
'Moving far too slow': Fashion labels lag behind on sustainability pledges
Yet researchers, companies and industry insiders say that little has been done to push this along in their supply chains in major textile-producing countries like Bangladesh, India and Cambodia.
"Brands are moving far too slow," said Todd Paglia, executive director of StandEarth, an environmental non-profit advocacy group based in North America.
In 2025, about a third of the 42 brands surveyed in a recent StandEarth report cut their emissions by 10%, compared to their baseline years – while 40% of brands saw their emissions grow.
It found that only a fraction of leading brands are providing funding to cut emissions in their supply chains, which puts pressure on factories and suppliers that lack the financial clout to shift towards cleaner processes.
About half of the major global fashion brands have set science-based targets for emission reduction, according to a 2024 report by Fashion Revolution, a non-profit group campaigning for sustainable fashion.
Meanwhile, a large number of brands still lack visible efforts to finance their climate plans and support suppliers to decarbonise.
"What we are seeing is a dangerous disconnect," said Mohiuddin Rubel, a former director of Bangladesh's garment manufacturers' association who is now director at textile maker Denim Expert Ltd.
"Brands are turning their ambitious targets into unfunded mandates placed upon suppliers, who are asked to bear the full financial burden of decarbonising the brands' value chain," he said.
Read more: Fashion label upcycles emotion into bold designs for Milan Fashion Week
Financing gap
Apparel manufacturers can cut factory-level emissions by switching to energy efficient equipment, installing renewable energy and using low-emissions transportation.
In Bangladesh, a garment manufacturing hub, 83% of the industry's emissions are due to the on-site burning of fossil fuels, like natural gas, to generate power or run boilers to produce heat and steam, a report by consulting firm FSG said.
Many suppliers balk at the high capital investment needed to replace gas-based boilers with more energy-efficient technologies, like heat pumps, according to a study by the Apparel Impact Institute (AII), a non-profit promoting sustainable investments.
Overall, Bangladeshi fashion suppliers face an investment gap of $4.8 billion for cutting emissions by half by 2030, AII has said.
Clothing makers in India and Vietnam also face challenges in reducing their reliance on fossil fuels in heat and steam generation, which are used to wash, dye and finish fabric production.
About half of the brands surveyed by StandEarth offered some form of support, but much of it involved assessments and audits to measure the carbon footprint or small-scale pilot projects, said Bangladeshi supplier Rubel.
"This is a drop in the ocean and does not address the systemic, industry-wide transformation required," he said.
Suppliers also need long-term purchase agreements and price premiums from brands that would work as incentives to invest in cleaner production, said Abhishek Bansal, head of sustainability at the Indian textile supplier Arvind Limited.
Read more: Turmoil or not, luxury fashion can't afford to ignore the Middle East region
Brand action
Only six brands reported that they offered project financing for suppliers' decarbonisation efforts, the StandEarth report said. Among them is the Swedish retail giant H&M, which has supported 23 smaller suppliers to invest in low-carbon tech.
"Brands need to accept that there will be a cost to climate transition, since expecting no cost for this rapid process is a little bit strange," said Kim Hellstrom, senior sustainability manager at H&M.
The retailer is planning to test energy-efficient thermal technologies in places like China, India and Vietnam.
"The low-carbon technology is here, and you don't need to talk about innovation – but you need to try them first for this industry," said Hellstrom.
If brands put budgets behind their goals, it would establish better partnerships with suppliers, said Kristina Elinder Liljas, senior director of sustainable finance and engagement at AII.
