Strategic Adaptation or Strategic Confusion? Fashion Organisations' Engagement With Sustainability Certifications

Despite considerable costs associated with environmental certifications, fashion organisations consistently adopt multiple schemes to address sustainability challenges. As key mechanisms of sustainability governance, certifications expand legitimacy signalling opportunities, yet questions remain about their practical implementation and outcomes. This study examines this pattern through the diffusion‐impact paradox, drawing on interviews with 30 participants and archival analysis of certification communications from Australian fashion organisations. We find that the paradox operates through the following three interconnected mechanisms: certification proliferation, economic exclusion and a shift towards more demanding governance frameworks. Rather than acting independently, these mechanisms form a cumulative sequence. Organisational size shapes how firms navigate these dynamics, with large, medium and small organisations pursuing distinct strategies. By reframing the diffusion‐impact paradox as a dynamic sequence rather than a static trade‐off, this study extends paradox theory and offers certification bodies and managers concrete guidance for improving certification accessibility and impact.