1. Introduction

The fashion industry stands as one of the most influential economic sectors globally, generating approximately $3 trillion annually and contributing nearly 2% of global GDP. Yet, its environmental footprint is equally significant. The sector is estimated to account for 9% of global greenhouse gas emissions and nearly 20% of worldwide water pollution, largely due to energy-intensive manufacturing and chemical-heavy textile processing.

These impacts are further intensified by fast-fashion business models, which:

• Accelerate production cycles

• Shorten product lifespans

• Increase textile waste

• Complicate end-of-life management

Global clothing production has roughly doubled since 2000, while the average number of times a garment is worn has dropped by approximately 40%. Some ultra-fast fashion items are discarded after just 7–10 wears, reflecting a linear consumption pattern that amplifies resource depletion and waste generation.

Growing Regulatory and Market Pressure in Europe

The sustainability debate in fashion is no longer voluntary — it is regulatory, financial, and consumer-driven.

Nearly six in ten EU citizens report willingness to pay more for sustainably produced and repairable products. This shifting consumer mindset aligns with major policy reforms across the European Union.

Several key regulatory developments are reshaping accountability:

• Separate collection of post-consumer textiles mandated from January 2025 under the amended Waste Framework Directive

• Introduction of eco-modulated Extended Producer Responsibility (EPR) schemes for textiles

• Phased sustainability reporting beginning 2025 under the Corporate Sustainability Reporting Directive

• Mandatory compliance with European Sustainability Reporting Standards

• Compulsory Digital Product Passports for textiles sold in the EU market

These measures signal a fundamental shift: environmental accountability is moving from individual products toward full organisational responsibility.

For fashion SMEs — particularly those embedded in subcontracting networks like Italy’s manufacturing ecosystem — this transformation presents both a challenge and an opportunity.

The Data Gap in Fashion Sustainability

Despite increasing commitments, organisations struggle with a persistent issue:

A lack of comprehensive, reliable data across their value chains.

This data scarcity limits informed decision-making and weakens credibility. A forensic review of voluntary climate targets revealed that by the end of 2024, only one-third of 2020 voluntary targets showed credible progress evidence.

Moreover:

• Investors increasingly request cradle-to-gate environmental metrics

• Global platforms demand quantifiable impact disclosures

• Yet few life cycle studies in fashion adopt an Organizational LCA (O-LCA) perspective

• Almost none focus on a real fashion SME

There remains limited empirical research demonstrating how environmental hotspots can be:

• Identified

• Quantified

• Strategically acted upon

— particularly at the SME level.

Why Organizational LCA (O-LCA) Matters

To address this gap, this study applies Organizational Life Cycle Assessment (O-LCA), guided by:

• ISO 14040

• ISO 14044

• ISO/TS 14072

O-LCA extends traditional product-level LCA thinking to the entire organisation, analysing:

• All inputs (materials, energy, water)

• All outputs (products, emissions, waste)

• Potential environmental impacts across the life cycle

Although O-LCA does not define a functional unit — limiting direct comparisons between different companies — it remains extremely valuable for:

• Year-by-year internal benchmarking

• Tracking environmental performance trends

• Identifying strategic intervention points

This perspective is particularly relevant in Italy’s fashion ecosystem, which is dominated by networks of specialised subcontracting SMEs. In such systems, upstream and downstream impacts are often fragmented, making holistic assessment indispensable.

Study Objectives

Using SimaPro and the Ecoinvent database, this case study conducts an Organizational LCA of an Italian apparel SME with three primary objectives:

1. Identify the main activities driving environmental impacts within fashion SMEs

2. Demonstrate how O-LCA effectively quantifies and prioritizes hotspots

3. Show that adopting O-LCA delivers managerial and strategic value, not just reporting compliance

The study expands existing O-LCA research by:

• Applying a hybrid inventory approach

• Integrating activity-based reporting

• Aligning with UNEP-SETAC Life Cycle Initiative guidance

• Operating despite limited SME-level data availability

Most importantly, it translates environmental metrics into actionable business recommendations, including:

• Transitioning to renewable electricity

• Improving fibre sourcing strategies

• Strengthening supplier engagement

Bridging Measurement and Strategy

This research responds to the urgent need for sector-specific, SME-centred evidence. By grounding methodological rigor in real operational constraints, it demonstrates that O-LCA is not merely a reporting tool — it is a strategic management instrument.

For fashion SMEs navigating regulatory pressure, investor scrutiny, and consumer expectations, Organizational LCA provides a structured pathway to:

• Avoid burden shifting

• Prioritize high-impact interventions

• Align sustainability with competitiveness

In the next section, we will examine how the methodological framework was adapted to the realities of an Italian fashion SME and how system boundaries were defined for meaningful organisational assessment.