Impact Labs

Author: Helena

  • Mapping Industrial Vulnerability in a Water Constrained Economy

    Mapping Industrial Vulnerability in a Water Constrained Economy

    We saw that the financial architecture is being built around water scarcity: the policy frameworks, capital reallocation, and emerging asset classes. But capital flows toward where the pain is. In 2026, that pain is hitting the sector level with striking force: in the fields, factories, and development sites where water is no longer an abstract commodity but an operational limit.

    The global investment thesis only holds if we understand who is truly exposed. The answer spans four industries that define the modern economy’s relationship with freshwater, and whose trajectories will determine whether the $114 billion annual funding gap closes through resilience or crisis.


    The New Era

    Agriculture remains the defining variable. While it accounts for 70% of global freshwater consumption, this figure masks a deeper structural fragility: 56% of irrigated cropland is now exposed to extreme water stress. The World Bank’s Global Water Monitoring Report (November 2025) found the world is losing 324 billion cubic meters of freshwater annually – enough for 280 million people – driven largely by unsustainable irrigation of water-intensive crops. The financial consequences are no longer theoretical: Archer-Daniels-Midland disclosed that water stress across four Mississippi River complexes could cost up to $640 million.

    The energy and utilities sector compounds this picture. Cooling water for power generation (from thermal plants to the AI-driven data center boom) is now a strategic chokepoint. While electric utilities represent the largest share of corporate water use, management has historically been a discounted ESG risk. That discounting is ending, fast.

    The global investment thesis only holds if we understand who is truly exposed. The answer spans four industries that define the modern economy’s relationship with freshwater, and whose trajectories will determine whether the $114 billion annual funding gap closes through resilience or crisis.

    The Quality Controllers: Fashion and Food

    Fashion is the sector where water risk is most legible and most underpriced. The industry consumes 93 billion cubic meters annually, with consumption projected to rise 50% by 2030. The micro-level data is equally stark: a single pair of jeans requires 10,000 litres of water; leather production can demand 17,000 litres per kilogram. This exposure is further complicated by geography; only 15% of water used for textiles consumed in Europe is used within its borders, exporting the risk and the blind spot to water-stressed nations in Asia.

    Food production mirrors this dynamic. One kilogram of beef requires roughly 15,000 litres of water; one kilogram of cotton, up to 20,000. In both cases, the cost has been structurally absent from pricing models. Now, however, tariff reforms and mandatory disclosure requirements are surfacing what was always there.

    The New Frontier: Real Estate and Tourism

    Perhaps nowhere is the price correction more disruptive than in sectors that rarely viewed themselves as water-intensive. In 2026, water access is recognized as a fundamental driver of property value. Water stress now directly impairs buildings, disrupts operations, hikes insurance costs, and lowers terminal values in markets facing structural climatic shifts.

    Tourism is where the tension becomes visible in the most immediate human terms. A hotel can average 1,500 litres per room daily, often exceeding local consumption by eightfold. The Mediterranean, handling one-third of global arrivals, faces a structural mismatch: tourism peaks in summer precisely when natural water availability is at its lowest. A resort without water is not an asset; it is a liability.

    You can keep up to date with the latest developments in these solutions on our Tech Radar, which features a curated selection of tools and companies organised by sector and technological maturity.

    Food production mirrors this dynamic. One kilogram of beef requires roughly 15,000 litres of water; one kilogram of cotton, up to 20,000. In both cases, the cost has been structurally absent from pricing models. Now, however, tariff reforms and mandatory disclosure requirements are surfacing what was always there.

    SBTN in Action: The Gold Standard Arrives

    What unites these sectors is a shared historical failure to precisely quantify water dependency. That excuse is expiring. In late 2024, the Science Based Targets Network (SBTN) validated the first corporate freshwater targets: a milestone that transforms “stewardship” from a brand narrative into a basin-level operating constraint.

    Kering provides the most significant proof point. Through the SBTN pilot, Kering set a 21% reduction target for freshwater withdrawals in Tuscany’s Arno Basin by 2030. Critically, this is not a factory-gate commitment; it applies to both direct operations and upstream suppliers. To operationalize it, Kering is establishing Water Resilience Labs in ten stressed areas to work with local stakeholders and restore ecological health.

    This is “nature-positive” in practice: a lab in Tuscany, a target tied to hydrology, and a supplier network held accountable. In the hard-to-abate industrial space, Holcim offers a parallel signal with a 39% reduction target in Mexico’s Moctezuma Basin, demonstrating that even heavy industry can anchor ambition to science.

    The pattern is clear. The industries most dependent on water are those that historically priced it at near-zero. As regulation, disclosure, and scarcity correct this mispricing, the corporate question shifts from whether to act to how fast they can build the data infrastructure and basin-level strategies to stay operational.

    That question of operational translation, from commitment to circularity, is precisely where a new generation of ventures is providing the answer.

    Bloomberg Finance, Scarcity Rising: How Water Shapes Sectors and Investments (Feb 2025).

    World Bank, Global Water Monitoring Report: Continental Drying (Nov 2025).

    Science Based Targets Network, SBTN Pilot: Kering (Oct 2024).

    ESG Today, Kering Launches New Water Sustainability Strategy (Apr 2025).

    CSO Futures, Kering Launches Water Resilience Strategy (May 2025).

    ESG Today, GSK, Kering, Holcim First to Set Validated Nature Goals (Oct 2024).

    Rawshot / Jannik Lindner, Textile Industry Water Consumption Statistics, Report 2026 (Dec 2025).

    Janus Henderson Investors, Weathering the Storm: Physical Climate Risk and the Future of Real Estate (Mar 2026).

    Counselors of Real Estate, 2026 Top Ten Issues Affecting Real Estate® (Jan 2026).

    Sustainable Hospitality Alliance, Water Stewardship: Addressing Hospitality’s Impact on Water Scarcity.

    International Journal of Water Resources Development, Water–Tourism Nexus Research in the Mediterranean: A Systematic Literature Review (2024).

