Technical Assistance on Environmental Footprint Life Cycle Assessments (LCAs) for the Textiles Sector (Denim, Home Textiles, Towels and Apparel/Garments (Knitted/Woven) and Socks) in Pakistan

11.1 Scope of Work (SOW)

BACKGROUND: 

The USAID-funded Pakistan Regional Economic Integration Activity (PREIA) is a nine-year (2015-2024) Project that provides technical, advisory, and capacity building support to the Government of Pakistan (GoP) and private sector stakeholders with an aim to enhance Pakistan’s trade competitiveness and increase its trade volumes. In doing so, the Activity primarily focuses on policy development and reform, customs facilitation, regional integration, and trade/investment promotion to strengthen Pakistan’s ability to compete in international markets. Component 2 addresses constraints at Pakistan’s borders that adversely affect trade and transit traffic with neighboring countries including by: 1) improving customs facilitation; and 2) promoting regional integration. The landscape for global trade is continuously evolving with innovations in trade technology, digitalization. However, emerging vulnerabilities arising from climate change and other environmental priorities are challenging existing trade frameworks, policies, and patterns. There is a growing realization that implementation of environmental standards in international trade is now an important matter and organizations are more cognizant of their impact on climate change and natural resources. This has resulted in a growing number of initiatives to green supply chains, including those related to textiles and apparels as these represent almost 10% of the world’s annual greenhouse gas (GHG) emissions.[1] As the world ramps up the implementation of such initiatives, they are beginning to affect the competitiveness of the textile and apparel sectors in Pakistan.

INTRODUCTION: 

Estimates suggest that the production, use and disposal of textiles and apparels are responsible for approximately 20% of the world’s water pollution and over a billion tonnes of carbon dioxide (CO₂) equivalent emissions or nearly 10% of annual GHG emissions. In addition, the sector is a major and growing contributor to landfill waste, due to the unprecedented growth in fast fashion and, hence, the increasing production of textiles and apparels that are made from inexpensive, non-durable, and non-sustainable materials and practices. Approximately 70% of the apparel industry’s GHG emissions are generated during the production, fiber processing and manufacturing processes.

In response to growing consumer and regulatory pressures to address GHG emissions, international apparel and retail brands are committing to aggressive GHG reduction targets. More than 140 global apparel sector brands have joined the Science Based Targets initiative (SBTi) which encourages companies to set GHG reduction targets in alignment with the Paris Agreement; i.e., limiting global warming to well below 2°C above pre-industrial levels and pursuing efforts to limit warming to 1.5°C.[2] A large portion of the Global fashion sector has also signed the UN fashion Industry Charter for Climate Change which requires brands to disclose climate-related data to the Carbon Disclosure Project and set science-based targets – using SBTi’s Sector-guidance for apparel and footwear – which means they commit to halving emissions by 2030 and achieve net-zero emissions no later than 2050. Key indicators which brands must report against include:

Basic requirement: CDP participation and GHG emissions reporting

Emissions reductions: GHG targets

Green transition: Renewable energy targets

Renewable Energy: Consumption and sourcing

Supply chain and public policy engagement

Climate governance

Global fashion brands are also investing on their own, and sector wide funds such as Fashion for Good Fund have been established to accelerate transitioning of decarbonization of the fashion industry’s supply chains.

Between 2015 – 2022, the international textile industry and the fashion and apparel sector, resolved to play their due role in attaining a sustainable, regenerative future. What followed was the formation of several global alliances (Fashion for Good, Jeans Redesign, Fashion Industry Charter for Climate Action, Science Based Targets Initiative, etc.) that would represent an industry-wide commitment to promote a circular economy and issue broad guidelines on how the industry can reduce its carbon footprint over time. Many global brands began developing strategic plans for climate action, with an eventual goal of attaining net-zero GHG emissions across company operations. The commitments made by brands were specific, time-bound, and included reductions in Scopes 1 and 2 emissions as well as Scope 3 or indirect emissions that occur along the textile value chain (see Figure 1). This means that all manufacturing partners and suppliers associated with the brand are increasingly asked to incorporate environmentally responsible practices within their operations in alignment with the brand’s vision.

