Sustainability in Fashion Companies: What and How to Report

While playing a significant role in our daily lives, the fashion industry also has a substantial impact on the environment and human rights.

The production of clothes and footwear relies heavily on raw materials extraction and transportation within complicated supply chains. Overall, fashion is responsible for 10% of global emissions and is a source of water, waste and plastic pollution. Many fashion brands rely on low-cost labour in developing countries, where workers, including women and children, may face exploitative conditions such as low wages, excessive working hours, and unsafe environments.?

It puts fashion companies under pressure from stakeholders, including customers, investors, and regulators, to adopt sustainable and ethical practices. The best way to demonstrate progress is to disclose genuine commitment (and supporting performance data) to scientifically informed thresholds and benchmarks in a sustainability report.

For larger fashion companies, ESG disclosure is not only an option but a requirement. For smaller companies, although it is not mandatory, producing a sustainability report is a great way to build trust with stakeholders and improve their competitiveness in an industry increasingly focused on ethical and transparent practices.

What to start with? What exactly should fashion companies report on in terms of sustainability, and how should they choose a reporting framework? This article explores existing reporting practices widely adopted by large and small fashion companies.

Large companies: CSRD and CSDDD

In the European Union, two critical regulations impacting the fashion industry's approach to sustainability reporting are the Corporate Sustainability Reporting Directive (CSRD) and Corporate Sustainability Due Diligence Directive (CSDDD).?

CSRD

CSRD introduces detailed reporting requirements, including double materiality, where companies must assess how sustainability issues affect them and how their activities impact society and the environment. Specific indicators are listed in the European Sustainability Reporting Standards (ESRS).?

The ESRS report should follow a specific format and include four sections: General Information, Environmental Information, Social Information, and Governance Information. Fashion companies should pay special attention to reporting information on water use, pollution, biodiversity, circularity, and social aspects related to workers and consumers. For example, they should report on the negative impacts of their activities in terms of water and marine resources pollution, including pollution by microplastics.

Since 2024, CSRD compliance has been mandatory for large companies in the EU that are already subject to the Non-Financial Reporting Directive (NFRD) and have more than 500 employees. Examples of fashion companies whose reports for 2024 should be written in accordance with ESRS, include H&M Group, Inditex (the parent company of Zara and Massimo Dutti), Adidas, Kering (the parent company of Gucci, Yves Saint Laurent, Balenciaga, etc.), LVMH (Louis Vuitton, Dior, Givenchy, etc.), and some others.

Smaller but still relatively large fashion companies with more than 250 employees, €40 million net revenue, or €20 million in total assets will begin reporting under the CSRD from 2025. This will include, for example, Veja, Patagonia (EU operations), Superdry, Scotch&Soda, and others.

Listed SMEs (with less than 250 employees) will have to be disclosed under CSRD from 2026, and non-listed SMEs with significant activities in the EU – from 2028. The smaller the fashion company is, the more time it has to prepare for new European regulations.

If you want to see how companies prepare for ESRS requirements, we have 26 fashion companies?in our database, including Inditex, Hermès, Kering, Hugo Boss and ASICS, already addressing these standards.

CSDDD

The CSDDD requirements apply to large companies with significant EU activities, with over 1,000 employees and more than €450 million net worldwide turnover.??

The new directive requires them to conduct human rights and environmental due diligence in their own operations and across supply chains. Companies should identify, prevent, mitigate, and account for adverse human rights and environmental impacts. CSDDD emphasises supply chain transparency, where the fashion industry faces significant challenges.

Although directly applied to only large companies, CSDDD will also significantly indirectly impact smaller producers. Fashion brands will need to engage more closely with their suppliers and business partners to ensure compliance with CSDDD requirements. For factories and fabric manufacturers, it means they must be prepared for detailed ESG data collection, even if national regulators do not require it. Otherwise, they may lose their most prominent clients, as large companies may need to reconsider or restructure their supply chains to avoid high-risk suppliers.

For companies with more than 5,000 employees, CSDDD?will be mandatory from 2027; for companies with more than 1,000 employees, it will be required from 2029. Fashion companies won’t have to publish a separate CSDDD report. All these requirements will be part of their CSRD disclosure.

Medium and Small companies: SASB, GRI, CDP, B Corp

Fashion brands not immediately subject to CSRD disclosure requirements may consider adopting voluntary reporting standards such as the Sustainability Accounting Standards Board (SASB) and Global Reporting Initiative (GRI) standards. These standards apply not only to European companies but to any company worldwide.

