Why ESG is the Missing Thread in Sustainable Fashion

By Steven W. Pearce, MBA, MPM — Sustainability & Global Development Consultant

The Conversation — and Google Search — That Sparked This Article

When I first met Valeriya Hjertanaes, I knew she was accomplished, a world-famous supermodel, sustainable fashion advocate, Mrs. World Congeniality, and host of the Diversity GameChanger podcast.

But it was after I Googled her that I really understood the influence she had, not just in modeling, but in shaping the conversation around fashion’s future. I read her interviews on the use of sustainable materials, and what stood out most was her focus on upcycling and the circular economy. She wasn’t just talking about the next season’s trends; she was talking about redesigning the entire system.

That perspective inspired me to write this article.

When we spoke more recently, I saw just how deeply she has spent years championing diversity, equity, and inclusion (DEI) in the fashion world while raising awareness about sustainability. Our conversation quickly moved beyond the catwalk. We went from fabrics and design to supply chain ethics, worker well-being, and climate responsibility.

She shared stories of brands that meant well, they talked about sustainability, invested in eco-friendly materials, and made public pledges, but still fell short because they lacked structure. There were no accountability mechanisms, no verified data, and no cross-department ownership of sustainability goals.

That’s when it hit me: this is where ESG comes in.

ESG: The Backbone of Authentic Sustainable Fashion

We hear the term ESG, Environmental, Social, and Governance, more and more these days. It appears in boardroom discussions, investor reports, and brand manifestos. Yet in fashion, ESG is still often misunderstood as a purely investor-facing compliance exercise.

The truth is far richer, and in fact, it’s exactly what Valeriya Hjertanaes champions through her work in upcycling and the circular economy, which she has emphasized in her interviews. 

For fashion brands, ESG is the invisible framework that transforms sustainability from a marketing slogan into measurable, credible, and lasting impact. Without it, even the most innovative eco-friendly fabric or climate-conscious campaign risks becoming mere greenwashing.

ESG isn’t a side project, it’s the structural backbone that holds a brand’s sustainability strategy together, now supercharged by Valeriya’s circular economy philosophy.

Environmental (E) – Designing for a Circular Planet

This goes beyond swapping conventional fabrics for organic ones. It involves rethinking the entire material lifecycle, from sourcing to end-of-life, and prioritizing circularity and regenerative practices that Valeriya has championed.

An ESG-informed environmental strategy includes:

• Upcycling & deadstock use: As Valeriya urges, brands should repurpose leftover fabric rolls from major fashion houses, transforming waste into limited-edition garments, reducing resource strain, and celebrating creativity. 
• Farm-to-closet initiatives: Valeriya highlights partnerships with traditional farmers and artisans to cultivate bionatural fabrics, like organic cotton, banana fiber, or pineapple thread, through agroecological, chemical-free methods. This fosters regenerative supply chains and community empowerment. 
• Resource efficiency: Implementing closed-loop water systems in dyeing to recycle up to 90% of water, minimizing energy use across manufacture, shipping, and retail.
• Material traceability: Embedding digital IDs or QR codes to trace a garment’s evolution from raw material to resale—a practice aligned with both ESG and circular economy ideals.

Social (S) – People-Centered Circularity

Valeriya’s focus on community, artisans, and diversity reverberates through the social dimension of ESG, where people are central to sustainability.

Key facets include:

• Artisan empowerment: Through farm-to-closet collaborations, artisans shape authentic narratives and equitable value chains, elevating traditional craft and supporting local economies. 
• Fair wages: Ensuring that agricultural workers, artisans, and upcycling makers receive living wages, not just fair compensation, so they can sustain their craft and communities.
• Cultural inclusion: Integrating diverse design perspectives inspired by global traditions, like Filipino pineapple fiber or bamboo fabrics, strengthens both sustainability and representation. 
• Community engagement: Supporting communities involved in regenerative fiber production through health, education, or cultural preservation initiatives.

Governance (G) – Institutionalizing Circular Practices

Strong governance turns good intentions, like upcycling and farm-to-closet models, into standard practice.

