Over the last year, two seemingly contradictory trends have come into focus.

On the one hand, consumer survey after consumer survey indicates that shoppers’ concern about the climate is increasing. On the other, a flurry of sustainability-focused brands have closed down, unable to compete in the high-pressured fashion market.

What’s going on?

Consumer behaviour is complicated. Lots of people who intend to shop more consciously, actually care more about things like style and price when it comes to making a purchasing decision. And there’s no getting round the fact that producing clothes in a way that prioritises protecting the planet and respecting labour rights is more expensive. As a result, consumers shopping sustainable fashion are slapped with a “green premium.”

At the same time, brands that choose not to make such efforts benefit from lower operating costs — a “brown discount” — that allows them to underprice and undercut competitors.

Let me explain.

‘Green Premiums’ and ‘Brown Discounts’

Ten years ago, philanthropist and tech titan Bill Gates joined a group of investors to form investment firm Breakthrough Energy Ventures, aiming to fund and accelerate adoption of climate solutions. Gates soon realised that scaling decarbonisation in almost every sector of the economy (including agriculture, jet fuel, heavy industry and indeed fashion) was constrained by what he dubbed the “green premium.” Gates defined this as “the difference in cost between a product that involves emitting carbon and an alternative that doesn’t.” For example, if traditional jet fuel cost $2.20 per gallon and advanced low-carbon biofuels cost $5.50 per gallon, the green premium equates to 150 percent. Lower-impact textiles, from recycled to organic to bio-based materials, come with similar elevated prices when compared to conventional alternatives — just one example of how the green premium shows up in fashion.

But the fashion sector also suffers from an additional burden: a “brown discount.” In Gates’ analogy, this would be the equivalent of a chunk of the airline industry choosing to purchase a third, more polluting form of jet fuel, that sold at a lower price than even the traditional product. In fashion, there’s no need to look further than the dominance of plastic polyester (one of the cheapest fibres available) or the rise of ultra-low-cost instant-fashion companies like Shein to understand its impact — it’s at least part of the reason why the average cost of a Shein top is $10.07 versus an average of $22.55 for H&M.

What to Do?

There is no magical way to reduce fashion’s environmental footprint and improve its working conditions for free. While a select few investments (like switching to energy-efficient LED lighting and improving factory efficiency) do lower costs and lessen environmental impacts, these remain the exception.

Factories that pay a fair wage, limit excessive overtime, adhere to minimum safety standards and invest in technology to decarbonise are more expensive than sweatshops that ignore social and environmental costs. Likewise, adoption of lower-impact materials and manufacturing processes require investment to scale. The end result: brands that operate more responsibly are burdened with higher costs and greater operating complexity, while those that don’t continue to fuel a race to the bottom in an effort to get products to market as quickly and cheaply as possible.

For the industry to achieve its sustainability targets, the green premium and the brown discount need to be extinguished. This can be done in one of two ways: either win-win technologies emerge that are both lower priced and better for the planet (like solar energy is in many countries today), or rules need to change to mandate sustainable outcomes.

Given that it took nearly 70 years and hefty subsidies for solar power to achieve price parity with fossil energy, rule change is the only practical option.

At a recent gathering of the financial community, Canadian Senator Rosa Galvez made this very point. Galvez is behind one of the most interesting pieces of climate legislation currently in the works anywhere. Her proposed Climate-Aligned Finance Act would require Canadian financial institutions to align with national climate commitments “as a superseding duty” under national law.

Galvez argued that voluntary action (the current status quo) would continue to be inadequate because good actors are operating on an uneven playing field. “There is some leadership coming from the private sector,” she said, but “the elephant in the room is that you are all in competition. So, we need somebody to come and give the rules.”

New rules that make green practice mandatory are also needed in the fashion industry.

Kenneth P. Pucker is a professor of practice at the Tufts Fletcher School. He worked at Timberland for 15 years and served as chief operating officer from 2000 to 2007.

Imagine you are the chief supply chain officer at a multi-billion-dollar fashion brand.

Your company has set ambitious targets to reduce its planet-warming emissions. That’s made your job more complicated. The supply chain, which you oversee, is where most of your company’s climate impact takes place. It’s also where you have the least control because you don’t own the mills that make your fabrics, the facilities that dye your cloth or the factories where your products are sewn.

It’s a prodigious problem, so you’ll tackle it bit by bit. This season, one focus is on reducing the carbon emissions associated with fossil fuel-powered boilers used in the jeans dying process. A supplier presents you with two options (both with the same capital and operating costs), only one of which they can fund:

• Option 1: In one facility, the supplier can swap out a very old natural gas-powered boiler for a newer version. The old boiler can process one pair of jeans per cubic meter (m³) of gas and the new, more efficient one can process two pairs per m³.
• Option 2: In another facility that was already using the next generation boiler, the supplier offers to install an even more efficient version that would increase production from two pairs of jeans per m³ to five units per m³.

