Shein’s recent SBTi approval demonstrates how Scope 3 loophole undermines science‑based net-zero targets in fashion.
Net-zero targets validated by the Science‑Based Targets initiative (SBTi) are rapidly becoming table stakes in corporate sustainability. But most of a company’s greenhouse gas emissions — commonly in Scope 3 — occur within its supply and value chains, beyond its direct control. That leaves a vast blind spot where genuine impact may never materialize, even as press releases trumpet progress.
Recent backlash over Shein’s SBTi validation last month illustrates the danger of celebrating targets without scrutinizing how emissions are actually managed. The fast fashion juggernaut, long accused of environmental negligence, became one of the few major apparel brands to secure official net-zero alignment. Yet, Shein’s Scope 3 emissions — those stemming from manufacturing, materials, and global shipping — rose 83 percent between 2022 and 2023, hitting nearly 17 million metric tons of CO₂e. “If Shein were a country, it would be the 100th-biggest emitter in the world,” watchdog group Stand.earth stated in its recent Fossil-Free Fashion Scorecard.
In a LinkedIn post, Raz Godelnik, Associate Professor at Parsons School of Design, called Shein’s SBTi approval a “good example” of the deeper issues the fashion industry faces on sustainability and climate change.
“We’re looking at a company whose core business model — hyper fast fashion — is inherently unsustainable,” Godelnik wrote. “And yet, under public pressure, it’s now trying to present a more ‘sustainable’ face. This is a classic case of doing things right instead of doing the right thing — a mindset at the heart of the problem.”
Shein’s staggering growth highlights a much broader problem: estimated Scope 3 emissions reported by major companies can be off by close to 2500 percent compared to verified data. That gap underlines how the “value chain” loophole can undermine even science‑based net-zero credentials. And nowhere is this tension more visible than in fashion’s sprawling, upstream‑heavy ecosystem, where every stitch, transport route, and overproduced garment adds to a ballooning footprint that remains largely hidden.
Godelnik says instead of questioning whether a company like Shein should even have a social license to operate, “we’re debating whether its 1.5°C-aligned net-zero target is feasible.”
Scope 3 reality check
Scope 3 emissions stem from every part of a company’s extended value cycle, including raw material extraction and supplier energy use, to logistics, product use, and end‑of‑life disposal. According to the Greenhouse Gas Protocol, these indirect emissions represent at least 75 percent of most companies’ footprints. Even among S&P 500 firms, only 30 percent disclosed any Scope 3 data in 2022. And with the potential for estimates to deviate more than 2400 percent from reality, that level of error transforms value chain disclosures into guesswork. Worse still, it opens the door for firms to report minimal progress while emissions continue to rise unchecked.
Fashion brands in particular struggle to crack the complexity of Scope 3. Disclosures from over 250 major apparel brands indicate that a quarter have no decarbonization plan at all. Of those with net zero targets, most fall short on supply chain transparency and supplier engagement — even with SBTi‑approved pathways.
Apparel manufacturing produces up to eight percent of global greenhouse gas emissions, with raw materials accounting for two‑thirds of that impact. The fast fashion model, driven by high turnover and low prices, compounds that: the more clothing made and shipped, the larger Scope 3 grows.
Shein, which saw emissions surge by 176 percent since 2021, now eclipses Zara owner Inditex, driven by growth in production volumes. These sharp increases reveal how growth and emissions remain closely entwined. Unless net-zero targets explicitly address overproduction and value‑chain emissions, brands can technically meet validated thresholds while continuing to generate huge downstream pollution.
“This is exactly how we end up in a never-ending loop of system tweaks: carbon accounting gymnastics à la SBTi intertwined with the strategic needs of companies that are unsustainable at their core — allowing them to appear better than they are and continue business-as-usual, just with some minor adjustments,” Godelnik says.
Regulators, standards, and the blind spots
The SBTi’s net zero framework, launched in 2021, requires companies to set targets across Scopes 1, 2, and 3. To maintain credibility, brands must reduce absolute emissions, not rely on offset schemes. That said, the organization’s upcoming changes may permit environmental attribute certificates and voluntary carbon credit use to hedge against Scope 3 reductions. H&M has criticized this path, urging SBTi to prioritize absolute Scope 3 decline over offsets.
Meanwhile, SBTi’s flag‑based emissions guidance, tailored for fashion and agriculture, focuses on Scope 3 land use — yet still excludes the freight, garment lifecycle, and overproduction that define fast fashion’s emissions. Until standards better capture the full product lifecycle, brands may claim emissions progress on paper while real reductions remain elusive.
Numerous studies underline how brands report net-zero goals without actionable plans that address their direct impacts. The NewClimate Institute’s 2024 Corporate Climate Responsibility Monitor found that major fashion players lack convincing emission‑reduction plans, especially around overproduction. It concluded they’re not moving away from the fast fashion business model.
