Abstract
The global fast fashion industry presents a significant challenge to environmental sustainability because its business model combines rapid product turnover, resource-intensive manufacturing, complex international supply chains and substantial post-consumer textile waste. Although multinational corporations (MNCs) increasingly publish sustainability reports, the availability of environmental information does not necessarily demonstrate that environmental damage is being adequately measured, financially recognised or reduced.
This article critically examines the regulatory frameworks governing environmental accounting and sustainability reporting, evaluates environmental accounting practices among multinational fast fashion companies, and assesses whether existing accounting standards adequately meet the requirements of environmental accountability. It considers the European Union’s Corporate Sustainability Reporting Directive (CSRD), European Sustainability Reporting Standards (ESRS), the International Sustainability Standards Board’s IFRS S1 and IFRS S2, the Global Reporting Initiative (GRI), the Greenhouse Gas Protocol and relevant environmental due diligence requirements. H&M Group and Inditex are considered as illustrative corporate cases.
The analysis argues that contemporary frameworks have strengthened disclosure, comparability and accountability, but significant challenges remain regarding supply-chain data, biodiversity, water pollution, product durability, textile waste, assurance and the relationship between corporate growth and absolute environmental impact. It concludes that environmental accounting must move beyond disclosure towards consistent measurement, independent verification, lifecycle-based cost recognition and demonstrable reductions in environmental harm.
Keywords: Environmental accounting, green accounting, fast fashion, multinational corporations, sustainability reporting, CSRD, ESRS, IFRS sustainability standards, greenwashing, circular economy, environmental accountability.
1. Introduction: The Environmental Cost Behind Fast Fashion
Fast fashion has transformed the global clothing market by making trend-driven apparel accessible, affordable and rapidly available. Yet the commercial advantages of short production cycles and high product turnover can conceal substantial environmental costs distributed across international supply chains.
The environmental footprint of a garment begins well before it reaches a retail store. Cotton cultivation can contribute to water stress; synthetic fibre production relies heavily on fossil-based feedstocks; textile dyeing and finishing can generate wastewater pollution; manufacturing consumes energy; international logistics create emissions; and washing, disposal and incineration generate further environmental pressures.
The United Nations Environment Programme (UNEP, 2023) estimates that the textile value chain accounts for approximately 2–8% of global greenhouse gas emissions. Its research also identifies substantial pressures involving water consumption, pollution, biodiversity and textile waste. These figures refer to the wider textile value chain, not exclusively to fast fashion.
The central accounting problem is that conventional financial statements do not automatically capture all these costs. A business may recognise expenditure on electricity, water, raw materials and waste disposal while failing to measure the wider environmental damage associated with its activities. Pollution-related health effects, ecosystem degradation and future remediation liabilities may remain outside the company’s reported accounts unless recognition requirements or applicable laws bring them into scope.
Environmental accounting (EA) seeks to address this gap by identifying, measuring, analysing and communicating environmental costs, resource use, emissions and associated financial or physical impacts. It encompasses environmental management accounting within organisations as well as external sustainability reporting.
For multinational fashion corporations, the challenge is particularly complex. A brand may design products in one country, source raw materials in another, manufacture garments through independent suppliers in several jurisdictions and sell to consumers worldwide. Environmental impacts consequently occur across corporate boundaries, making responsibility difficult to measure and enforce.
This article investigates a fundamental question: Are existing environmental accounting regulations and sustainability reporting standards sufficient to ensure that multinational fast fashion corporations account for, and meaningfully reduce, their environmental impacts?
The article addresses three objectives:
- To explore and analyse regulatory frameworks for green or environmental accounting governing MNC operations and the challenges associated with environmental accounting.
- To analyse sustainability reporting and environmental accounting practices among MNCs operating in the global fast fashion industry.
- To determine whether existing frameworks, regulations and accounting standards adequately serve the requirements of environmental accounting.
2. Environmental Accounting and the Regulatory Framework Governing MNCs
2.1 Understanding environmental accounting
Environmental accounting integrates environmental information into organisational decision-making, performance measurement and external reporting. It extends beyond recording environmental expenditure to consider the relationship between economic activity and environmental resources.
