As the push to meet ambitious sustainability goals intensifies, the fashion industry is focusing more on decarbonization, aiming to reduce supply chain emissions at their source. But making a real impact is harder than it seems. With fashion’s complex, global supply chains and top-down sustainability strategies that often overlook suppliers’ role in scaling decarbonization, progress has been slow.
Recently, several reports related to decarbonization have been published, offering new insights into one of fashion’s biggest challenges. Reading through multiple 30-plus-page reports can be daunting, so Vogue Business has done the heavy lifting. Below are the key takeaways from six recent reports, highlighting findings that challenge assumptions, data that supports common beliefs, and aspects of decarbonization that have been overlooked.
Several reports echo similar messages: decarbonization is moving too slowly, or brands aren’t doing enough to help suppliers take action. Together, these reports create a “surround sound” effect, lending credibility and raising awareness for the work of smaller nonprofits and labor groups by reinforcing their messages. “This way, it’s not just an activist protesting outside a brand’s office—it’s a whole ecosystem sharing the same message, even if with different accents,” says Ruth MacGilp, a climate campaigner at Action Speaks Louder.
MacGilp finds it “refreshing” that recent decarbonization reports connect to broader sustainability issues. “Several recent reports link climate change with labor rights and business resilience—not treating them as separate issues, but encouraging brands to take an integrated approach that tackles root causes. When you address only one issue at a time, you risk unintended consequences, so making these connections is crucial.”
A reality check
In January, the member-led nonprofit Cascale released its 2026 State of the Industry report, offering a sobering look at fashion’s decarbonization efforts. The report aggregates data from 13,000 Tier 1 and Tier 2 facilities that submitted self-assessments using Cascale’s Higg Facility Environmental Module (FEM) tool for independent auditing.
Many brands are relying on electrification—shifting from fossil fuels to renewable energy—as a key solution. However, Cascale notes that electrification alone will be “insufficient” to meet the Paris Agreement goals, largely because production countries often lack grid-level renewable energy. This makes on-site renewable infrastructure (like solar panels) and off-site sources (such as wind farms) “critical.” Currently, renewable energy makes up just 2% of the industry’s total energy use.
But this shouldn’t lead brands to abandon certain production countries or suppliers, says Joël Mertens, director of Higg Product Tools. Instead, brands should use the report to deepen engagement with suppliers, build long-term partnerships that include co-investing in decarbonization, and move beyond easy fixes to pursue “deeper transformation.”
Under pressure from shareholders to boost profits, many brands are still increasing production. This has led sustainability teams to shift focus from reducing absolute emissions to lowering energy intensity—the carbon emissions per unit of energy used. Yet Cascale found that progress is lagging. “Even with small decreases in energy intensity, rising production means total emissions are still increasing. We’re quite far off track,” says Mertens. “We haven’t even reached a plateau in emissions yet, which means the industry is further from its sustainability targets than many realize.”than we were when we set our baselines.”
Unsurprisingly, Cascale found that larger factories tend to produce higher emissions. More striking, according to Mertens, is that their energy intensity is also greater. “The good news is that focusing on a smaller number of factories can lead to a bigger impact. The bad news is that larger factories rarely have a single brand accounting for most of their production, which means driving change will require collective action.” He explains that this can be challenging because brands are not accustomed to pooling resources and co-investing in supply chain improvements with their competitors. Some hesitate because they can only claim a portion of the emissions reductions they help fund. However, such collaborations represent the industry’s best chance for progress.
The Business Case for Decarbonization
Late last month, the Apparel Impact Institute (Aii) released The Cost of Inaction, which makes bold claims about how climate inaction could hurt fashion brands’ profits. The key takeaway? By 2030, brands that fail to address three major climate risks—carbon pricing, energy volatility, and raw-material disruption—could see their operating margins shrink by 3%, potentially cutting profits by 34%. By 2040, profit losses could reach nearly 70%. Conversely, Aii states that brands investing early could see a 2% increase in EBIT, improved liquidity, and a 5–10% valuation premium for climate-aligned portfolios.
The report targets brands’ finance teams, aiming to build a business case for decarbonization and spur action toward both industry goals and Aii’s own target of cutting up to 100 million tonnes of CO₂ from apparel supply chains by 2030. It categorizes brands into three groups: conventional operators, pragmatists, and pioneers. Conventional operators have little sustainability engagement and rely heavily on fossil fuels. Pragmatists do the minimum to meet regulations but lack ambitious transformation. Pioneers lead the way with aggressive net-zero strategies, extensive use of renewable energy, and co-investment with suppliers and peers to speed up decarbonization.