  • Beyond the Tap: De-Risking the World’s Most Essential Commodity

    Beyond the Tap: De-Risking the World’s Most Essential Commodity

    Water is the only commodity humans cannot live without, yet for decades, we have priced it as if it were infinite. In fact, only 3% of climate-tech funding was invested in water, despite 45% of global GDP being at risk from issues related to water scarcity. In 2026, that illusion has finally shattered. As we navigate what experts now term “Global Water Bankruptcy,” the era of cheap, undervalued water is giving way to a sharp and necessary price correction.

    The global landscape is currently a study in extremes: while European utilities implement steep tariff hikes to fund “PFAS-ready” infrastructure, other regions face systemic collapse due to a lack of basic investment. Bridging this $114 billion annual funding gap requires more than just higher utility bills; it demands a revolution in how we finance freshwater. From the rise of specialized “blue tech” venture capital to a new wave of government-backed circularity, the market is rapidly transforming water from a neglected utility into a strategic asset class.

    In 2026, public funding has transitioned from simple grants to “Outcome-Based” investments, driven by the EU Water Resilience Strategy (2025). Governments are no longer just funding research; they are de-risking the massive infrastructure shifts required for a water-smart economy. Private capital has moved beyond viewing water through a narrow ESG lens, with 2023 marking a record high of $863.9 million followed by strong momentum in 2024 and 2025. It is now treated as a core business continuity risk, particularly as the AI and semiconductor booms place unprecedented demand on ultra-pure water and cooling systems.

    The global water investment has coalesced around three strategic axes. These priorities reflect a shift from reactive spending to proactive, technology-driven resilience.

    1. Consumption Reduction & Circularity: Investment is surging into “Watering the New Economy,” specifically targeting the AI and semiconductor sectors.
    2. Water Quality & Compliance (PFAS): As of January 2026, new European Union regulations have made the monitoring of 20 specific PFAS (“forever chemicals”) and other micro-pollutants mandatory.
    3. Risk Analysis & Systemic Detection: The 13th OECD Roundtable on Financing Water (May 2026) has formally integrated water shocks into global financial stability frameworks.

    Ultimately, 2026 marks the end of taking the tap for granted. As public policy and private capital finally align, water is shedding its status as an invisible utility to become the strategic backbone of global industrial and environmental security.

  • Fresh water crisis: is it already out of control?

    Fresh water crisis: is it already out of control?

    Freshwater, the water found in rivers, lakes, and underground aquifers that we rely on for consumption and humans activities, makes up just 2.5% of all water on Earth. Yet we’re using it at a pace that has pushed us beyond the planetary boundary scientists define as our “safe operating space.”

    This overshoot is driven by a combination of climate change (disrupting precipitation patterns and the entire water cycle), population growth, and rapid urbanization, all of which are placing increasing pressure on already limited resources. As a result, the natural systems that regulate global freshwater stability are no longer functioning within the limits that allowed human societies to thrive

    And it starts closer to home than you’d think. Your morning coffee required roughly 140 liters of water to produce. A single cotton t-shirt? Around 2,700 liters. A kilogram of beef? Up to 20,000 liters. We interact with freshwater constantly, mostly without seeing it.

    As a result, the impacts are already cascading across sectors:

    • Human health: unequal access to safe drinking water is increasing health risks, compounded by PFAS contamination in water supplies
    • Agriculture: heavy reliance on irrigation makes food systems highly exposed to water scarcity
    • Industry (fashion, food, and more): water-intensive supply chains are increasingly at risk of disruption
    • Utilities: rising pressure on water supply and treatment infrastructure
    • Real estate: growing water stress is starting to affect asset value and long-term viability

    This is not a one-dimensional issue, but a dual crisis:

    • quantity, with rivers drying up, aquifers depleting, and glaciers retreating
    • quality, with pollution, wastewater, and agricultural runoff degrading what remains

    Both dynamics are accelerating, and both are hitting businesses where it matters most: operations, supply chains, and regulatory exposure. If water quality and monitoring do not improve, current data indicate that the health and livelihoods of 4.8 billion people could be jeopardized by 2030.

    This is where frameworks like the Science Based Targets Network (SBTN) come in, reflecting how water is increasingly being integrated into broader nature-related strategies. They provide a clear, science-based method to manage impacts at the scale where it matters most: local watersheds.

    At the same time, the NAT40 index, launched in 2026 by WWF France, represent the first benchmark enabling an independent assessment of CAC 40 companies’ maturity in addressing nature-related challenges. The index notably includes freshwater and Oceans, reflecting the importance of water within companies’ dependencies and impacts on natural systems. **Based on their regulatory disclosures, companies are scored out of 100: Kering leads with 52 (the only one above 50!), followed by LVMH (49) and Carrefour (48).

    Together, these frameworks and benchmarks mark a shift: from broad sustainability commitments to measurable, science-based accountability on water and beyond. Yet a major gap remains, while nearly 45% of global GDP is at risk from water-related challenges, only around 3% of climate-tech funding is directed toward water. Bridging this gap will be critical, and is increasingly emerging as a key frontier for nature finance.

    Sciences & Vie, «Planète : y aura-t-il assez d’eau pour tous ?» (2021).

    UN, World Water Development Report (2025).

    Stefan Gössling, «Tourism and water use: Supply, demand, and security. An international review» (2012).

    M. Zekri, «La sixième limite planétaire a été franchie. Et maintenant ?» (2023).

    INRAE, «L’eau, une ressource limitée à préserver» (2022).

    SBTN, Freshwater (2024).

    Water Footprint Network, “What is water footprint?” (2024).

    Cyrille Souche, “NAT 40 : Le premier classement biodiversité pour mettre les entreprises du CAC 40 à l’épreuve de la nature” (2026).

    WWF France, “Le WWF France publie l’indice NAT 40 et appelle les entreprises françaises à accélérer leur transformation en faveur de la nature face à l’urgence écologique” (2026).