"Everybody has skin in the game: For brands, it's about future-proofing their businesses, and for suppliers, to make sure they remain relevant to the brand they are catering to," she said. – Reuters
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Malay Mail
2 days ago
- Malay Mail
ESG reforms key to restoring trust in sustainable finance — Nahrizul Adib Kadri
JULY 26 — The global sustainable finance market has reached an inflection point. With the United Nations estimating that $4 trillion annually is required to achieve the Sustainable Development Goals, ESG (Environmental, Social, and Governance) investing has moved from the periphery to the centre of financial decision-making. Yet fundamental challenges threaten to undermine its credibility and effectiveness. The evolution from socially responsible investing in the 1990s through Corporate Social Responsibility in the 2000s to today's ESG framework reflects a growing recognition that non-financial factors materially affect long-term returns. However, this progression has exposed critical structural weaknesses in how we measure and verify sustainability claims. The most pressing issue facing sustainable finance is the absence of standardised ESG metrics. Different rating agencies routinely assign contradictory scores to the same company, creating confusion for investors and opportunities for manipulation. While quantifiable factors like carbon emissions can be measured with reasonable accuracy, subjective elements such as governance quality remain poorly defined. This inconsistency enables 'rating shopping', where companies selectively engage with agencies likely to provide favourable assessments. The reliance on self-reported data compounds these problems. Without mandatory third-party verification, companies face few barriers to exaggerating their sustainability credentials. This has given rise to various forms of misrepresentation: greenwashing (inflated environmental claims), brownwashing (concealing harmful practices), and greenhushing (deliberately understating sustainability efforts to avoid litigation). Each undermines market integrity and investor confidence. As an example of the perverse incentives created by ESG frameworks, consider Malaysia's used cooking oil (UCO) market. European regulations favour sustainable aviation fuel made from waste products like UCO over virgin palm oil, creating a premium for supposedly 'used' oil. The result: fresh cooking oil in Malaysia sells for approximately $0.60 per kilogram while UCO commands $1.00. This price differential has spawned an entire fraudulent ecosystem where fresh oil is passed off as used, defeating the environmental purpose while enriching intermediaries. Criminal syndicates have emerged to exploit this arbitrage, mixing subsidised fresh oil with UCO shipments. The environmental impact is precisely opposite to what regulators intended — instead of reducing waste, the system creates additional demand for palm oil production and associated deforestation. This cooking oil fraud exemplifies a broader pattern in sustainable finance: well-intentioned regulations creating unintended consequences. When the market values the appearance of sustainability more than actual environmental impact, rational actors will supply that appearance. The UCO case demonstrates how ESG metrics, divorced from rigorous verification, become vehicles for fraud rather than instruments of change. Current regulatory frameworks remain inadequate to address such systemic failures. The UN-backed Principles for Responsible Investment, while well-intentioned, lack enforcement mechanisms. Signatories can claim adherence without meaningful implementation, reducing these principles to symbolic gestures. The European Union's binding regulations offer a more promising model, yet as the UCO example shows, even mandatory frameworks can be subverted without proper verification systems. Recent empirical evidence raises additional troubling questions about ESG implementation. Research on board diversity reveals that companies with female directors experience greater IPO underpricing — approximately $13 million more left unclaimed. This suggests that markets may value the appearance of ESG compliance over substantive impact, indicating that much ESG adoption remains performative rather than transformative. The tension between fiduciary duty and sustainability goals has become increasingly apparent. BlackRock's legal challenges exemplify this conflict, with the asset manager facing lawsuits from both ESG advocates and critics. This highlights the fundamental question: can investment strategies prioritise sustainability while maintaining competitive returns? The financial sector's response to this question will shape the future of sustainable investing. These challenges occur against a backdrop of declining public trust in financial institutions. Survey data indicates that confidence in finance professionals has deteriorated more rapidly than in other sectors since the mid-1990s. This erosion of trust creates additional obstacles for ESG adoption, as sceptical stakeholders question whether financial institutions can credibly champion sustainability. Proposed technological solutions present their own paradoxes. Blockchain technology could enhance transparency in ESG reporting, but its significant energy consumption contradicts environmental objectives. Such contradictions illustrate the complexity of implementing sustainable finance solutions. For Malaysian financial markets, these global trends carry important implications. The UCO fraud case demonstrates how local markets can be distorted by international ESG requirements. As international investors increasingly integrate ESG factors into allocation decisions, local companies and financial institutions must navigate between genuine sustainability commitments and performative compliance. The choice of regulatory approach — voluntary guidelines versus mandatory standards with robust verification — will significantly influence market development. The path forward requires addressing fundamental weaknesses in the ESG ecosystem. Standardised metrics must replace the current patchwork of rating methodologies. Independent verification should become mandatory, not optional. Regulatory frameworks need enforcement mechanisms that ensure accountability. Companies must move beyond symbolic gestures to substantive changes in business practices. Financial institutions face a credibility test. After decades of prioritising short-term profits, they must demonstrate that their commitment to sustainability extends beyond marketing rhetoric. This requires acknowledging trade-offs between immediate returns and long-term sustainability, rather than perpetuating the fiction that all ESG investments automatically enhance profits. The sustainable finance sector stands at a critical juncture. The gap between its promise and current practice threatens to undermine legitimate efforts to align financial markets with environmental and social objectives. As the Malaysian UCO case illustrates, without rigorous verification and enforcement, ESG frameworks can create perverse incentives that worsen the very problems they aim to solve. Closing this gap demands rigorous standards, authentic leadership, and regulatory frameworks that distinguish genuine sustainability from performative compliance. The $4 trillion question is not whether sustainable finance can work, but whether market participants will implement the reforms necessary to make it work. For emerging markets like Malaysia, the decisions made today will determine whether sustainable finance becomes a driver of meaningful change or another chapter in the long history of financial sector disappointments.


