LONDON, United Kingdom — Fashion companies should receive tax incentives to produce environmentally friendly garments — and penalties if they don't, — a cross-party group of UK lawmakers said in a report published Tuesday.

Following a months-long investigation into the fashion sector, Parliament’s Environmental Audit Committee called on the government to create financial incentives for brands to reduce their environmental footprint. It also recommended stricter requirements on brands to police their supply chains.

“For too long I think we’ve allowed fashion to just mark its own homework and turned a blind eye,” said Mary Creagh, a Labour MP who serves as chair of the committee. “What we’re trying to do in this report is look at what are the impacts on the planet? What are the impacts on the people who are making it?”

The report takes aim at fast fashion retailers like Amazon UK and Boohoo Group, brands the committee called out for not doing enough to tackle "unsustainable" and "exploitative" industry practises in an interim report published last month. Amazon declined to comment on the interim report. Boohoo said its findings did not fully reflect the company's commitment to sustainability.

Luxury brands didn't escape criticism, with the report noting that Louis Vuitton now offers small collections every two weeks. So-called "fast luxury" offerings are often stitched in the same factories as those producing cheap fashion for high street brands, the report said, without naming which labels have adopted this practise. It called out others, like Versace, for failing to comply with the UK's Modern Slavery Act, which requires large brands to explain in an annual statement how they are ensuring their supply chains do not rely on forced labour.

In the UK, fashion is a big business, contributing around £30 billion ($39 billion) to the British economy each year. The country’s also become a hub for fast fashion, with British consumers buying more new clothes per person than any other country in Europe.

While the EAC acknowledges some companies are making progress to reduce their environmental footprint, it said those improvements have been outweighed by the increased volumes of clothing being sold by fast fashion brands. Around 300,000 tons of clothing is thrown away annually in the UK, with 80 percent ultimately incinerated and the rest ending up in landfills, the report said.

“We need a new economic model for fashion,” the report said. “Business as usual no longer works.”

The findings reflect the growing scrutiny on the industry amid concerns over its role in encouraging over-consumption, generating excessive waste and mistreating workers.

Since the EAC’s inquiry was launched last June, the committee has quizzed many of the country’s largest fashion businesses on issues including worker protections, wage abuses, the use of sustainable materials and the re-use or recycling of unsold stock.

It’s ultimately found significant failings in the way the industry operates, noting its negative impact on the climate and poor track record in protecting workers’ rights.

According to Tuesday’s report, textile production creates an estimated 1.2 billion tonnes of carbon dioxide equivalent a year, more than the emissions from international flights and maritime shipping combined. The cotton required to make a shirt and a pair of jeans can use as much as 10,000 to 20,000 litres of water to produce. And between 20 percent to 35 percent of all primary source microplastics in the marine environment are from synthetic clothing. Moreover, more than 90 percent of workers in the global garment industry have no possibility to negotiate their wages or conditions.

While the UK is the first government to study the industry’s sustainability in detail, the inquiry has attracted interest from others, including the U.S., France, Denmark and the Netherlands, said Creagh.

“I think this is going to be a real landmark report,” she said.

To combat the industry’s problems, the EAC is calling for tax reforms that would penalise practises that damage the environment and reward brands who engage in more climate-friendly production. Its recommendations include a levy of one penny per garment on producers to fund better clothing collection and recycling schemes, as well as extending a proposed UK tax on virgin plastics to non-recycled synthetic textiles.

The committee also called for much more stringent requirements on companies to ensure the people who make their clothes are well treated. Companies that fail to comply with the Modern Slavery Act should face a penalty and large brands and retailers should be required to ensure their products are produced without the use of forced or child labour, it said.

“Fashion retailers must not be allowed to turn a blind eye to labour and environmental abuses in their supply chains,” the report said.

Other recommendations included mandatory environmental targets for large fashion companies, banning the practise of incinerating or landfilling unsold stock that can be reused or recycled, and including lessons on designing, creating and mending clothes in the school curriculum.

The UK government now has two months to respond to the report.

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