    ImpactLabs.earth, “Digital 4 Impact – Tech Radar – Water management Deep Dive” (no link provided).

    Aqua Tech, Appetite for water tech grows with seeding round success (2026).

    World Economic Forum, Investing in Water: Aligning Investment Strategies with Water Innovation.

  • Biodiversity & Impact Measurement​​

    Biodiversity & Impact Measurement​​

    The latest IPBES report is clear: businesses are highly dependent on Nature. Hence, it becomes critical to measure the impact on biodiversity of their operation, allowing companies to take the best operational decisions to reduce it and to potentially monetise the positive effects of improving practices.

    For example, a company that shifts to regenerative agriculture can bring multiple advantages to the environment. These benefits could be monetarily valued in different ways, such as Credit mechanisms – e.g. Biodiversity or Nature Credits -, Payments for Ecosystem Services and Green Premiums, paid either by the final consumer (B2C activity) or a company (B2B activity).

    In general, there are two methods to measure biodiversity impacts. The first is action-based, linking an activity with the average impact measured. Despite only considering a general context and average data, it is easy to use and scale. The second is outcome-based, measuring specific on-the-ground effects. In this case, the assessments are more detailed, yet it can be complex and costly to execute.

    And to clearly measure the biodiversity state of nature, there are two main categories of indicators:

    • Species diversity: species richness, presence of important species…
    • Habitat quality and complexity: canopy cover, presence of specific habitats such as wetlands…

    Over time, different types of measurement have been developed, each with its own purpose and attributes.

    The most common, and historical, is field sensing. On-the-ground biodiversity information is collected either manually by an ecologist or using devices like bioacoustics sensors or camera traps. New platforms, such as the crowdsourced iNaturalist, have also been gaining traction and reducing the costs of collecting information.

    However, advanced technologies are being scaled as well. Soil and water sampling, with either eDNA or Chemical & Physical analysis, are powerful tools to understand species richness and ecosystem conditions. Remote sensing, utilising drones or satellites, collect data from the air with different resolution levels, facilitating flora assessments at large scale.

    This measurement market, despite its ongoing improvements, still has key pain points:

    • Lack of maturity and excessive fragmentation, with many new solutions created in the past few years.
    • Solutions are not always adapted to local contexts, due to specific flora and fauna.
    • Measurement is still quite expensive, and can vary a lot from one player to another.
  • RegenAg as a Tool for Sustainable Agriculture Transition

    RegenAg as a Tool for Sustainable Agriculture Transition

    Agriculture sits at the fault line of planetary boundaries.

    Farmland is where biodiversity loss, land use change, and carbon emissions converge. It is a pressure point. Yet, because of its scale, it is also one of the greatest levers for restoration. Agricultural land is both a challenge and a powerful opportunity to create biodiversity buffers and regenerate ecosystems from within supply chains.

    Farming is not separate from nature. It is rooted in soil, water, climate, and living systems. Production does not stand outside these forces; it emerges from them.

    Modern intensive agriculture treats production as an equation: inputs in, outputs out. Control the inputs, control the yield. This view ignores the living foundation of productivity. Soil fertility is generated by roots, microorganisms, and nutrient cycles working together. When these biological relationships are weakened, productivity becomes dependent on external substitutes.

    There is urgency in shifting course. Agriculture must recognise how deeply it depends on biodiversity and natural processes, and begin to work with them rather than override them.

    Regenerative agriculture offers a holistic, place-based, practical pathway. Rather than imposing a fixed system, it reads the context, follows natural flows and patterns, and treats food production as the living, evolving process it truly is. This way of seeing agriculture naturally leads to a set of guiding principles — ones that prioritise relationship over extraction, offering a shared direction: toward healthier soils, richer ecosystems, and farming systems that can truly last.

    By diversifying crops and land use, it creates habitats for birds, insects, and small mammals, strengthening ecosystem resilience. Functional biodiversity reduces the need for chemical plant protection by restoring natural balance.

    Continuous root growth and living ground cover feed soil life through root exudates (root glucose based production that enables plant communication with the rhizosphere), activating microbial communities. Healthy microbiomes build fertile soils. Fertile soils produce nutritious crops. Above- and below-ground biodiversity reinforce each other in a self-sustaining cycle.

    Our team has the chance to continuously participate in the construction of regenerative projects, through contextual building of GaiaLabs and learning opportunities such as Phillipe Birkin’s workshop at the Herdade no Tempo.

    At Impact Labs, we work with this reality, supporting companies in transforming their supply chains to reconnect agricultural production with biodiversity flows and strengthen resilience from the first mile.

    Impact without measurement is intention and our MRV framework gives regenerative commitments a rigorous, transparent backbone.

  • How private finance can support nature-positive outcomes

    How private finance can support nature-positive outcomes

    The process starts with mapping all entities related to the organisation, and associating to them the datapoints necessary to analyse the impact on biodiversity. There are several possible data sources — e.g. financial, commodities/product and pressure — which should be combined with the entities’ location to better assess how the company affects local environmental pressures and its proximity to high-risk/sensitivity areas.

    Then, the platform will convert this data into both pressure metrics, related to the five drivers of biodiversity loss, and a unified score of biodiversity impact using relevant models and datasets. With this information, it is possible to identify the most significant impacts of the organisation’s operation, its net/avoided impact and other relevant outputs that are particular to the scope of each assessment.

    ESG due diligence methodologies have rightfully become indispensable for investors, helping them not only mitigate risks, but also preserve and enhance deal value. As dealmakers have difficulty quantifying ESG’s impacts, sustainability specialists can help by enhancing resource allocation and improving the quality and precision of due diligence, allowing them to get tailored insights that facilitate decision-making processes.

    In 2024, a group of major French institutional investors launched “Objectif Biodiversité”*, a fund dedicated to financing companies that provide concrete solutions for the preservation and restoration of ecosystems.

