Status Quo Analysis - Textile Sector

In the background, the textile industry's market structure creates significant challenges for chemical traceability implementation. The (Swedish Chemicals Agency, 2014) analysis reveals that approximately 80% of EU-consumed textiles are imported, creating substantial information asymmetries between producers and consumers.

The integration of environmental considerations into economic decision-making remains inadequate, presenting significant challenges in implementing traceability and addressing externalities. While various methods exist to bridge this gap, the underlying practices and drivers of decision-making reflect a complex interplay of factors. This challenge is particularly evident in supply chain dynamics, where (Wiesmeth and Häckl, 2015) demonstrate how inadequate environmental integration complicates traceability implementation, with price mechanisms often failing to account for environmental and health externalities, thereby creating misaligned incentives throughout the supply chain.

Organisations currently integrate environmental considerations primarily through monetary valuation methods, including economic consequences assessment, mitigation and restoration costs, and willingness-to-pay analyses. Though these methods aim to quantify environmental impacts in economic terms, their variability can significantly influence decision-making outcomes (Sena et al., 2020). In response, Environmental, Social, and Governance (ESG) factors are being increasingly incorporated into financial systems, adapting decision-making processes to enhance sustainability (Ziolo et al., 2019; Aldowaish et al., 2022). 

As businesses transition toward a circular economy, many are adopting environmental accounting practices that integrate environmental capabilities into their operations, potentially improving both environmental and financial performance (Scarpellini et al., 2020). However, economic considerations typically dominate decision-making processes, often overshadowing critical environmental impacts (Sena et al., 2020). External stakeholder pressure, particularly from consumers and regulatory bodies, has emerged as a crucial driver for sustainable practice adoption, influencing how businesses integrate environmental considerations into their strategies (Iliopoulou et al., 2024). Additionally, the growing need to manage financial risks associated with environmental impacts has led companies to develop integrated models that consider both economic and environmental performance metrics (da Silva et al., 2019).

Despite these various integration methods and drivers, from monetary valuation to ESG integration and environmental accounting, the dominance of economic considerations highlights the need for more standardised and comprehensive approaches to ensure adequate consideration of environmental impacts in decision-making processes.