Fashion’s Balancing Act: Sustainability vs. Profit in 2025
What the latest State of Fashion report reveals–and what it doesn’t
Introduction: The State of Fashion 2025
The State of Fashion 2025 report, jointly published by McKinsey & Company and The Business of Fashion, paints a stark picture of a fashion industry grappling with economic uncertainty, shifting consumer behaviours, and regional market transformations. But amid these shifts, the report reveals a troubling trend: sustainability is slipping down the industry’s list of priorities, seen as less urgent in the face of short-term challenges.
For sustainability advocates, this poses a critical question: How do we ensure the long-term health of the planet remains central when the industry’s focus appears increasingly short-sighted?
The Findings: Navigating an Uncertain Future
The report highlights several key themes shaping the industry in 2025:
Economic Reshuffling: For the first time in over a decade, non-luxury fashion is predicted to drive profit growth, overtaking luxury. Inflation-weary consumers are seeking value, turning to outlets and affordable “dupes”
Regional Power Shifts: With China facing challenges, brands are diversifying into other Asian markets like India, Japan, and Korea
Consumer Trends: AI-powered curation is redefining online shopping, but consumers remain hesitant to pay extra for sustainability
Climate and Cost Conflicts: Fashion leaders cite economic volatility and consumer spending habits as the biggest risks, yet the growing costs of inaction on climate change remain undeniable
Sustainability’s Decline on the Agenda
Only 18% of executives consider sustainability a top-three priority for growth in 2025, down from 29% in 2024. This shift is a red flag. With consumer demand for sustainable products plateauing and economic pressures rising, companies are deprioritising green initiatives—despite mounting climate risks.
However, the report makes it clear: ignoring sustainability is not an option. The climate crisis continues to accelerate, and collective action is critical to meet decarbonisation targets. Efforts like Bangladesh’s push for 40% renewable energy by 2041 demonstrate what’s possible when the industry unites behind a shared goal.
The Irony of McKinsey’s Role
The involvement of McKinsey—a consultancy criticised for aiding high-emission industries—raises an ethical dilemma. While the report champions sustainability as vital for long-term success, McKinsey itself has come under fire for profiting from clients driving the climate crisis.
This duality is reflected in McKinsey’s own rhetoric. As managing partner Bob Sternfels once stated, “Companies can’t go from brown to green without getting a little dirty.” Critics argue that this pragmatism enables continued environmental harm, even as McKinsey positions itself as a leader in sustainable transitions.
For the fashion industry, McKinsey’s dual role underscores the complexities of meaningful change. Can an industry heavily reliant on consulting firms with conflicting interests truly achieve transformation? Addressing these tensions may require a fundamental reassessment of whom the industry partners with–and whether those partnerships align with the vision of a sustainability industry.
Regional Spotlight: India’s Rise and Shein’s Pivot
India’s booming economy and rapidly expanding middle class make it one of the fastest growing fashion markets, projected to grow 7% annually in 2025. With 430 million middle-class consumers—more than the combined populations of the US and Western Europe—India’s market offers immense opportunity for both mid-market and luxury brands. However, its diversity demands careful adaptation to local tastes, preferences, and spending habits, especially in tier-two and tier-three cities poised for growth.
Similarly, the global shift toward nearshoring is reshaping supply chains, with regions like Turkey emerging as key hubs for European fashion brands. However, controversial fast-fashion players like Shein highlight the pitfalls of prioritising cost and speed over environmental responsibility. Shein’s rapid scaling through partnerships with Turkish manufacturers raises serious concerns about worker welfare and the environmental impact of mass production, serving as a cautionary example for the industry.
The Way Forward: Long-Term Thinking Amid Short-Term Pressures
The report’s overarching message is clear: while short-term economic challenges dominate executives’ concerns, those who invest in sustainability will gain a competitive edge. From adopting renewable energy to reducing excess stock (estimated at 2.5–5 billion items in 2023), every step counts.
For Bergstrand Consultancy and our clients, the imperative is to lead by example. Despite economic headwinds, the transition to sustainable practices must remain a priority. If not now, when? If your brand is looking for guidance in navigating these challenges or advancing sustainability in your operations, we are here to help. Reach out to info (at) bergstrand.co to explore how we can support you.
Closing Thoughts
As the fashion industry enters another tumultuous year, the tension between profit and planet will only grow. The State of Fashion 2025 report offers valuable insights—but also serves as a reminder of the work still to be done. At Bergstrand, we believe that by challenging these long-established practices and prioritising sustainability, we can help shape a fashion future that favours both people and the planet.