    Impact Labs has contributed to guaranteeing a rigorous approach with an additional layer of independent assessment with our due diligence methodology, which:

    • Qualifies and quantifies biodiversity impact.
    • Provides a consistent and comparable view of a companies sustainability performance that can be mapped to an investors’ portfolio risk framework;
    • Aligns with EU regulations and leading standards, facilitating compliance and reporting for the investors under the SFDR, EU Taxonomy or CSRD;
    • Results in impact qualification grounded on globally recognised frameworks and databases, complemented with company and industry knowledge to capture context-specific nuances.

    Our process is rooted in strong sustainability and data expertise to assess key points and answer key questions:

    • Biodiversity Impact: What is the company’s biodiversity impact?
    • ESG and Mission Purpose Maturity: How robust is the company’s ESG impact management and mission purpose?
    • ESG Materiality: What are the company’s material topics and what are the associated risks?
    • Strategic Risk Management and Impact Plan: How can the company manage the identified risks in an actionable way during the investment period?

    Ultimately, our due diligence process helps to identify value-creation opportunities and guarantee tangible nature-positive results. The influence and adoption of ESG factors on due diligence processes is not yet uniform, however Europe is at the forefront and we are confident these processes can promote not only better financial performance, but also better sustainability performance, for people and the planet.

    *The French institutional investors behind the “Objectif Biodiversité” (Biodiversity Objective) initiative, launched in 2024 with Af2i – Abeille Assurances (Aéma Groupe), BNP Paribas Cardif, BPCE Assurances, Caisse des Dépôts, CNP Assurances, EDF Gestion, MAIF, MACIF (Aéma Groupe), Malakoff Humanis, Société Générale Assurances, Crédit Agricole Assurances, AXA, Allianz France, AÉSIO mutuelle (Aéma Groupe), PRO BTP, and CARAC – now joined by Caisse Générale de Prévoyance des Caisses d’Épargne (CGP), announce the selection of Starquest-Montefiore as the manager for the unlisted fund.

    Kengelbach, J. et. al (2024, April). The payoffs and pitfalls of ESG due diligence. Boston Consulting Group (BCG) and Gibson Dunn

    State of Nature Finance (2026), UNEP

  • Impact Labs x Darwin: Scaling the Nature-Positive Transition

    Impact Labs x Darwin: Scaling the Nature-Positive Transition

    As previously mentioned, there is strong case for companies to go beyond GHG emissions, especially when assessing their environmental impacts. Without accounting for broader elements, such as land use changes and water consumption, these assessments become limited — restricting the capacity to further understand the nature-related risks, dependencies and opportunities.

    Impact Labs and its technology partner Darwin Data are implementing a methodology to measure biodiversity impact with rigour and transparency. Darwin’s platform combines advanced technologies with impact and lifecycle databases to scale nature strategies – including biodiversity footprinting, risk assessments, spatial analysis and reporting.

    Illustration of the Darwin Platform.

    The process starts with mapping all entities related to the organisation, and associating to them the datapoints necessary to analyse the impact on biodiversity. There are several possible data sources — e.g. financial, commodities/product and pressure — which should be combined with the entities’ location to better assess how the company affects local environmental pressures and its proximity to high-risk/sensitivity areas.

    Then, the platform will convert this data into both pressure metrics, related to the five drivers of biodiversity loss, and a unified score of biodiversity impact using relevant models and datasets. With this information, it is possible to identify the most significant impacts of the organisation’s operation, its net/avoided impact and other relevant outputs that are particular to the scope of each assessment.

    By combining Impact Labs’ nature-positive expertise with Darwin Data’s cutting-edge technology, our methodology is ideal for companies that either want to improve or start their biodiversity impact assessments.

    Our services also include the definition of impact KPIs, the development of strategic action plans and the improvement of data sources — further enhancing the scale and impact of our clients environmental strategy.

    Contact us for a demo or more information.

    DarwinData

  • Biodiversity: the “hidden” engine of our planet​

    Biodiversity: the “hidden” engine of our planet​

    For long, greenhouse gas emissions have been the focal point of sustainability. However, there are other key elements that compose our planetary systems that deserve as much attention — and biodiversity is certainly one of them.

    It refers to the variety of genes, species and ecosystems on Earth, influencing the interactions of billions of living beings. For humans, biodiversity not only has an intrinsic value, but it is also deeply connected to the cultural, regulating and provisioning services from nature.

    Despite that, societal values and behaviours have already put more than one million species of plants and animals — of the eight million estimated to exist — at risk of extinction. Such biodiversity loss has profound consequences for our society and is directly driven by five factors (in order of impact):

    1. Changes in land and sea use
    2. Direct exploitation of organisms
    3. Climate change
    4. Pollution
    5. Invasion of alien species

    According to the Intergovernmental Science-Policy Platform on Biodiversity and Ecosystem Services (IPBES) — the main independent intergovernmental body for biodiversity and ecosystem services — the intensity of these drivers differs regionally, ultimately underpinned by factors such as production and consumption patterns, trade, and technological innovations.

    With time, this context has become undeniably material for companies. The World Economic Forum (WEF) estimates that more than half of the world’s GDP is moderately or heavily dependent on nature. If enterprises continue to operate in unsustainable ways, they will feed a vicious circle where not only the multiple consequences of biodiversity loss become more intense, but also their operations become more fragile.

    Impact Labs is committed to changing this system and helping organisations operate within the boundaries of our planet. With offers such as biodiversity trainings and footprints, we are leading the transition to a nature-positive economy.

    Biodiversity. Queensland Government, 18/07/2025.

    What are ecosystem services? European Environment Agency, 18/12/2025.

    What is biodiversity and why is it important to preserve it? European Environment Agency, 17/11/2025.

    Facts about the nature crisis. UN Environment Programme, 28/04/2025.

    Global Assessment Report on Biodiversity and Ecosystem Services. IPBES, 2019.

    Nature Risk Rising: Why the Crisis Engulfing Nature Matters for Business and the Economy. World Economic Forum, 2020.

