Fashion Industry's Climate Reporting Has Outrun Its Actual Emissions Progress

The distinction between absolute and intensity reductions is more than an accounting technicality. Absolute reductions measure total emissions decline. Intensity reductions measure emissions per unit of output. A company can improve its emissions intensity—producing each garment more efficiently—and still increase its total carbon footprint if production volumes rise faster than efficiency gains. For an industry structured around volume expansion, this distinction determines whether reported progress reflects genuine decarbonisation or operational mirage.

STICA classifies signatories as "on track" if their emissions trajectory aligns with stated targets. But 48% of companies self-report they are not on track to meet Scope 3 targets. Eleven companies have increased absolute emissions since their base year. Among those that have reduced emissions, the picture is complicated by base year selection. Sixty percent of signatories use 2020 or 2021 as their baseline—years in which pandemic disruptions suppressed production. For these companies, reported reductions may partially reflect recovery from an artificially depressed starting point rather than structural transformation.

The mathematics of growth impose exponential pressure. A company aiming for a 42% absolute reduction by 2030 from a 2020 baseline can achieve this with a 42% per unit intensity reduction if production volumes remain flat. In the report's discussion of growth scenarios, the required per unit reductions are presented with slight variation between the main text and Figure 13: at 4% annual growth, the report cites 60% in the text and 61% in Figure 13; for 10% growth, it cites 80% in the text and 78% in Figure 13; and for 20% growth, it cites 90% in the text and 91% in Figure 13. STICA's modelling presents a fictional "average" STICA company scenario in which the combined deployment of renewable energy, material efficiency, coal phase-out, and transport optimisation yields a maximum reduction potential of approximately 56% over ten years. Growth rates above 4% annually outpace the aggregate decarbonisation capacity of currently available interventions.

Circular business models—resale, rental, repair—are positioned as the mechanism for decoupling revenue growth from production volume. In theory, these models allow companies to expand economically without increasing material throughput. STICA data indicate that a majority of signatories have launched circular initiatives, but a significant share report uncertainty regarding projected circular revenue by 2030, and only a small minority expect circular business to represent a substantial share of revenue by the end of the decade. Signatories report that the operational costs of collecting and sorting second-hand items exceed the cost of producing new garments, making circularity structurally unprofitable under current market conditions.

The implication is that efficiency improvements alone cannot offset the emissions trajectory of a growth-oriented business model. A company growing at 20% annually would see absolute emissions nearly quadruple by 2030 even after implementing the full suite of identified reduction actions. Without growth, those same actions would yield a 56% absolute reduction. The gap between these scenarios is not bridgeable through operational optimisation. It is a question of economic structure.

All information in the STICA 2025 Progress Report is self-reported by participating companies, with STICA conducting quality checks on a selected group of companies to support methodological consistency. Fourteen signatories have secured third-party verification of their data. The remaining companies report varying levels of assurance or have not obtained third-party verification. The report does not present quantified uncertainty ranges or confidence intervals alongside reported emissions totals.

Scope 3 reporting boundaries vary despite STICA's standardisation efforts. The framework requires companies to report emissions from purchased goods, fuel- and energy-related activities, and transportation. It does not require reporting of use-phase emissions—Scope 3 Category 11—which encompasses energy consumed when customers wash and dry garments. STICA identifies this category as significant but does not require it within the mandatory reporting scope. Companies are not penalised for omitting a major lifecycle stage.

Where data gaps exist, companies rely on average emission factors. STICA recommends the Higg Material Sustainability Index despite acknowledging criticism of the tool. A KPMG review identified the functional unit problem: Higg MSI uses emissions per kilogram, but materials differ in weight required to achieve equivalent function. A lighter material may show lower per-kilogram emissions yet generate higher total emissions if more mass is needed for a durable garment. Additional uncertainty drivers include outdated emission factors, non-representative geographic data, and data ownership by industry associations with potential built-in biases. The report does not quantify how these affect reported reductions.

