Apparel industry voices call for accelerated financing and climate adaptation

In 2024, the tsunami of regulation facing Europe, calls for high-integrity data, and the integration of circular business models into commercial strategies reigned supreme in conversations. A year later, the situation the industry finds itself in was not something we could have predicted. 

Impending impacts of a global trade war, wider geopolitical instability, a regulatory rollback and waning appetite for investing in sustainability, both the environmental and social, were of heightened focus in Amsterdam. 

As brands and retailers teeter in and out of crisis mode, the question remained: how can the industry chart a path forward and prioritise sustainability efforts whilst balancing the need for commercial survival? 

Moving to the next phase of the industry’s decarbonisation strategy took centre stage. Discussions outlined how companies must move beyond the low-hanging fruit to reduce scope 1 and 2 emissions and invest in more than energy efficiency measures for their supply base. 

Manufacturers shared valuable anecdotes and clear financials on which technologies they have invested in to transition to low-carbon thermal energy, away from coal and the conditions, at a country level, needed for this to be successful.  

With pressure put on manufacturers to meet specific mandates set by brands on greenhouse gas emissions reduction and the adoption of renewable energy, honest discussions covered how stakeholders can work together to de-risk investments and which collaborative financing mechanisms will be most impactful. 

Evolving the number of financing solutions and improving the funding proposition to ensure suppliers are treated equally is paramount. One participant called for the decoupling of the business cycle from the investment cycle, as justifying investment to decarbonise through growth was paradoxical. 

Many continue to demand improved traceability on shared supply chains in order to overlay the impact and shared financing opportunities for brands to scale decarbonisation efforts. 

The intrinsic need to integrate water and biodiversity into climate strategies was also apparent, with multiple case studies highlighting the positive social impact that regenerative projects can bring, especially to smallholder farmers at tier 4 of the supply chain. 

Tangentially to concrete decarbonisation strategies, there were critical moments that spotlighted the need for robust climate adaptation strategies and time-bound climate adaptation targets. With workers across supply chains facing risks of extreme heat stress and flooding, not only in facilities but in local communities, more efforts to engage with workers to understand what they are facing must be made. 

Climate adaptation is more than simply installing air conditioning units, one participant commented. The value of social dialogue in this instance was highlighted, as it was argued that workers are a source for solutions and the industry must focus strategies. This can be informed by a bottom-up approach, alongside prioritising freedom of association and collective bargaining rights to protect workers in the conditions that they face. 

The regulatory rollback and consequences of the EU Omnibus characterised discussions too. In particular, has it really diluted the ambition of the industry? 

Despite concerns about how Omnibus revisions would impact supply chain due diligence, corporate transparency and ambitious action, investors were keen to underscore how heightened levels of disclosure will set organisations apart from those who become complacent with minimum reporting requirements. 

It is clear, the industry has moved quickly and is able to adapt and iterate its processes, resources and reporting as well as navigate new policies better than it might have anticipated. And, across the two days, attendees were keen to share their learnings with others. 

When it comes to circularity, the sentiment was clear – the industry is now far beyond the pilot stage. The value creation of circular business models was a topic of focus, with leaders sharing lessons on profitability, what to prioritise when budgets get tightened and specific cultural nuances that can make one initiative successful in one market, compared to another. 

Scaling infrastructure, such as textile-to-textile recycling, gave many reasons for hope. With organisations such as Syre now building plants in key manufacturing hubs including Vietnam, participants heard first-hand what the conditions for success are.  For instance, the call for more case studies to catalyse the next wave of investment, as well as achieving price parity between textile-to-textile recycled materials with their virgin counterparts. 

One speaker outlined that to make circularity the rational business choice, it needs to be ubiquitous in order to become the obvious choice for brands to make. The industry cannot afford to wait for consumer demand; it must move now, and this movement can be stimulated through regulation, one speaker said. 

The conference’s Dragon’s Den-style session framed what role companies should have in supporting innovative startups. In particular, homing in on material innovation and identifying what brands are looking for, considering integral investment considerations such as how a new solution provider fits into a supply chain and what startups and scaleups must do to stand out in a saturated market.  

Materials still matter. This year, more candid conversations took place surrounding the environmental impact of fibres, touching on chemical and microfibre pollution, debates surrounding natural versus synthetic fibres, and honest conclusions that weaning the industry from petroleum-based synthetics in the next ten years seems unlikely. 

Yet, positively, constructive dialogue on durability outlined how the industry might test for this and develop a universal standard that certifies around the quality of garments. The lack of correlation between price and durability and the need to narrow the cognitive dissonance that citizens experience surrounding sustainable clothing were also discussed. 

Addressing an entrenched system driven by profitability, overproduction and oversupply was called for by both participants and protestors. Responsibility to address textile waste that continues to find itself washed onto the shores of the global south, and a reality check on transparency surrounding production volumes, was spotlighted. 

Demands for collaboration continue, be that on collective financing, policy advocacy, material offtake agreements and supply chain transparency. 

Now is a critical time for the implementation of these collaborative efforts by getting into the granular details with peers to share methodologies, data, and supply chain sourcing. 

While bold leadership, planetary stewardship and appropriate governance structures can enable progress from the top down, voices of manufacturing partners must be heard and valued to co-create and implement resilient strategies to secure the industry’s future.  

Accelerating action is imperative. The noise from both within and outside the conference hall is too hard to ignore.