Similarly, another report found that nearly 40 percent of surveyed fashion companies saw their Scope 3 emissions increase while more than 60 percent are behind on decarbonization targets, according to McKinsey data. Many of these companies relied on generic, spend‑based models that obscure true reductions. These shortcuts allow brands to claim minor emissions control while their largest impact stays hidden.
Inditex, Zara’s parent company, offers a case in point. In 2024, its upstream transport emissions increased by ten percent, due to higher air freight usage amid Red Sea shipping disruptions. Though it saw declines in purchased goods and services emissions by six percent to 6.7 million tonnes CO₂e, Scope 3 overall stayed flat near 13.4 million tonnes — far from the steep reductions promised by its SBTi‑validated goals.
Inditex plans to cut overall Scope 3 by 15 percent by 2030 and 90 percent by 2040 against 2018 baseline levels. But, unless it recalibrates sourcing, shipping, and production, its strategy lacks traction, according to sustainability analysts and regulatory recommendations.
A path from abstraction to action
Experts argue that to close the Scope 3 blind spot, brands must shift from passive disclosure to proactive reduction. According to consultancy ERM, robust Scope 3 data can generate business value through supplier engagement, low‑carbon innovation, and improved investor confidence. This requires granular measurements across raw material sourcing, logistics, product life, and end‑of‑life cycles.
Data coherence is crucial. The GHG Protocol’s Scope 3 Standard is under revision, with calls to mandate detailed supplier data rather than generic, spend‑based estimates. Stabilizing calculation methods, mandating lifecycle inventories, and aligning accounting across Scopes could greatly improve comparability and accuracy.
Regulatory frameworks such as the EU’s Corporate Sustainability Reporting Directive and Sustainability Due Diligence Directive are driving demand for more comprehensive Scope 3 reporting. The Securities and Exchange Commission now enforces climate disclosure rules. As these demands rise, brands lacking full‑value‑chain decarbonization risk investor backlash or regulatory penalties.
“If we fail to address Scope 3, corporate net-zero pledges cannot be achieved.”
– Sanda Ojiambo, CEO and executive director of the UN Global Compact
First, there must be an explicit commitment to reduce overproduction — such as limits on output volumes tied to environmental intensity metrics. That would shift brands beyond recyclable fabrics to tangible systemic change.
Second, supply‑chain engagement must become non‑optional. Brands should set binding targets for suppliers, offering technical support and incentive structures to reduce their footprints. SBTi suggests that transition plans should include resource allocation for supplier decarbonization.
Third, brands need to redesign business models. Circular initiatives, such as Shein’s reported deadstock usage or polyester recycling, are only meaningful when they tackle garment volume and extend product lifespans. That demands policy shifts towards repairability, resale, and durable design.
Fourth, brands must embrace transparent and traceable accounting. That includes lifecycle emissions across raw materials, manufacturing, logistics, product use, and disposal. Investing in traceable supply chain databases — not generic input‑output models — is essential for verification.
Finally, voluntary claims need scrutiny. Allowing offsets or certificates to mask a lack of decarbonization, especially within Scope 3, renders the credibility of net-zero commitments. H&M’s letter urging absolute Scope 3 reductions represents a prescient call for integrity.
Scope 3 is where invisible emissions accumulate and where reputations are most vulnerable. As public scrutiny grows and regulators tighten mandates, brands risk being publicly called out not for flashy sustainability statements but for the emissions that never showed up on their spreadsheets.
“If we fail to address Scope 3, corporate net-zero pledges cannot be achieved,” Sanda Ojiambo, CEO and executive director of the UN Global Compact, a voluntary initiative supporting sustainability in business, told Climate Change News.
“Most business-related emissions come from Scope 3, which means neglecting them keeps us on a dangerous path to exceeding 1.5C [of global warming],” Ojiambo said.
Shein’s SBTi‑validated plan has drawn criticism precisely because its Scope 3 emissions rose 83 percent in a single year. If net-zero certification does not correspond with supply‑chain transformation, it becomes a superficial badge.
According to Maxine Bédat, director of the think tank the New Standard Institute, credibility involves transparency around how brands are incentivizing suppliers, how many resources are they putting toward incentivizing their suppliers, how much are they spending on lobbying (for or against policies that align with their targets), and how their growth targets align with their transition plan.
“There is a real misunderstanding of what an approved target means, and this ends up being used as greenwashing,” she told Trellis.
“Real action means transforming business models — not just aiming to collect stamps of approval from SBTi and the like,” Godelnik wrote.
“If we’re serious about tackling climate change, it’s time to stop tweaking the edges of broken models.”
Related on Ethos:
