The fashion industry faces a critical juncture. As detailed in the BoF-McKinsey State of Fashion 2025 report, the sector’s fragmented nature demands a unified approach to decarbonisation efforts; otherwise, it risks falling behind economically and environmentally. The urgency of collaborative action has never been clearer, as the challenge to achieve sustainability lies not just within individual companies but across a complex web of suppliers and consumers.
Decarbonisation of fashion’s supply chain could incur costs nearing $1 trillion. However, insights suggest that the economic implications may be less severe than many executives anticipate. Numerous factors contribute to a distorted perception of the costs associated with sustainable practices and the potential benefits of investment in decarbonisation.
A significant portion of fashion emissions—estimated at around 70%—occurs upstream, yet suppliers often encounter obstacles. These include tight margins that hinder their capacity to invest in decarbonisation initiatives, as well as high costs in financing. Moreover, effective sustainability strategies typically require deep collaboration and operational changes that can expose suppliers to various risks, such as slower lead times or unpredictable order volumes.
Simultaneously, there exists a dissonance in consumer behavior surrounding sustainable fashion. Data shows that while 46% of UK shoppers profess an aversion to buying fast fashion, over half admit to purchasing from fast fashion retailers within the last year. Moreover, a majority (61%) in both the US and UK identify price as a more pressing consideration than sustainability when making fashion purchases. This contradiction underscores the need for brands to not only produce sustainable products but also engage in consumer education to drive demand for these goods.
Attempts at corporate sustainability across the industry reveal a troubling trend: many brands are deprioritising or scaling back their sustainability commitments. As of now, 63% of these firms lag behind their own sustainability targets. Alarmingly, only 18% of fashion executives view sustainability as a top-three risk to growth for 2025, a decline from 29% in 2024. Alongside this general inaction, over 40 suppliers reported failing to set science-based sustainability targets, citing feasibility and high costs as main barriers.
Innovative startups within the sustainable materials sector are struggling to achieve traction and scale. Names like Renewcell have faced bankruptcy, only to be revived under new management with hopes for better financial support. Similarly, initiatives such as Bolt Threads, despite significant backing, paused operations due to challenges in securing necessary funds and establishing feasible production volumes.
The time for decisive action is now. With global apparel consumption projected to surge by 63% to 102 million tonnes by 2030, the fashion industry is on a path that could see it using more than a quarter of the world’s carbon budget by 2050. Moreover, stricter regulations like the EU Strategy for Sustainable and Circular Textiles signal a shift away from voluntary compliance, imposing penalties for non-adherence.
To mitigate risks and promote sustainable practices, brands must adopt a value chain orchestrator role and undertake collective actions that stimulate critical mass and scale while sharing costs across players. Explore the potential for cost-effective decarbonisation. Contrary to popular belief, implementing sustainability measures can also produce cost-efficiencies—a substantial portion of tier-two emission reductions can be cost-neutral.
For instance, collaborating with suppliers on energy efficiency can facilitate financial savings that offset the higher costs of innovative sustainable materials. Additionally, adopting better inventory management techniques can vastly reduce waste and overproduction, contributing to emissions reduction.
Long-term collaborations between brands and suppliers are essential to mitigate industry emissions, particularly since tier-two production accounts for approximately 45-65% of fashion’s scope-three emissions. Currently, around 75% of fashion brands neglect to involve their suppliers in sustainability initiatives, shifting the burden of funding and execution onto the suppliers themselves.
Instances of successful collective action are surfacing, but more brands need to jump on board. For instance, the H&M Group, Bestseller, and Copenhagen Infrastructure Partners are working together on an offshore wind project in Bangladesh to supply renewable energy to local manufacturers. This initiative estimates an annual reduction of around 725,000 tonnes in emissions and plays a vital role in supporting the nation’s renewable energy targets.
Similarly, the Future Supplier Initiative, launched in 2024, is designed to lower the financing costs for suppliers undertaking decarbonisation projects, aided by the Fashion Pact and various partners. This initiative not only identifies the most impactful projects but also fosters a collaborative network among apparel brands.
The landscape for sustainable material innovators must improve if we hope to combat fashion’s emissions-heavy practices. Brands are encouraged to make bolder, more concentrated investments in emerging technologies, helping to scale operations for viable sustainable alternatives.
For example, H&M Group’s recent partnership with Syre aims to develop textile-to-textile polyester recycling and secure substantial funding for expansion. Inditex has also committed to a partnership with Ambercycle, boosting its efforts to include a significant percentage of next-gen materials in its production by 2030.
Executives in the fashion industry must respond to current shifts by committing to sustainability as a unified mission. They should cultivate a collaborative model that encompasses effective investment strategies and seek to understand the potential of sustainable materials thoroughly. By rethinking long-term supplier contracts to encourage adherence to sustainability plans and prioritising data transparency, the sector can advance toward measurable impact.
In conclusion, the fashion industry stands at a crossroads, where embracing collaboration and innovative strategies could dictate its sustainability future. Stakeholders must act collectively and holistically to navigate the intricate challenges that lie ahead, ensuring the sector’s growth aligns with environmental responsibility.