Governance strategies include:

• Circularity leadership: Appoint roles like a Director of Circular Innovation to embed principles like upcycling and regenerative sourcing into business models.
• ESG oversight in the boardroom: Ensure these circular strategies (e.g., deadstock programs, farm-to-closet sourcing) are reviewed at the highest levels with budget, targets, and KPIs.
• Supplier alignment: Include circularity in sourcing agreements, for example, contracts requiring deadstock use or regenerative mill partnerships.
• Measurement and reporting: Transparently report metrics such as kilograms of waste diverted through upcycling, number of traditional artisans supported, and lifecycle emissions avoided.
• External validation: Use third-party audits or certification to verify circular and regenerative claims, building trust with consumers, regulators, and investors.

Bottom line: ESG isn’t just an operational framework, it’s the launchpad for a truly circular, inclusive, and ethically governed future in fashion. When strengthened by Valeriya’s vision, ESG becomes a blueprint for system-wide transformation, not just a metric collection exercise.

Would you like me to draft this section into the full article or enhance other parts, like “Statements to Systems” or the case studies, with the same integration of her circular economy perspective?

From Statements to Systems: The Three Shifts That Matter

In my consulting work, I’ve seen two types of fashion brands:

1. Those that talk about sustainability — issuing glossy reports, running seasonal eco-campaigns, and making well-intentioned promises.
2. Those that operationalize sustainability — embedding it into every department, supply chain decision, and leadership conversation.

The difference between the two comes down to three decisive shifts. These shifts are non-negotiable if a brand wants to move beyond statements and into systems that deliver measurable, lasting change.

1. Governance – Clear Ownership from Boardroom to Dyehouse

If no one truly owns ESG in your organization, it won’t happen. Governance means assigning decision-making authority and ensuring ESG performance is reviewed with the same rigor as financial performance.

It’s not enough to have a “sustainability department” tucked away from core decision-making. You need leaders in every department, design, procurement, logistics, retail, with ESG in their job descriptions, budgets, and performance reviews.

Example:
A mid-sized denim brand I worked with appointed an ESG lead in each department, all reporting directly to a newly created Chief Sustainability Officer (CSO). This meant design was accountable for material sustainability, procurement for supplier compliance, and logistics for carbon reduction. Within a year, sustainability moved from a siloed initiative to a company-wide culture.

Valeriya’s perspective in governance:
She has often spoken about the importance of institutionalizing circular economy practices, such as mandating upcycling and regenerative sourcing in contracts. This isn’t a side project; it’s written into procurement rules, tracked by leadership, and embedded in supplier agreements. Without governance, even the most visionary ideas about deadstock use or farm-to-closet production risk being lost in the shuffle.

2. Incentives – Tying Money and Milestones to Real Change

Good intentions fade without clear rewards and consequences. Brands that succeed link contracts, bonuses, and supplier agreements directly to ESG outcomes.

Example:
A luxury fashion house implemented supplier scorecards that rated partners on water conservation, waste management, and worker welfare. High-scoring suppliers received priority contracts and better payment terms. Within a year, supplier compliance rates jumped by 43%, not because it was fashionable to do better, but because the incentives were real and measurable.

Valeriya’s perspective in incentives:
When brands reward upcycling innovation or regenerative farming partnerships, they not only cut waste but also elevate craftsmanship. Imagine offering premium contracts to suppliers who can demonstrate creative reuse of deadstock or invest in sustainable weaving methods. This ties financial gain directly to environmental and social impact, aligning profit with purpose.

3. Evidence – Traceability, Third-Party Verification, and Public Metrics

Without proof, there’s no credibility. Consumers, investors, and regulators no longer accept vague claims. They expect hard data and full transparency.

This means using tools like:

• Blockchain for supply chain traceability
• Digital garment IDs that allow customers to scan a QR code and see the entire production story
• Independent audits to verify labor and environmental claims

Example:
A sportswear brand embedded QR codes in clothing tags so customers could see exactly where each garment was made, how much water was saved during production, and whether workers were paid living wages. This not only built trust but also became a powerful marketing asset.

Valeriya’s perspective in evidence:
She’s clear about the need for visible proof of circularity, showing consumers exactly how much waste was diverted through upcycling, or which rural communities benefited from farm-to-closet sourcing. Transparency transforms the circular economy from a concept into a tangible, shareable story.

