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Curbing Overproduction Shouldn’t Take an Act from Congress

Dan Leahy

June 30, 2022

This morning, the Supreme Court ruled in a 6-3 decision that the EPA’s enforcement ability tied to the Clean Air Act must be limited to areas of clear specific authorization from Congress. If you’re not feeling confident in this Congress’ ability to adequately address the specifics of our responses to the climate crisis, you’re not alone.

Forecasting broader energy policy and associated regulation is well above my pay grade, but the path to lowering retail’s emissions (which represent 4-8% of global CO2e emissions) is one I know well.

And while there are rumblings of an increased role of government agencies forcing the hand of the retail industry to hit net carbon zero by 2050 (SEC transparency recommendations, New York Fashion Act, EU regulations), it’s a near certainty that retail brands themselves will need to lead the way if the industry is to do its part in reducing CO2e emissions enough to avoid the calamitous and irreversible effects of global temperatures rising a further 1.5 degrees Celsius. 

So what will it take for the retail industry to step up and play the role that our government looks increasingly unwilling and unable to fulfill?

In short, retail needs to shift from celebrating company-level emissions footprint transparency as a win in and of itself, and move aggressively toward driving tangible footprint reductions. While sustainable capsules, powering stores with cleaner energy, and facilitating resale programs all play a role in reducing emissions, by FAR and away the biggest driver of retail’s impact on the environment is the new products they produce. Specifically, 84% of retail’s Scope 1 through Scope 3 emissions are driven by the production of new inventory. 

As a brand leader, ask yourself: what am I doing to address our number one emissions driver? Do I have product-specific sustainability data flowing through my PLM so that category teams can see firsthand the environmental impact of different product concepts? Am I arming my product teams with tools to curate tighter assortments that do more (profits) with less (inventory)? Do I have capabilities in place to determine when sticking with products I’ve already launched is a better path to our growth goals than throwing yet more newness against the wall and hoping for the best? have I ever once celebrated the category in my brand who’s delivered the highest ratio of profits to footprint? Do I even know which team that is?

The good news is, this work doesn’t have to come at the expense of your bottom line. In fact, it may very well be the thing that saves it. Is your board NOT focused on rightsizing your inventory levels? Have you thought about tapping into the deep intrinsic motivations of your team members to help you get there? selling more with less leads to faster turns, enabling capital efficient growth, and frees up capital to invest in the future. When done correctly, brand leaders can harness the desire of employees and consumers to embrace more sustainable practices as a tool to hit financial goals. 

The detailed sustainability reports that brands have started producing over the past few years are great. but unless brands are taking concrete action in their day-to-day inventory decision-making, they’re falling woefully short of the change we need. The prognosis for the government helping us out of this mess is not a good one; will brand leaders step up to fill the void?

Dan Leahy
Co-founder and CEO, MakerSights

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