Three complementary dimensions are particularly relevant.
Environmental management accounting identifies the environmental costs of internal business processes. Examples include water consumption in textile dyeing, energy used in garment manufacturing, raw material losses, waste treatment, chemical inputs and the financial implications of resource inefficiency.
Environmental financial accounting considers the financial consequences of environmental matters. Depending on the applicable accounting rules and circumstances, these may include remediation obligations, provisions for environmental liabilities, impairment of assets exposed to environmental regulation and expenditure on pollution control.
Environmental and sustainability reporting communicates an organisation’s environmental impacts, risks, policies, targets and performance to investors and other stakeholders. It may include greenhouse gas emissions, water use, pollution, biodiversity, waste, recycled materials and supply-chain impacts.
These dimensions are related but not interchangeable. A company can publish an extensive sustainability report without fully incorporating environmental costs into internal product pricing or financial decision-making. Likewise, recognising an environmental provision in financial statements does not necessarily reveal the company’s complete physical environmental footprint.
Environmental accounting should therefore connect physical measurements, management decisions, financial consequences and public accountability.
2.2 The European Union’s Corporate Sustainability Reporting Directive and ESRS
The European Union has developed one of the most significant regulatory approaches to corporate sustainability reporting through the Corporate Sustainability Reporting Directive (CSRD) and the European Sustainability Reporting Standards (ESRS).
The ESRS framework addresses environmental topics through standards covering climate change (ESRS E1), pollution (E2), water and marine resources (E3), biodiversity and ecosystems (E4), and resource use and the circular economy (E5). Its double materiality approach considers both how sustainability matters affect a company financially and how the company’s activities affect people and the environment (European Commission, 2023).
This is particularly important for fast fashion. A narrow financial perspective might prioritise the effects of carbon pricing, water shortages or environmental regulation on profitability. An impact perspective can also examine the pollution caused by suppliers, the water consumed in cotton production and the environmental consequences of discarded garments, even when those impacts do not immediately create a direct financial loss for the brand.
The CSRD and ESRS therefore offer a broader basis for environmental accountability than investor-focused reporting alone. They can also encourage companies to connect environmental disclosures with governance, strategy, targets and value-chain information.
However, regulatory scope and implementation schedules have evolved. The EU adopted amendments to sustainability reporting and due diligence requirements in 2026, alongside revised ESRS. Companies must therefore determine which rules, thresholds, exemptions and transitional provisions apply to their particular reporting period and corporate circumstances. The existence of a directive does not mean that every multinational is subject to identical requirements.
A further limitation is that disclosure standards do not themselves eliminate pollution, require every garment to meet a particular environmental threshold or guarantee a reduction in production volumes. Their impact depends on implementation, enforcement, data quality and the decisions made in response to the information disclosed.
2.3 IFRS S1 and IFRS S2: Sustainability information for financial decision-making
The International Sustainability Standards Board (ISSB) issued IFRS S1, General Requirements for Disclosure of Sustainability-related Financial Information, and IFRS S2, Climate-related Disclosures, in 2023. Both standards are effective for annual reporting periods beginning on or after 1 January 2024 for entities applying them, subject to the relevant jurisdiction’s adoption and applicable transition provisions.
IFRS S1 establishes general requirements for reporting sustainability-related risks and opportunities that could reasonably be expected to affect an entity’s prospects. IFRS S2 provides specific requirements concerning climate-related risks, opportunities, metrics and targets, including Scope 1, Scope 2 and Scope 3 greenhouse gas emissions.
For fast fashion companies, Scope 3 reporting is especially important because emissions can arise from purchased materials, manufacturing, transportation, product use and end-of-life treatment. The standards also encourage the use of industry-specific information when identifying material sustainability-related risks and opportunities.
Nevertheless, the ISSB approach primarily serves the information needs of investors, lenders and other creditors. Environmental damage that does not reasonably affect a company’s financial prospects may not receive the same prominence as under an impact-oriented framework.
This distinction is fundamental: information about the financial consequences of environmental problems is not identical to information about the total environmental consequences of a company’s operations.
IFRS S1 and IFRS S2 can improve financial transparency, but they should not be treated as a complete substitute for broader environmental impact accounting.
