The 34% Warning: The Number That Should Be Keeping Every CFO Up at Night
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A new report has put a very specific number on what doing nothing will cost fashion brands. Spoiler: it's not a small one.
Picture this. Your buying team has just signed off a range. The margins look good. The cost prices are tight. Everyone's happy.
Now fast forward to 2030. Those same margins have been quietly eroded - not by a bad season, or a cost price negotiation gone wrong, but by a tide of carbon taxes, packaging levies, and regulatory costs that nobody built into the model. Because nobody ever did (because you just carried on with BAU).
That's not a worst-case scenario. According to the Apparel Impact Institute's landmark report "The Cost of Inaction," published in February 2026, fashion brands face a 34% drop in profits by 2030 and up to 67% by 2040 if they don't accelerate supplier decarbonisation. And CFOs - not just sustainability directors - are being urged to lead the response.
A 34% drop in profits. Not a PR problem. Not a sustainability penalty. A commercial reality - for brands that don't act.
And the Aii isn't the only one sounding the alarm. Cascale's latest industry climate report shows that fashion's collective emissions are still going up, not down. The industry is falling short of its own 2030 climate targets - and every year that gap widens, the regulatory and financial consequences get closer.
Meanwhile, Fairly Made's 2026 strategy e-book makes the point that the most forward-thinking brands have already figured out: sustainability isn't something you layer on top of how you run a business. It is how you run a business. And that starts with something as fundamental as how you cost a product.
This week, we're digging into exactly that. Each day we'll look at one piece of the puzzle - EPR fees, carbon costs, water, toxicity, pre-loved value - and ask the same question: why isn't this in the cost price?
Because if it isn't, your margin model is telling you a story. Just not the whole one.
THE IMPACT MARGIN CALCULATOR
The 34% profit warning is the reason we built the Impact Margin Calculator. It's a tool designed specifically for BMD teams - so that before a single purchase decision is made, buyers, merchandisers and designers can see the full picture: EPR costs, carbon risk, water impact, chemical compliance, and pre-loved value, all built into the cost working.
Not after the range is signed off.
Before.
Want to see what it looks like in practice? Book your free demo ourfashionfix.com/contact