This briefing outlines the main opportunities identified in the Sustainable Fashion Academy’s white paper on natural capital accounting, which was written by Trucost following feedback from a range of brands within the apparel industry. One of the main benefits of natural capital accounting is as a tool that apparel companies can use to understand environmental risks facing their businesses such as water scarcity, land degradation, greenhouse gas emissions and chemical use.
Trucost calculated the apparel sector’s total natural capital cost to be more than $40bn per year, equivalent to more than 6% of the sector’s revenue. Unless apparel firms take action to minimize these risks, tighter environmental regulation such as higher water abstraction charges and carbon prices could force companies to pay some or all of these costs in future years. For example, the Otto Group calculated its environmental costs to be the equivalent of 10% of its turnover, with textile manufacturing as the most significant source of its impacts.