texfash: Your report makes a deliberate shift from framing climate as a reputational or compliance issue to presenting it as a direct threat to operating margins—with potential bottom-line impacts of 34% by 2030 and 67% by 2040. When you modelled these scenarios, what assumptions proved most contentious with participating brands?
Kristina Elinder Liljas: Each brand has their own set of dependencies, anchored in their brand & product differentiation, business model, geographic footprint, size & capabilities, etc, meaning the conversations, and reactions, were quite individual. We did learn that many brands would like to have a tighter dialogue between sustainability and treasury teams than they have today. The Cost of Inaction report helps to bridge this internal gap.
It is clear the scope of material/textile fibre is highly complex and often rooted in a brand’s identity; this probably created the most discussions. This reporting is a starting point for many, and we believe brands will benefit from a separate analysis to better understand their individual risks and paths forward.
The projection that inaction could erode up to 70% of industry value under a net-zero transition is striking. How should senior executives read that figure—as a stress-test against policy acceleration, a market correction scenario, or as a baseline risk that is already priced in too lightly?
Kristina Elinder Liljas: I would read it as a stress test under a net-zero transition—not as a baseline forecast of what will automatically happen, but as a credible downside scenario that is still underpriced in many balance sheets. It’s not saying that 70% erosion is inevitable. It’s saying that if the transition accelerates—through tighter policy, expanded carbon pricing, energy system shifts, increased material costs, or investor pressure—markets will reprice companies with unmanaged climate exposure.
And in a Scope 3–heavy industry like apparel, that repricing could be sharp rather than gradual. The more important shift for executives is how they frame the risk. Climate change is no longer an external ESG consideration; it directly affects cost structures, margins, asset values, and access to capital. When you translate it into COGS, supply chain resilience, and competitiveness, the relevance becomes clear.
You isolate carbon pricing, raw material inflation, and energy volatility as the three dominant financial pressures. In your analysis, which of these risks is most structurally embedded in current business models, and therefore hardest to unwind?
Kristina Elinder Liljas: Carbon pricing would be the most structurally embedded risk and hardest to reverse. Carbon pricing is different as it sits directly on Scope 3, where 96–99% of apparel emissions occur. That means it’s embedded in Tier 2 manufacturing and upstream energy systems. Unless those systems decarbonise, cost exposure compounds year over year.
![Beycesultan (pronounced [ˈbejdʒe sulˈtan]) is an archaeological site in western Anatolia (Asia Minor), located about 5 km southwest of the modern-day city of Çivril in the Denizli Province of Turkey. It lies in a bend of an old tributary of Büyük Menderes River (Maeander River).](/sites/texfash/files/styles/excerpt_1_xl/public/images/2026/02/20/20260220-anatolia.jpg.webp?h=c5515535&itok=XHrncjHz "Beycesultan (pronounced [ˈbejdʒe sulˈtan]) is an archaeological site in western Anatolia (Asia Minor), located about 5 km southwest of the modern-day city of Çivril in the Denizli Province of Turkey. It lies in a bend of an old tributary of Büyük Menderes River (Maeander River).")
