As the race to meet ambitious sustainability targets heats up, fashion is directing more attention to decarbonization, hoping to cut supply chain emissions at the source. But delivering impact isn’t as easy as it might seem. Between fashion’s penchant for fragmented, global supply chains and its tendency towards top-down sustainability strategies that overlook the role of suppliers in scaling decarbonization, progress has been slow.
In recent months, a slew of decarbonization-adjacent reports have been published, offering fresh perspectives on one of fashion’s most critical challenges.
But trudging through multiple 30-plus-page reports isn’t for the faint-hearted, so Vogue Business decided to do the heavy lifting. Below, you will find the key takeaways from six recent reports, charting the findings that challenge assumptions, the data that backs up commonly held beliefs, and the facets of decarbonization previously overlooked.
Several of the reports repeat similar messages: decarbonization is moving too slowly, for example, or that brands are not doing enough to help suppliers accelerate action. Taken as a whole, the reports offer a “surround sound” effect, which can help bring credibility and awareness to the efforts of smaller nonprofits and labor groups by reinforcing their messaging, says Ruth MacGilp, a climate campaigner at Action Speaks Louder. “This way, it’s not just an activist screaming outside a brand’s office, it’s a whole ecosystem sharing the same message, albeit with different accents.”
The relevance of recent decarbonization reports to broader sustainability topics is “refreshing”, says MacGilp. “A few reports have come out recently which link climate change with labor rights and business resilience — not looking at them as siloed issues, but encouraging brands to take an integrated approach that addresses the root causes. We know that when you only address one issue at a time, you get unintended consequences, so the more we can make those links, the better.”
The reality check
In January, member-led nonprofit Cascale released its 2026 State of the Industry report, offering a sobering reality check for fashion’s decarbonization efforts. The report aggregates data from 13,000 Tier 1 and Tier 2 facilities, which submitted self-assessments to Cascale’s Higg Facility Environmental Module (FEM) tool for independent auditing and verification.
One solution many brands are pinning their hopes on is electrification, shifting from fossil fuels to renewable energy-powered electricity. Electrification alone will be “insufficient” to meet the Paris Agreement, Cascale reports, largely because production countries are generally lacking in grid-level renewable energy. This means on-site renewable energy infrastructure (such as solar panels) and off-site energy sources (such as wind farms) will be “critical”. Right now, renewable energy accounts for just 2% of the industry’s total energy use. But this shouldn’t be an excuse for brands to abandon particular production countries or suppliers, says Joël Mertens, director of Higg Product Tools. Instead, brands should use the report to motivate deeper supplier engagement, long-term partnerships that include co-investing in decarbonization, and moving beyond the “low-hanging fruit” to pursue “deeper transformation”.
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Faced with pressure from shareholders to supercharge profits, many brands are still increasing production, which has led sustainability teams to shift the emphasis from decreasing absolute emissions to decreasing energy intensity — the amount of carbon emissions tied to each unit of energy used. Still, Cascale found that progress is lagging. “Even with small decreases in energy intensity, the increase in production we are seeing means that total emissions are still going up. So we are quite far off track,” says Mertens. “We haven’t even reached a place of plateauing emissions yet, which means the industry is further away from its sustainability targets than we were when we set our baselines.”
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Unsurprisingly, Cascale found that emissions tend to be higher in larger factories. More “eye-opening” is that energy intensity does too, says Mertens. “The good news is that we can focus on a smaller number of factories to make a bigger impact. The bad news is that larger factories rarely have one brand representing the bulk of production, which means we are going to need collective action to drive change.” This can be difficult, he explains, because brands are not used to pooling their resources with other brands and co-investing in supply chain improvements in this way. Some are hesitant to do so because they will only be able to claim a percentage of the emissions savings they pay to address, but these collaborations are the industry’s best hope.
