Global renewable electricity campaign RE100 counts Kering and Chanel among its fashion signatories, but complex supply chains and legislative barriers threaten to limit its impact.
Last September, Kering tweaked its sustainability strategy, taking a little-known pledge on behalf of all its brands. A few months later, Ralph Lauren and Chanel followed suit. The common thread? Switching to renewable electricity with the help of NGO campaign RE100.
At first glance, RE100 is a straightforward solution for fossil fuel-reliant fashion brands seeking to reduce their environmental impact. The campaign — developed by international net-zero carbon advocates The Climate Group — asks companies to commit to sourcing 100 per cent of their electricity from renewable suppliers by 2050 at the latest. Other fashion industry members include Burberry, Nike and Yoox Net-a-Porter, while beauty extends to Cotyand the Estée Lauder Companies.
RE100 is not a complete sustainability solution; the campaign has an intentionally blinkered focus. “We do one job, and we do it very well,” says head of RE100 Sam Kimmins. The concise message is clear enough to satisfy consumer expectations, which 87 per cent of members cite as a strong motivation for joining.
But switching to green energy — while essential — is not as easy as it seems. The pledge is limited to members’ own operations, which poses an issue for the very many brands with complex global supply chains. Third-party suppliers, especially those in places with fewer options for renewable electricity, have less incentive to sign up and are hesitant to cover the upfront costs without brands confirming their long-term custom.
Flexible means to a hardline end
RE100 sets the rules, but its 253 members have the flexibility to decide when and how they meet them before the final 2050 deadline. Kimmins says this promotes innovation. With the emphasis on renewable electricity, not zero-carbon, nuclear energy sources don’t make the cut. Instead, RE100 advocates for wind, solar, hydropower, biogas, biomass and geothermal energy.
Switching makes good business sense, as well as benefiting the environment. “Since 2011, the cost of wind, solar and battery storage have dropped by 49, 80 and 80 per cent respectively,” says Kimmins. “RE100 members who invest in physical infrastructure like solar panels generally see payback on the upfront cost within five years. Those signing wind farm deals (such as PVH, Nike and Ikea) could see payback within as little as three years.” Having invested around €1.5 billion in renewable generation projects, homeware group Ikea now has more than 700,000 solar panels on its stores and distribution centres. “Ikea now owns more wind turbines than stores,” says Kimmins.
Ralph Lauren joined RE100 in December 2019, setting its target for 2025. As of this year, it uses two per cent renewable electricity. The brand plans to implement virtual power purchase agreements in North America and support community solar projects near its US locations, using renewable energy certificates to cover any outstanding global electricity use. CEO Patrice Louvet says the move affirms Ralph Lauren’s support for the Paris Agreement, calling climate change “one of the biggest challenges facing our world”.
Unlike many sustainability initiatives and coalitions, RE100 has a clear target and rigorous checks in place. Members submit annual progress reports — detailing what electricity they’re buying, where they’re buying it and how — which are verified by The Climate Group’s partner organisation CDP, an external not-for-profit that manages environmental impact disclosure systems. Progress is then reviewed on a quarterly basis by RE100’s technical advisory group, which includes its partner CDP, conservation charity WWF, global research organisation WRI and the American renewable energy agency NREL. When members reach the goal of 100 per cent renewable electricity, their claims have to be verified before being announced publicly.
Legislative barriers may limit progress
In countries with more favourable legislation, companies can buy renewable energy off-the-shelf from an energy company, or negotiate directly with a wind farm and buy their supply. Several companies in the US and Europe are on track to reach 100 per cent renewable electricity by the end of 2020, including Gucci and the Estée Lauder Companies.
Progress is limited in countries where legislative barriers and fossil fuel subsidies are still in place. “In Korea, a single company has control over the entire electricity supply, and they’re very coal-dependent. There’s no open market for renewable electricity yet,” says Kimmins. He notes that members in Japan often set targets between 2030 and 2040 to allow time for the local market to develop.
Burberry is aiming for 100 per cent as early as 2022, improving energy efficiency and reducing absolute consumption along the way. It currently sources 90 per cent of its electricity from renewable sources and counts RE100 as an essential partner in regions where this is harder to achieve.
Fossil fuel subsidies are the “elephant in the room”, as Kimmins puts it. Many countries still subsidise fossil fuel energy products, making renewable energy a less competitive option. In 2019, the value of electricity subsidies stood at $51.7 billion in Iran, $12.4 billion in China, and $5.8 billion in Saudi Arabia, according to the International Energy Agency.
By supporting the renewable energy market and minimising fossil fuel subsidies, governments can open up significant investment opportunities for suppliers. Bloomberg New Energy Finance estimates that RE100 companies will need to invest $98 billion to reach their targets. “This is very attractive for governments,” says Kimmins. “Countries with progressive energy legislation are benefiting from this investment. We’re not asking for subsidies, we’re asking for the removal of legislative barriers.”
To tackle these barriers, RE100 companies club together to lobby governments more effectively. A group of European members, which includes Google, Facebook and Ikea, worked with the European Parliament in 2018 to add a paragraph to its Renewable Energy Directive (RED II), allowing corporations to buy renewable electricity across all countries in Europe. More recently, the Japanese Covid-19 package included $50 million equivalent of support for on-site power purchase agreements, citing the growth in RE100 membership in Japan as motivation. Tsai Ing-wen, president of Taiwan, also cited RE100 as an important consideration in Taiwan’s industrial policy driven by demand from buyer companies for suppliers to use renewable electricity.
Reaching out to suppliers
RE100’s collaborative efforts are of particular importance for groups like H&M, which hopes to achieve 100 per cent renewable electricity by 2030, having already hit 96 per cent this year. But H&M’s own operations — including stores, offices, data centres and distribution centres — only account for 0.3 per cent of its total emissions. “We operate in a supply chain that is highly dependent on fossil-based energy,” says H&M climate and water strategy lead Kim Hellström. “When looking at a product’s lifecycle, the most significant sources of greenhouse gas emissions are outside our own operations.”
H&M has installed solar panels on the roof of its head office in Stockholm.
© H&M
H&M is collaborating with German sustainable development agency GIZ on rooftop solar projects with suppliers in five key production markets: Bangladesh, Cambodia, Myanmar, Pakistan and Vietnam. The group has already supported three of its suppliers in China and India with solar panel installation.
Burberry offers suppliers guidance on switching to renewable energy. At present, 41 per cent of its products are manufactured in facilities that use renewable energy. The brand says several of its suppliers have noted the difficulty of financing energy efficiency and renewable energy programmes.
Other companies asking their suppliers to sign up for RE100 have faced similar obstacles. “This is particularly challenging for fashion brands, who might be sharing a factory with five other brands,” explains Kimmins. Suppliers are less likely to adopt initiatives suggested by brands with short-term contracts, which could be concluded by the time they make the investment. Approaching suppliers together, brands can demonstrate the widespread support for — and competitive advantage of — suppliers using renewable electricity.
“If your country’s companies can’t buy renewable energy, they’re losing a competitive advantage over other potential suppliers,” says Kimmins. “We’re aggregating demand for renewable energy, but also the demand on suppliers.”