Is sustainability a retail priority for 2025?

If you asked the typical retailer exec if sustainability is crucial, the answer would, of course, be ‘yes’.

Brands and retailers publicly proclaim that sustainability is a ‘priority’ for their business and express the importance of it.

But as we approach a new year that is being described by many as ‘difficult’ for retailers, is sustainability actually a priority for the industry behind the scenes?

Are Retailers Still Focused on Sustainability?

Signs from the industry aren’t entirely encouraging when it comes to the importance of sustainability. Retailers are more concerned about challenges that have an immediate impact on their profitability in 2025, such as economic pressures and consumer sentiment.

Only 18% of fashion executives identified sustainability as a top risk for growth in 2025 in the recent State of Fashion report by McKinsey & Company and BoF Insights. This was a decline from 29 percent in 2024. The report also stated that 63% of fashion brands are falling behind on their sustainability commitments.

In The Visionary CEO’s Guide to Sustainability 2024, Bain & Company evaluated multiple global surveys and concluded that sustainability has become a much lower-ranked priority for CEOs relative to other topics.

In our own recent survey of UK retailers for The State of Sourcing Report: Sourcing and Sustainability in 2025, there was an almost even division between retailers who said that would be increasing funding into sustainability and ESG over the next 12-18 months (54%) and those who won’t (46%).

If we look at the 46% of businesses who said they weren’t increasing sustainability spending, large companies (51+ employees) said this was down to sustainability not being a priority (36%) and having conflicting priorities for investment (36%).

Small businesses (0-50 employees) said they felt they are already doing enough to make real advancements (55%), that there is a lack of financial justification (18%), and that sustainability wasn’t a priority (12%).

Clearly, this pattern of sustainability not being a top priority is a common one across all sizes of business.

The World Needs Sustainable Retail

At the same time, making retail more sustainable is a more critical task than ever.

According to fast fashion giant Shein’s own recent sustainability report, its carbon dioxide emissions almost doubled between 2022 and 2023. This equated to 16.68 million metric tons of carbon dioxide, which makes it fashion’s biggest polluter at present.

Heatwaves in 2024 saw key fashion manufacturing hubs in South and Southeast Asia struggling with staff becoming unwell and machinery failing to function.

Shein and Chinese-owned e-commerce marketplace Temu are being questioned by a British parliamentary committee as part of an inquiry into employment rights in their supply chains. And a new report by US non-profit Transparentem has alleged that major brands like Adidas, H&M, and The Gap sourced cotton from farms in India that use child labour.

Elsewhere, the secondhand fashion market was dealt a devastating blow at the start of 2025 after a huge fire destroyed Kantamanto Market in Ghana. This is West Africa’s largest secondhand clothing market and one of the biggest globally.

According to Ghanaian-American non-profit The Or Foundation, traders at the market put 25 million secondhand items of clothing back into circulation every month. This is through resale, reuse, repair, and remanufacturing.

It’s no wonder then that the market’s loss has put the spotlight back on fashion’s waste problems and lack of sustainable options.

All of these examples show just how much work is still to be done on making retail more sustainable.

New regulation also means that retailers can’t just push sustainability down the priority list. The introduction of the EU’s Ecodesign for Sustainable Products Regulation (ESPR) last year aims to make environmentally sustainable and circular products the norm.

This includes the introduction of Digital Product Passports, making it illegal to destroy unsold products in 2026, and setting ‘ecodesign requirements’ among other measures.

Over in the US, legislation has been agreed that requires large companies that do business in California to disclose their greenhouse gas emissions and report on climate-related risks by 2026.

Sustainability Can’t Be Overlooked

It’s easy to draw depressing conclusions about sustainability in 2025 based on the evidence – both the responses from retailers and the climate events the world keeps experiencing.

However, as Bain & Company points out in The Visionary CEO’s Guide to Sustainability 2024, it’s likely that many retailers are in the “trough of disillusionment,” when it comes to their sustainability efforts. As with any major shift or transformation, this was inevitable – particularly in the case of sustainability.

Sustainability is an area that was never going to have a quick or easy win because retail’s core business of making and selling products causes the very environmental issues that the industry is now trying to fix.

A long-term view is required, even when retailers are feeling the pressure from other priorities or downturns in the market. And there is plenty of positive evidence of sustainability action taking place in retail right now.

In our State of Sourcing and Sustainability Report, more than 50% of the UK retailers who said they are planning to increase their investment in sustainability say they will spend roughly 0-40% more. 12% will invest as much as 81-100% more, although this figure could include businesses who are going from nothing to something when it comes to sustainability funding.

On the whole, large businesses were twice as likely to say they would be investing more in sustainability than not. This is good news as larger businesses not only can make a bigger impact due to the size of their operation and supply chains, but also pave the way for others to follow.

There is also consumer demand for a more sustainable retail industry, even if shoppers aren’t necessarily putting their money where their principles are. In a global study by Bain & Company of nearly 19,000 consumers, 60% said they are more concerned about climate change than they were two years ago. For many, this was due to personally experiencing more extreme weather.

What the retail industry needs more than ever is to take a collective approach to trying to do business in a better way. By working together, the industry can save time and money and put in place changes that are sustainable in terms of being viable, maintainable, supportable, and legitimate.

Ahead of the new EU regulations, 10 of the largest companies in Spain have announced plans to take part in a year-long textile waste collection trial.

RE-VISTE – which is the new name for SCRAP (Collective System of Extended Producer Responsibility) – is a new initiative from The Association for the Management of Textile and Footwear Waste, which was formed by Decathlon, El Corte Inglés, H&M, IKEA, Inditex, KIABI, Mango, Primark, Sprinter/JD, and Tendam.

Starting from April 2025, the project will implement a collection network for unwanted textiles, which will then be sorted for resale, reuse, and recycling.

This is exactly the type of collaborative effort towards a shared responsibility – the lifespan of textiles – and requirement – the ESPR legislation – that can make a real difference.

Instead of everyone trying to come up with their own scheme and gather their own data and make things complicated for consumers, these businesses are pooling resources to learn together. And at a time when the pressure is on elsewhere, making resources go further through collaboration is the best way to keep making progress.