The Fabric Story is Only the Beginning

Don’t get me wrong, materials matter. In fact, sustainable fabric innovation is one of the most exciting, fast-moving areas in fashion today. From lab-grown textiles to regenerative agriculture fibers, the breakthroughs are inspiring.

But if we stop there, we miss the bigger picture. A fabric may be “sustainable” in isolation, yet lose that status once you examine the full ESG context — the way it’s sourced, processed, manufactured, and delivered.

Valeriya Hjertanaes has been clear on this point in her interviews: upcycling, deadstock reuse, and farm-to-closet sourcing are vital not because they’re trendy, but because they address the entire lifecycle of fashion production. If the system producing the fabric is exploitative or wasteful, the “sustainable” label collapses.

Here are just a few examples of why material choice alone is not enough:

• Organic Cotton – Yes, it uses less water and fewer pesticides. But if it’s sourced from farms with poor labor conditions or forced labor, it fails the “S” (Social) in ESG.
• Recycled Polyester – It reduces waste by giving plastic bottles and old textiles a second life. But if the recycling process is powered by coal-fired plants, the carbon footprint can still be massive.
• Hemp & Linen – These are low-impact crops in cultivation, but if the dyeing and finishing processes use toxic chemicals, the environmental gains are quickly undone.
• Deadstock Fabrics – As Valeriya champions, using leftover rolls from fashion houses avoids virgin resource use. But if the sewing facilities lack safe conditions or fair pay, the social damage offsets the environmental win.
• Natural Innovations – Banana fiber, pineapple leaf fiber, and bamboo fabrics can be game changers, if sourced from regenerative agriculture systems and processed without harmful chemicals.

In other words: a sustainable product is only as sustainable as the system that produces it. ESG is the only framework that ensures those systems work together, environmentally, socially, and at the governance level, to deliver real sustainability.

Case Study: Turning ESG Into a Competitive Advantage

One of my clients, a high-end womenswear brand, learned this lesson the hard way. An exposé revealed unsafe conditions at a subcontracted factory producing part of their collection. The public backlash was swift and severe:

• Sales dropped sharply in key markets
• Brand trust plummeted
• Investors started asking hard questions about their supply chain oversight

We rebuilt their ESG strategy from the ground up, integrating principles similar to what Valeriya advocates, full accountability, incentivized compliance, and transparent evidence.

Governance

We created a Sustainability Oversight Committee that reported directly to the board, ensuring ESG had equal priority with financial performance. The committee had authority over supplier approvals, contract renewals, and corrective action mandates.

Incentives

Supplier bonuses were linked to labor compliance, environmental performance, and upcycling innovation. This meant that a factory could not only retain contracts by meeting safety standards, but also secure better terms by reducing waste or integrating deadstock use.

Evidence

We partnered with a third-party auditing firm to conduct unannounced inspections, introduced blockchain-based supplier records, and provided public reporting on corrective actions taken.

The Results (18 Months Later)

• +26% Increase in customer trust scores
• Zero negative press mentions related to labor or environmental violations
• Secured a major investment from an ESG-focused fund, which cited the brand’s new traceability measures as a primary reason for backing them

This transformation showed that ESG is not just risk management, it’s a growth strategy. In a market where consumers reward transparency and investors prioritize sustainable performance, ESG turns mistakes into momentum.

And critically, by embedding circular economy thinking, rewarding upcycling, mandating safe conditions, and sourcing regeneratively, the brand positioned itself not just as compliant, but as innovative and resilient.

Why This Matters Now More Than Ever

Fashion is standing at a crossroads, and the choice is stark: evolve or be left behind.
Three converging forces are accelerating this moment of reckoning:

1. Regulators – From Voluntary to Mandatory ESG

The era of “voluntary sustainability” is ending. Around the world, governments are moving from encouragement to enforcement, turning ESG transparency into a legal requirement.

• European Union: The Corporate Sustainability Reporting Directive (CSRD) demands audited ESG data from thousands of companies, including non-EU brands selling into the EU market. Reporting now carries the same weight, and legal liability, as financial statements.
• France: The Anti-Waste for a Circular Economy (AGEC) law mandates extended producer responsibility, banning the destruction of unsold goods and requiring disclosure of product environmental impacts.
• United States: New SEC climate disclosure rules and state-level regulations like California’s Climate Corporate Data Accountability Act require companies to measure and publicly disclose their greenhouse gas emissions.

