Key Takeaways:
- Behind fashion’s glossy sustainability pledges lies an inconvenient truth: the industry still runs largely on coal. From Bangladesh to Vietnam, fossil-fired boilers and power grids fuel up to 83% of production emissions — and with most brands yet to set a coal phase-out target, the clock is ticking on credibility.
- Talk doesn’t cut carbon. The factories making real progress are the ones wiring up sensors, running on renewables, and swapping chemistry for clean tech — from enzyme-based dyeing to AI-optimised boilers.
- As finance turns away from fossil fuels, coal-powered factories are being priced out of the future. Those that modernise gain data, resilience, and relevance. Those that don’t will be left behind. In fashion’s next chapter, foresight — not fossil fuel — is the real luxury.
Earlier this month, reports confirmed that renewable energy finally overtook coal’s share in the global electricity mix. The economics are shifting just as quickly, with a recent study showing that 91 percent of newly commissioned renewable projects are now cheaper for electricity generation than most fossil fuels.
Yet the fashion industry is struggling to adapt. Despite grand promises, most leading fashion brands remain far from a coal phase-out. In fact, 86 percent of major brands have yet to disclose any such target.
When you look beyond the boardrooms to where clothes are actually made, the picture gets starker. In some of the world’s textile production hubs, such as Bangladesh, on-site burning of fossil fuels accounts for up to 83 percent of industry emissions.
The main centres of global apparel production, China, Vietnam, India and Indonesia, still run on coal-heavy energy grids. Together they consume nearly three quarters of the world’s coal, and their dependence is deepening. China’s coal construction reached a ten-year high in 2024, and India plans to boost coal production by as much as 42 percent by 2030.
But the geography of energy use isn’t the only story. The fashion sector has made a fine art of polluting on its own terms. Fabric dyeing and finishing is responsible for a fifth of the world’s clean water pollution and still depends on coal-fired boilers. Polyester, the synthetic thread that binds modern wardrobes, is another culprit, spun from fossil fuels and responsible for billions of tonnes of greenhouse gases each year. This blend of location-based energy dependence and industry-driven habits makes fashion one of the dirtiest industries on the planet, responsible for about ten percent of global pollution, more than all international flights and shipping combined. At the current pace, its emissions could climb by another third before the decade is out.
But the financial and regulatory tides are turning. Global initiatives now call for a 50 percent cut in carbon emissions by 2030, and regulators are losing patience. France has already backed a bill to rein in ultra-fast fashion giants such as Shein and Temu, promising fines, curbs on advertising and a little overdue accountability. Under upcoming EU rules, producers will be barred from destroying unsold textiles and footwear and will have to find other fates for them, whether through resale or recycling. Even the regulations-averse United States has introduced bills such as the FABRIC Act to raise labour standards and promote responsible production.
If the coal-burning end of fashion hopes to survive, it will have to modernise or die.
Technology, not rhetoric, holds the key. It offers the only realistic path to making fashion cleaner without making it poorer. Smarter systems allow factories to measure what they use, waste less, and replace guesswork with control. The next generation of manufacturing depends on energy that can be managed, stored and shared, not burned and forgotten. Some in the industry are already moving. H&M and PVH Corp, which owns Tommy Hilfiger and Calvin Klein, are testing renewable microgrids and AI-optimised boilers to cut fossil fuel use and water consumption. In India, Arvind Mills has introduced sensors that track steam use and prevent heat loss, trimming fuel needs by around 30 percent.
Innovations in textile processing are already showing what cleaner production can look like. Low-temperature dyeing, enzyme-based bleaching and waterless finishing are cutting the need for high-heat processes once powered by coal-fired boilers. DyeCoo’s CO₂ dyeing technology removes water and steam entirely, halving energy use. Novozymes has developed enzymes that reduce water usage by up to 70% during fabric processing. Levi’s Water<Less process prove that cleaner chemistry is a matter of technology, not virtue.
Yet much of the industry is still betting on coal, and in doing so, shutting itself off from the very innovations that could keep it alive.
Coal-powered systems are notoriously capital intensive and inflexible, creating structural inertia that keeps innovation out of reach. Once a factory is built around coal-fired boilers or steam systems, switching to cleaner or smarter alternatives becomes costly and disruptive. This infrastructure inertia makes it difficult to adopt digital energy management tools, AI-driven efficiency systems or renewable microgrids, all of which depend on adaptable frameworks.
In Southeast Asia, regulatory barriers compound the problem. In Vietnam, the state utility EVN controls transmission and limits private producers’ ability to feed in excess solar power. As a result, garment factories, even those with suitable rooftops, cannot install solar or battery storage economically. In Ho Chi Minh City’s textile parks, pilot solar projects by TAL Apparel only succeeded because it struck direct power purchase deals with renewable providers, bypassing EVN’s restrictions.
Finance tells a similar story of divergence. Global lenders are retreating from coal, and carbon pricing is driving costs ever higher. The World Bank and Asian Development Bank have both pledged to end financing for new coal projects, cutting off the cheap credit many manufacturers once relied on. In 2023, HSBC stopped funding coal-dependent supply chains altogether, forcing several textile exporters in India and Vietnam to seek costlier private loans. With operating costs rising and access to finance shrinking, factories that cling to coal find themselves unable to invest in research, digital upgrades or cleaner technology.
Where producers have broken free from coal, the payoff has been clear. Cleaner energy has become a catalyst for modernisation: once the boilers go, the smart grids and sensors move in. Renewable systems invite automation, data tracking and quality controls that make production leaner and more resilient. Many of the most efficient manufacturers in Asia have discovered that moving away from coal is often a business upgrade.
Bangladesh offers a case study in how market pressure, rather than regulation, can drive that transformation. The country’s manufacturers are piloting blockchain-based digital passports that allow buyers to trace a garment’s life cycle and verify its environmental impact. These transparency tools are emerging in response to financial and buyer demands for proof of sustainability, not government mandates.
Similar tools are being tested in Europe, but the motivations differ sharply. Here, innovation is often compliance-driven – designed to meet upcoming green regulations – whereas in Bangladesh it’s survival driven: A pragmatic race to stay competitive in a market where sustainability now determines who wins contracts.
That distinction matters. It shows how cleaner operations can emerge not only from legislation, but from the urgent realities of global trade.
Meanwhile, back in Bangladesh, private-sector leaders are proving what transition looks like in practice. Youngone Corporation, the sportswear manufacturer behind the Korean Export Processing Zone (KEPZ) in Chattogram, has turned its operations into a study in quiet efficiency. Its factories now draw much of their power from one of Bangladesh’s largest rooftop solar systems, generating about 37 megawatts as of last year. The site includes dozens of green-certified buildings and a reforestation programme that has brought wetlands and mangroves back to life around the complex. It is proof that industrial growth and environmental care can share the same ground.
Beyond its solar fields, Youngone has begun replacing coal with biomass and liquefied gas across its factories, cutting fuel emissions by more than 40 percent. Sensors installed under its Factory Energy Management System now log every kilowatt of power used across production lines, identifying inefficiencies long before they reach the balance sheet. In Chattogram, water captured from the zone’s reservoirs is filtered and reused in dyeing and washing, saving some 360 million gallons a year. These measures make the company both cleaner and more competitive – a model for the industry’s future.
For a country still dependent on fossil fuels, Bangladesh’s approach is striking. Its drive for cleaner production is less about virtue than survival. In a market where sustainability now decides who gets the contracts, that pragmatism should serve as a warning to other producers still tied to coal.
In the race to stay relevant, the real luxury is foresight. Coal has none to offer.