2.4 Global Reporting Initiative (GRI)
The Global Reporting Initiative provides sustainability reporting standards designed to help organisations report their impacts on the economy, the environment and people.
The GRI framework is particularly relevant to environmental accounting because it can support disclosures on energy, water, emissions, waste, materials and other impacts that may extend beyond immediate financial materiality. Its impact-oriented approach complements the investor-focused perspective of the ISSB.
For multinational fashion companies, GRI-based reporting can help communicate environmental pressures associated with fibre sourcing, textile processing, chemical management, waste and supplier operations.
However, the use of a reporting framework does not automatically guarantee consistent outcomes. Differences in organisational boundaries, estimation methods, data coverage, materiality judgements and assurance can affect comparability between companies. GRI is a reporting framework rather than a universal environmental tax or a complete system of financial accounting rules.
2.5 Greenhouse Gas Protocol and environmental measurement
The Greenhouse Gas Protocol provides widely used methods for measuring and reporting greenhouse gas emissions. Its corporate accounting framework distinguishes between three scopes:
- Scope 1: Direct emissions from sources owned or controlled by a company.
- Scope 2: Indirect emissions associated with purchased electricity, steam, heating and cooling.
- Scope 3: Other indirect emissions across the company’s value chain.
For a fashion retailer, Scope 1 and Scope 2 emissions may arise from stores, warehouses and offices. Scope 3 emissions can include the production of cotton and synthetic fibres, fabric processing, garment manufacturing, logistics and product disposal.
Scope 3 accounting is indispensable but difficult. Companies may depend on supplier estimates, industry-average emission factors, expenditure-based calculations or incomplete production data. Results can change when methodologies are revised, even without a corresponding change in actual environmental performance.
Moreover, carbon accounting alone is insufficient. A garment’s climate footprint does not fully describe its water scarcity impact, chemical pollution, microfibre release, land-use consequences or contribution to textile waste. A comprehensive environmental accounting system must combine climate metrics with other relevant environmental indicators.
2.6 Environmental due diligence and corporate responsibility
Reporting requirements are only one part of the regulatory landscape. Environmental due diligence seeks to identify, prevent, mitigate and, where appropriate, address adverse environmental impacts associated with business operations and value chains.
The EU Corporate Sustainability Due Diligence Directive (CSDDD), as amended in 2026, is part of this broader approach. Its current scope, obligations and application dates must be assessed against the amended legislation and relevant national implementing rules.
Due diligence differs from disclosure. A company may report a supplier’s emissions or water use without taking adequate steps to address serious environmental harm. Conversely, an effective due diligence system requires attention to the underlying problem, not simply the publication of a policy or performance indicator.
For fast fashion, effective environmental governance should therefore connect reported data to supplier engagement, purchasing practices, production processes, pollution prevention, grievance mechanisms and corrective action.
3. Environmental Accounting Challenges Facing Multinational Corporations
3.1 Fragmented international supply chains
The first major challenge is the geographical fragmentation of production. Fashion companies frequently rely on networks of suppliers, subcontractors, raw material producers and logistics providers operating under different national laws.
The brand may not directly own the factory responsible for a substantial proportion of its environmental footprint. Yet its purchasing prices, delivery schedules, order volumes and product specifications can influence production methods.
When suppliers lack reliable environmental measurement systems, brands may be forced to rely on estimates or incomplete information. Lower-tier suppliers can be particularly difficult to monitor.
This creates a distinction between operational control, financial responsibility and influence over environmental outcomes. Effective environmental accounting must make these boundaries transparent rather than allowing organisational structures to obscure significant impacts.
3.2 Measuring environmental costs
Many environmental costs are difficult to quantify in conventional monetary terms. Water consumption can be measured in physical units, but its environmental significance varies according to the location, season and availability of water. Similarly, one tonne of textile waste may have different consequences depending on its composition, toxicity, disposal route and potential for recovery.
Carbon emissions can be expressed in tonnes of carbon dioxide equivalent, but biodiversity loss, ecosystem damage and chemical pollution cannot always be reduced to a single monetary figure without substantial assumptions.