The business case for decarbonization
Late last month, the Apparel Impact Institute (Aii) published The Cost of Inaction, with some bold claims about just how badly fashion brands’ climate inertia will hit profit margins. The topline takeaway? By 2030, brands that fail to act on three key climate risks — carbon pricing, energy volatility, and raw-material disruption — could shave 3% off their operating margin, which could cut profits by 34%. By 2040, profit losses could hit closer to 70%. On the flip side, Aii says that brands that invest early will unlock a 2% bump on EBIT, improved liquidity, and a 5 to 10% valuation premium for climate-aligned portfolios.
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The report addresses brands’ finance teams, hoping to make the business case for decarbonization and catalyze action towards not only industry goals, but Aii’s own target of reducing up to 100 million tonnes of CO2 from apparel supply chains by 2030. It separates brands into three categories: conventional operators, pragmatists, and pioneers. Conventional operators have minimal engagement with sustainability and still rely heavily on fossil fuels in their sourcing and production. Pragmatists do the bare minimum to comply with sustainability regulations but lag behind on ambitious transformation. Pioneers lead the pack, pursuing aggressive net-zero strategies, using renewable energy extensively, and co-investing with suppliers and peers to accelerate decarbonization.
Likewise, it models three different scenarios for each key climate risk. The first is based on current policies and a business-as-usual approach. The second follows a delayed transition plan that kicks in after 2030 goals have already been missed. And the third charts immediate, ambitious climate policies, which limit global warming to 1.5°C and put the industry on track to hit net-zero by 2050.
Which pathway becomes reality depends on how deeply brands embed decarbonization in their businesses today, and how closely they collaborate with suppliers, says Kristina Elinder Liljas, senior director of sustainable finance and engagement at Aii. “The fashion industry is very fragmented, and most brands don’t own their suppliers, but around 96% of emissions sit in the supply chain. Brands need to support suppliers to invest in energy efficiency and decarbonization, or they won’t meet their climate targets. The longer they wait, the harder this will hit.”
The emissions-versus-earnings equation
In February, sustainability consultancy Swanstant — founded by former Ellen MacArthur Foundation circular fashion lead Francois Souchet — published a new benchmarking report which measures the performance of fashion and consumer goods companies across economic growth and emissions. It taps into one of the most critical questions underpinning decarbonization: can emissions shrink while earnings boom, decoupling material resource use from profits?
“We see a lot of fluctuation here,” says Souchet. “The results show that brands can achieve some degree of decoupling if they are within a certain growth band. Fewer than 33% of companies in our dataset achieved absolute decoupling in 2024, down from 40% in 2023. Our analysis identifies a structural tension between growth and emissions reduction. Among companies still growing their revenue, the probability of achieving absolute decoupling drops sharply with speed: 73% for those growing below 5%, falling to 56% at 5-10% growth, 46% at 10-15% growth, and then halving to 22% once growth exceeds 15%. When you’re growing very aggressively, decoupling becomes very difficult.”
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The report also introduces a few new metrics that track carbon efficiency, the pace of decarbonization, and the intersection between economic and environmental performance over time. “This allows us to see how steady a brand’s decarbonization has been over time,” explains Souchet.
The results — based on data brands disclose publicly — shows that progress on decarbonization is “slowing but not reversing”, says Souchet. In 2022, 65 companies scored high on environmental and economic scores. By 2024, that dropped to 42 companies, while companies that scored high on economic but low on environmental increased significantly. This could be because some companies stopped reporting or decreased the quality of their reporting in that time, Souchet adds.
Moving forward, Souchet says he is keen to evolve the argument that brands should pay more for decarbonization and create a way to quantify how much financial “headroom” brands have to fund decarbonization. “It’s very preliminary work,” he notes. “But the idea is to understand each brand’s ability to reduce emissions or improve carbon profitability compared to other companies with similar financial profiles.”
The call for climate adaptation
Brands need to urgently redress the power imbalances in their supplier relationships and co-invest in co-designed decarbonization. This message was repeated in almost every single report Vogue Business surveyed over the past two months.
Advocacy organization Stand.Earth took a qualitative approach, consulting with workers, manufacturers, and brands to understand how brand-level decarbonization plans are affecting the people in their supply chain, and what more needs to be done to guarantee a just transition. The report found that fashion brands are largely failing to consider workers in their decarbonization plans, lagging on climate adaptation despite the urgent need for it.
