The last thing the apparel industry needs is more headwinds when it comes to cleaning up its products and processes. Yet, several external factors have recently developed, threatening to further undermine the pace of climate action.
“I think it’s safe to say the apparel industry right now is at a crossroads,” Michelle Mendlewicz, senior sustainability strategist for fashion & sporting goods for consulting firm Quantis, told HGI. “We are seeing this combination of macroeconomic pressures and supply chain volatility and the whole evolving regulatory landscape, and these are really creating challenges for sustainability progress in general.”
The result is an existential test. Either allow short-term crises to be a distraction or remain steadfast in prioritizing sustainability and future-proofing operations. Obviously choosing the latter is easier said than done when a host of factors are eating away at already anemic margins.
Preferred fibers under pressure
Weak global demand and rampant uncertainty have virgin cotton prices at a near 5-year low. Meanwhile, slumping oil prices and massive quantities, primarily coming out of China, equal a glut of inexpensive virgin polyester at a time when sustainable synthetic fiber supply remains very small with a premium price tag.
Bruna Angel, principal analyst for fibers at Wood MacKenzie, said the math is not favorable, particularly for shoppers who aren’t feeling rich right now.
“The actual volumes [of chemical textile-to-textile recycling] today are tiny, and China is putting in 10.2 million tons more polyester capacity just between 2023 and 2025, and out to 2040 it’s another 26.6 million tons of polyester fiber, mainly virgin but also from PET bottle waste recycling,” she said. “That is a shock for anybody that is thinking, ‘We’re going to start doing textile-to-textile waste [recycling]’—not at the prices that consumers are looking for.”
It’s a particularly hard pill to swallow at a time when retail prices are poised to balloon in response to the reciprocal tariffs themselves, not to mention the costs associated with the resulting upheaval.
“The current environment—with the additional pain points of 24/7 ever-changing [tariff announcements]—is completely counterproductive,” Katrin Ley, managing director, Fashion for Good, said. “When you look at materials, it is about a longer-term strategy. The uncertainty that comes from tariffs changing sourcing patterns makes it even more challenging.”
More challenging, more expensive and less desirable—at least that’s the fear for those who recognize the price-sensitive nature of this industry.
“For the vast majority of companies, particularly in this environment with high tariffs and also potential for more inflation getting into the system, those external forces are only going to further put pressures on that price differential,” said Robert Antoshak, vice president, global strategic sourcing and development, at Grey Matter Concepts sourcing company. “Even if companies believe in it, what a lot of companies will end up doing is this kind of blended approach.” By this he means a scenario in which brands and retailers use preferred fibers only for select programs as they look to manage costs.
“We really need to think about this low cost as a perceived low cost, because right now, virgin fibers are cheap, but they are not low risk.”
—Michelle Mendlewicz, Quantis
Mendlewicz warns this is a shortsighted approach.
The senior sustainability strategist for fashion & sporting goods at consulting firm Quantis said the industry needs to broaden its definition of cost. “We really need to think about this low cost as a perceived low cost, because right now, virgin fibers are cheap, but they’re artificially cheap. We think they’re cheap, but they are not low risk,” she said. Even just looking at cotton, she said, the floods in Pakistan, extreme heat in India and drought in the U.S. illustrate the risk—and it’s only going to get worse. “These next-gen materials or preferred materials aren’t just environmental upgrades or nice to have. They can be true mitigation tools as part of their supply chain.”
That is, if you can get your hands on them.
A recent Quantis report showed that demand for preferred materials will outpace supply by 133 million tons by 2030. This imbalance means those who forgo preferred fibers in favor of low-cost virgin inputs could be left in the cold, Mendlewicz cautioned. “They should really be thinking about how they can lock in some of these preferred materials now, before this scarcity ends up driving prices even higher and more risks in their supply chain.”
Rather than companies pulling back from sustainable fibers, Ley said the current environment is prompting a more strategic approach.
“I wouldn’t say everybody has retracted, but there is much more focus and priority setting,” she said. “Many brands have started to work on material strategies, reflecting on our 2030, SBTi targets, and how that is also substantiated with regards to the materials that we would then need to have in the portfolio.”
While the leaders in the space are still primarily the same small group that has been pioneering sustainability efforts from the beginning, as the technologies scale Ley is seeing more incumbents taking up the cause. “If you look at textile-to-textile recycling on the polyester side, you see established players offering it now in the mainstream supply chain. Chinese offerings on textile-to-textile polyester recycling—still using postindustrial to a large extent—makes this more accessible to more brands that don’t want to directly work with innovators,” she said.
Unintended consequences of ESG policies
Romain Narcy, partner at denim garment maker Ereks-Blue Matters and Founder of Rematters Textile Recycling Solutions in Turkey, does not see a pull back on preferred fibers, particularly because ESG regulations in the EU continue to move forward. But he admits, the CapEx for advanced recycling, collection and sorting is high, pushing prices for recycled alternatives up.
“The only way to reduce that gap is actually through an effective EPR system, [where] producers are charged eco-modulated fees based on the environmental performance of their products,” he said. “The funds generated through these schemes can then be strategically reinvested into the recycling value chain, helping to scale infrastructure for collection, sorting and processing, and to support innovation in fiber-to-fiber recycling technologies.”
In the end, this will result in lower per unit costs for these fibers. But first, the policies have to become law and come into force—and many are facing challenges in that regard, which causes a domino effect.
“There is a lot of regulatory uncertainty right now, and it doesn’t help because what happens is sustainability teams, they see regulations coming around the corner, then they plan for it, and then suddenly, [there’s a] delay,” Mendlewicz said. “Some brands see this as a reason to maybe slow down their plans.”