Environmental accounting should consequently combine physical indicators with monetary information where defensible. Attempts to monetise environmental harm should disclose their assumptions and should not imply that all ecological damage can be offset by a financial payment.
3.3 Inconsistent reporting boundaries and methodologies
Comparisons between corporate sustainability reports can be misleading when companies use different baselines, emission factors, organisational boundaries or definitions of recycled materials.
Changes in methodology may also produce apparent reductions in emissions without corresponding physical improvements. Conversely, improved measurement can reveal previously unreported impacts and cause reported emissions to increase.
For example, H&M Group’s 2025 sustainability reporting disclosed methodological revisions that materially changed previously reported Scope 3 estimates for certain categories. This illustrates why methodological transparency, recalculation policies and consistent historical comparisons are essential when assessing performance.
A credible environmental accounting system should distinguish genuine environmental improvement from changes caused by revised calculations, acquisitions, divestments or changes in reporting scope.
3.4 Greenwashing and selective disclosure
Greenwashing occurs when environmental claims create a misleading impression of a company’s performance or sustainability credentials.
In fast fashion, claims about recycled fabrics, sustainable collections, renewable electricity or circular initiatives can distract from other material questions, such as total production volumes, garment durability, absolute emissions, supplier pollution and the proportion of products that are actually reused or recycled.
A company may increase the percentage of recycled materials while simultaneously increasing the number of garments sold. A higher share of recycled fibres therefore does not, by itself, establish that the company’s total resource consumption or environmental damage has declined.
The solution is not to dismiss all corporate sustainability reporting. Rather, claims must be assessed against measurable outcomes, consistent baselines, transparent boundaries and independent verification.
3.5 Limited assurance and data reliability
External assurance can improve the credibility of sustainability information, but the level and scope of assurance matter.
Limited assurance provides less extensive assurance than reasonable assurance. Moreover, assurance over selected emissions metrics does not mean that an entire sustainability report, every supplier estimate or every environmental claim has been independently verified.
Environmental accounting can be strengthened through clearer reporting of assurance scope, data limitations, estimation uncertainty, material omissions and corrective actions. Assurance should be understood as a mechanism for increasing confidence in information, not as proof that a company’s business model is environmentally sustainable.
3.6 The growth-versus-sustainability dilemma
Perhaps the most important challenge is whether environmental improvements are compatible with continued growth in resource-intensive production.
A fashion company may improve energy efficiency per garment while producing more garments overall. Its environmental intensity may decline even as its absolute environmental footprint remains unchanged or increases.
Both indicators matter:
- Environmental intensity measures environmental impact relative to an activity, such as emissions per garment sold.
- Absolute environmental impact measures the total burden generated during a defined period.
For a sector associated with high product turnover, environmental accounting should report both. Otherwise, efficiency improvements may be presented as evidence of sustainability without demonstrating a corresponding decline in total environmental pressure.
4.1 H&M Group: Reporting progress and the importance of measurement
H&M Group provides a useful example of how a multinational fast fashion company reports environmental performance across its operations and value chain.
Its 2025 Annual and Sustainability Report presents information on greenhouse gas emissions, material sourcing, resource consumption, supplier engagement and circularity initiatives. The company reported that 91% of its commercial product materials were recycled or sustainably sourced in 2025, including 32% recycled materials. It also reported reductions of 41% in Scope 1 and 2 greenhouse gas emissions and approximately 34.6% in Scope 3 emissions against its 2019 baseline (H&M Group, 2026).
These figures demonstrate the value of reporting quantified indicators against a historical baseline. They allow stakeholders to examine whether a company is progressing towards its stated environmental objectives.
However, they must be interpreted carefully. The category of recycled or sustainably sourced materials combines different attributes, while recycled content alone does not measure the durability, repairability or end-of-life outcome of a garment. Similarly, reported emissions reductions need to be evaluated alongside changes in measurement methods, sales volumes, production levels and the company’s overall environmental footprint.
H&M’s disclosure of methodological revisions is instructive. Its 2025 reporting explains that updated emission factors and calculation approaches materially affected previously reported figures for certain Scope 3 categories. Transparent recalculation improves methodological accountability, but it also demonstrates why comparisons across reporting years require scrutiny.
