The ACT (Assessing low-Carbon Transition) initiative is the result of collaboration between the French Agency for Ecological Transition (ADEME), the Carbon Disclosure Project (CDP) and the World Benchmarking Alliance (WBA). Together, they have developed a methodology for assessing the maturity of companies’ low-carbon transition plans. At the initiative of Paris Good Fashion, with ADEME, French growth accelerator DEFI Mode and consultancy Deloitte as facilitators, the group decided (following a similar move for 14 other industrial sectors) to create an ACT methodology dedicated to fashion and luxury. While it might be feared that this methodology would complicate a landscape already cluttered with corporate sustainability reporting directives (CSRDs), carbon footprints and other barometers, the reality is quite different. In this article, we analyse how it simplifies and, on the contrary, facilitates the process rather than adding to it.
A response to greenwashing
The primary objective of this method is to evaluate the credibility of companies’ decarbonisation strategies. In other words, it is like saying: “I’m company X, and I’m committed to achieving carbon neutrality by 2030”, to which the ACT Methodology responds: “Show us how, and with what means you intend to achieve this”, as explained by Isabelle Lefort, co-founder of Paris Good Fashion and initiator of the project. The aim is to assess the credibility of these decarbonisation strategies, whatever the industry, and thus put an end to the “greenwashing” practised by some companies. “This methodology was developed jointly by ADEME, CDP, a UK-based organisation that compiles data on the environmental impact of the biggest companies, and World Benchmarking, three entities recognised internationally for their expertise and commitment to sustainable development,” Lefort added.
The ACT methodology: A tool to end confusion about decarbonisation
At first glance, one might fear that this methodology would bring an additional burden to companies by imposing yet another set of criteria to the already long list, including carbon footprint, CSRD or even ESG. Aren’t we already overwhelmed by the proliferation of criteria? “Absolutely,” said Lefort. “There is a flagrant lack of uniformity and internationalisation in these scales.” Indeed, without a common standard, how can we compare the level of decarbonisation of a French company with that of a Swiss company? How can we carry out analyses on a European or international scale? How can we understand the direction of the economy?
“Without being able to measure and compare ourselves, it is difficult to work together and make effective progress,”
This is the context in which the ACT methodology was developed. In fact, it has already been developed, with a common matrix and specific criteria, for 14 industrial sectors including automotive, power generation, retail, construction and property management, cement, transport, oil and gas, and steel and iron. Others are being finalised for agriculture and agri-food, aluminium, chemicals, glass, paper and pulp. And finally fashion and luxury, a sector for which this methodology had not yet been implemented.
Why is ACT methodology interested in the fashion sector?
It is the members of Paris Good Fashion themselves who chose to develop an ACT methodology. “We made this decision after an in-depth study about a year ago to assess the level of commitment of French fashion players to sustainable development. With Climate Chance [an organisation encouraging collaboration between non-state actors, ed.], we took a quantitative look at more than 25 companies, analysing their CSR reports and available carbon footprints, while at the same time conducting qualitative interviews with managers and experts. At the end of our work, we found that there was a real awareness of the issues, such as eco-design and traceability, but that there was no harmonisation or common measurement. Without being able to measure and compare ourselves, it is difficult to work together and make effective progress,” explained Lefort. This is where Paris Good Fashion comes in, by developing and promoting the adoption of this methodology in the fashion and clothing sector.
How does this methodology measure the specific challenges of decarbonisation in the sector?
The ACT methodology does not think. It is a tool. It would still be necessary to be able to adequately measure the specific challenges of decarbonisation in the fashion sector. With this in mind, how does this methodology assess the credibility of decarbonisation strategies? Paris Good Fashion, ADEME and DEFI began looking at the issue last September, commissioning Deloitte to facilitate exchanges. Together, with a dozen companies and the support of the federations, they interviewed members of Paris Good Fashion and around 30 experts, in order to carefully define the scope and guarantee its accuracy and rigour. They then launched a public consultation in which more than 185 organisations volunteered to take part.
The consultation, which generated over 200 comments, aims to enable companies to test the methodology and check that the references and assumptions are appropriate, consistent and useful for the sector. Some 15 companies, including brands, distributors and international manufacturers (French, Italian, British, Swedish, etc.), are currently testing the methodology in the field. The whole process will be completed in June 2024. Ultimately, the ACT’s Fashion & Luxury Methodology will be co-owned by ADEME, DEFI Mode and Paris Good Fashion.
“We need to develop an ACT methodology for all sectors (…). This indicator will help companies to steer their transition strategy; it will simplify and unify their climate data management,”
Why adopt the ACT methodology?
Paris Good Fashion’s commitment to a project of this scale is due to brands needing concrete and practical solutions for the industry, covering the diversity of problems encountered in the sector. “When we presented the first results with Climate Chance, LVMH and Chanel immediately said ‘let’s do it’. In the end, in a year and a half, we are on the road to success,” commented Lefort. Brands that do volunteer to test and develop the methodology typically see it as a considerable advantage in the face of the increasing number of environmental regulations imposed on them.
For internationally-operating groups such as LVMH, Kering and Décathlon, the need for and added value of this methodology are all the more obvious. “We are interested in accelerating change. And to do that, you need to get the right people around the table,” explained Lefort. “When you bring together players such as ADEME, DEFI, CDP and World Benchmarking, it lends undeniable credibility to the methodology, which itself is already an international authority for more than 14 industrial sectors.”
What levers could, however, encourage brands and companies to adopt this methodology rather than another?
Firstly, as we mentioned, there is the credibility and network of the players involved in its creation. In addition to this, the methodology itself is inexpensive for companies. Not least because it is made available by a government body, and funded by ADEME, DEFI and Paris Good Fashion with its members. Unlike environmental labelling, which remains national, and the CSRD, which is European, the methodologies developed by private bodies often require a fee to access their classification. And if they are public, they can sometimes be politically oriented. But that’s not all.
“While environmental labelling is French and the CSRD is European, the ACT methodology is an international benchmark,”
Why and how does this methodology come to simplify the company balance sheet process?
Let’s return to the question of the possible redundancy of the ACT methodology. How is it actually positioned in the complex and sometimes laborious process of making assessments? “In developing the ACT Fashion Methodology, we studied all the work in progress, adapted to the sector, from the European CSRD to environmental labelling, as well as other methodologies, with a view to converging the data to avoid overloading the work. For example, if you already do the CSRD work, it will be included in the ACT methodology. The data collection processes are synchronised,” Lefort noted.
“This convergence was in response to a request from companies, as data collection is a particularly time-consuming stage. This means that the same data is used, but with a more in-depth analysis, placing it in a wider context. This represents a global synthesis and enables comparisons not only within one’s own sector of activity, but also with other sectors, and on an international scale,” Lefort explained, before adding: “While environmental labelling is French and the CSRD is European, the ACT methodology is an international benchmark.”
François Villeroy de Galhau, governor of the Bank of France, said: “We need to develop an ACT methodology for the sectors. (…) This indicator will help companies to steer their transition strategy; it will simplify and unify their climate data management.” An analysis of this kind will enable companies to approach investors, shareholders and banks with confidence. They can present their assessment and obtain financing more easily, thus benefiting from greater leverage when negotiating a capital injection or renegotiating the terms of a contract. In short, they are more bankable. “It is possible that other international methodologies will develop in the future. But for the moment, we believe that this one is the most relevant and will enable all players who wish to do so to align themselves,” concluded Lefort.