Sustainable Production and Firm Outcomes: Descriptive Evidence from the Fashion Industry

The paper investigates whether a sustainable approach to production in the fashion industry correlates with firm outcomes, measured primarily through sales. Secondary studies, alongside survey-based research, systematic literature reviews, and the analysis of consumers' willingness to pay, point to the fact that sustainable production generally leads to higher prices due to increased material, labor, and ethical certification costs. However, demand differs: many consumers profess their readiness to pay extra for causes widely supported by the public (e.g., child-labor-free products), but going up in price seems to cause a higher drop in demand for less visible issues such as union support or living wages. In this paper, I analyze data from China's garment industry from Li (2024) and find that investment in sustainable practices does not impact firm revenue, indicating that in this context, sustainability and sales do not go against each other.