Climate decarbonisation efforts in garment supply chains are transferring financial and operational risk onto suppliers and workers, a new industry report has revealed, warning that 2.4 billion workers worldwide are already exposed to heat stress linked to climate change. Based on consultations with manufacturers, labour representatives and global brands, the document found that limited brand financing, loan-based funding models and short-term purchasing contracts are constraining factory-level investment in renewable energy and worker protections.
- Only six of 42 major fashion brands assessed reported providing any supplier decarbonisation financing, with just one offering non-loan-based project support.
- Most brands lacked formal, funded, country-specific climate adaptation policies despite documented heat stress, flooding and income disruption affecting garment workers across industrial zones.
- Manufacturers cited high upfront renewable costs, restricted grid access and debt-based financing structures as key barriers to electrification and energy efficiency upgrades.
- While the analysis centres on Bangladesh, the report presents the case as illustrative of broader structural imbalances in global fashion supply chains and cost-sharing models.
- The report, Fair Share for the Future, was released Tuesday by earth, Oxfam in Bangladesh and the Bangladesh Center for Workers Solidarity.
- A companion Roadmap outlined brand-focused actions including responsible procurement reforms, grant-based financing mechanisms and structured climate adaptation funding frameworks.
THE REPORT: The report draws on consultations conducted throughout 2025 with garment workers, trade union representatives, manufacturers and global brands operating in major production hubs. A total of 104 workers participated across three industrial zones, alongside structured discussions with large and small manufacturers and written and virtual submissions from five international brands. Findings were supported by literature review and cross-referenced with public brand disclosures.
- The assessment builds on Stand.earth’s 2025 Fossil Free Fashion Scorecard, which analysed public materials from 42 global fashion brands.
- Manufacturers consulted included both large exporters and small and medium-sized factories, several of which requested confidentiality.
- Brand consultations covered climate adaptation planning, financing barriers, procurement practices and worker inclusion in transition strategies.
- Draft recommendations were reviewed by additional industry stakeholders before finalisation, though participation did not constitute endorsement.
WHAT THE EVIDENCE REVEALS: Brand financing for decarbonisation and worker adaptation remains limited despite stated climate commitments. Supplier investments in renewable energy and efficiency upgrades are largely self-financed or debt-funded, while formal brand-backed adaptation frameworks remain rare across assessed companies. Worker exposure to heat stress, flooding and income disruption was repeatedly documented, yet structured financial support from buyers remains minimal.
- Just one brand demonstrated evidence of non-loan-based project funding that did not increase supplier debt exposure.
- None of the 42 companies analysed provided clear evidence of specific financing or training to support worker-focused climate adaptation.
- Factory-level heat conditions were reported reaching 38–40°C, with associated health impacts including dehydration, high blood pressure and reduced productivity.
- The report referenced climate events such as Cyclone Remal, which displaced 800,000 people in May 2024, underscoring infrastructure vulnerability.
STRUCTURAL CONSTRAINTS: Upfront capital requirements, debt-based funding models and structural energy constraints are limiting supplier participation in renewable deployment and electrification. Existing green loan schemes carry high interest rates, limited project ceilings and administrative bottlenecks, particularly for small and medium-sized factories. Renewable access remains constrained by grid reliability, import duties and restricted Power Purchase Agreement frameworks, while close to 90% of sector energy demand is still met through fossil gas.
- Energy efficiency, renewable installation and clean heat technologies were described as cost-prohibitive without brand co-financing or grant-based support.
- Existing financing mechanisms rely heavily on loans, increasing supplier debt exposure and excluding smaller factories with limited credit access.
- Import duties ranging from 18–38% on solar technologies were cited as barriers to scaling on-site renewable generation.
- Grid limitations and restrictions on Corporate Power Purchase Agreements constrain access to renewable electricity beyond small-scale rooftop solar.
RISKS TO WORKERS AND SUPPLIERS: Current cost-sharing models risk intensifying financial pressure on manufacturers and workers as decarbonisation requirements accelerate. The report documented factory closures, wage strain and growing labour insecurity linked to price-driven sourcing practices and climate compliance costs. Without procurement reform and structured adaptation funding, the transition could deepen supplier consolidation and employment volatility across production networks. The report noted that action by as few as 10 major brands could materially accelerate a faster and fairer decarbonisation pathway.
- Industry representatives cited an estimated 250 garment factory closures over the past 18 months, resulting in more than 220,000 job losses.
- Workers reported wage penalties linked to climate-related lateness, flooding disruption and production shutdowns without income protection.
- Short-term contracts and downward price pressure were identified as limiting manufacturers’ ability to absorb decarbonisation investments.
- Stakeholders warned that uneven climate compliance demands may incentivise divestment from smaller suppliers rather than investment in transition support.
- Recommendations include national climate risk insurance for workers, co-financed by brands, manufacturers and government, alongside development of a global pooled financing mechanism under the UNFCCC Fashion Industry Charter for Climate Action.
- A 2025 study cited in the report found that technological upgrades have resulted in a 30.58% reduction in overall employment in the garment sector, disproportionately affecting entry-level roles.
WHAT THEY SAID
Brands have built enormous wealth by outsourcing production and pollution to countries like Bangladesh. Now, as the climate crisis accelerates, they are demanding rapid decarbonization without paying for it. That’s not a just transition. This report delivers a clear message to global fashion brands: Shifting the costs and risks onto suppliers and workers is climate injustice, and won’t deliver for either climate or communities. This roadmap shows how brands can step up with real financing, fair purchasing practices, and policies that protect workers
— Rachel Kitchin
Senior Corporate Climate Campaigner
Stand.earth
If brands are serious about climate leadership, they must stop treating adaptation as a supplier problem. We are calling for binding brand commitments that guarantee fair pricing, ring-fenced climate funding, and income protection for workers during climate disruptions — because decarbonization that is paid for by workers is not sustainability, it is exploitation
— Kalpona Akter
Executive Director
Bangladesh Center for Worker Solidarity