The broader lesson is that environmental accounting should not merely count sustainability initiatives. It should establish whether the initiatives produce measurable, lasting improvements in environmental outcomes.
4.2 Inditex: The importance of examining the complete corporate report
Inditex, the parent company of Zara and other fashion brands, is another relevant case because of its international sourcing, extensive retail operations and global product distribution.
Its official 2025 annual-report download centre provides access to the group’s sustainability report and consolidated financial reporting. These documents offer a basis for examining how environmental targets, resource use, supply-chain management and corporate performance are communicated together.
A rigorous analysis of Inditex should examine at least five areas:
- Whether emissions are reported across Scopes 1, 2 and 3, with sufficient detail on upstream manufacturing and materials.
- Whether water consumption and wastewater risks are assessed at supplier and production-site level.
- Whether textile waste and circularity initiatives are evaluated through measurable outcomes rather than programme participation alone.
- Whether environmental targets are expressed in absolute terms as well as relative intensity measures.
- Whether material environmental information is subject to external assurance and whether changes in methodology are explained.
These questions should be applied to the actual disclosures rather than assuming that the publication of a sustainability report establishes strong environmental performance.
Inditex and H&M are useful comparative cases, but they should not be treated as representative of every fast fashion company. Differences in product mix, sourcing geography, reporting boundaries and business models can affect the results.
4.3 Comparative assessment of corporate practices
The following comparison identifies the central accounting questions raised by these cases.
| Assessment dimension | H&M Group | Inditex |
| Public environmental reporting | Annual and sustainability reporting, including quantified environmental indicators | Annual and sustainability reporting, including environmental disclosures |
| Climate accounting | Scope 1, 2 and 3 reporting with published methodological explanations | Assess through the current sustainability report and supporting methodology |
| Materials and circularity | Reports recycled or sustainably sourced materials and recycled-content figures | Examine material sourcing, product lifecycle and circularity metrics in the report |
| Key accounting concern | Methodological changes and the interpretation of reported reductions | Consistency, completeness and comparability of value-chain disclosures |
| Further evidence required | Product volumes, absolute impacts, supplier data quality and independent assurance scope | Equivalent metrics, boundaries, supplier data quality and assurance scope |
Source basis: H&M Group’s 2025 Annual and Sustainability Report and Inditex’s 2025 Annual Report download centre. This is a framework for critical comparison, not a claim that the companies have identical reporting methods or environmental performance.
The comparison reveals why environmental accounting research should examine both the quantity and the quality of information. The number of metrics reported is less important than whether they capture material impacts, allow meaningful comparison and support accountability for environmental outcomes.
5. Are Existing Environmental Accounting Frameworks Adequate?
The third research objective requires a distinction between the adequacy of reporting standards and the adequacy of the wider regulatory system.
Existing frameworks have made significant progress in defining sustainability disclosures, identifying material environmental issues and improving transparency. Nevertheless, their effectiveness remains conditional on legal scope, implementation, enforcement and the information available from global supply chains.
5.1 Where existing frameworks are effective
First, they improve transparency. Standardised emissions categories, reporting requirements and environmental indicators help stakeholders assess corporate performance more systematically.
Second, they strengthen governance. Requirements concerning board oversight, targets, risk management and sustainability strategy can integrate environmental issues into business decision-making.
Third, they encourage value-chain reporting. Frameworks such as ESRS and IFRS S2 help bring indirect emissions and upstream activities into corporate reporting, although their scope and materiality requirements differ.
Fourth, they create a foundation for verification. Consistent methodologies, documented assumptions and external assurance make environmental disclosures easier to evaluate and challenge.
Finally, they support regulatory convergence. The growing use of international standards can reduce unnecessary fragmentation, although jurisdictional differences and changes in legal requirements remain significant.
5.2 Where existing frameworks remain insufficient
Despite these advances, several gaps persist.
Financial materiality is not the same as environmental accountability. Investor-focused reporting may not capture every significant ecological impact unless it affects the company’s prospects or is addressed by another applicable requirement. Impact-oriented frameworks help close this gap, but their coverage and implementation vary.
Disclosure does not necessarily require environmental improvement. Reporting a high level of water consumption or emissions does not, by itself, compel a company to reduce that impact. Effective outcome-based rules, environmental permitting and enforcement are also necessary.