“In some ways, legislation right now is counterproductive to the realities of what not only our industry, but other industries, are facing at the moment.”
—Robert Antoshak, Grey Matter Concepts
This is of particular concern in the U.S. where the government has prioritized rolling back environmental policies. But the opposite needs to happen, according to Antoshak, who contends the current approach of individual states attempting to take the lead won’t work. And even at the federal level, it can’t happen in a vacuum. Washington has to be clued into what’s realistic. “In some ways, legislation right now is counterproductive to the realities of what not only our industry, but other industries, are facing at the moment,” Antoshak said.
Angel points to provisions under the EU Strategy for Sustainable and Circular Textiles as a prime example. They call for a virtual ban on textile waste exports—particularly for countries not a part of the Organization for Economic Co-operation and Development (OECD)—without provisions for recycling infrastructure, which means the cost for the resulting fiber will still be prohibitive.
“Supposedly, there is going to be a level playing field for imports and for domestically-produced textiles in apparel, because otherwise you’re just going to have low-cost imports, and the European industry is not going to be able to compete,” Angel said. Ultimately, the well-meaning legislation could be the final straw for an already fledgling fiber and textile industry, she said.
“European consumers today don’t feel rich. And if all of a sudden, you’re being asked to pay 6-7-8 times for a T-shirt, what you paid in 2024, that is going to have a huge impact on demand.”
Greenwashing backlash
“One aspect of regulations that we have seen evolving really quickly is around making environmental claims. I don’t think that part has slowed down at all,” Mendlewicz noted.
In fact, there are quite a few, including the EU Green Claims Directive, which would require companies to substantiate sustainability statements with scientific and verifiable proof. Though that policy may now be abandoned, owing to the administrative burden of compliance, the European Commission said it remained committed to achieving its goal through other means. Also, the French Climate and Resilience Law mandates that clothing and footwear must carry a label that, among other things, explains the environmental and social impact of the product throughout its life cycle. And, though its fate hangs in limbo, the U.S. Securities and Exchange Commission’s Climate Disclosure Rules would require companies to communicate their climate-related risks plus their direct and indirect greenhouse gas emissions.
The threat of legislative action to combat greenwashing has ushered in the era of green hushing, Mendlewicz said. “Years ago, we saw this boom of companies talking about ESG left and right, and making all these claims with no substantiation, which was not great, and that led to a lot of greenwashing problems,” she said. “And now we’re seeing the other extreme of that, which is companies not wanting to talk about it at all because they’re so scared.”
The result is that even legitimate achievements may go unheralded, which is problematic given that consumer buy-in is a vital part of progress. Mendlewicz said the industry needs to find a happy medium, and that starts with cross functional collaboration. “Sustainability teams need to be working very closely with marketing teams to do it in the right way, that won’t get them in any kind of trouble later on,” she said.
Local headwinds
While the macroenvironment is rife with challenges, regional concerns can weigh just as heavily on environmental stewardship.
Bangladesh has been in the midst of a transformation—one that could now see a major setback, according to Iftekhar Zaman, executive director, Transparency International Bangladesh.
The ready made goods (RMG) sector in Bangladesh has been going through myriad challenges, which culminated in the ouster of then-Prime Minister Sheikh Hasina and the introduction of an interim government last August. With that change comes new hopefulness that the country can combat the corruption that has hampered many aspects of business, including sustainability.
Zaman said the country is steadily improving the efficiency, accountability and transparency of its laws and institutions. Next, it needs to tackle the political and business culture where corruption and lack of compliance has been “normalized.”
This is of particular concern in the RMG sector, which represents the lion’s share of Bangladesh’s exports and therefore wields a lot of power. “As a result, it has always been able to extort all kinds of concessions,” Zaman said.
Rana Plaza was one disastrous example. The Rampal Power Station is another. The power plant was constructed on in UNESCO World Heritage forest despite an outcry from environmentalists. While big breaches like this is common, smaller scale examples are readily evident, such as sustainability certifications, on offer to the highest bidder.
Despite all of this, the sector has made good progress toward sustainability with some companies even recognized globally for their environmental achievements. But now Zaman is concerned that the financial pressures related to the trade war could undermine them.
“We have a huge opportunity now, after the fifth August and the fall of the authoritarian regime. Bangladesh is undergoing a huge transformation. But the timing of the issue of new tariffs is so kind of unfortunate for Bangladesh….,” Zaman said. “Mr. Trump’s policies are not going to be helpful for Bangladesh, unfortunately.”
In Turkey, tariffs could actually help the garment industry, given the country’s relatively low 10 percent rate. But even that advantage may not be enough to offset its unchecked inflation. Now at 60 percent, inflation recently ballooned to 120 percent.
“If you combine that with the fact that we are capped on our export price because brands do not allow us to the increase price, we lost 30 percent in terms of competitiveness. We are working with negative gross margin as a sector,” said Narcy. “As a result, the industry is dying.” And that’s despite the country’s privileged position as one of the few nations to have vertical operations back to raw materials, plus the influx of interest from brands and retailers looking to diversify out of heavily-tariffed countries. “If we look at the volume of business, I am full but because of the macroeconomics, I’m losing money every month.”
Needless to say, sustainability has had to take a backseat in Turkey.
“The good thing is that we did investment in sustainability many years ago, but we cannot afford any additional investment currently,” Narcy said.
Through it all, Narcy continues to champion a changed industry, and he’s resolute that legislation can create the level playing field to make it happen. “With regulation, the transition becomes financially viable, scalable, and systemically embedded in the way the textile industry operates.”