The report also models three scenarios for each climate risk: one based on current policies and business as usual; a delayed transition that starts after missing 2030 goals; and an immediate, ambitious pathway aligned with limiting warming to 1.5°C and achieving net-zero by 2050.
Which path becomes reality depends on how deeply brands integrate decarbonization into their operations today and how closely they collaborate with suppliers, says Kristina Elinder Liljas, Aii’s senior director of sustainable finance and engagement. “The fashion industry is very fragmented, and most brands don’t own their suppliers, yet around 96% of emissions come from the supply chain. Brands need to help suppliers invest in energy efficiency and decarbonization, or they won’t meet their climate targets. The longer they wait, the harder the impact will be.”
The Emissions vs. Earnings Equation
In February, sustainability consultancy Swanstant—founded by former Ellen MacArthur Foundation circular fashion lead Francois Souchet—published a benchmarking report measuring fashion and consumer goods companies’ performance on economic growth and emissions. It tackles a critical question behind decarbonization: can emissions fall while earnings rise, effectively decoupling resource use from profits?
“We see a lot of fluctuation here,” says Souchet. “The results show that brands can achieve some degree of decoupling within a certain growth range. In 2024, fewer than 33% of companies in our dataset achieved absolute decoupling, down from 40% in 2023. Our analysis…”The analysis highlights a fundamental conflict between business growth and reducing emissions. For companies that are still increasing their revenue, the likelihood of achieving absolute decoupling—where emissions fall while revenue rises—plummets as growth accelerates. Among firms growing at less than 5%, 73% manage to decouple. This rate drops to 56% for those growing between 5-10%, falls further to 46% for 10-15% growth, and then halves to just 22% when growth exceeds 15%. Essentially, aggressive growth makes it extremely difficult to separate economic success from environmental impact.
The report also introduces new metrics to track carbon efficiency, the rate of decarbonization, and the evolving relationship between economic and environmental performance. “This helps us see how consistently a brand has been reducing its carbon footprint over time,” explains Souchet.
Based on publicly disclosed data, progress on decarbonization is “slowing but not reversing,” says Souchet. In 2022, 65 companies scored highly on both environmental and economic measures. By 2024, that number had fallen to 42. Meanwhile, the number of companies scoring high economically but low environmentally rose significantly. Souchet adds that this decline could be partly due to some companies stopping or reducing the quality of their public reporting.
Looking ahead, Souchet aims to develop the argument that brands should invest more in decarbonization. He wants to create a method to quantify how much financial capacity, or “headroom,” brands have to fund these efforts. “This is very preliminary work,” he notes. “But the goal is to compare each brand’s potential to cut emissions or improve carbon profitability against other companies with similar financial situations.”
The Call for Climate Adaptation
There is an urgent need for brands to address power imbalances in their supply chains and co-invest in collaboratively designed decarbonization plans. This message was echoed in nearly every report reviewed by Vogue Business over the past two months.
The advocacy group Stand.Earth took a qualitative approach, consulting workers, manufacturers, and brands to understand how corporate decarbonization plans affect people in the supply chain and what is needed to ensure a just transition. Their report found that fashion brands are largely failing to include workers in their climate plans and are lagging in climate adaptation, despite its urgency.
“When we spoke to workers, their main concerns were wages and working conditions, which are severely affected by heat and climate events like flooding,” says Rachel Kitchin, a senior corporate climate campaigner. “If an extreme weather event closes a factory, workers lose their wages. This shows the direct link to a just transition. Climate action without adaptation is incomplete. If brands don’t consider workers or include adaptation in their plans, the transition won’t happen as quickly or as fairly as required.”
Solutions that tackle both decarbonization and a just transition can coexist, Kitchin continues. For example, switching factories from coal-powered boilers to electric heat pumps cuts carbon emissions and can also lower indoor temperatures—a significant benefit for workers facing extreme heat. However, these solutions require funding, which highlights the financial aspect of a just transition.
This new report expands on Stand.Earth’s 2025 Fossil Free Fashion Scorecard, which analyzed 42 major brands. That study found only six reported any financing for supplier decarbonization projects, and just one provided strong evidence that its financing did not burden suppliers with debt. “Brands are not paying their fair share today,” says Kitchin.