Environmental costs are not fully captured by conventional financial accounts. Existing accounting standards address certain environmental obligations and expenditure, but they do not require a universal monetary valuation of all pollution, ecosystem damage or resource depletion. A broader environmental accounting approach must combine financial recognition with physical impact measurement.
Global supply chains remain difficult to verify. Multinational corporations may depend on estimates and supplier-reported information. Lower-tier suppliers and informal production networks can remain difficult to monitor, limiting confidence in reported figures.
Comparability remains imperfect. Differences in reporting boundaries, materiality assessments, emission factors, baselines and assurance scope can prevent direct comparisons between companies.
Circularity claims can be difficult to evaluate. Recycling initiatives, take-back programmes and resale services do not automatically demonstrate a reduction in virgin material consumption, total waste or overall production. Outcome-based indicators are necessary.
Regulatory coverage changes over time. The 2026 amendments to EU sustainability reporting and due diligence legislation illustrate that regulatory scope, obligations and implementation dates can evolve. Such changes may reduce administrative burdens, but they can also complicate longitudinal research and comparisons between companies or reporting periods.
The overall assessment is therefore qualified: existing standards provide an increasingly robust architecture for sustainability disclosure, but they do not yet constitute a complete, globally uniform system of environmental cost accounting and enforceable environmental performance requirements.
6. Towards a More Effective Environmental Accounting Model for Fast Fashion
To address these limitations, environmental accounting should evolve from a predominantly disclosure-centred practice into an integrated system of measurement, decision-making, verification and accountability.
6.1 Introduce a lifecycle-based accounting approach
Environmental measurement should follow products from raw material extraction through fibre production, textile processing, garment manufacturing, distribution, consumer use and end-of-life treatment.
Lifecycle assessment can help identify environmental hotspots and prevent companies from shifting impacts from one stage to another. For example, replacing one fibre with another should be evaluated against relevant climate, water, land-use, chemical and end-of-life considerations rather than a single sustainability label.
Lifecycle assessment and environmental accounting are complementary: lifecycle assessment evaluates environmental impacts, while accounting systems can connect the results to costs, management decisions and public disclosures.
6.2 Report absolute impacts and environmental intensity together
Fast fashion companies should disclose both total annual impacts and relevant intensity measures.
For example, reporting emissions per garment can demonstrate improvements in manufacturing efficiency, while reporting total emissions shows whether the overall environmental burden is falling.
The same principle should apply to water use, material consumption and textile waste. Companies should also disclose the reporting boundary, baseline year, changes in product volumes and any methodological revisions.
6.3 Strengthen supplier-level environmental data
Brands should develop systems that capture reliable data from raw material producers, textile processors, dyeing facilities, garment factories and waste-management partners.
Priority indicators include:
- Energy use and greenhouse gas emissions by production stage.
- Freshwater withdrawal and consumption, with attention to local water stress.
- Wastewater quality and compliance with relevant discharge requirements.
- Chemical management and pollution prevention.
- Material composition, recycled content and traceability.
- Production waste, unsold stock and end-of-life treatment.
Data collection should be proportionate to supplier capacity while maintaining meaningful standards of completeness and verification.
6.4 Link environmental accounting with financial decisions
Environmental information should inform procurement, product design, investment appraisal and operational budgeting.
Environmental management accounting can identify hidden costs arising from wasted raw materials, excess energy use, inefficient water consumption and defective production. These measurements can support decisions that reduce costs and environmental harm simultaneously.
Where environmental damage creates a present legal or constructive obligation meeting applicable recognition criteria, financial reporting should reflect the resulting liability or provision as required by the relevant accounting standards. Such recognition must not be confused with assigning a comprehensive monetary value to all environmental damage.
6.5 Improve assurance and comparability
Environmental disclosures should explain which metrics have been independently assured, the level of assurance provided, the reporting boundaries covered and any exclusions or qualifications.
Standardised definitions, transparent baselines and consistent recalculation policies are essential for comparing performance across years and companies.
Regulators and standard setters should also promote interoperability between reporting frameworks while preserving the distinction between financial materiality and wider environmental impact.
