A new report from Carbon Market Watch indicates that while major players in the global fashion industry are implementing some climate strategies, their collective efforts fall significantly short of the targets required to align with the goals of the Paris Agreement. Released on June 26, a key section of the 2025 Corporate Climate Responsibility Monitor report assesses the climate performance of five of the world’s largest fast fashion corporations: Adidas, H&M Group, Inditex, Lululemon, and Shein.
These five companies represent a substantial portion of the sector, collectively generating a staggering $123 billion in annual revenue in 2023. The report scrutinizes their approaches across a range of critical areas, including the electrification of manufacturing processes, the integration of renewable energy throughout their supply chains, efforts to reduce overproduction, initiatives to curb virgin material use, and the adoption of low-emissions fibres and logistics.
Limited Progress and Superficial Solutions
Despite some signs of progress and the implementation of more sophisticated strategies by certain companies – with H&M Group specifically noted as being at the helm of some improvements – the report’s overarching conclusion is stark. It describes the current trajectory as one characterized by “half measures and false solutions.” According to Carbon Market Watch, these efforts often serve to patch over fundamental issues rather than addressing the systemic challenges that drive the fashion sector’s significant environmental footprint.
The assessment highlights a considerable disparity in performance among the reviewed companies. Shein, the ultra-fast fashion giant, was ranked at the bottom of the group due to a notable lack of meaningful climate action and transparency regarding its environmental impacts and strategies.
Electrification and Renewables Gap
One critical finding of the report concerns the disconnect between renewable energy pledges and practical implementation, particularly in the supply chain’s manufacturing phase. While companies like H&M Group, Inditex, and Lululemon have made commitments to procure renewable electricity, the report points out a significant deficiency in their clear plans for electrifying their actual production processes. This gap means that while energy sources might be cleaner on paper, the energy-intensive operations of manufacturing facilities may still rely heavily on fossil fuels, undermining the potential climate benefits of renewable purchases.
The fashion industry’s complex global supply chains, often involving numerous third-party manufacturers in various countries, present unique challenges in tracking and influencing energy use. However, the report emphasizes that genuine progress requires tackling these challenges head-on, moving beyond simply purchasing renewable energy credits to actively transforming manufacturing processes.
Addressing Overproduction and Material Use
Beyond energy, the report also examines the companies’ strategies related to material consumption and production volumes. The fast fashion model is inherently built on rapid cycles of production and consumption, often leading to significant overproduction and waste. Strategies to reduce the reliance on virgin materials, increase the use of recycled or low-impact fibres, and curb excessive production are identified as crucial components of a credible climate strategy.
While some companies are exploring these avenues, the report suggests that the scale and pace of these efforts are insufficient to counteract the environmental burden imposed by the sheer volume of goods produced and consumed within the fast fashion sector. The continued growth of these companies, despite sustainability commitments, raises questions about the fundamental compatibility of their business models with rapid decarbonization.
Expert Call for Regulation
Benja Faecks, an expert involved in the Corporate Climate Responsibility Monitor (CCRM) project at Carbon Market Watch, underscored the report’s findings with a call for stronger external drivers for change. Faecks emphasized that achieving truly transformative climate action within the sector is unlikely to occur at the necessary speed and scale through voluntary corporate initiatives alone.
According to Faecks, “transformative climate action requires sector-specific regulation.” This perspective suggests that binding policies and legal frameworks are necessary to compel companies to adopt more ambitious and effective climate strategies, particularly in areas where voluntary action has proven insufficient, such as supply chain decarbonization and addressing overproduction.
Conclusion
The findings of this section of the 2025 Corporate Climate Responsibility Monitor report paint a picture of an industry taking tentative steps towards climate responsibility but ultimately failing to match the urgency and scale demanded by the Paris Agreement goals. While some companies demonstrate improved strategies and targets, the prevalence of “half measures” and a lack of fundamental transformation, particularly highlighted by the performance of companies like Shein and the gap in electrification plans for others, indicates that the fast fashion sector has a long way to go. The report reinforces the view that without increased regulatory pressure, the industry may continue to lag significantly in its contribution to global climate efforts.