While the primary driver of corporate action amongst the apparel and textile exporters of Pakistan has been the need to comply with their global customer’s aspirations for sustainability, upcoming regulations being introduced by key export markets are adding further impetus on exporters to address circularity and account for GHG emissions. Pakistan’s major export market, the European Union, accounts for more than 30% of Pakistan’s total export, of which 76% are textiles.[3] Under the European Green Deal,[4] EU presented in March 2022 its strategy for sustainable textile which will require textiles in EU markets, by 2030, to be long-lived, recyclable, made with recycled content, and with traceable GHG impact.  Other regulations such as the EU Climate Law,[5] EU Circular Economy Action Plan,[6] EU Industrial Strategy,[7] EU Strategy for Sustainable and Circular Textiles,[8] and Registration, Evaluation, Authorization and Restriction of Chemicals (REACH) Regulations are only some examples that have made it mandatory for Pakistani firms to begin decarbonizing their supply chains and ensuring transparent reporting of GHG and environmental indicators along the value chain.

In addition, the European Commission is preparing the Product Environmental Footprint Category Rules (PEFCRs) for the category of Apparel and Footwear, covering 13 sub-categories of products (T-shirts; shirts and blouses; sweaters and mid-layers; jackets and coats; pants and shorts; dresses, skirts, and jumpsuits; leggings, stockings, tights, and socks; underwear; swimwear; apparel accessories; open-toed shoes; closed-toes shoes; boots). PEFCRs are in line with the standardized Life Cycle Assessment (LCA) methodology[9] and provide further guidelines for environmental assessment within specific product groups. The goal of the PEFCRs is to enable unambiguous and fair comparisons of products within the same category. The apparel and footwear PEFCRs are currently in the testing phase and their official adoption is expected in 2024. A draft version is already publicly available.[10]

The US and EU are major markets for Pakistani products (55% of the country’s total exports are destined for these two regions alone). The textile sector, which accounted for over 60.8% ($15.39 of $25.3 billion) of total export revenues generated by Pakistan in 2021,[11] is heavily reliant on the EU and US markets to sustain and grow Pakistan’s economy. As per estimates, Pakistan holds 5% of the EU’s $100 billion import market for textiles and clothing and has consistently ranked among the top 10 suppliers for the product category worldwide. Given that the global market for textiles is transitioning towards green production, it has become imperative for Pakistani suppliers to adjust to this new trend. They must do so while navigating multiple reporting requirements from different brands for a mix of corporate and product carbon footprints, responding to concerns about greenwashing in commonly used sustainability certifications for the textile sector,[12] staying on top of new innovations in traceability, and addressing supply chain data gaps.

The Textile / Apparel industry of Pakistan - at least to the extent of the country’s top 15 exporters – has been quick to respond to the shift towards sustainability, and have invested in people, technology, and processes to green their facilities. Most, if not all, large-scale, vertically integrated textile manufacturers have started to redesign and augment their operations over the past 5 years to reduce the environmental impact of production units. To do so, firms have aligned themselves to international best practices and are not only aware of globally recognized benchmarks such as Science Based Targets Initiative (SBTi), Higg Index, and Global Recycling Standard (GRS) but are also signing up to SBTi.

Despite this progress, Pakistan’s exporters and manufacturers are faced with several challenges that hamper their ability to consolidate their investments towards carbon neutral or Net Zero pathways either as a company, or as a sector.  These include:

Lack of standardization of requirements from global brands: The apparel / textile manufacturers supply to multiple brands, each with their own compliance rule book. While some initiatives and practices overlap the compliance needs set by the customers, many require duplication of efforts in terms of monitoring and reporting.

Net Zero Pathway Commitment: While most of the large Pakistani apparel exporters have submitted their intent to commit to Science Based Targets towards Net Zero, only some have submitted their commitments and shown progress in terms of formal reporting. It appears from PREIA’s discussions with exporters that most of the global brands are requiring suppliers to undertake discrete investments or actions towards environmental sustainability; however, they do not yet require the suppliers to account for GHG emissions across their value chain. This means that there is little transparent accounting of how the various environment-focused initiatives impact overall GHG emissions of individual companies.  For example, treating effluent water is a requirement of all global brands that apparel / textile exporter must meet, but the need for the effluent treatment plant to be operated on renewable energy source is not.  As market regulations, such as those of EU, require GHG traceability, companies may need to re-assess their investments from the perspective of the overall impact of investments on their GHG emission contribution.