    The methodological assessment report on the impact and dependence of business on biodiversity and nature’s contributions to people: Summary for policy makers. IPBES, 08/02/2026.

  • Avoided Emissions: The What, The Why, And The How

    Avoided Emissions: The What, The Why, And The How

    As sustainability claims proliferate across fashion labels, the industry’s sourcing strategies and value-chain actions reveal a more uneven reality. This article examines where environmental commitments reflect genuine progress and where they fall short of the systems required to support them.

    The New Era

    The fashion industry is entering a more constrained, regulated, and efficiency-driven era, where scale, data, durability, and compliance matter more than rapid trend cycles or sustainability storytelling.

    In recent years, the fashion industry has become fluent in the language of environmental responsibility. Labels promise lower impact, brands publish climate targets, and sourcing narratives increasingly emphasize recycled materials, preferred fibers, and circular ambitions. To consumers and investors alike, these commitments suggest an industry in the midst of meaningful transformation. Yet beneath the surface, a more complicated picture is emerging, one in which environmental claims often outpace the structural changes required to support them.

    As growth slows and costs rise across labor, energy, and logistics, fashion is undergoing a fundamental recalibration. The industry’s focus is shifting from rapid expansion to operational efficiency and risk management. This economic pressure is reshaping sourcing strategies, driving diversification away from single-country dependence and increasing the value placed on speed, resilience, and supply-chain control. While these changes are frequently framed as progress toward sustainability, they are just as often responses to cost volatility and disruption risk, raising questions on how environmental intent and commercial necessity intersect. [1, 2, 3, 4, 5, 6]

    At the same time, sustainability itself is no longer confined to branding or selective “green” collections. Stronger regulations around greenwashing, waste, and producer responsibility particularly in the European Union are pushing environmental commitments into the realm of legal and financial accountability. Brands are investing in traceability systems, impact reporting, and value-chain data, but the scope and depth of these efforts vary widely. Ambitious targets are increasingly announced beyond a company’s direct operations, extending into raw material sourcing, manufacturing, and end-of-life management, areas where brands often exert limited control. [7, 8, 9]

    Circularity has become a prominent feature of this narrative, promoted as evidence of systemic change. Yet in practice, circular models remain constrained by logistical, economic, and technological barriers. Recycling at scale has proven difficult and costly, prompting a growing emphasis on resale, repair, and durability instead. While these initiatives reflect incremental progress, they also highlight the gap between aspirational frameworks and the realities of implementation. [10, 11, 12]

    This article examines that gap. By looking closely at environmental claims, sourcing strategies, and beyond–value chain mitigation commitments, it asks whether the fashion industry’s current actions align with the promises attached to its labels. Rather than measuring intent, the focus here is on evidence: What has actually changed? What remains largely theoretical? And where sustainability commitments risk becoming symbolic rather than transformative?

    The Progress Report

    To assess whether fashion’s environmental claims hold up, this article examines three interconnected layers: how waste and pollution actually occur, how production and sourcing strategies are changing in response, and how industry commitments measure, and sometimes obscure, real progress.

    Circularity & Waste: Where Environmental Impact Physically Materializes

    Circularity has become fashion’s go-to response to environmental criticism. Recycled fibres, take-back schemes, and resale platforms now dominate sustainability messaging. Yet recent research suggests that the industry’s waste problem is driven less by a lack of circular initiatives than by the scale and structure of production itself.

    Evidence shows that plastic pollution from fashion is dominated by mismanaged synthetic textile waste, not consumer washing alone. A global assessment of synthetic clothing leakage estimates that tens of millions of tonnes of synthetic garments enter waste streams each year, with the largest share of environmental leakage occurring at end of life. These pathways sit largely outside the reach of brand-led recycling or take-back programs. Microfibre pollution, often framed as a laundering issue, reinforces this systemic view. Reviews of fibre shedding show that microplastics are released throughout a garment’s lifecycle and are strongly influenced by fibre choice and textile construction. With synthetic fibers accounting for roughly two-thirds of global fiber production, continued growth in polyester volumes means microplastic emissions remain structurally embedded, regardless of downstream mitigation efforts. [13, 14, 15]

    Life Cycle Assessment (LCA) research further challenges the industry’s emphasis on recycling. Across multiple studies, reuse and extended garment lifetimes consistently deliver greater environmental benefits than fibre-to-fibre recycling, particularly when recycling involves energy-intensive processing or results in downcycled materials. In many cases, the environmental gains of recycling depend on whether recycled products actually displace new production, an assumption that is rarely verified. [16, 17, 18]

    Policy tools such as Extended Producer Responsibility (EPR) are increasingly cited as evidence of progress. Research shows EPR schemes can improve funding for collection and sorting, but without mechanisms to curb production volumes or incentivize durability, they risk formalizing waste management rather than reducing waste generation. [19]

    Taken together, research suggests that fashion’s waste problem is not primarily a failure of circular ideas, but a mismatch between circular ambitions and linear realities. This raises a critical question for evaluating environmental claims: whether circularity in fashion is being pursued as a transformative strategy, or as a compensatory framework that manages the consequences of overproduction without fundamentally challenging it.

    Production & Sourcing: Where Brands Say Change Is Happening

    If circularity addresses what happens after clothing is sold, sourcing and production are where brands most often claim they are reducing impact at the source. Preferred materials, cleaner processes, and supplier engagement now anchor many sustainability strategies. Yet industry data suggests that improvements in efficiency are being outpaced by continued growth in overall production.