You will need to process 1,000 pairs of jeans in each facility to meet your production quota and the choice seems like a no brainer. With Option 2 you get three more units per cubic meter of gas burned; with Option 1 you only get one.

But here is where fashion’s climate math stops making intuitive sense; though Option 2 seems like it will deliver more impact, Option 1 will actually deliver larger emissions reductions.

Let me break it down:

The first upgrade to your supplier’s boiler — the one that gives you just one extra unit per m³ — results in a healthy 500m³ reduction in your suppliers’ natural gas consumption for every 1,000 units produced. The second upgrade only saves 300m³.

This is fashion’s decarbonisation calculus; the more efficient production gets, the harder it is to squeeze out energy and emissions savings. In other words, the relationship between effort and impact is a nonlinear one of diminishing returns.

Decoding Fashion’s Climate Math

The same math manifests in almost all the industry’s decarbonisation efforts.

When brands and manufacturers first get started, emissions reductions can be quite swift and cost efficient. This is the domain of low-hanging fruit. For instance, factories can switch to more efficient LED lighting, thereby reducing their energy consumption, and often get returns on the investment in less than one year.

But more ambitious projects, like upgrading boilers to make them more efficient or switching them to run on less carbon-intensive fuels, generally cost more and deliver savings more slowly, if at all. Getting factories fully off carbon-intensive fossil fuels requires massive investment and government action to shift national grids to renewable energy.

Two additional factors further complicate fashion’s decarbonisation math.

First, the impact of climate change — the end result of the industry’s current polluting practices — is hitting harder and faster than most expected. Temperatures in many of fashion’s largest manufacturing hubs in Asia pushed 40 degrees Celsius in April and May. In parts of India and Pakistan they breached 50 degrees. Such extreme heat is becoming more common, more severe and lasting longer. The industry will have to adapt to this grim climate reality, which has serious implications for worker health, productivity and general factory operations. That means air conditioning factories, according to one Asia-based sustainability executive. But effective cooling will come with a hefty energy bill, adding to emissions at fossil fuel-dependent factories just when the industry is trying to decarbonise.

Finally, even where companies are successfully curbing emissions, that progress is often offset by continued growth. This is why, one now ex-sustainability executive from a multi-billion-dollar brand told me, no fashion brand with robust science-based climate targets is in a position to deliver on them.

The Consumer Conundrum

A similar non-linear calculus comes into play when looking at the other side of this equation: consumer demand.

For many years, the industry has advertised its pursuit of sustainability goals based on the assumption that this would appeal to shoppers. Indeed, surveys often ask consumers to rate their environmental concern from one to five, and over time, the results of such exercises indicate worry about the climate is increasing. But that hasn’t directly translated into changes in purchase behaviour.

If all this makes your head hurt, you’re not alone. The human brain tends to think in straight lines, so these complex, non-linear relationships are literally mind boggling. (If you want to understand this better read this excellent analysis from The Harvard Business Review, which has helped shape my thinking on the topic). This also helps to explain why delivery of environmental sustainability is such a daunting challenge.

Yet if the consumer intention versus action gap lessens pressure on brands and decarbonisation turns out to be harder and more expensive than anticipated, the prognosis for voluntary progress is dim. This math is immutable, even if it is counterintuitive.

This is precisely why sane policy is needed to mandate and incentivise minimum social and environmental standards — measures that could tip fashion’s climate calculus more in favour of action.

That’s not simply down to the fact survey participants are rarely totally honest in their responses. It’s also because the relationship between consumer attitudes and consumer behaviour maps on a curve, not a straight line — just like efforts to reduce emissions.

In fact, academic research shows little or no behavioural difference between consumers who, on a five-point scale, give their environmental concern the lowest rating, one, and consumers who rate it a four. But the difference between fours and fives is huge.

In other words, only those who care the most really act on their values.

Kenneth P. Pucker is a professor of practice at the Tufts Fletcher School. He worked at Timberland for 15 years and served as chief operating officer from 2000 to 2007.

Over the last two weeks, leaders from 175 countries gathered in Ottawa, Canada to hash out the details of a global treaty to end plastic pollution which is expected to be finalised in a last round of negotiations set to be held in Korea in November.

The issue is urgent. A new study by the US-funded research and development centre, the Lawrence Berkeley National Laboratory, found that plastics have grown by more than any other bulk material on earth over the past decade, with significant and damaging consequences for human health and the environment.

