Inditex Ups Sustainability Commitments as Regulators Take Aim at Fast Fashion

Zara-owner Inditex is planning to boost its resale service and increase its use of next-generation and recycled materials in an effort to halve its emissions by the end of the decade, the company told investors at its annual meeting Tuesday.

The moves represent an update to a sustainability strategy laid out in 2019 and come as the European Union has laid out ambitions to “end fast fashion.” The powerful bloc of European countries is pushing to make clothing retailers pay for the waste the industry produces and mandate greater use of recycled textiles, amongst other things.

By the end of the decade, Inditex is aiming for 40 percent of the materials it uses to come from conventional recycling and 25 percent to come from new innovations, including emerging recycling technologies that are only just beginning to scale.

Inditex has already started to invest in the space, participating in textile recycler Circ’s $30 million series B funding round last year. Earlier in 2022, it signed a €100 million ($110 million) off-take contract with Finnish textile-to-textile recycling business Infinited Fiber Company, guaranteeing the fast-fashion giant 30 percent of the company’s annual production for three years. In June, Bloomberg reported that the company was considering setting up an investment fund to back start-ups and technologies with the potential to green its business.

The new commitments build on existing targets to improve the environmental footprint of the materials Inditex uses. The company has also added targets to source 25 percent of its fabrics from regenerative or organic farms and the final 10 percent from sources certified to have a lower impact. Other new goals include a commitment to expand a pilot programme to introduce repair, resale and takeback services launched in the UK last year to other key markets by 2025 and the introduction a target to protect, restore or regenerate 5 million hectares of land by 2030 in an effort to improve the company’s biodiversity impact.

The new strategy represents a “greater level of ambition [aimed at] transforming ourselves and helping to lead the transformation of all our industry,” Inditex CEO Óscar García Maceiras said at the company’s annual meeting, speaking through an interpreter.

At the core of the company’s sustainability ambitions is its goal to reach net-zero emissions by 2040 — an area where companies are coming under increasing scrutiny. To back up its efforts, Inditex stepped up its plans to cut emissions in its supply chain — where most of its environmental impact takes place. Its new target to curb so-called scope 3 emissions 50 percent by 2030 is more in line with goals set by leading competitors than its previous goal of a 20 percent reduction.

It’s a monumental task. Last year, Inditex was responsible for emissions amounting to roughly 18 million tonnes of carbon dioxide equivalent — about the same as someone flying from New York to London and back one million times, and more than rivals H&M Group and Shein combined, according to those companies’ public disclosures.

To be sure, comparisons between companies are limited by differing methodologies and data quality. For instance, Inditex’s calculations include the impact of consumer use and end-of-life of products, which many others don’t.

The company has also succeeded in reducing its emissions 7 percent since 2018 (the baseline year for Inditex’s emissions targets). But continuing to bring that number down will require the company to deliver on its new sustainability strategy while balancing the impact of its future growth plans.