    According to industry reporting from Textile Exchange, global fiber production reached approximately 124 million tonnes in 2023, continuing a decades-long upward trend. Synthetic fibers remain dominant, accounting for roughly two-thirds of total fiber output. While brands increasingly emphasize recycled or “preferred” fibers, these materials still represent a relatively small share of total volumes. The result is a sourcing landscape in which incremental material substitutions coexist with expanding absolute demand for raw inputs. [20]

    This growth has direct implications for environmental impact. Research linking fiber sourcing to land use and ecological pressure shows that fashion’s material footprint extends well beyond factories and mills. The UNCCD’s Fashion & LAND report connects cotton cultivation, grazing for animal fibers, and wood-based cellulosics to land degradation and biodiversity loss across multiple regions. These impacts are often diffuse, geographically distant, and difficult to trace. Yet they sit upstream of many sustainability claims made at the product level. [21]

    Chemical use in textile production presents a similar challenge. Detailed technical assessments from the OECD show that fabric finishing and coating processes involve complex chemical inputs with multiple release pathways into air and water. While regulatory controls and substitution efforts can reduce risks locally, the cumulative environmental burden remains closely tied to production scale. Cleaner chemistry does not eliminate pollution if overall output continues to rise. [22]

    Brands frequently frame sourcing diversification and nearshoring as sustainability wins, citing reduced transport emissions, improved oversight, and faster lead times. In practice, these shifts are often driven by cost volatility, supply-chain risk, and geopolitical uncertainty as much as environmental intent. Shorter lead times may reduce overproduction at the margins, but there is limited evidence that sourcing reconfiguration alone delivers absolute reductions in emissions or resource use.

    While material efficiency, cleaner processes, and improved oversight can reduce impacts per unit, they do little to counteract the effects of continued growth in fiber production and garment output. As long as sustainability progress is measured primarily in relative terms, percent improvements, preferred material shares, or supplier participation, it risks obscuring the more consequential question: whether the industry’s sourcing model is compatible with meaningful reductions in environmental pressure.

    Claims, Commitments & Accountability: Where Narrative Meets Evidence

    As environmental scrutiny intensifies, fashion brands have responded with an expanding array of commitments. Net-zero targets, preferred materials pledges, and value-chain mitigation plans now feature prominently in corporate reports and public-facing communications. On paper, the industry appears aligned around climate action. In practice, however, the credibility of these commitments depends less on ambition than on how progress is defined, and what remains outside the frame.

    Independent assessments suggest that many fashion decarbonization strategies rely heavily on future material shifts and efficiency gains, rather than on reductions in overall production. Analysis from Carbon Market Watch finds that climate plans across the sector often assume significant emissions savings from recycled or “preferred” fibers, despite uncertainty around scalability, displacement effects, and data quality. In many cases, emissions reductions are projected rather than demonstrated, and near-term progress remains limited. [23]

    Industry-led progress reports present a similarly mixed picture. Publications from groups such as Global Fashion Agenda and The Fashion Pact document improvements in renewable energy sourcing, supplier engagement, and reporting coverage. Yet these reports also reveal the limits of voluntary action. Participation varies widely, metrics are not always comparable, and progress is often measured in relative terms, percentages of suppliers engaged or materials classified as preferred, rather than absolute reductions in emissions, resource use, or pollution. [24, 25]

    Methodological challenges further complicate the landscape. Guidance from Textile Exchange cautions against the selective use of LCA data in product claims, noting that results can vary significantly depending on assumptions, system boundaries, and data sources. When LCAs are used to support marketing claims without transparent context, they risk overstating environmental benefits while obscuring trade-offs elsewhere in the value chain. [26]

    Evidence suggests that fashion’s environmental claims are not empty, but they are often incomplete. The challenge, moving forward, is not a lack of pledges, but whether commitments can be reconciled with the scale, speed, and volume at which the industry continues to operate.

    Going Beyond the Value Chain

    Beyond direct operations, many brands now include “beyond value chain mitigation” in their climate strategies, investing in external projects to compensate for residual emissions. While such measures may play a role in broader climate finance, they do not substitute for reductions within core sourcing and production systems.

    What is Beyond Value Chain Mitigation?

    Beyond Value Chain Mitigation (BVCM) is a relatively new concept within the Science Based Targets initiative’s (SBTi) framework that expands how companies contribute to global climate goals. Under the SBTi’s Corporate Net-Zero Standard, BVCM refers to mitigation actions or investments that fall outside a company’s own value chain, including initiatives that avoid, reduce, or remove greenhouse gas (GHG) emissions beyond what the company directly controls or influences. [27, 28]

    Traditionally, corporate climate strategies have focused on reducing Scope 1, 2, and 3 emissions—those generated within operations, purchased energy, and across value chains. BVCM sits alongside these efforts as a complementary step. Rather than substituting for internal decarbonization, it is intended to accelerate the broader global net-zero transformation by financing or enabling emission reductions that a company cannot achieve through its own activity or supply-chain changes alone.

    At its core, the BVCM concept reflects an evolving understanding of corporate climate responsibility. Many emissions, such as those from energy infrastructure, land-use change, or broader economic activity, cannot be eliminated through individual corporate supply-chain interventions alone. BVCM invites companies to finance or participate in climate solutions beyond their immediate operational footprint, whether through supporting renewable energy deployment, nature-based solutions like forest restoration, or emerging technologies such as direct air capture. When integrated alongside robust internal reduction efforts, these actions can help fill gaps in global mitigation pathways that traditional value-chain interventions struggle to address.

    However, BVCM also sits at the intersection of ongoing debate about corporate climate claims. Because these activities occur outside a firm’s direct value chain, they are not counted as Scope 1–3 reductions and cannot be used to make traditional “net-zero” attribution claims on their own. Instead, the SBTi and wider climate community emphasize that such efforts should complement, not replace, direct emissions reductions aligned with science-based targets. How BVCM investments are measured, reported, and communicated will be critical to ensuring they drive meaningful global progress rather than serving as a veneer for unmet internal decarbonization goals.

    Reduction Pathway in Practice: Where Ambition Meets Reality

    In 2025, Impact Labs had the opportunity to have a discussion with a major fashion player in helping them reshape and refine their reduction pathway as well as their BVCM strategy aligning with the SBTi’s 1.5°C trajectory. Throughout our discussions, the truth behind the struggles of fashion brands on their sustainability commitments became more evident.