Carbon pollution created by plastic production is responsible for 2.24 gigatons of CO2 per year, or nearly five percent of all global emissions. Microplastics, some of which shed from synthetic fashion, are entering our bodies through the food we eat and the air we breathe, with dangerous health implications. According to the UN, more than 2,400 chemicals that are associated with plastics are of concern to our health or the planet. And because they do not biodegrade, products like nylon tights and polyester sneakers can remain in landfills for generations. Incinerated plastics release heavy metals and toxins.

According to Ecuador’s chief negotiator, Walter Schuldt, the talks on global plastics treaty are “about the survival of the future of life, not only human life but all sorts of life on this planet.”

Big stakes. And ones in which fashion is complicit.

Plastic Fashion

Plastic, in the form of polyester, acrylic, nylon and elastane, has fused with fashion. Cheap, durable, functional and plentiful polyester is now the world’s most used textile, accounting for more than half of global production. This was not always the case; before 2000, natural fibres dominated the fashion industry.

The most contentious element of the ongoing negotiations over a plastic pollution treaty could help redress that balance. Some “high ambition” countries are pushing for targets to reduce global plastic production, similar to the agreement to keep a cap on global warming reached under the UN Paris Agreement in 2015.

But reduction is not a focus of the fashion industry. Instead, big brands, industry trade groups and NGO-backed consortia that are still dominated by corporate interests are focused on the promise of recycling and reuse, leaning into technologies that have yet to be proven at scale, aren’t cost competitive and fail to tackle the root issue of overproduction.

A recent Lululemon-sponsored report published by trade group Textile Exchange highlighted this view. The report, titled “The Future of Synthetics” said that the industry must shift away from the use of virgin fossil fuel-based plastics to meet its climate goals, recommending a switch instead to alternatives that include textile-to-textile recycling, biosynthetics and materials made from captured carbon.

Unfortunately, these steps won’t come anywhere close to delivering on Textile Exchange’s stated ambitions.

Why not?

None of these emerging technologies can compete with virgin polyester on price, efficacy or volume. All preferred solutions require decades and billions of dollars of investment to scale — capital which will not flow to financially bootless options. It’s also not yet proven which, if any of these options will meaningfully reduce the industry’s carbon emissions, or curb the toxic levels of chemicals and microplastics released by today’s plastic fashion.

What Can Be Done

While the first step of Textile Exchange’s plan to reduce the fashion industry’s growing dependence on plastics is fanciful, the report proposes a second step: to reduce the overall volume of stuff produced and sold.

Adoption of this recommendation would have a profound and immediate impact. Unfortunately, the report does not make any suggestions for how to accomplish this dramatic turn.

Just as other big fossil-fuel producing countries are pushing back against any proposal to cap global plastic production, the fashion industry is unwilling to entertain ideas that would restrain growth. After all, for brands like report sponsor Lululemon, their valuation depends on growing output.

But, if caps on fashion sales are inconceivable, a sufficiently high tax on plastic inputs would represent a step in the right direction. Such a measure would discourage the use of plastics by increasing their cost and make less damaging natural alternatives more attractive. It would simultaneously create a pool of funds to address the negative environmental and health impacts caused by plastic pollution.

Consider, for example, that taxes on cigarettes have caused prices to balloon and consumption to plummet.

For those who nonetheless insist that such a proposal is fantasy, look to France, which is already considering a sin-style tax on fashion. Rather than recommend dubious “solutions,” the fashion industry ought to support credible paths to reduce its negative impacts, thus restoring its standing as a creative and constructive force for good.

For the past two years, I have been working with the New Standard Institute to secure passage of the New York Fashion Act. The Act represents the first thorough attempt to regulate the fashion industry in the United States requiring that brands selling in New York state perform due diligence, report on their impacts and reduce carbon emissions in keeping with planetary boundaries. As part of the process, I have engaged with scores of industry participants including brands, suppliers, trade associations, unions and activists.

The conversations have been constructive. One proposal has, however, led to surprising consternation. With few exceptions (which include progressive brands such as Patagonia, Reformation, Cotopaxi, and Eileen Fisher), big fashion brands and trade associations have bemoaned the “impracticality” of the Act’s mandated disclosure of their supply chains. This disclosure is needed to engender transparency and to link output to impacts.

Notwithstanding advances in technologies including blockchain, smart sensors, isotope identification and supply chain mapping software, many industry participants maintain that it is “next to impossible” to know which suppliers are growing their cotton, tanning their leather and dying their fabrics. After all, they explain, raw inputs are typically blended with many others en route to market, brands do not always nominate upstream suppliers, factories often subcontract without approval and demands for faster product introductions outpace brands’ ability to collect data.

Said differently, financial outcomes supersede efforts to assure supply chain transparency.