SASB

SASB presents a set of industry-specific sustainability accounting standards. They cover 77 industries across 11 sectors, including, specifically, Apparel, Accessories & Footwear, which is a part of the consumer goods sector.?

SASB standards require companies in the fashion industry to disclose four main topics that present specific sustainability-related risks and opportunities associated with their activities and are likely to be helpful to investors. Such topics include the Management of Chemicals in Products, Environmental Impacts in the Supply Chain, Labour Conditions in the Supply Chain, and Raw Materials Sourcing. Each topic contains several metrics, both qualitative and quantitative.

Examples of fashion companies using SASB standards include Next (UK), Deckers (USA), Nike (USA), Gap (USA), Van de Velde (Belgium), Kering (France), Canada Goose (Canada), Hansae (South Korea), Raymond (India) and many other fashion brands from all over the world.?

While many fashion brands prefer to include SASB metrics in their sustainability reports, some may also publish separate SASB reports. This is, for example, a comprehensive?Next SASB Disclosure for 2023.?

There are 186 examples of SASB disclosure for the Apparel, Accessories & Footwear industry in the etOso’s database.?

GRI

Another popular international reporting standards are GRI, used by more than 14,000 organisations in over 100 countries. Their purpose is to enable organisations to report information about their most significant impacts on the economy, environment, and people, including impacts on their human rights.?

GRI does not have a specific standard for the fashion industry but offers a wide range of Economic, Environmental, and Social topics, each with dozens of associated metrics. To select the most relevant ones for their stakeholders, fashion brands must run their materiality assessment, gathering input through surveys, interviews, and data analysis.

Examples of fashion companies following GRI disclosure requirements include Swatch (Switzerland), H&M Group (Sweden), Calzedonia (Italy), Puma (Germany), Mango (Spain), Hugo Boss (Germany) and others. Some large fashion companies – for example, Nike (USA), Inditex (Spain), and Ralph Lauren (USA) – include both SASB and GRI indicators in their sustainability reports. (All these reports?can be found in etOso.)

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CDP

Another way for fashion companies to demonstrate transparency in their environmental impact, specifically regarding carbon emissions, water use, and supply chain sustainability, is by disclosing through CDP (Carbon Disclosure Project).

CDP is not a reporting framework but a global environmental disclosure system, providing comprehensive questionnaires for companies from different industries and countries. Their climate change questionnaire consists of several topics, including Governance, Risk and Opportunities, Business Strategy, Targets and Performance, Emissions Methodology, Emissions Breakdown, etc. Most of these questions?are aligned with the leading reporting standards, including GRI, and are fully aligned with Taskforce on Climate-related Financial Disclosure (TCFD).?

Each disclosing company receives a CDP score based on the completeness of its disclosure. The more complete the disclosure, the higher the score. It does not always correlate with the company's environmental practices. Among 2023 CDP A-listers (the maximum score) are such fashion companies as Kering, Inditex and LVMH. Their disclosures are publicly available on the CDP website for registered users.

B Corp Certification

Although SASB, GRI and CDP welcome disclosure not only from large companies but also from SMEs, in practice, most medium and small businesses may not have enough resources to provide such comprehensive analysis and reporting.?

Many fashion brands, therefore, prefer to get a B Corp certificate, which measures companies’ social and environmental impact. This process involves completing the B Impact Assessment and achieving a minimum verified score of 80 out of 200 points.

In addition to demonstrating a commitment to sustainable practices to stakeholders, fashion brands often use the B Corp certificate for marketing purposes. You can find a B Corp logo on websites and packages of Baukjen (UK), Patagonia (USA), Ganni (Sweden) and hundreds of other fashion companies. Currently, the B Corp website lists over 370 apparel brands worldwide that obtained its certification.

Conclusion

A fashion company's approach to disclosing sustainability information largely depends on its size, the market it operates in, and specific regulatory requirements. For large fashion companies in the EU, disclosure under the CSRD is becoming mandatory. Many CSRD requirements align with existing frameworks like SASB and GRI, which are already widely adopted by large fashion companies.

While medium and small fashion brands can also utilise SASB and GRI frameworks, they less commonly use them in practice. Instead, smaller brands more frequently prefer B Corp certification, which not only requires the disclosure of ESG information but also serves as a valuable marketing tool.