the UK alone, around 140 million pounds worth of clothing is sent to landfill each year.
This is insane. We live in a world where approximately 9.2 percent of the global population lives on less than $2.15 per day, according to research in 2019. These figures are likely to have worsened since the pandemic, which saw a transfer of wealth from the poor to the rich.
How can we be producing so much that are thrown away when so many people cannot afford basic levels of sustenance?
Consider all of the above and then remember that global leaders never tire of telling us about targets that have been set to mitigate the effects of climate change and limit global warming. These targets are outlined in international agreements, national commitments, and various initiatives by governments, organisations, and corporations. The main climate targets include the Paris Agreement, adopted in 2015 under the United Nations Framework Convention on Climate Change (UNFCCC) and which is the primary international accord guiding global climate action. This aims to limit global warming, keeping the global average temperature increase well below two degrees Celsius above pre-industrial levels. It will also see countries pursue efforts to limit the temperature increase to 1.5 degrees Celsius above pre-industrial levels.
The ultimate goal is to achieve net-zero greenhouse gas emissions by the second half of this century.
So, what is causing global warming? We know rising CO2 emissions are a major contributor. And the fashion industry is responsible for approximately 2.1 billion metric tonnes of CO2 emissions annually, which is about four percent of the global total, according to a report by McKinsey & Company and the Global Fashion Agenda.
Major fashion brands have invested a lot of time and resources into reducing and mitigating their CO2 emissions in recent years. All sorts of options are now being considered, including futuristic carbon capture technologies.
While I don't want to be critical of such efforts, I wonder if we are jumping the gun. Would it not be better to focus all our efforts on tackling overproduction first of all?
I mentioned a statistic early about 30 percent of fashion products not being sold. This figure is hard to verify, and my guess is it is slightly exaggerated. Fashion has invested heavily in better logistics and more accurate forecasting models in recent times.
But let's cut the figure in half and suggest it is 15 percent. If 15 percent of clothing produced is unnecessary that means 15 percent of CO2 emissions are also unnecessary. By definition, if the fashion industry tackled overproduction, it could cut CO2 emissions by 15 percent. This would be a remarkable achievement.
As an industry, fashion and its supply chains spend a lot of time pondering how they can reduce emissions. Shifting to renewable energy is one obvious means of doing this, and the renewable energy transition in Bangladesh, which I expect to see gather pace in the coming years, is to be welcomed.
But if our industry carries on overproducing—like many other industries, it should be added—it will make an already huge problem that much more challenging. The world does not need everything it produces. Nor does the fashion industry. We routinely produce too much, which leads to unnecessary and harmful CO2 emissions.
Industry leaders should tackle this challenge head-on. Perhaps regulators could also take a look, and consider more stringent methods to clamp down on and penalise excessive production. One way of doing this is through Extended Producer Responsibility (EPR) schemes, which compel companies to take more responsibility for waste production in their supply chains.
Another way is through better logistics and use of tools such as AI to better streamline and manage supply chains. Some brands are investing in better technologies but at the moment, it is often cheaper just to produce too much than to make the necessary investments. That's why regulation could be the only way to manage this issue.
Mostafiz Uddin is managing director of Denim Expert Limited. He is also the founder and CEO of Bangladesh Denim Expo and Bangladesh Apparel Exchange (BAE).
Views expressed in this article are the author's own.
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