In the endless drive to expand gross margins and increase revenue, fashion brand executives continue to press supply chains to speed up product introduction and drive costs down. This leads to transience, opacity and complexity which is often accompanied by a reluctance to invest in voluntary disclosure. After all, why invest in traceability for a fast changing, upstream supply chain when reporting is voluntary and consumers do not demand or understand this information. According to Fashion Revolution, only 12 percent of the biggest 250 fashion brands publish a list of their raw material suppliers.

It Wasn’t Always This Way

Fifty years ago, many brands were manufactures and production was more geographically concentrated, making it easier to track. For example, at Timberland (where I served for 15 years, seven as COO), the original factory was located in New England, the same region as the company’s leather suppliers and footwear equipment manufacturers. Timberland’s tagline “More Quality Than You May Ever Need” was premised on the trained expertise of its own production workers. Traceability was straightforward.

However, a shift towards trade liberalisation precipitated a ramp up of outsourcing from the ‘90s onwards. The result: most fashion brands’ manufacturing assets suddenly became liabilities, burdened by higher operating and labour costs when compared to Asian alternatives. Outsourcing led the locus of competition to shift from an emphasis on quality and innovation to a focus on flexibility and low cost.

Brand Upside, Societal Downside

Shifting production to ever cheaper locales has enabled the fashion industry to keep prices low, helping to fuel its rapid growth over the last 30 years. It has also allowed fashion companies to benefit from regulatory arbitrage — because environmental and labour regulations and enforcement in Asian sourcing hubs have often been laxer than those in the US and Europe. This has led to worsening unit for unit environmental impact of fashion production.

While outsourcing to multi-tier supply chains has benefited big brands and acquisitive consumers, it has led to far reaching social and planetary damage. Fashion is one of the world’s most environmentally damaging industries, with impacts spanning chemical, land and water usage, as well as carbon emissions. Trends are not positive. Predictions estimate that plastic polyester fibre production will increase by 47 percent in the next decade while carbon emissions from fashion are on track to grow by 30 percent.

Other Paths

The structure and impacts of the fashion industry are not immutable or preordained. They are choices. Indeed, some brands are choosing to move in the opposite direction to the wider industry pattern by localising and verticalising production. As but one example, entrepreneur and creative director Brunello Cuccinelli took a joint-minority stake in a cashmere yarn producer last May. At the time, he noted, “I’m not worried about who’s going to buy the product, but I’m worried about who’s going to produce the product.” All the brand’s products are made in Italy.

This approach is not exclusively the domain of luxury labels. For example, Welsh brand Huit Denim produces all its jeans in its own factory in Cardigan, a town that used to host to Britain’s largest denim factory (which closed in 2002). According to co-founder David Hieatt, “Our grandmasters are craftsmen and women. Having a factory in the town where we live allows us to be transparent, responsive and assures superior quality.”

While neither Brunello Cuccinelli nor Huit Demin share detailed mapping of their supply chains, implementation of regulation that mandates such disclosure would be straightforward for both companies. Other industry participants including Another Tomorrow and a partnership between Levi’s and Artistic Milliners are demonstrating that transparency is possible. So is VF Corporation which has mapped and shared the complete multi-tiered journey for one hundred of its highest volume products.

What Next?

Why do traceability and disclosure matter?

Firstly, absent robust traceability, brands will soon no longer be able to make green claims. Last week, by a vote of 593 to 21, the European Parliament voted to adopt a new anti-greenwashing law banning the use of generic product claims including “environmentally friendly” or “climate neutral.” This law was a response to industry abuse. According to a European Commission study, more than half green claims by companies in the EU were vague or misleading, and forty percent were completely unsubstantiated.

In addition, to maintain its social license to operate, the fashion industry will have to address and minimise its negative externalities: the harmful social and environmental side effects of doing business. Today, the fashion industry does not pay for externalities including labour abuses, pollution and carbon emissions — these costs are borne by society. However, legislation including the Uyghur Forced Labor Prevention Act (UFLPA) is being adopted to force brands to limit their negative impacts.

Disclosure alone, will not address all the industry’s negative externalities. Nor will it be simple. Fashion supply chains have become astonishingly complex.

Disclosure is, however, a first step. According to McKinsey, 79 percent of fashion executives consider “the lack of access to standards to assess sustainability performance as the greatest hurdle to improving” customer perception of sustainability. It follows, then, that fashion brands who want to message authentic sustainability ought to support legislated standards to require reporting on the lineage and contents of production.

So doing is a necessary precursor to getting brands to internalise externalities. The industry’s current inability or unwillingness to do so is a choice — one borne out of a desire to optimise for financial outcomes, not reduce social or environmental harmful impacts.

Kenneth P. Pucker is a professor of practice at the Tufts Fletcher School. He worked at Timberland for 15 years and served as chief operating officer from 2000 to 2007.