13-05-2025
Sustainability is no longer in fashion, but the apparel industry's future depends on it
May 12 - For U.S. apparel retailers, these are difficult times. Economic uncertainty has led to plunging consumer sentiment — the second-lowest on record . At the same time brands are fighting an uphill battle on costs as they consider how on-and-off tariffs for manufacturing leaders may raise apparel prices up by 58%.
But amid talk of cutting costs, changing sourcing locations and scaling up investments in the U.S., there's a critical solution that risks being overlooked: investing more in sustainability, not less.
In fact, our research suggests that capital expenditure on renewable energy and energy efficiency may be the most practical path forward in keeping goods affordable and retaining customers.
This business case only strengthens as brands leverage hubs like India, Bangladesh, and Vietnam to lessen tariff impacts from manufacturing in China, the biggest source of American apparel imports. While 37% of American apparel imports came from China last year, this is set to change, especially given the end of the duty-free fashion for imports under $800 in early May.
Currently, strained infrastructure, fragmented grids, and logistics bottlenecks leave power costs high in other manufacturing hubs. Despite dropping global energy prices, industrial energy costs are steeply rising. In these burgeoning supplier countries, power can consume up to 20% of a supplier's operating cost, directly impacting brand bottom lines and consumer price tags.
The Bangladesh Energy Commission, for example, recently announced a 33% increase in gas prices for new industrial consumers, while India has cut domestic gas supplies and raised the price of locally produced gas. This matters for the fashion industry, which is characterized by energy-intensive processes, like spinning, weaving, and wet-dyeing and thus highly sensitive to the cost of energy.
Compare this to China, which by integrating solar energy into manufacturing facilities, boosting energy efficiency, and building a robust, connected energy infrastructure, has enabled manufacturers to price goods at levels once unthinkable.
On average, China can produce a megawatt-hour of electricity at 11-64% lower than other markets.
With high tariffs now driving brands to source more outside of China, brands may have to do more to help their suppliers invest in renewables and energy efficiency. This can offer a clear return on investment for both brands and suppliers, and enables better conditions for workers.
Take, for example, Bangladesh: In this developing hub, green has gained traction by both suppliers, for competitive advantage, and brands, for cost savings.
Supplier investment in solar panels at a factory in Bangladesh cut energy costs in half, improved working conditions, and positioned the supplier "for the next level of competitiveness." Brands H&M Group and Bestseller are helping Bangladesh build its first offshore wind farm, scaling renewables on the ground and ultimately lowering operating costs.
Let us be clear: this isn't about a race to the bottom. Here, what is good for business is also good for the planet. Energy-efficient operations and renewable energy don't just reduce emissions, they lower long-term costs and strengthen supplier competitiveness.
Regardless of what comes next — another pause, a new levy, or the cancellation of tariffs altogether — consumers aren't in the mood to spend more. Brands and retailers that want to weather this period of global economic uncertainty should focus on delivering affordable products, by all means.
The same goes for countries that look to fill a new manufacturing vacuum and develop a competitive advantage. While sustainability may no longer be in vogue, it may be the most practical path to keeping prices low.