Primary data collection—obtaining actual emissions figures from suppliers—is concentrated at Tier 1 facilities. Eighty-one percent of Tier 1 production emissions use primary data, or 58% when excluding H&M Group. At Tiers 2 through 4, where energy-intensive processing occurs, coverage drops sharply. Excluding H&M Group, which accounts for 81% of STICA's total emissions, primary data for Tiers 2-4 falls to 10%. For most signatories, the majority of supply chain emissions remain estimated rather than measured.

The report requires companies to recalculate their base year if methodological changes occur. A company replacing average data with primary data and observing a reduction must assess whether that reflects physical decarbonisation or improved data quality. But the distinction is not always clear. A signatory transitioning to primary data may see emissions fall not because operations changed, but because the new data source reveals lower figures than the previous estimate. Whether such reductions are real or artefactual depends on internal judgement, subject to STICA's quality checks but not independent verification in most cases.

The result is a reporting architecture in which precision of disclosed figures does not necessarily correspond to accuracy. Companies report emissions to multiple decimal places, but underlying data may rest on industry averages, unverified self-assessments, and allocation methods that shift results depending on the metric chosen. The question is not whether companies are fabricating data. The question is whether the current methodology can reliably distinguish a genuine 10% reduction from a 10% improvement in estimation.

Sixty-seven percent of STICA signatories report that a C-suite-level person is responsible for climate action. Eighty-eight percent report that executive pay and bonuses are not linked to decarbonisation performance. Climate targets may exist on paper, but financial accountability for meeting them does not extend to the compensation mechanisms that shape executive behaviour.

Climate Action Transition Plans have been developed by most signatories, but their integration into core operations remains uneven. Forty-six percent of companies report that their transition plans are used to guide financial decisions. Fifty-six percent report that their financial growth plans do not align with their climate plans. At the board level, 67% of signatories report that their boards lack competence in climate issues. Without climate-literate governance, decarbonisation remains subordinated to conventional financial metrics.

Supplier engagement shows similar patterns. Sixty-five percent of signatories report that contracts with Tier 1 suppliers include no financial incentives for climate action. The figure rises to 71% for Tier 4 suppliers. Small and medium-sized STICA members report that their purchasing volumes are insufficient to exert meaningful influence over supplier behaviour.

Eighty-eight percent of STICA signatories have not set public targets to phase out coal-fired boilers by 2030. Coal remains the dominant energy source for thermal processes in textile mills across Vietnam, India, and China. Alternatives face implementation barriers related to cost and infrastructure readiness. Without explicit coal phase-out commitments backed by financial transition support, thermal decarbonisation in Tiers 2 through 4 will remain marginal.

Just Transition planning is largely absent. Thirty-three percent of companies have developed a Just Transition plan. Among those that have, the scope of action is narrow. The report indicates no signatories currently report co-creating climate adaptation solutions with suppliers, providing financial compensation for workers affected by climate impacts, supporting reskilling of affected workers, or disclosing real-time heat and humidity data in supplier facilities.

Some signatories report a perceived conflict between Just Transition principles and emissions reduction imperatives. Just Transition frameworks encourage companies to remain with existing suppliers rather than shifting production to cleaner grids. But signatories operating under strict 2030 timelines face pressure to achieve rapid cuts. If a supplier cannot transition quickly enough, commercial logic favours relocating production. This tension has not been resolved.

Regulatory rollback introduces additional instability. The European Union's decision to scale back sustainability reporting directives removes most STICA companies from mandatory reporting scope. For small and medium-sized enterprises, this eliminates the external pressure that has driven disclosure progress. Without legislative mandates, voluntary frameworks must rely on internal commitment—a mechanism signatories themselves identify as insufficient given shareholder demands for short-term growth.

The picture that emerges is one of structural misalignment. Climate responsibility is assigned, but financial incentives are not. Transition plans are developed, but not embedded in financial decision-making. Supplier engagement is extensive, but contractual leverage is limited. Coal phase-out is necessary, but uncommitted. Just Transition is endorsed in principle, but absent in practice. Regulatory pressure is receding.