The De-risked Innovation Pipeline
In January, the Transformers Foundation also addressed this funding imbalance.The report, Unlocking Equity in Innovation, examines how current dynamics affect the pipeline for decarbonization solutions. It recognizes the essential role of innovators in helping fashion brands and factories meet climate goals, but argues that factories are bearing an unfair financial burden to commercialize these new technologies.
“Some suppliers reinvest $2 to $6 million of their revenue annually into research and development,” says Melinda Tually, intelligence director at Transformers Foundation. “Many also partner with startups to adapt lab-developed solutions for commercial use. While the pressure to scale these climate innovations is mounting as deadlines approach, misaligned expectations and major knowledge gaps are stalling progress.”
A key obstacle is funding. Startups need capital at specific stages to scale, but brands have been reluctant to provide crucial support like offtake agreements or letters of intent to help secure that funding. This creates an “uneven distribution of risk,” Tually notes. “Decarbonization reports often highlight this. The supply chain needs co-financing options so it doesn’t shoulder all the risk.”
The report provides three checklists for the main groups in the innovation pipeline: brands, suppliers, and innovators. Each covers readiness for innovation, including how to secure internal support, identify the right partners and locations for scaling, and balance technical, financial, and partnership factors. “These are not just tick-box exercises,” Tually emphasizes. “Ultimately, we need radical change, bold leadership, and transformative solutions to meet our goals.”
The Just Transition Manifesto
The idea of a “just transition” can seem abstract to brands. To clarify what it means for fashion, IndustriALL Global Union dedicated a recent report to outlining its practical application. “The concept isn’t new, but we recognized that the textile and garment sector is highly impacted and has unique characteristics, so we wanted a more specific framework,” explains Diana Junquera Curiel, IndustriALL’s director of industrial policy. The union helped establish the International Accord for Health and Safety in the Textile and Garment Industry.
The report highlights three critical areas for a just transition in fashion: heat stress, climate mitigation and adaptation, and digital transformation. “The core principle is that workers must be involved from start to finish in all these changes. These transformations cannot happen without them,” says Junquera Curiel. “This is central to the International Labour Organization’s guidelines—a just transition must be tripartite, involving employers, governments, and workers.”
Brands that pursue decarbonization without following just transition principles risk violating human rights due diligence laws, fostering instability, and facing accusations of greenwashing, she adds. Involving workers early also brings advantages. “Workers are the experts on the ground every day. Including them isn’t just about wage negotiations; it’s about bringing that expertise into planning. It leads to effective strategies that benefit everyone.”
Frequently Asked Questions
FAQs Fashions Sustainability Goals Whats Next
BeginnerLevel Questions
What does sustainability mean in fashion
It means creating selling and using clothes in a way that minimizes harm to the environment and people This includes using less water and chemicals cutting carbon emissions ensuring fair wages and reducing waste
Why is the fashion industry missing its sustainability goals
The main reasons are the sheer scale and speed of fast fashion complex global supply chains that are hard to track higher costs for sustainable materials and a lack of strict universal regulations
What is fast fashion and why is it a problem
Fast fashion is the business model of producing huge volumes of trendy cheap clothes very quickly Its a problem because it leads to overconsumption massive waste pollution and often poor working conditions
What are some simple signs a brand might be more sustainable
Look for brands that are transparentthey openly share where and how clothes are made Other signs include using certified organic or recycled materials having repair services and setting clear measurable reduction targets for water carbon and waste
As a shopper whats the most impactful thing I can do
The single most impactful action is to buy less and wear what you already own more often Taking care of clothes repairing them and buying secondhand are also powerful choices
Advanced Practical Questions
What are Scope 3 emissions and why are they so critical for fashion
Scope 3 emissions are the indirect emissions from a companys entire value chain like raw material production manufacturing and product use For fashion over 90 of a brands carbon footprint often comes from these Scope 3 emissions making them the biggest challenge to address
Is recycling or circular fashion the solution
Recycling is a helpful part of the solution but its not a silver bullet Most clothes are hard to recycle into new highquality fabric True circularity requires designing clothes for longevity and easy recycling from the start which is still in early stages Reducing production volume is more critical
What does greenwashing look like in fashion
Greenwashing is when a brand exaggerates or falsely claims ecofriendly practices Common examples are highlighting a small conscious collection while most business is unsustainable