Sustainability is no longer sitting on the sidelines of the fashion business. Environmental, Social and Governance (ESG) considerations are increasingly influencing how the industry sources, manufactures, invests and responds to changing regulatory requirements.
The HKTDC ESG Index 2026 found that 92 percent of fashion practitioners considered ESG an essential element in business decision-making, up from 85 percent in 2025. The proportion of fashion businesses sourcing or selling ESG-related products and services also increased from 33 percent to 46 percent.
The findings were drawn from fashion industry stakeholders surveyed as part of the wider HKTDC ESG Index, which gathered more than 1,800 responses across 10 HKTDC fairs and business events. The 2026 fashion analysis included 134 respondents.
Hong Kong's fashion ESG Index reached 65.5 in 2026, increasing 2.3 points year-on-year. All three pillars improved, with the Environmental Sub-Index reaching 64.3, Social 67.0 and Governance 66.1.
Importantly for fashion businesses, the research also indicated a commercial benefit from ESG activity. Of the 53 fashion exhibitors surveyed, 33 offered ESG-related products or services. Among those businesses, 61 percent reported an additional profit margin of at least 10 percent. Of the 81 buyers surveyed, 28 sourced ESG-related products or services, with 47 percent of those prepared to pay a green premium of 10 percent or more.
ESG engagement was particularly strong among manufacturers and suppliers. Some 62 percent of exhibitors provided ESG-related products or solutions in 2026, up from 50 percent in 2025. Buyer participation increased from 23 percent to 35 percent.
The shift comes as fashion businesses face greater regulatory and supply chain pressures. In Europe, measures include the EU Strategy for Sustainable and Circular Textiles, the Ecodesign for Sustainable Products Regulation and the Corporate Sustainability Reporting Directive. The EU's Digital Product Passport is also expected to become mandatory for the fashion and textile industry between late 2028 and mid-2029.
Technology is consequently becoming an important part of ESG compliance. Sustainable supply chain platforms were the most sought-after Hong Kong digital solution identified by fashion respondents, selected by 54 percent. AI analytics and supplier collaboration tools followed at 31 percent each.
Fashion's fragmented global supply chains remain a key challenge. When asked about solutions, 44 percent selected tools providing greater transparency and traceability, followed by ESG certification at 40 percent and ESG audits and risk-analysis solutions at 28 percent.
Access to capital was another priority. Ease of investing in green and sustainable opportunities remained the highest-ranked environmental factor for fashion practitioners in both 2025 and 2026, while access to green and sustainability-related financing also ranked among the top three.
The findings suggest ESG is moving beyond a sustainability conversation to become part of the industry's wider commercial strategy. For fashion businesses, responsible practices are increasingly connected with profitability, sourcing, technology, finance and access to international markets.
With 92 percent of practitioners surveyed considering ESG essential to business decision-making, the question is becoming less about whether businesses should engage with ESG and more about how effectively it can be incorporated throughout the fashion supply chain.