For brands, this means the cost of non-compliance will be higher than the cost of building a robust ESG framework. And with cross-border supply chains, ignoring these rules in one market can trigger consequences in multiple others.

2. Investors – Capital is Flowing to Verified ESG Leaders

Sustainability is no longer a “nice-to-have” in investment portfolios, it’s a risk and return factor.

• ESG-aligned companies are attracting more capital from both institutional investors and specialized sustainability funds.
• Private equity firms and venture investors are using ESG performance as a key due diligence metric.
• Poor ESG scores can now increase the cost of capital or even exclude brands from major investment pools.

Fashion brands with circular economy models, upcycling initiatives, and verified supply chain transparency are increasingly seen as future-proof. Investors view these brands as better equipped to handle resource volatility, reputational risks, and shifting consumer demands.

3. Consumers – A Generation That Demands Proof

Millennials and Gen Z together make up nearly half of the global consumer base. And their expectations are reshaping the market:

• They are willing to switch brands, or pay a premium, for products with verified sustainable and ethical credentials.
• “Verified” is the keyword. These consumers want traceable evidence, not just feel-good slogans.
• Digital tools like QR codes, blockchain garment passports, and third-party certifications are becoming purchase drivers, not just marketing extras.

Valeriya Hjertanaes’ advocacy for upcycling, farm-to-closet sourcing, and regenerative textile production directly resonates with this demographic. These consumers are drawn to authenticity and innovation, especially when a brand can prove its claims.

The Message is Clear

Transparency is no longer optional. It is survival.

The fashion industry has reached a point where good intentions are irrelevant without verifiable action. Brands that fail to operationalize ESG, with strong governance, meaningful incentives, and credible evidence, will be overtaken by competitors who can prove their impact, line by line, garment by garment.

This is not a slow-moving change. It is happening in real time:

• Regulators are issuing new rules with teeth.
• Investors are re-allocating capital toward verifiable ESG performers.
• Consumers, particularly Millennials and Gen Z, are rewarding transparency and punishing greenwashing.

Those who act now won’t just avoid fines, reputational damage, and shrinking investor interest. They’ll seize a competitive advantage in a fashion market that is finally and irreversibly, aligning profit with purpose.

And this is where Valeriya Hjertanaes’ philosophy becomes more than inspiration — it becomes a blueprint. Her emphasis on upcycling, farm-to-closet sourcing, and embedding circularity at every stage isn’t just an environmental statement; it’s a market strategy that delivers on ESG across all three pillars.

For the brands ready to lead, the path is clear:

1. Govern with accountability — from the boardroom to the smallest subcontractor.
2. Incentivize for change — reward suppliers and teams who deliver measurable ESG outcomes.
3. Prove it with evidence — make your sustainability story transparent, traceable, and trusted.

Because in the new reality of fashion, the runway to relevance is paved not with promises, but with proof.

Why Fashion Leaders Must Think Like Sustainability Consultants

From my perspective, fashion leaders need to adopt the mindset I bring as a sustainability consultant: balance creative vision with operational discipline.

Fashion thrives on creativity, storytelling, and aesthetic vision, but without operational systems to deliver on ESG commitments, even the boldest ideas collapse under scrutiny. In the future, creative directors and sustainability officers will need to work side by side, ensuring that the artistry of fashion is backed by measurable, verifiable impact.

This means:

• Designing collections with lifecycle thinking in mind – From sketch to end-of-life, envision the garment’s full journey, including repairability, resale potential, and recyclability.
• Embedding ESG targets into contracts and supplier relationships – Make sustainability non-negotiable by tying supplier agreements to circularity, ethical labor practices, and emissions reductions.
• Communicating progress transparently – Use digital platforms, garment IDs, and verified data to show consumers exactly what’s behind each product.

Valeriya Hjertanaes’ work is a perfect example of this mindset. Her advocacy for upcycling, farm-to-closet sourcing, and embedding circularity into brand DNA demonstrates that fashion can be both visionary and disciplined. It’s a reminder that ESG is not the enemy of creativity, it’s a creative challenge in its own right.