6.6 Evaluate business models, not only reporting quality
Ultimately, environmental accounting should examine whether corporate strategies are consistent with meaningful reductions in environmental pressure.
Indicators of progress should include reductions in absolute emissions, improved wastewater outcomes, lower virgin resource consumption, longer garment lifespans, credible reuse and recycling outcomes, and reductions in waste.
A company should not be considered environmentally sustainable solely because it publishes a detailed report or meets a narrow operational target. The evidence must demonstrate progress against material environmental impacts.
7. Research Methodology and Analytical Framework
For an academic study, these objectives can be addressed through a qualitative comparative case-study design supported by documentary analysis.
The study should combine regulatory documents, published accounting standards, sustainability reports and independent environmental research. H&M Group and Inditex provide a practical starting point because both operate internationally and publish corporate sustainability information.
7.1 Data sources
Primary documentary sources should include:
- EU legislation and ESRS delegated regulations.
- IFRS S1 and IFRS S2.
- GRI reporting standards.
- The Greenhouse Gas Protocol.
- Corporate annual and sustainability reports.
- Relevant environmental due diligence legislation.
Secondary sources should include peer-reviewed research on environmental accounting, lifecycle assessment, corporate environmental disclosure, greenwashing and textile supply chains, alongside reports from UNEP and other credible institutions.
7.2 Analytical procedure
The research should first identify the disclosure and accountability requirements under each framework. It should then examine how each selected company reports environmental performance, including its metrics, boundaries, baselines, targets, estimation methods and assurance arrangements.
The resulting evidence should be compared against a common assessment framework.
| Evaluation criterion | Research question |
| Regulatory coverage | Which legal and reporting requirements apply to the company? |
| Environmental scope | Are climate, water, pollution, biodiversity, materials and waste addressed? |
| Value-chain coverage | Are relevant upstream and downstream impacts included? |
| Measurement quality | Are methods, assumptions, baselines and exclusions disclosed? |
| Financial integration | Are material environmental costs and obligations reflected in relevant decisions and accounts? |
| Verification | Which disclosures are externally assured, and at what level? |
| Outcome accountability | Is there evidence of improvement in absolute environmental impacts? |
The analysis should distinguish between a company’s stated commitments, reported activities and independently verifiable environmental outcomes. It should also account for changes in regulation and reporting methodology over the study period.
This approach allows the third research objective to be evaluated systematically without assuming that the presence of a particular standard necessarily results in better environmental performance.
8. Conclusion
Environmental accounting has become increasingly important as multinational corporations face growing scrutiny over climate change, resource consumption, pollution and supply-chain responsibility. In the global fast fashion industry, the need is especially pronounced because environmental impacts occur throughout an international product lifecycle and may remain outside the direct operational boundaries of the brands that sell the garments.
This article has shown that frameworks such as the CSRD, ESRS, IFRS S1, IFRS S2, GRI and the Greenhouse Gas Protocol provide important mechanisms for measuring and communicating environmental information. Environmental due diligence legislation adds a complementary dimension by focusing on the identification and management of adverse impacts.
Nevertheless, the effectiveness of these arrangements is limited by inconsistent data, complex supply chains, estimation uncertainty, incomplete financial recognition of environmental externalities, differences in reporting boundaries and the gap between disclosure and actual environmental improvement.
The corporate cases of H&M Group and Inditex demonstrate why published sustainability information must be evaluated critically. Quantified targets and emissions reductions are valuable, but their significance depends on measurement consistency, absolute environmental outcomes, supply-chain coverage and independent verification.
The central conclusion is that existing frameworks are necessary but not sufficient. Environmental accounting must connect standardised disclosure with lifecycle assessment, reliable supplier data, appropriate recognition of environmental obligations, independent assurance and enforceable environmental performance requirements.
For the fast fashion industry, genuine accountability requires more than demonstrating that a company is becoming more efficient. It requires credible evidence that the total environmental burden associated with its business is being addressed.
The future of green accounting therefore depends not only on what multinational corporations report, but also on what their accounting systems reveal, what their business decisions change and what measurable environmental outcomes they ultimately achieve.
By Team Cite&Write
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