“When we talked to workers, their primary concerns related to wages and working conditions, which are dramatically impacted by heat and climate events like flooding. If an extreme weather event happens and they can’t access the workplace or the factory is forced to close, they forfeit wages, so there is a direct connection to just transition there,” says senior corporate climate campaigner Rachel Kitchin. “Climate action without climate adaptation is incomplete. Without considering workers or including climate adaptation in brand transition plans, those transitions won’t happen as fast or as fairly as they need to.”
Solutions that address both decarbonization and just transition can co-exist, continues Kitchin. For example, factories transitioning from coal-powered boilers to electrified heat pumps is a win for carbon emissions, but it can also reduce temperatures, which is a win for workers battling with extreme heat. But these solutions cost money, which is where the other side of just transition comes into play. The new report builds on Stand.Earth’s 2025 Fossil Free Fashion Scorecard, which analysed public information from 42 major fashion brands, and found that just six reported any kind of decarbonization project financing for suppliers, and only one demonstrated strong evidence that the financing offered did not put the supplier in debt. “Brands are not paying their fair share today,” says Kitchin.
The de-risked innovation pipeline
In January, the Transformers Foundation picked up on this imbalance in funding and drilled down into how it affects the innovation pipeline for decarbonization solutions. Its report, Unlocking Equity in Innovation, acknowledges the vital role of innovators in helping fashion brands and factories meet their decarbonization goals, while also arguing that factories are currently struggling under a disproportionate financial burden for bringing these innovations to market
“Some suppliers are reinvesting between $2 to $6 million of revenue each year into research and development,” says Transformers Foundation intelligence director Melinda Tually. “Many then play a dual role, acting as partners to innovation startups, transforming solutions developed in universities and labs into something that can be used in a product. There is a lot of pressure for these climate solutions to scale as decarbonization targets draw nearer, but there are also misaligned expectations and profound knowledge gaps that hinder the innovation pipeline.”
One significant barrier is that startups need capital at very specific junctures to scale, but brands have shown limited willingness to sign offtake agreements or write letters of intent, which would help them secure critical funding. This leads to an “uneven distribution of risk”, says Tually. “This is something you often find in decarbonization reports. The supply chain needs co-financing options so it doesn’t hold all the risk.”
The report includes three checklists that address the stakeholder groups crucial to the innovation pipeline: brands, suppliers, and innovators. Each one runs through innovation readiness, including how to get cross-functional buy-in; find the right location and partners to scale a particular solution; and balance technical, financial, and partnership considerations. “These are not tick-box exercises,” says Tually. “Ultimately, we need radical change, radical thought leadership, and radical solutions to meet our goals.”
The just transition manifesto
Just transition is one of those concepts that can feel quite abstract to brands, which is why IndustriALL Global Union dedicated its latest report to pinning down exactly what a just transition might look like in the fashion industry. “This concept is not new, but we realised that the textile and garment sector was one of the most impacted, and it has several peculiarities, so we wanted to create a more specific political framework,” says Diana Junquera Curiel, director of industrial policy at IndustriALL Global Union, one of the organizations behind the International Accord for Health and Safety in the Textile and Garment Industry.
The report pulls out three critical factors for fashion to consider as it pursues a just transition: heat stress, climate mitigation and adaptation, and the digital transformation. “The main issue is that, for all of these changes, workers need to be involved from the very beginning until the end. These transformations are not possible without workers,” explains Junquera Curiel. “This is a key part of the International Labour Organization (ILO) guidelines on what makes a just transition — it has to be tripartite, so you have employers, governments, and workers represented.”
Brands that attempt to decarbonize without following the just transition guidelines risk breaching human rights due diligence regulations, courting instability or conflict, and being accused of greenwashing, continues Junquera Curiel. There are also co-benefits to bringing workers into decarbonization plans early, she adds. “Workers are the experts. They are the ones working in the field or the factory every single day. So when we talk about including workers, we’re not just talking about collective bargaining on wages; we’re talking about bringing the experts into the discussion. It’s about making a plan that works, and that benefits everyone involved.”
