With H&M Group at their helm, some of the world’s largest clothing companies are belatedly improving their ill-fitting climate strategies, but none have refashioned their business model along sustainable lines, according to the latest Corporate Climate Responsibility Monitor. Shein came bottom of the league due its failure to take any meaningful action.
Due out on 26 June, along with a chapter on the tech sector, a new section of the 2025 Corporate Climate Responsibility Monitor takes a deep dive into the fast fashion industry, assessing the climate strategies of five of the largest corporations in the sector: Adidas, H&M Group, Inditex, Lululemon and Shein, together worth a combined $123 billion in annual revenue in 2023. It assesses progress made in a number of vital areas: the electrification of manufacturing processes and use of renewable energy along the supply chain, the reduction of overproduction and curbing the use of virgin materials, as well as the utilisation of low-emissions fibres and logistics.
The new Corporate Climate Responsibility Monitor reveals that the trendsetters among this group of companies have made some improvements to their climate strategies and targets but the cohort as a whole is still significantly off track to implement the kind of transformative change required to ensure that the fashion sector contributes its fair share to the goals of the Paris Agreement.
“We commend the efforts of some companies in the fashion sector and the important work of standard setters. However, transformative climate action needs to be cut from different cloth: it requires sector-specific regulation as its foundation,” says Benja Faecks, an expert on global carbon markets involved in the CCRM at CMW.
Dressed for climate action
Although receiving only a moderate score for its climate performance, Swedish high street fashion chain H&M Group stands out for its climate strategy, specifically with regards to its high level of disclosure of supply chain energy balances, and setting of specific targets for renewable energy in the supply chain. However, it remains unclear how much impact these steps will have, as the role of standalone Renewable Energy Certificates in reaching these targets remains unclear, and as H&M Group continues to fall short in such critical areas as the electrification of its production process.
“Electrification, powered by high-quality renewable energy, is the most viable and scalable solution to decarbonising fashion companies’ supply chains,” Eve Fraser from NewClimate Institute said. “To stay on a 1.5°C-aligned pathway, the industry must move beyond replacing coal use with biomass and fossil gas and commit to fully electrifying key manufacturing processes.”
The other companies which received a moderate score were German sportswear manufacturer Adidas and Spanish owner of the Zara high street fashion chain Inditex, both of which strengthened their climate targets.
Chinese online fast fashion platform Shein scored the lowest of all the evaluated corporations. This is due not only to its failure to envision any radical changes to its business model, but also because its target to slash a quarter of its emissions by 2030 compared with a 2023 could lead to the company to more than double its emissions compared with 2021.
Half measures and false solutions
While commendable, the progress companies achieved patches over the underlying issues rather than embarking on the direly needed transition to a fashion sector tailored to the climate crisis.
For example, although H&M Group, Inditex and Lululemon have pledged to purchase renewable electricity, they do not possess clear plans to electrify their production processes. More worryingly, instead of electrifying manufacturing processes, some companies are substituting coal with biomass, which has serious implications for biodiversity and food supply, and fossil gas, which locks in the use of fossil fuels. Electrification, powered by high-quality renewable energy, is the only scalable and sustainable solution to this problem.
This lacklustre performance highlights the continuing need for governments and regulators to step up and take their climate responsibility. “It is now up to regulators to raise the bar for credible climate action and establish a tailored framework for meaningful, sector-wide decarbonisation,” concludes Faecks.
About CCRM
First launched in 2022, the annual Corporate Climate Responsibility Monitor is a joint initiative between NewClimate Institute and Carbon Market Watch. NewClimate leads on investigating corporate climate strategies and CMW leads on the policy implications and recommendations of the research.