Monitoring and Evaluation: Data collection and reporting are difficult tasks – particularly for the calculation of GHG and Scope 3 emissions – and firms mostly rely on broad industry guidelines (SBTi, Higgs Index, etc.) to conduct self-led assessments to evaluate progress against environmental compliance. However, some of these standards – such as Higgs – have been faulted for biased results and lack of transparency. Furthermore, discussions with the teams overseeing sustainability initiatives indicate a need for the development of capacity amongst sustainability professionals within these companies to measure Scope 3 emissions and other environmental impacts. Until a time that the global community can develop and agree on a standardized, verifiable, and scientifically proven system for monitoring firm-level interventions along with an adequate provision of activity data, industry baselines, and capacity building initiatives, the private sector will continue to grapple with the challenges of finding their own path towards greener practices. In Pakistan, firms are also struggling to access basic data sets on country-wide industrial emissions, which form the basis of scope 2 and 3 interventions.

PREIA is looking to strengthen the capacity of export-oriented textile / apparel firms to conduct product lifecycle assessments in key subsectors using internationally recognized methods/standards. PREIA will do this by working with partner firms to share information on product LCA approaches for GHG emissions and other environmental impacts (i.e., wastewater, waste generation, energy and water use, plastic pollution, air pollution), conduct pilot LCAs, and provide technical assistance to Pakistani firms on reliable data sources for conducting product LCAs.

11.1.1         Objectives and Scope

PREIA seeks an expert company/firm to advise denim, apparels/garments (knitted/woven), home textiles, towels and socks firms on preparing environmental footprint LCAs for products in Pakistan’s textile and apparel sectors, including supporting companies to conduct pilot LCAs for their products.

11.1.2        Tasks (Performance Requirements)

The company/firm is expected to perform the following tasks:

1. Conduct consultations with export-oriented companies and associations in Pakistan’s textile / apparel sectors to identify companies that are interested in piloting LCAs for products in key subsectors such as:

1. Denim,

2. Towels

3. Home Textiles

4. Apparel/Garments (knitted/woven)

5. Socks.

Identify 5 products in each of these subsectors for LCA pilots. The pilots will focus on GHG

emissions and other environmental impacts such as water and energy consumption, chemical use, wastewater discharge, waste generation, and oceans plastic and air pollution.

2. Recommend 2-3 standards/tools for conducting LCAs in the denim, apparel/garments (knitted/woven), home textiles, towels, and socks, with a preference for those that align with the International Organization for Standardization (14040:2006, Life Cycle Assessment: Principles and Framework, and 14044:2006, Life Cycle Assessment: Requirements and Guidelines), particularly those commonly used in the USA and EU markets and brands.

3. Design the overall framework for the selected textile/apparel companies with the completion of 5 pilot LCAs in each sub sector, including data collection and/or identification of defaults from international datasets. The LCAs should apply a cradle-to-gate approach and at least 2 different LCA standards/tools to compare results.

4. Prepare a draft and final report summarizing the approach used and lessons learned. The report shall include the selected pilot LCAs in the appendices, however, these should be based on actual data (generic data to be used only to avoid disclosing confidential information from participating companies). Non-disclosure agreements to be signed with the selected companies before initiating the LCAs.

5. Develop and deliver a 2-day training for denim, apparels/garments (knitted/woven), home textiles, towels and socks stakeholders in major industrial cities of Pakistan (to be decided in consultation with PREIA team) on how to conduct a product LCA in the denim, apparels/garments (knitted/woven), home textiles, towels and socks. The training must include best practices in LCA and recommendations for how to address data gaps.

11.1.3        Required Deliverables, Estimated Completion Time and Payment Schedule

The company/firm will be responsible for delivering the following:

1. Submit a final workplan for the project (05% Payment)

2. Propose at least 10 companies in each subsector, i.e., denim, apparel/garments (knitted/woven), home textiles, towels, and socks, for final selection by the PREIA team for conducting the LCAs. At least four proposed companies should be SME in each subsector. Also submit a non-disclosure agreement to be signed between your company and participating businesses. USAID, DAI, and PREIA will not be parties to the NDA. (10% Payment)

3. Develop non-proprietary excel tools tailored for each product category (denim, apparel/garments, home textiles, towels, and socks) to facilitate comprehensive LCAs. Also draft and final report recommending 2-3 standards / tools for conducting environmental footprint LCAs in the denim, apparels/garments (knitted/woven), home textiles, towels, and socks and 5 proposed products for the pilot LCAs. (20% Payment)

