Geopolitical tensions, including the war in Ukraine, the Israel-Hamas war and US-China trade conflict, remain key risks for 2025 and, combined with the re-election of Donald Trump as the new US president, reinforce the possibility of further global fragmentation, a macroeconomic scenario in which leading economies take more protectionist measures and lead inward-orientated policies. In such a context, the international cooperation required to tackle climate change is likely to become increasingly difficult, while the growing scarcity of natural resources is also set to aggravate tensions in future.
Moreover, sustainable fashion requires investing in high-quality materials, fair pay and strong labour practices throughout the supply chain and using eco-friendly materials and energy sources. These factors combined result in higher production costs, in turn resulting in a pricing gap that can make it difficult for consumers to choose sustainable fashion over more affordable alternatives as they continue to feel the impact of the cost-of-living crisis and worry about the growing economic and political uncertainty.
In the current context of changing regulation and depletion of natural resources, fashion companies should actively pursue their efforts to rethink their business model. Sustainable fashion regulation is indeed shaping up in various parts of the world, led by the EU Strategy for Sustainable Textiles.
But the tide is turning in other major apparel markets, including the UK, the US (notably California) and Japan. Before its current political limbo, France saw its lawmakers approve the introduction of a special tax on fast fashion items in early 2024.
Recently, a decision by a US court to uphold the TikTok divestiture law opens the door to a ban of the Chinese platform, considered responsible for the rise of ultra-fast fashion, in the hands of President-elect Donald Trump who might not have sustainability as a priority on his political agenda but has promised to raise tariffs on Chinese goods in his electoral campaign.
As the regulation changes, businesses should monitor this carefully, and take measures to ensure they comply with the new environmental and social norms, when these become effective – instead of having to pay penalties or damaging their reputation and bottom line.
For consumers, “value” does not always mean “price”
While policymakers in various parts of the world are trying to force change, in the current context of economic challenges and consumers seeking value, fashion labels should position themselves as more responsible and show their efforts to reduce their negative impact on the environment.
This would add value to their brand and products, rooted in the ethics, durability, reparability and quality of their items. In future, as volume sales are under threat with the changing regulation, brands could capitalise on making more durable items that can be repaired and resold. This has been growing in importance.
26% of global consumers state that they would rather repair existing items than buy new ones
Source: Euromonitor International’s Voice of the Consumer: Lifestyles Survey, fielded January to February 2024 (n=17,757)
Further down the line, it will be impossible for Gen Alphas, individuals born since 2010 and tomorrow’s consumers who have been exposed to discussions about climate change and environmental degradation since their early years, to ignore the pressing issues facing the planet. So, even if they cannot yet afford sustainable products with their pocket money, it is likely that as they grow older and gain financial independence, the environmental emergency will shape their purchasing decisions towards brands that have limited their negative impact.
Could sustainability become a geopolitical advantage?
To conclude, as regulation and consumers’ demands evolve, companies should continue to invest in the pursuit of sustainability and collaborate with manufacturers, policymakers and tech developers to harness the full potential of AI technology and its application towards greater circularity. Governments will also have a key role to play in supporting climate adaptation efforts through FDIs and a mix of public and private sector investments which will be essential to secure alliances and gain geopolitical advantages.
Read our report, World Market for Apparel and Footwear for a deep dive into the industry at a time when diversity and sustainability are becoming imperative.