The fashion business is confronting a rare confluence of credibility and operational crises. Standards that brands have used to substantiate sustainability claims are coming under intense scrutiny, and the costs are rippling through supply chains already strained by trade conflicts. As governments and investors prepare for the next UN climate summit, the sector faces urgent questions about who validates green claims and who pays for the consequences when those validators fail.

For years, global apparel brands leaned on third-party certifications—textile ecolabels, labor audits and industry indexes—to reassure consumers and investors that production was low-carbon and socially responsible. That confidence is cracking. In recent years many of the most cited standards have been contested over weak enforcement, conflicts of interest and opaque methodologies. The cumulative effect has been a deepening skepticism among consumers and NGOs, and rising scrutiny from regulators looking to curb greenwashing.

That credibility gap matters financially. Sustainability claims are a market signal that supports price premia, investor allocations and brand equity. When those signals look unreliable, demand for certified products can soften, capital flows to so-called green firms can be rerouted, and litigation and regulatory action become more likely. The EU and national watchdogs have already stepped up investigations into deceptive environmental claims in consumer markets, and investors are pressing for verifiable, auditable data on emissions and working conditions.

At the same time, trade policy shocks have intensified human costs in production countries. Tariffs imposed in recent years on hundreds of billions of dollars of goods, with levies up to about 25% on certain imports, altered sourcing economics and order flows. Buyers responded by cancelling orders, compressing lead times and shifting volumes—moves that have contributed to factory closures, reduced hours and layoffs for the tens of millions of garment workers concentrated in Asia, Africa and Latin America. The combination of lower-margin sourcing pressures and the costs of compliance has squeezed suppliers, leaving workers exposed when orders evaporate.

The policy stakes are high as the UN climate summit approaches. Fashion accounts for a material share of global emissions—commonly estimated at roughly 10 percent when including full supply-chain impacts—and supply-chain decarbonization will be central to meeting national commitments. Yet divergent standards and disputed accounting methods make it difficult to measure progress. Policymakers face a choice: continue to rely on voluntary certification ecosystems that have shown limits, or move toward mandatory disclosure, harmonized metrics and stronger enforcement to align corporate incentives with climate and labor goals.

Market participants are already responding. Some brands are consolidating around more rigorous, transparent reporting frameworks and pushing suppliers into longer-term contracts to stabilize production. Others are lobbying for standardized, internationally recognized verification systems to restore consumer trust. For workers and low-margin suppliers, however, these shifts come too slowly; the immediate risk is further displacement and poverty when certifications prove insufficient protection.

The coming international climate talks will test whether governments and industry can convert the fraught debate over standards into concrete rules that reduce emissions without offshoring social costs. Without clearer validation mechanisms and stronger safety nets for workers, the industry risks trading one set of scandals for another—green promises that don’t stand up and supply chains that leave millions worse off.