4. Conduct and complete LCAs as agreed with PREIA team. Also summarize the results and lessons learned from the pilot LCAs. Report should contain the LCAs for each subsector. (40% Payment)

5. Draft and final training program on how to conduct environmental footprint LCAs for products in the denim, apparels/garments (knitted/woven), home textiles, towels and socks. (10% Payment)

6. Conduct a 2-day training on product LCAs for export stakeholders in major industrial cities (Karachi, Lahore, Faisalabad, and Sialkot) of Pakistan. This training should also include capacity building on using the excel tools developed for calculating the LCAs for the sectors defined above. (15% Payment)

The deliverables are expected to be completed by May 2024, to the satisfaction of the Peer Review Team of USAID PREIA. The contract term is expected to be complete by May 2024.

11.1.4        Qualification and Experience

The ideal candidate for the Consultancy Services (Firm) role should possess the following qualifications:

1. Minimum of 5 ~ 7 years of relevant professional experience in conducting environmental footprint LCAs using internationally recognized standards.

2. Demonstrable track record of designing spreadsheet tools for LCAs assessments.

3. Knowledge of internationally recognized LCA standards and protocols including methods for conducting the LCAs.

4. Experience working with international brands and companies in the textile / apparel sectors.

5. Experience working with complex, multi-system environments in the public and private sectors, preferably in the fields of climate change mitigation/environment/sustainability.

6. Expertise in GHG emissions accounting for private sector.

7. Experience delivering trainings in diverse settings.

8. Ability to work in Pakistan.

11.1.5    Base of Operations: 

Pakistan, including travel to major industrial cities in Pakistan.

11.1.6    Reporting:

The company/firm will report to the Regional Trade Promotion Advisor, USAID PREIA. 

11.1.7    Payment Schedule

Please refer 11.1.3 above for details.

(Please use attachment 11.2 template)      

[1] United Nations Framework Convention on Climate Change (2018).

[2] To limit warming to 1.5°C, the Intergovernmental Panel on Climate Change (IPCC) asserts that global GHG emissions must be cut by 45 percent from 2010 levels by 2030 and reach net zero emissions around 2050.

[3] https://policy.trade.ec.europa.eu/eu-trade-relationships-country-and-region/countries-and-regions/pakistan_en

[4] The European Green Deal is a package of policy initiatives, which aims to set the EU on the path to a green transition, with the goal of reaching climate neutrality by 2050.

[5] The European Climate Law sets into legislation the EU Green Deal targets to reduce net GHG emissions by at least 55% by 2030 (compared to 1990 levels) and achieve climate-neutrality by 2050.

[6] The EU circular economy action plan includes over 30 action points on design of sustainable products, circularity in production processes and empowering consumers and public buyers. It targets sectors such as electronics and ICT, batteries, packaging, plastics, textiles, construction and buildings, and food.

[7] Adopted in 2020, the EU Industrial Strategy leads twin transitions towards climate neutrality and digital leadership, and outlines measures for three drivers for industrial transformation: global competition, climate neutrality, and a digital future.

[8] The EU Strategy for Sustainable and Circular Textiles addresses the way textiles are designed and consumed, introducing new design requirements for textiles under the Ecodesign for Sustainable Products Regulation, setting mandatory minimums for the inclusion of recycled fibers in textiles, and calling for clearer information on textiles through Digital Product Passports that meet EU information requirements on circularity and other environmental aspects. The strategy harmonizes EU rules on

extended producer responsibility and offers economic incentives to make products more sustainable.

[9] ISO 14040:2006/Amd 1:2020; The International Standards Organization Environmental Management—Life Cycle Assessment—Principles and Framework—Amendment 1. ISO: Geneva, Switzerland (2020); and ISO 14044:2006/Amd 2:2020; The International Standards Organization Environmental Management—Life Cycle Assessment—Requirements and Guidelines. ISO: Geneva, Switzerland (2020).

[10] Quantis. Draft Product Environmental Footprint Category Rules; Apparel and Footwear: Zürich, Switzerland (2021).

[11]https://www.pbs.gov.pk/sites/default/files//external_trade/annual_analytical_report_on_external_trade_statistics_of_pakistan_2020-21.pdf