Adoption of green technologies in the Portuguese textiles and apparel industry

This paper examines the drivers of investment in sustainability by firms in the Portuguese textile and apparel industry.

A preliminary analysis reveals that firms fall into two broad groups: those leading the way in green technology adoption and those lagging behind. Key inputs shaping differences between these groups include operational performance, company maturity, and financial strength. Larger, more established firms with stronger financials are more likely to embrace sustainability, while smaller, less mature firms face greater challenges.

The study then identifies factors that help firms transition from market followers to leaders in green technology adoption. Companies that export to the European Union (EU) and other international markets, source materials from outside the EU, invest in advertising, engage in corporate social responsibility initiatives, and develop their own brands are more likely to adopt green technologies. These patterns hold true both during the industry’s peak export year in 2017 and over the broader period from 2010 to 2017.

The study also looks at an important but often overlooked issue: the balance between sustainability and profitability. Companies willing to invest in environmentally friendly materials tend to do so with the help of subsidies, particularly when supplying high-quality products to European markets. Meanwhile, firms producing lower-quality goods often choose to offer retail discounts rather than switching to sustainable inputs, suggesting that cost pressures remain a major barrier to greener production.

In conclusion, this research identifies challenges and incentives shaping sustainability in the Portuguese textile and apparel industry. While international demand push firms toward greener practices, financial pressures continue to limit widespread adoption, particularly among smaller players.

Click here to go to the paper by Vitor Miguel Ribeiro and Isabel Soares