Sustainability at scale – From greenwashing to grounded action

Sustainability in retail has officially moved past trend status. In 2025, it’s a business imperative. Climate-conscious consumers, tightening legislation, and the environmental impact of global logistics are placing sustainability front and centre. But today, it’s not enough to simply talk the talk— retailers must walk it, measure it, and prove it.

In 2025, customers are holding brands accountable, legislators are tightening regulations, and shareholders are asking tougher questions. As the environmental and social stakes rise, retailers are being called to move beyond glossy promises and into measurable, operational change.

This evolution isn’t just about reducing emissions or banning plastic bags. It’s about rethinking how products are designed, sourced, fulfilled, and returned. It’s about balancing the realities of commercial success with the moral imperative to do better for the planet, for people, and for long-term business resilience.

Retailers leading this charge have adopted sustainability, not as a side project but as a guiding principle across every part of the value chain. They’re embedding circularity into design processes, investing in low-impact materials, and partnering with suppliers that meet higher standards. And they’re building systems that can not only track sustainability metrics but turn them into levers for smarter decision-making.

One of the biggest challenges lies in reverse logistics. Returns continue to rise, particularly in fashion and lifestyle categories, and with them comes a hidden carbon cost. Packaging, transportation, and repackaging all contribute to a system that is expensive, inefficient, and environmentally harmful. Retailers that tackle returns from a sustainability perspective by offering smarter sizing tools, more accurate product visuals, and localised restocking are reducing waste while improving customer satisfaction.

“Retailers leading this charge have adopted sustainability not as a side project but as a guiding principle across every part of the value chain.”

“One of the biggest challenges lies in reverse logistics. Returns continue to rise, particularly in fashion and lifestyle categories, and with them comes a hidden carbon cost.”

Beyond eco-marketing: Building circular value

Circular business models are also gaining momentum. Brands like Patagonia, Arket, and Norrøna are leading with repair services, take-back schemes, and resale platforms. These efforts not only extend the product lifecycle but also create new revenue streams and deeper engagement with values-driven consumers. And, for emerging players, designing with circularity in mind from day one is no longer radical. It’s smart business.

Rather than a linear model of produce-sell-dispose, forward-looking retailers are designing systems to extend the lifecycle of products and minimise waste. This includes:

• Offering resale and recommerce models, like Patagonia’s ‘Worn Wear’ or Zalando ‘Pre-owned’ and dedicated apparel recommerce retailers or marketplaces such as The RealReal and Vinted
• Investing in rental platforms and repair services, as seen with H&M, Arket, and Norrøna.
• Launching take-back and recycling initiatives with in-store drop-off points.

Utilising store space as repair centres e.g. Levis, Arc’terx and Patagonia These initiatives not only reduce environmental impact, but they also strengthen brand affinity and customer loyalty. Consumers increasingly prefer brands that support circular practices and make it easy to shop sustainably.

Sustainability at the forefront

The pressure isn’t only coming from consumers. Regulations like the EU’s Digital Product Passport (DPP) and Corporate Sustainability Reporting Directive (CSRD) are forcing transparency. Retailers must now trace and report everything from material origin to labour conditions, CO₂ footprint to disposal options. Those who are prepared, like Kappahl with its supply chain traceability by using tools like TrusTrace and the Higg Index to assess and communicate impact. Or Asket, with its full lifecycle disclosures, aren’t just staying compliant. They’re earning trust.

Sustainability in 2025 is also about technology. AI and data platforms are now helping brands measure impact in real time, automate carbon scoring, and simulate the environmental trade-offs of different fulfilment options. These tools turn intention into action and action into business advantage.

At its core, sustainability is no longer a communications exercise. It’s an operational discipline. Retailers that build greener, smarter, more circular systems are finding that doing good and doing well are not at odds, they’re in alignment.

In 2025, the retailers who are transparent, adaptive, and genuinely committed to sustainability won’t just win hearts. They’ll future proof their businesses.

The brands that are winning on this front have evolved their sustainability strategies from marketing narratives to operational blueprints. They recognise that responsible retail must be embedded into every function, from product development and sourcing to fulfilment and returns.

Tackling the returns challenge

Returns are a growing problem, financially and environmentally. The increase in online purchases, paired with flexible return policies, has created mountains of reverse logistics that strain operations and inflate carbon emissions. In 2025, retailers must address returns not just as a cost centre, but as a sustainability priority.

Solutions might include: 

• Smarter sizing tools and fit visualisers to reduce unnecessary returns.
• Local restocking and consolidation of return shipments.
• AI-driven return predictions that help reduce returns rates through better product recommendations.

Best-in-class retailers

Zalando – Combining AI, OMS, and sustainability scoring to optimise the delivery and return experience.

Norrøna – A pioneer in product repairs, with spare parts and DIY repair guides supporting long-term use.

Residus – A circular fashion brand utilising deadstock fabrics, transparent sourcing, and local production.

Kappahl - Leveraging supply chain traceability and lifecycle tools to align internal practices with EU legislation.

Customer case: Kappahl

Kappahl utilises the Higg Index, a suite of tools developed by CASCALE (former Sustainable Apparel Coalition), to assess and improve its sustainability performance across various aspects of the supply chain, including:

Environmental impact: The Higg Facility Environmental Module (Higg FEM) evaluates energy use, water use, waste management, and chemical management in manufacturing facilities, identifying opportunities for improvement. 

Social impact: The Higg Facility Social & Labor Module (Higg FSLM) assesses workers’ rights, health and safety, wages, and working hours, promoting fair labor practices and enhancing worker wellbeing. 

Brand performance: The Higg Brand & Retail Module (Higg BRM) examines environmental and social impacts throughout the value chain, including product design, sourcing, logistics, and consumer use, guiding brands to improve their sustainability efforts.

“The Higg Index provides valuable insights into the environmental and social performance of fashion brands like Kappahl”

To further improve its sustainability efforts, Kappahl has implemented TrusTrace, a digital platform designed to provide comprehensive visibility across the supply chain. TrusTrace offers several benefits: 

Supply chain mapping: TrusTrace enables Kappahl to map its entire supply chain, from raw materials to finished products, ensuring complete transparency. 

Supplier collaboration: TrusTrace facilitates better collaboration with suppliers, allowing for information sharing and tracking progress toward sustainability goals. 

Regulatory compliance: TrusTrace helps Kappahl meet upcoming EU regulations, such as the Forced Labour Regulation and the Corporate Sustainability Due Diligence Directive, by providing detailed visibility of the supply chain. 

Consumer transparency: By using TrusTrace, Kappahl can offer customers detailed information about the factories involved in producing their purchases, including the name, address, number of workers, and parent company, enhancing DPPs are crucial to the brand trust and loyalty.

Read the full story here.

“DPPs are crucial to the fashion industry’s shift towards sustainability. Textile products will be among the first to comply with DPP regulations, underscoring the urgency for retailers to adapt”

Final thought 

In 2025, sustainability is not a separate strategy, it’s the lens through which every decision must pass. From assortment planning to logistics and returns, retailers must measure, optimise, and innovate with the planet in mind. 

The retailers leading this movement aren’t perfect. But they are transparent, intentional, and constantly evolving. In a world where consumers vote with their values, sustainability is no longer a differentiator. It’s a license to operate.

Are you interested in the full report? Find it here.