The Star
5 days ago
- The Star
Turmoil or not, luxury fashion can't afford to ignore the Middle East region
Elie Saab held its 45th anniversary show in Riyadh last November, featuring a performance from Celine Dion. Photo: Instagram/Elie Saab With Middle East airspace reopening and the US-brokered ceasefire between Israel and Iran appearing to hold, the luxury fashion sector is still counting on the region's wealthy shoppers to help offset weakness in its main US and Chinese markets – for now. The Middle East, helped by strong tourist flows and local wealth, has bucked a recent global slowdown in luxury sales that is expected to deepen this year, with some brands growing sales there at double-digit rates. Luxury sales in Gulf countries were up 6% to US$12.8bil (approximately RM54.1bil) of the nearly US$400bil (RM1.7tril) market last year, outpacing a global drop of 2%, with strong appetite for high-end fashion, jewellery and beauty products, retail consultant Chalhoub Group said. However, that trade is heavily dependent on the region's burgeoning tourist trade, with consulting firm Bain estimating that some 50-60% of the Middle East's luxury sales come from tourists. Read more: Though absent, Giorgio Armani's vision still comes to life at Milan Fashion Week This month's outbreak of an air war between Israel and Iran emphasised the ongoing risks in a region in which unrest was already simmering, with airlines cancelling flights and rerouting planes following Israel's strikes against Iran on June 13 – measures that are now being unwound. "At this point, we have not adjusted our long-term growth forecast, as we continue to see considerable potential in the region," said Federica Lovato, senior partner at Bain. "However, short-term volatility has increased in the last few weeks and may continue, depending on how the situation develops." The region is an important hub for travel spending, favoured by Russian oligarchs but also wealthy Asians, and has increased in importance since Russia's invasion of Ukraine triggered sanctions and the rerouting of flights between Europe and Asia from more northerly routes to the Middle East. It also serves as a gateway for high-end brands to reach wealthy shoppers from India, where high tariffs have kept companies like LVMH from expanding store networks. Max Heinemann, co-CEO of travel retail group Gebr Heinemann, which recently expanded into Saudi Arabia and operates airport fashion retail stores carrying luxury brands in Jeddah, said the region's travel market has shown long-term resilience despite unrest. He remains optimistic: "Dips may be witnessed, but growth will remain." At Prada, first-quarter sales in the region rose 26% year-on-year, while Hermes' sales there were up 14%. High-end fashion and jewellery brands have been opening new stores and hosting splashy events. Milan-based menswear label Zegna this month took its spring collection to the opera house in Dubai, the region's leading luxury hub, for a catwalk show in an elaborate set evoking an Italian villa. Read more: Uncovering Valentino's fashion legacy: Celebrities, luxury and the power of red Elie Saab held its 45th anniversary show in Riyadh last November, featuring a performance from Celine Dion. Dior, Saint Laurent and Valentino last year opened stores in Bahrain, while this year Louis Vuitton brought guests to the Dubai desert for a dawn meal and Chanel hosted a dinner in Abu Dhabi linked to a high jewellery launch. But maintaining visitor numbers to Middle Eastern destinations will be vital to bringing shoppers through the doors. Luxury travel agency Global Travel Moments says that for now, its long-term travel volumes to the Middle East have been unaffected by the latest unrest. However, given recent events, there is currently "certainly more caution" before finalising trips to the broader Middle East, it said. – Reuters


The Star
5 days ago
- The Star
'Moving far too slow': Fashion labels lag behind on sustainability pledges
