2025 in focus: Why designing not reacting will be key to fashion’s future

The California fires, which so tragically marked the start of 2025, were a stark reminder of the urgency of our work and that we are part of a complex picture of challenges and solutions. 

That complexity was laid out in this year’s World Economic Forum Global Risks Report, published as the LA fires still raged. State-based conflict, geoeconomic confrontation, misinformation and disinformation, social polarization, and extreme weather events topped its list of 2025’s greatest risks. Taken individually they would be concerning, but when combined, they threaten not only our immediate social, economic and environmental well-being, but have the potential to derail our efforts to shape a safe and sustainable future in the long term.

Our industry – with its reliance on natural materials, often specific to certain geographies – is particularly exposed to many of these risks. When layered with regulatory shifts, and the likelihood of incoming US tariffs, it makes for a tangled picture of interwoven global challenges. And in the midst of all of this we cannot lose sight of the fact that GHG emissions from the fashion industry continue to rise.

It is clear the question is not ‘will we see the fashion industry change significantly in 2025’, but rather how? 

As Peter Drucker famously said, the best way to predict the future is to create it. Acknowledging that factors outside of our control will force fashion to change, does not remove our agency to design a response that not only meets 2025’s challenges, but strengthens us for the road ahead.

Overcoming barriers through collective action

Despite the scale and urgency of challenges such as climate change and nature loss, there is a danger that in the face of so many pressures, some industry players will seek to merely comply with sustainability standards and leave others to take on the long-term agenda of industry transition. In the face of a challenging 2024 sadly, we saw this across industries, with several companies and governments scaling back efforts or stepping back from commitments. 

Yet, inaction poses significant risks of its own, including higher costs to business and vulnerable supply chains, threatening the viability of companies at all stages of the value chain in the near term. To address these threats and create resilience in the face of future ones, there is a need for solutions that deliver measurable impact.

McKinsey estimates about 39% of the necessary GHG emissions reductionsin the fashion industry can be achieved using existing solutions.This involves actions such as improving energy efficiency, increasing renewable energy use, and optimizing production. The barrier therefore is the pace and scale of investments needed to implement such solutions and to avoid the Valley of Death between development and commercialisation of new solutions.

Collective investment and blended finance have already shown themselves to be a valuable way to overcome these barriers; by distributing risks and rewards, as we have seen through the Future Supplier Initiative and the CVPPA. As the urgency and scale of challenges increases, these kinds of joint action can deliver industry-level impact, such as decarbonisation, and individual benefits such as economies of scale, shared risk, and accelerated innovation cycles. This will be important as we make the transition to next generation materials and dry processing technologies.

Building resilience through circular economy

Such business models make up 3.5% of the global fashion industry today, with the potential to increase to 23% by 2030. Circular economy is starting to show that it can reduce virgin resource use and production volumes, while opening up new revenue opportunities – in other words decoupling growth from materials consumption and, in some cases, harmful production processes.

Such business models make up 3.5% of the global fashion industry today, with the potential to increase to 23% by 2030. Circular economy is starting to show that it can reduce virgin resource use and production volumes, while opening up new revenue opportunities – in other words decoupling growth from materials consumption and, in some cases, harmful production processes.

Resale outpaced the broader retail clothing sector by 15x in 2023 and online resale experienced accelerated growth at 23% year-over-year. Yet only 0.3% of secondary materials are circled back into the industry to be made into new clothing. In 2025, the economic imperative to move the dial on this is as strong as the environmental one.

Making it happen will take inclusive solutions and connected teams

Past sustainability efforts have often been driven by single brands identifying a problem and working to solve it. As we seek to address the systemic barriers to a net-zero and nature-positive fashion industry, solutions need to involve a wider community of supply chain stakeholders. As we have seen with the Unlock Programme, industry initiatives require a strong mandate from diverse players, which means designing solutions that can benefit all parties, from farmers to brands.

These types of systemic responses not only transform the value chain, but also internal operations. As we have seen with FSI, collaborative financing models for climate, involving CFOs and legal teams, are crucial for pushing action forward. As companies invest in supply chain decarbonization and continue scaling collective financial mechanisms, we can expect to see the sustainability silos that have hampered progress in the past, be challenged internally, as well as externally.

The choice is ours

Industry-level change also brings with it the need for what The Fashion Pact co-chair Paul Polman describes as ‘courageous, regenerative leadership.’ We must be grounded in doing what is needed in the long run, while meeting short term demands; abandoning business-as-usual’s zero-sum game against our future selves.

The urgency for action in 2025 is clear; climate change is no longer a distant threat, but a lived reality. While economic uncertainty, political instability and social polarisation add to a complex set of pressures, the choice is whether to sit back and let circumstances and the agendas of others dictate what happens to our industry or to work together to shape a future for fashion we can all be proud of.

(1)  Global Risks Report, World Economic Forum (2025)
(2)  Fashion on Climate, McKinsey (2020)
(3)  Reimagining Growth, Textile Exchange (2024)