    Scope 3 remains the main problem
    For fashion companies, the contrast between Scope 1 and 2 emissions and Scope 3 emissions is stark. Reducing emissions from owned operations and purchased electricity is relatively direct: companies control their buildings, energy contracts, and logistics assets, and the technical solutions are well established.

    The more consequential challenge lies in Scope 3, where the vast majority of fashion’s emissions are concentrated. For most fashion brands, Scope 3 emissions are dominated by sourcing: raw material production, textile processing, garment manufacturing, and upstream energy use. These activities span thousands of suppliers across multiple tiers and jurisdictions, limiting direct control and entangling emissions reduction with purchasing practices, production volumes, and lead-time expectations.

    Material substitution sits at the center of the company’s sourcing narrative. Increased use of recycled polyester, lower-impact cotton, and alternative cellulosic fibers is presented as a pathway to decarbonizing upstream emissions. Yet, preferred fibers account for a growing share of inputs, but still represent a minority of total fiber volumes, and their benefits depend on displacement: whether they replace virgin production rather than supplement it.

    Supplier engagement and energy efficiency form the second pillar of the company’s approach. Programs to encourage renewable energy adoption and process improvements in mills and factories are necessary and increasingly common across the industry. However, these efforts operate within commercial structures that prioritise cost, speed, and flexibility. Without parallel changes to purchasing practices, suppliers face limited capacity to deliver deep emissions cuts at scale.

    Transport and logistics optimisation highlight a further tension. The company’s fast-response model depends on frequent replenishment and, at times, emissions-intensive transport modes. Efficiency gains can temper emissions growth, but they struggle to offset the climate impact of high throughput and compressed timelines. Here, operational agility and climate ambition pull in opposite directions.

    The discussion illustrates a broader industry constraint rather than a company specific one. Scope 3 emissions are not difficult because solutions are unknown, but because they collide with the structural logic of fashion’s business model. This is precisely why BVCM is entering the conversation: not as a replacement for Scope 3 reductions, but as an implicit acknowledgment that value-chain decarbonization alone may not be fast enough under existing business models.

    Beyond Value Chain Mitigation: Promise, Purpose, and Pitfalls

    For large fashion groups with complex, globally dispersed supply chains, the appeal of BVCM is clear. Scope 3 emissions are slow to abate and difficult to control directly. Even with aggressive supplier engagement and material shifts, companies face a timing gap between their decarbonisation ambitions and what sourcing systems can realistically deliver. BVCM offers a way to contribute to climate mitigation beyond those constraints, particularly in sectors such as energy and land use where emissions reductions may be faster or cheaper to achieve.

    However, SBTi guidance is explicit about the boundaries of BVCM. Beyond-value-chain actions cannot be counted toward Scope 1–3 reduction targets and cannot be used to claim net-zero achievement. Instead, they are positioned as an “above and beyond” contribution that sits alongside science-based reductions. [29, 30, 31]

    Several critical points emerge from SBTi’s guidance that are particularly relevant for fashion companies.

    • Internal decarbonisation must remain the priority. BVCM is only considered credible when companies are demonstrably on track to meet their near-term Scope 1–3 targets.
    • Quality and transparency matter. SBTi emphasizes that BVCM actions should deliver real, additional, and durable climate benefits.
    • Strategic alignment. The most credible BVCM strategies are those that complement core risks such as investments in renewable energy systems relevant to manufacturing regions, or nature-based solutions aligned with fibre sourcing impacts.

    Ultimately, BVCM reflects both progress and limitation. Its growing prominence signals recognition that value-chain decarbonisation alone may not deliver emissions reductions at the pace required. At the same time, its credibility depends on restraint: clear separation from Scope 1–3 claims, robust governance, and transparency about what BVCM can and cannot achieve. For fashion’s largest players, the challenge is not whether to engage with BVCM, but how to do so without allowing it to become a substitute for confronting the structural drivers of their own emissions.

    1. Global fashion industry heading for slowdown in 2023. Just Style, 30/11/2023.

    2. All the Major Fashion Brands and Retailers Severely Impacted by the COVID-19 Pandemic. Women’s Wear Daily, 24/12/2024.

    3. Luxury fashion: independent brands in a consolidating industry. Bocconi Students M&A Circle, 23/01/2023.

    4. Is apparel manufacturing coming home? McKinsey & Company, 11/10/2018.

    5. How To Find Clothing Manufacturers In Vietnam 2025 // Top Clothing Suppliers And Factories In Vietnam List. Cosmo Sourcing, 22/11/2025.

    6. Supply Chain Resilience In The Fashion Industry: Navigating Disruptions And Emerging Strategies. Rural Handmade, 05/05/2024.

    7. Fast fashion: EU laws for sustainable textile consumption. European Parliament, 19/09/2025.

    8. The Role of Extended Producer Responsibility (EPR) in Reducing Textile Waste. Textile Focus, 26/03/2024.

    9. Fashion’s Next Trend. Human Rights Watch, 18/12/2019.

    10. Fashion resale market grows as cost-conscious consumer emerges. Just Style, 11/11/2022.

    11. Take-Back Programs: What They Are and How to Get Started. EcoEnclose, 28/08/2025.

    12. Transformable Fashion: The Biggest Sustainable Clothing Trend That Never Was. The Fashion Studies Journal, 22/10/2018.

    13. The global apparel industry is a significant yet overlooked source of plastic leakage. Nature Communications, 12/06/2024.

    14. Release of microplastic fibers from synthetic textiles during household washing. Science Direct, 15/09/2024.

    15. From production to pollution: a review of microfiber release mechanisms and mitigation strategies in the textile industry. The Journal of The Textile Institute, 02/09/2025.

    16. Life cycle assessment applications to reuse, recycling and circular practices for textiles: A review. Science Direct, 15/06/2024.