Looking Ahead: The Future of ESG in Fashion

We’re heading toward a future where ESG will be as fundamental to a fashion brand as design or marketing. Those who are ahead of the curve now will define what leadership looks like in this new era.

Here’s what’s coming:

• Full Supply Chain Transparency – Digital IDs and blockchain technology will make every garment traceable from raw material to resale. Consumers will expect to know exactly where and how each component was made.
• Circular Business Models – Designing for repair, resale, and recycling will be standard practice, with upcycling and deadstock innovation built into seasonal collections.
• Integrated Reporting – ESG metrics will be included in annual reports alongside financial results, and will carry equal weight in investor and stakeholder decision-making.
• Consumer-Driven Auditing – Shoppers will use mobile apps to instantly verify ESG claims, scan sustainability scores, and compare brands in real time before making a purchase.

For brands that embrace these changes early, the payoff will be more than compliance, it will be loyalty, market leadership, and resilience in an increasingly volatile industry.

The Final Thread: Why This Matters Beyond Fashion

Fashion is one of the most globalized industries in the world, touching agriculture, manufacturing, logistics, retail, and media. Its supply chains reach into rural farming communities, industrial hubs, and urban fashion capitals, making it a powerful driver of both harm and healing.

When fashion gets ESG right, it doesn’t just change runways, it sends positive ripples across entire economies:

• Supporting regenerative agriculture in cotton-growing regions
• Elevating artisan communities through ethical sourcing
• Reducing carbon footprints in manufacturing and shipping
• Setting global standards for labor rights and diversity in creative industries

As sustainability professionals, we have a responsibility to move this industry beyond surface-level change, beyond slogans, beyond seasonal marketing, into systems that protect people, planet, and profit equally.

Because in the end, sustainable fashion isn’t about a single dress, shirt, or jacket.
It’s about the world we want to live in when those clothes are gone, and the legacy we leave for the next generation of makers, wearers, and innovators.

Call to Action

The future of fashion is being written now and every brand must decide whether to lead it or follow it. ESG is no longer an optional add-on; it’s the operating system for a resilient, competitive, and ethical fashion industry.

If you’re a brand leader, designer, investor, or supply chain decision-maker, the time to act is now:

• Audit your current ESG framework and identify where governance, incentives, and evidence are lacking.
• Embed circular economy principles into product design, sourcing, and distribution.
• Partner with experienced sustainability consultants who can help you operationalize ESG across every department and supplier relationship.

The brands that move first will define the market. The ones that delay will be left explaining why they didn’t.

About Steven W. Pearce

Steven W. Pearce, MBA, MPM is an award-winning sustainability strategist, global development expert, and author. With over 13 years of experience advising governments, NGOs, and corporations across the U.S., MENA, Sub-Saharan Africa, and Europe, Steven specializes in ESG planning and reporting, climate risk assessment, circular economy strategy, and sustainable business transformation.

His work has spanned projects with USAID, UN-affiliated initiatives, defense contractors, and national ministries, helping organizations build compliance, credibility, and market leadership through operationalized sustainability.

As a recognized thought leader on ESG and climate resilience, Steven’s articles and books have been published globally, and his consulting strategies have helped clients secure multimillion-dollar investments, win international sustainability awards, and lead their industries in transparency and innovation.

About Pearce Sustainability Consulting Group

Pearce Sustainability Consulting Group (PSCG) is a globally recognized sustainability and ESG advisory firm headquartered in the United States, with active operations in international markets. PSCG’s mission is simple: “Simplifying Sustainability, Amplifying Impact.”

Specialties include:

• ESG strategy, planning, and reporting aligned with GRI, SASB, and TCFD
• Climate risk and mitigation planning
• Circular economy and upcycling integration for fashion and consumer goods
• Impact measurement and management for the UN Sustainable Development Goals (SDGs)
• Supplier engagement and compliance systems
• Sustainability-driven brand positioning and investor readiness

PSCG has been honored as the Best Sustainability Consulting Firm in California and Best SDG Impact Measurement and ESG Reporting Company in America, and is the only USAID/DoD partner providing ESG services to U.S. government contractors and grant recipients.

With deep expertise in both the creative industries and global supply chains, PSCG helps brands not only meet ESG requirements but turn sustainability into a competitive advantage.