While some fashion companies have made progress in their climate strategies, the lack of critical transition measures and reliance on false solutions like biomass and fossil gas undermine the integrity of their efforts, according to the new analysis by the 2025 Corporate Climate Responsibility Monitor (CCRM), released today by NewClimate Institute in collaboration with Carbon Market Watch.  

This year’s fashion deep dive of the 2025 CCRM, in its fourth edition, assesses five major global fashion companies – Adidas, H&M, Inditex, Lululemon and Shein – focusing on how well they align with the major transitions needed to reduce their sector’s carbon footprint. The full report, which evaluates the climate strategies of 55 companies across various sectors, will be released in early July.

Despite some progress, the report finds that the companies’ current actions are insufficient to drive meaningful sector-wide emissions reductions. While stronger greenhouse gas (GHG) emissions reduction targets are a positive step, the report emphasises that these targets alone are not enough. With most of the sector's emissions stemming from energy use in garment production, real progress depends on how effectively companies implement key transition measures, such as electrifying manufacturing processes and sourcing renewable electricity to power production.  

Eve Fraser from NewClimate Institute said: “Electrification, powered by high-quality renewable energy, is the most viable and scalable solution to decarbonising fashion companies’ supply chains. To stay on a 1.5°C-aligned pathway, the industry must move beyond replacing coal use with biomass and fossil gas and commit to fully electrifying key manufacturing processes.”

This year, three companies – Adidas, H&M and Inditex – were rated "moderate" for their strong GHG emissions reduction targets and their first steps towards critical transitions. Lululemon was rated "poor" due to its weak GHG reduction targets, while Shein received a "very poor" rating for its minimal GHG reduction targets and absence of key transition actions.

None of the fashion companies assessed were rated “reasonable” or “high” in terms of their climate strategy integrity, primarily due to the absence of electrification plans for their manufacturing processes and other caveats in their commitments. 

Promising signs of improvement, but a long road ahead  

Among the companies assessed, H&M, Inditex and Lululemon have committed to procuring renewable electricity within their supply chains. However, these commitments lack concrete plans to electrify production processes. The report also finds that transparency on supply chain energy consumption remains limited, with H&M being the only company to provide clear disclosure. While H&M stands out for its transparency and initial steps to address issues like circularity, it remains unclear how much impact these steps will have. The company still falls short in critical areas such as electrification.

Another concerning trend is the ongoing reliance on false solutions like biomass and fossil gas. While more companies commit to phasing out coal, they often replace it with these unsustainable alternatives. All the companies assessed, except for Shein, which does not disclose specific information and continues to rely on coal, have presented plans to switch from coal to biomass or fossil gas in their supply chains. These alternatives do little to reduce emissions and risk locking companies into carbon-intensive technologies. Biomass, in particular, raises serious environmental and social concerns, including threats to biodiversity and food security due to land clearance for bioenergy crops, the report warns.  

Silke Mooldijk from NewClimate Institute said: “Many fashion companies promote bioenergy as a sustainable alternative to coal, but this is simply not true. Bioenergy is not an emissions-free energy source and may have a range of negative implications for local communities and ecosystems.”  

The 2025 CCRM comes at a critical time, as revisions to important climate standards – such as the SBTi Corporate Net Zero Standard, ISO Net Zero Standard and the GHG Protocol – are underway, presenting a crucial opportunity to strengthen the frameworks guiding corporate climate action.

In light of these findings, the report calls on standard setters to provide clearer guidance for companies in setting measurable transition goals. For the fashion sector, this includes concrete measures such as stricter guidelines to limit the use of biomass, as well as stronger policy measures to reduce clothing overproduction and promote more sustainable fibre sourcing.    

Benja Faecks from Carbon Market Watch said: “We commend the efforts of some companies in the fashion sector and the important work of standard-setters. However, transformative climate action needs to be cut from a different cloth: it requires sector-specific regulation as its foundation. It is up to regulators to raise the bar for credible climate action and establish a tailored framework for meaningful, sector-wide decarbonisation.” 

Notes to editors:
In-depth CCRM analyses of the agrifood and tech sectors have already been released. The full report with cross-sector findings and recommendations, including all sector deep dives (agrifood, fashion, tech and automotive manufacturers), will be launched on 10 July 2025. A special CCRM edition on carbon dioxide removals will be published in late July.