The fashion industry is responsible for up to 8% of the world's planet-heating greenhouse gas emissions, according to United Nations figures, which many of its companies have promised to tackle with targets to reach net zero by 2050 or sooner. Yet researchers, companies and industry insiders say that little has been done to push this along in their supply chains in major textile-producing countries like Bangladesh, India and Cambodia. "Brands are moving far too slow," said Todd Paglia, executive director of StandEarth, an environmental non-profit advocacy group based in North America. In 2025, about a third of the 42 brands surveyed in a recent StandEarth report cut their emissions by 10%, compared to their baseline years – while 40% of brands saw their emissions grow. It found that only a fraction of leading brands are providing funding to cut emissions in their supply chains, which puts pressure on factories and suppliers that lack the financial clout to shift towards cleaner processes. About half of the major global fashion brands have set science-based targets for emission reduction, according to a 2024 report by Fashion Revolution, a non-profit group campaigning for sustainable fashion. Meanwhile, a large number of brands still lack visible efforts to finance their climate plans and support suppliers to decarbonise. "What we are seeing is a dangerous disconnect," said Mohiuddin Rubel, a former director of Bangladesh's garment manufacturers' association who is now director at textile maker Denim Expert Ltd. "Brands are turning their ambitious targets into unfunded mandates placed upon suppliers, who are asked to bear the full financial burden of decarbonising the brands' value chain," he said. Read more: Fashion label upcycles emotion into bold designs for Milan Fashion Week Financing gap Apparel manufacturers can cut factory-level emissions by switching to energy efficient equipment, installing renewable energy and using low-emissions transportation. In Bangladesh, a garment manufacturing hub, 83% of the industry's emissions are due to the on-site burning of fossil fuels, like natural gas, to generate power or run boilers to produce heat and steam, a report by consulting firm FSG said. Many suppliers balk at the high capital investment needed to replace gas-based boilers with more energy-efficient technologies, like heat pumps, according to a study by the Apparel Impact Institute (AII), a non-profit promoting sustainable investments. Overall, Bangladeshi fashion suppliers face an investment gap of $4.8 billion for cutting emissions by half by 2030, AII has said. Clothing makers in India and Vietnam also face challenges in reducing their reliance on fossil fuels in heat and steam generation, which are used to wash, dye and finish fabric production. About half of the brands surveyed by StandEarth offered some form of support, but much of it involved assessments and audits to measure the carbon footprint or small-scale pilot projects, said Bangladeshi supplier Rubel. "This is a drop in the ocean and does not address the systemic, industry-wide transformation required," he said. Suppliers also need long-term purchase agreements and price premiums from brands that would work as incentives to invest in cleaner production, said Abhishek Bansal, head of sustainability at the Indian textile supplier Arvind Limited. Read more: Turmoil or not, luxury fashion can't afford to ignore the Middle East region Brand action Only six brands reported that they offered project financing for suppliers' decarbonisation efforts, the StandEarth report said. Among them is the Swedish retail giant H&M, which has supported 23 smaller suppliers to invest in low-carbon tech. "Brands need to accept that there will be a cost to climate transition, since expecting no cost for this rapid process is a little bit strange," said Kim Hellstrom, senior sustainability manager at H&M. The retailer is planning to test energy-efficient thermal technologies in places like China, India and Vietnam. "The low-carbon technology is here, and you don't need to talk about innovation – but you need to try them first for this industry," said Hellstrom. If brands put budgets behind their goals, it would establish better partnerships with suppliers, said Kristina Elinder Liljas, senior director of sustainable finance and engagement at AII. "Everybody has skin in the game: For brands, it's about future-proofing their businesses, and for suppliers, to make sure they remain relevant to the brand they are catering to," she said. – Reuters