Gucci, Pandora, H&M push sustainability even as shoppers demand value
Fashion recycling startup Circ separates cotton and polyester from clothing that can’t be repaired or resold and sells it back to the clothing supply chain.
Courtesy: Circ
COPENHAGEN, Denmark — As the retail world navigates the first half of 2026, a strange paradox has taken hold of the global fashion industry.
On the one hand, the runways of Paris and the digital storefronts of fashion giants are flooded with “green” messaging. Danish jeweler Pandora is focusing on lab-grown diamonds, Kering‘s Gucci is touting “circular” polyester, and major retail apps are rolling out resale platforms.
But despite the marketing blitz, fashion executives admit that most consumers, battered by a persistent cost-of-living crisis, aren’t willing to pay more for an ethically produced product, or “sustainability premium.” Instead, shoppers have become increasingly selective and price-sensitive, looking for value above all else.
The fashion industry remains an outsized contributor to climate change, accounting for roughly 10% of global carbon emissions.
But if the consumer isn’t buying the pitch, why is the industry doubling down on a sales pitch that isn’t selling? The answer is cold, hard risk management.
Ditching the old growth playbook
For much of the last decade, retail’s financial playbook was simple: scale up, lower sourcing costs, and use tactical promotions to clear the racks.
In 2026, brands can no longer rely on those levers to grow profits, according to the latest State of Fashion report by McKinsey and the Business of Fashion.
Instead, brand strength and flexible sourcing are becoming important levers for protecting margins. Executives said that changes to margin and cost strategies will be the second-most important theme shaping the industry in 2026 — second only to trade disruptions like tariffs, the report found.
Adding to the sector’s challenges of wavering consumer demand and aggressive new e-commerce competition are macroeconomic shocks hitting production lines. The blockade of the Strait of Hormuz has sent energy prices soaring, driving up the cost of petroleum-tied synthetic fibers like polyester.
For discount retailers operating on thin margins, rising costs make sustainability efforts a tougher sell. However, some argue that neglecting the issue creates an even larger vulnerability.
[Sustainability] is a risk-mitigation issue… It’s even a competitive edge.
Helena Helmersson
Former H&M CEO
The Middle East conflict and subsequent energy shock have led some companies to worry about transport, supply chains, and raw material prices, deprioritizing environmental and social issues, former H&M CEO Helena Helmersson told CNBC in an interview.
“That’s when you haven’t realized that sustainability is business,” she said. “Those who have a long-term view now get an extra push because when oil prices go up, polyester prices go up. Transportation costs go up and down, and it’s way too volatile to be able to build a sustainable…
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