How off-price business models can reduce CO2 emissions and textile waste

Fashion outlet platform Otrium, in collaboration with carbon tracking software Vaayu, has published an analysis of CO2 emissions and textile waste savings through off-price business models.

Using Vaayu's proprietary artificial intelligence, machine learning and life cycle assessment, the calculations pulled in data from over 45 fashion brands (Otrium and external) and from nearly five million fashion products. In total, Otrium works with more than 400 fashion brands, including Belstaf, Diane van Furstenberg, Puma and Wolford.

“This report represents a new contribution to understanding the end-of-life phase of fashion products based on one of the largest datasets,” explains Otrium.

According to the report, the Amsterdam-based platform avoided 6,496 tonnes of CO2 and 104 tonnes of waste last year by providing fashion brands with a profitable solution to clear unsold stock, compared to an alternative scenario without an off-price model. According to the platform, this is equivalent to 2,219 round-trip flights between Amsterdam and New York or throwing away 130,524 pairs of jeans.

“In 2015, we founded Otrium to play a part in reshaping how fashion is produced and ultimately sold,” said co-founder Max Klijnstra in a statement. “Our business model is a first step in solving the growing challenge of unsold inventory. As a next step, the results from our Otrium 2022 Impact Report will inform and strengthen our sustainability strategy and climate targets. We will also use it to transparently communicate our progress with our community, brand partners and the fashion industry. At Otrium, we will be working steadily towards improving our impact one step at a time.”

“When we started Otrium, we didn’t just want to create a company. We wanted to start a movement. We wanted every item of clothing produced to be worn,” added Daniels.

How were savings of CO2 and waste calculated?

To calculate the impact of Otrium’s business model, Vaayu compared the carbon emissions and waste of selling a fashion item on the platform against alternative ways for brands to clear their excess stock, such as donation or disposal, based on survey responses from over 45 fashion brands.

Based on a life cycle assessment (LCA) approach, Vaayu calculated the carbon emissions and waste generated by fashion items sold on Otrium, minus the carbon and waste impacts of using alternative stock clearance channels, plus any additional impacts generated by market rebound effects, like changes in consumer purchasing behaviour.

This was done using Vaayu's proprietary carbon modelling engine, taking into account the latest EU guidelines for calculating the environmental footprint of clothing and footwear, as well as Otrium's input in terms of product type, size and weight, material composition, fabric construction, country of origin and country of sale.

Extension of the product cycle through repair

This created a baseline footprint for the typical lifecycle of an item (manufacturing, distribution, sales and disposal), which was used to compare potential carbon and waste savings. It also included the impact of Otrium repairing slightly damaged items.

“We try to go the extra mile to achieve this. When an item is damaged, we first try to repair it and give it a second chance on our membership-based platform. We also connect brand partners with selected stock buyers and local charities. This way, we’re able to recover the most value for each item regardless of its condition,” explains Otrium the platform’s approach.

This gave an average result per product of 2.13 kilograms of CO2e and 30 grams of waste. This was then extended to quantify the impact of Otrium's brand partners and its overall business.

Vaayu’s analysis purposely took a conservative approach to avoid overrepresentation of Otrium's carbon and waste savings. Stephen Allen, associate professor of life cycle assessment at the University of Bath, also independently reviewed the methodology on a regular basis.

Low excess purchase rate through resale

The carbon emissions and waste from alternative stock clearance channels were then calculated and compared against the baseline footprint of selling via Otrium. This helped estimate the potential savings from extending the life of fashion items and avoiding direct disposal through landfill, recycling or incineration.

The calculations took two main scenarios of alternative waste removal options into account: For one, stock clearance pathways leading to resale and second, those leading to disposal, where the fashion item is considered ‘deadstock’ and would eventually go to waste or be downcycled.

“The results show a relatively low excess purchase rate of 18 percent - this means that for every six items sold on Otrium, a customer buys one more additional item. On average, 82 percent of purchases on Otrium therefore remove the need for a new item,” concluded the report.