    17. Life cycle assessment in fashion industry: a systematic review. Discover Sustainability, 06/11/2025.

    18. Advancing sustainability of textiles: a life cycle and microfiber emission assessment of locally manufactured circular sportswear. Environmetal Sciences Europe, 27/10/2025.

    19. Extended producer responsibility in the garments sector. OECD Enviroment Working Papers, 2024.

    20. Materials Market Report 2024. Textile Exchange, 26/09/2024.

    21. Fashion & Land: Unravelling the Environmental Impact of Fibres. United Nations Convention to Combat Desertification, UNCCD, 2024.

    22. Emission Scenario Document on Chemicals Used in Fabric Finishing or Fabric Coating. OECD, 2024.

    23. Corporate Climate Responsibility Monitor 2025: Fashion Sector Deep Dive. NewClimate Institute, 2025.

    24. The GFA Monitor 2024 Update. Global Fashion Agenda, 2024.

    25. An Update on Progress 2023-2024. The Fashion Pact. 

    26. New paper sets out considerations for the responsible use of LCA data across the fashion, textile, and apparel industry. Textile Exchange, 07/08/2025.

    27. Beyond Value Chain Mitigation. Science Based Targets, 28/02/2024.

    28. SBTi CORPORATE NET-ZERO STANDARD. Science Based Targets, 2025.

    29. ABOVE AND BEYOND: AN SBTI REPORT ON THE DESIGN AND IMPLEMENTATION OF BEYOND VALUE CHAIN MITIGATION (BVCM). Science Based Targets, 2024.

    30. RAISING THE BAR: AN SBTI REPORT ON ACCELERATING CORPORATE ADOPTION OF BEYOND VALUE CHAIN MITIGATION (BVCM). Science Based Targets, 2024.

    31. Beyond Value Chain Mitigation FAQ. Science Based Targets, 2021.

  • Fashion’s Carbon Story: Promises vs. Progress

    Fashion’s Carbon Story: Promises vs. Progress

    Collecting accurate nature data to support climate mitigation and adaptation solutions is often complex and time-consuming. Data can be scattered across different entities and often be incomplete leading to challenges in:

    • Obtaining complete data to scale nature-positive impact, support decision-making and reporting to stakeholders, in a cost- and time-efficient manner;
    • Efficiently manage and leverage big amounts of data for sustainability decision-making and added value to their services.

    To deal with these challenges there are multiple approaches that rely on technical and data solutions:

    • More efficient data collection thanks to adapted tools and processes;
    • Remote sensing and sensors to support data collection, in addition to on-the-ground data collection processes;
    • Data treatment and management to ensure insights are accurate, actionable and support decision-making.

    In the past years, we helped a company with multiple Agroforestry Nature-Based Solutions projects improve the estimations of captured carbon by developing more precise science-based models. Due to the long time period between verification, it is key to have a robust forecasting of the carbon sequestration to avoid both overstock and shortage of supply. This difference between the forecast and the reality can be due to multiple factors:

    • Over or underestimation of the trees’ survival rate, especially during the first 2 years;
    • Usage of linear growth curve (from IPCC) that do not reflect reality, despite being a market standard;
    • Error in the data collection and/or selection of a sample that is not representative of the project.

    Additionally, often times approaches for carbon estimation are general and standardised across different species, planting models and regions. However, tree survival rates, species composition and growth conditions within the project area can significantly impact carbon capture.

    By analysing years of historical data, we reached the conclusion that the empirical data showed lower carbon sequestration in the first years of the tree life, when compared to IPCC data, proving that a linear growth curve was not reflecting the reality on the field. The analysis of over 15+ years of historical data obtained through on-the-ground biomass inventories allowed us to identify robust trends on the evolution of several Nature-based projects. Moving from an area-level to a tree-level estimation with higher granularity, through a census-based estimation of biomass at individual tree level and leveraging historical data we were able to successfully improve carbon estimations.

    This transition required a more rigorous and complex data collection process and an update on the foundational scientific assumptions. Scientific literature was used to complement historical data, leveraging recent and peer-reviewed species- and location-specific data on tree growth and survival rates. This would ultimately guarantee that the new model provides more accurate estimations with less uncertainties and be a better fit for complex agroforestry systems.

    Different precision levels for NbS project data

    In another client case, the challenge faced by the company was related to the time-consuming and inefficient process of obtaining data from multiple local public entities, which was often was incomplete and without key parameters that would enable the measurement of impact of urban greening projects. In order to attract investment into nature regeneration and social impact solutions, accurate reporting to all involved stakeholders is key, and that’s where Impact Labs contributed by guaranteeing high-quality impact data to support nature-positive decisions.

    In this case, the automated detection of trees and their characteristics, resourcing to a machine learning model developed by Impact Labs would provide significant benefits to the company, among which the acceleration of project implementation timelines, support for negotiations based on scientific and transparent data and allow the scaling of a cost-efficient model to create nature-positive impact.

    To achieve these goals we tested different approaches to automate the estimation of tree characteristics, relying on different data layers:

    • Google Earth to detect and localize trees at a large scale;
    • Google Street View to determine the location of individual trees and their characteristics;
    • LiDAR datasets as a verification layer due to their precision, but this data is only available for a limited number of locations.

    To develop an accurate and actionable model, first, we focused on location mapping based on ground-truth data to fine-tune the model and obtain a concept prototype with high levels of reliability. Ultimately, the development of this model at a Proof of Concept stage enabled the company to clearly define the next steps to fulfil their business and nature-positive goals.

    The goal was to ascertain which approach provided the most reliable, complete and actionable insights, based on the frequency of update, the required computing power and the level of accuracy. Business considerations were also important, such as the cost-efficiency, the scaling capabilities and the efficiency gain. These factors were all taken into consideration in the Proof of Concept stage, to provide the best recommendations on how to scale the automated detection of tree characteristics and the automated computation of tree location.

    These cases show how data management, tech, and scientific modelling can support scalable climate solutions by moving from standardized assumptions to more granular data.