Climate Inaction Threatens 34% of Fashion Industry Profits, Report Finds

The Apparel Impact Institute’s analysis puts a stark number on a familiar worry: roughly 34 percent of the fashion industry’s profits could be at risk by 2030. Bloomberg published the central finding on February 10, 2026, and Aii posted a press note headlined “Press: Climate Inaction Puts 34% of Fashion Industry Profits at Risk” on its website on February 19, 2026.

Bloomberg links that 34 percent projection to an operating-margin shock of three percentage points by the end of the decade, and connects the math directly: a three-point hit to operating margins translates into a 34 percent fall in profits. Lewis Perkins, president and chief executive officer of the Apparel Impact Institute, underscored the immediacy of the risk in Bloomberg’s coverage, saying, “You are already assuming some of these costs whether you know it or not,” and adding, “We are talking quarters, not decades.”

The long-term projections in published coverage vary. Bloomberg warned that “if those trends persist, as much as 70 percent of the $1.8 trillion fashion industry’s value could be wiped out by 2040.” Fibre2fashion, which labeled the Aii analysis “The Cost of Inaction” on February 16, 2026, gave parallel figures: a 34 percent margin hit by 2030 and a 67 percent margin hit by 2040 in one phrasing, and separately warned that inaction could cut the value of a $1.77 trillion sector by 70 percent by 2040 under a net-zero scenario. Those differences in 2040 percentages and base valuations appear across the published summaries and point to the need for the Aii report’s full tables and scenario definitions.

The mechanisms are concrete and familiar to finance teams: increasing carbon prices, higher raw-material costs, and more expensive energy are identified as the three primary risks that will erode margins, while supply-chain disruptions and higher operating expenses translate those macro pressures into hits to corporate earnings. Bloomberg specifically cites the European Union’s Carbon Border Adjustment Mechanism as an example of tightening regulatory and fiscal measures that act like a carbon import tax and raise costs for brands selling into the bloc.

Published summaries offer clear prescriptions. Fibre2fashion quotes the analysis urging early supplier decarbonisation, collaborative investment, and CFO-led action to protect profitability, and states that efficiency upgrades and supply-chain diversification can reduce climate exposure four- to five-fold. Bloomberg emphasizes that brands that fail to factor climate exposure into cost planning and investment decisions risk damaged margins and competitiveness.

Industry attention has been rapid: Bloomberg’s February 10 coverage was republished by Business of Fashion on its Sustainability page and circulated through ClimateWire and Politico’s ClimateWire feed, while Aii’s press note appeared on its site on February 19, 2026. The immediacy of the message and the numbers — 34 percent by 2030, three percentage points off operating margins, and 67 to 70 percent potential value erosion by 2040 on a roughly $1.77–$1.8 trillion base — leave one conclusion: finance teams and boards must treat supplier decarbonisation and scenario planning as front-line operational priorities, not deferred sustainability rhetoric.