Measuring the carbon footprint of individual products may be the next step in many companies’ ESG journeys. The European Commission (EC) has proposed legislation that would require companies to publish data on the raw materials, manufacturing, and recyclability of their products in the form of a Digital Product Passport (DPP). DPP regulation would also affect US companies, as the EC intends to apply it to products imported into the EU as well.
The EC expects DPP legislation to come up for approval this year and go into effect in 2026 or 2027. Though the status of the proposed regulations is still uncertain, companies are preparing now. In a recent webinar, Nina Khoury, vice president of strategic operations at apparel company Skims, discussed how her company has begun measuring the carbon footprint of its products.
Skims was co-founded in 2019 by reality TV star Kim Kardashian. Though it began by selling shapewear and underwear, it’s branched out into selling swimwear, loungewear, activewear, and menswear as well and now offers 3,000-4,000 products. In July 2023, the company received $270 million in funding and was valued at $4 billion, raising speculation that it might go public. But it’s still a smaller company, employing about 200 people, and does not yet have a dedicated climate team.
Measuring up: Even for large companies, tracking emissions is a complex undertaking—especially if a company tracks “cradle-to-grave” emissions, or emissions from a product’s entire lifecycle, from raw materials to use and disposal, recycling, or reuse. It involves calculating figures like the emissions factor of each material used in a product, the units of a product sold, and the energy costs to manufacture and ship a product.
Skims chose to start small, measuring the emissions of a few of its most popular products. It also began working with one vendor first to calculate emissions, and then scaled up. The advantage of starting with one vendor is that it lets you “invest up front in thinking through that process and what needs to happen,” Khoury said. “What I say to our teams is this is the first time we’re doing it; it will not be the last. This is like building muscle. We have to do it once, and then we’ll do it again and we’ll get better each time.”
The company takes a “bottoms up” and a “partnership” approach, Khoury said, letting its vendors know what its goals are and then requesting data from them. It works with its suppliers —which are located in China, Thailand, and Turkey—to gather data on sizes, measurements, dimensions, and materials. Then analysts input the data into a proprietary software system and analyze it.
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Insights from product-level data: Working with this data is where companies can really begin to make headway on emissions, Khoury said. Skims quickly noticed that about 60% of its emissions came from electricity, according to Khoury. It’s now launched a supplier engagement project, starting with supplier surveys on power use, to help its suppliers transition to clean power.
Skims also learned from the data that it could switch to recycled nylon without sacrificing quality. “We are a product-led company. We have never come out and said that we are sustainability-first,” Khoury noted. But Skims wants to be a “global corporate citizen,” she said, adding, “If an alternative is available and it does not impact the quality of our garment and it’s better for the world, we make that decision.”
Those product-level choices can add up to a big impact, Khoury said. Vendors are “not only working with Skims, they’re working with tens or hundreds of other brands out there,” she said. “And so if you’re able to impact one vendor, you’re actually impacting tens or hundreds of companies.”
“We’ve been growing very quickly,” she noted. “So if we say [ESG] is important to us, it’s got to be important” to vendors.
Getting started: Khoury advises companies that want to measure emissions to “exhaust all the datasets” they already have before going to their vendors. Companies can start by looking at data they already have internally, such as what’s stored in their bills of materials or product lifecycle management systems, Yohanna Maldonado, climate strategy manager at Watershed, an enterprise climate platform, said in the webinar.
When they do reach out to vendors, companies should give them as much detail as possible about what they need, Khoury said. “You have to be very explicit and set up the templates with what you want. Take the time up front versus just saying to them over a call, ‘We need our project-level measurement,’” she said.
And companies should focus on their “hero products,” i.e., the ones that drive the majority of their sales and thus are responsible for the bulk of their emissions, Maldonado said. Don’t “get caught up in every minute detail of a SKU that [you’ve] had for two months and are probably going to retire,” Khoury said. “Focus on those that move the dial.”
Khoury believes that product-level emissions measurement will soon become more widespread. “If you look at the market a couple of years ago, it was attracting a premium from an investment standpoint,” she said. “That was the impetus to where we are now. It is a must-have. This is nonnegotiable.”