Clean energy can help European fashion reduce 63% emissions: McKinsey

Portfolio transformation, green business building, green premiums and green operations focused on circularity can help European consumer goods firms shift to circular value pools of over €500 billion of annual revenues by 2030, estimates McKinsey. In the fashion industry, about 63 per cent of emissions reduction potential lies in more efficient, cleaner energy, it says.

Another 37 per cent of reductions in the fashion sector require alternative approaches.

Extended product life cycles, changes in consumer behavior, circular business models, reduced overproduction, increased use of recycled materials, and other measures in line with circular-economy principles could contribute up to 654 million metric tonnes of fashion industry emissions abatement by 2030, which would close the emissions reduction gap, McKinsey says in one of its insight reports.

In addition to the shift in consumer demand, factors such as regulation, technological progress, infrastructure, supply-side activity, and the macroeconomic environment will drive growth in demand for circular consumer goods, it says.

ircular Economy Action Plan (CEAP), pledging billions of euros to net-zero enablers over the next ten years.

One of CEAP’s key components is a proposal for eco-design focusing on product durability, reusability, upgradability and a ‘right to repair’, as well as recycled content, remanufacturing, and high-quality recycling.

The EU Commission’s recently published proposal for sustainable and circular textiles aims to put an end to misleading green claims. Meanwhile, several European nations have started implementing extended producer responsibility.

These kinds of initiatives present significant financial carrots to companies seeking to transition to circular business models, says McKinsey.

Companies that relax their defensive postures and aim to create strategies that promote sustainability could experience a rise in innovation activity, it notes. This could drive adoption and, in turn, motivate investment.

There could also be a greater demand for solutions to support product resale, refurbishment, and recycling, with a particular focus on scalable material collection and take-back programmes, reverse logistics and automated material sorting and processing for recycling, says McKinsey.

In addition to circular products, circular services will be a significant growth area. Maintenance and repair services, such as fashion mending, will see significant jumps in demand.