Environmental Accounting
Environmental Accounting refers to the systematic recording and analysis of a comprehensive set of environmental indicators related to the production, distribution, and consumption of goods and services. These indicators include water usage, energy consumption, carbon emissions, chemical usage, land use, and air pollution. The goal of environmental accounting is to provide a clear and detailed understanding of the environmental impacts associated with a product or service throughout its life cycle, paving the way for compliance with regulations such as the Corporate Sustainability Reporting Directive (CSRD) and fostering more sustainable business practices.
By integrating environmental accounting into the fashion industry, companies can accurately assess the ecological footprint of their operations and products. This involves gathering detailed data from suppliers, production processes, and distribution channels to evaluate the total resource use and emissions generated. This data-driven approach allows businesses to identify areas where they can reduce their environmental impact, such as by optimizing resource efficiency, reducing waste, and switching to cleaner energy sources.
A key component of environmental accounting is Life Cycle Analysis (LCA), which examines the environmental impact of a product from the extraction of raw materials to its end-of-life disposal. LCA provides a holistic view of the product’s environmental footprint and helps companies compare the sustainability of different materials and processes. For example, a fashion brand might use LCA to determine whether switching from conventional cotton to organic cotton would reduce water use and chemical pollution in their supply chain. Environmental accounting also supports the assessment of product service lifetimes, enabling companies to develop products that are more durable and have lower environmental impacts over time. By understanding the long-term environmental costs associated with different materials and production methods, companies can make informed decisions that align with both sustainability goals and regulatory requirements.
Implementing environmental accounting in the fashion industry is crucial for meeting growing consumer demand for transparency and sustainability. It also helps businesses anticipate and comply with emerging regulations that require detailed reporting on environmental impacts. By adopting environmental accounting practices, fashion brands can enhance their sustainability performance, improve resource efficiency, and contribute to a more sustainable industry.
Case studies
Puma – Environmental Profit & Loss (EP&L) Accounting
Puma developed one of the first corporate Environmental Profit & Loss (EP&L) accounts in the apparel sector, monetising impacts such as carbon emissions, water use, land use, air pollution, and waste across its value chain. The EP&L framework functions as an internal environmental accounting system, steering decisions on materials, suppliers, and product design toward lower-impact options.
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Kering – Group-wide Environmental Profit & Loss (EP&L)
Kering (parent company of Gucci, Saint Laurent, Balenciaga and others) applies an EP&L methodology across all brands to quantify environmental impacts in monetary terms from raw material extraction to retail. The EP&L results are used as a management tool to compare materials, guide design choices, and integrate environmental externalities into strategic and investment decisions.
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Levi Strauss & Co. – Lifecycle of a Jean & Water<Less®
Levi Strauss & Co. conducted a full life cycle assessment (LCA) of a pair of Levi’s® 501® jeans, mapping water, energy, and climate impacts from cotton farming through user laundry and end-of-life. The findings informed the Water<Less® programme, which reduces water use in finishing, and underpin Levi’s ongoing environmental accounting of product impacts and user-phase behaviour.
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Allbirds – Product-level Carbon Footprint Labelling
Allbirds measures cradle-to-grave carbon footprints for each product, covering raw materials, manufacturing, transport, use, and end-of-life, and prints the per-product CO₂e value on labels and product pages. These product-level accounts are used internally to set reduction targets and externally to communicate environmental impacts in a simple, comparable metric for wearers.
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Patagonia – Life Cycle Assessment and Footprint Transparency
Patagonia applies life cycle assessment and environmental accounting to key product categories, publishing impact information through its “Footprint Chronicles” and sustainability reports. By tracking energy, water, carbon, and chemical impacts across materials and manufacturing sites, Patagonia uses these data to prioritise recycled fibres, organic inputs, and renewable energy, while disclosing product impacts to stakeholders.
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References
He, C., Shu, C., Wang, P., & Zhang, L. (2025). Systematic review of carbon footprint accounting methods and indicators in the textile and apparel industry. Central European Environment and Sustainable Development, 18(2), 287–313. https://doi.org/10.18690/cee.18.2.287-313.2025
Assandri, E. (2023). Sustainability trends and gaps in textile, apparel and fashion industries. Environment, Development and Sustainability, 25(8), 7955–7980. https://doi.org/10.1007/s10668-022-02887-2
Braun, M., Behrendt, S., & Liedtke, C. (2021). Environmental consequences of closing the textile loop: A life cycle assessment of a circular polyester jacket. Applied Sciences, 11(9), 4137. https://doi.org/10.3390/app11094137
Liu, Z., Wu, H., Wang, Z., & Li, Y. (2021). Water risks and uncertainties of apparel manufacturing in China: A process-based assessment. Processes, 9(7), 1212. https://doi.org/10.3390/pr9071212
Luo, X., Li, Y., & Zhang, Y. (2023). Environmental impacts of textile products in the use stage: A systematic review of life cycle assessment studies. Sustainable Production and Consumption, 36, 45–60. https://doi.org/10.1016/j.spc.2023.01.015