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The fashion industry needs to drastically reduce its environmental impact. However, there is confusion and misunderstanding between consumers, retailers, and policymakers as to how the different dimensions of environmental impact in fashion are understood and valued. In addition, there are currently no regulation in place to curb the industry's highly impactful production. We combine an incentive-aligned choice-based conjoint (IA-CBC) experiment, a Hierarchical Bayes Multinomial Logit (HB-MNL) model, and joint product-line and pricing optimization model to measure preferences and willingness-to-pay (WTP) for three environmental attributes---Recycled Content, Durability, and Circularity Design---and the trade-off between profitability and restrictions on environmental attributes. Our experimental design also includes a between-subjects manipulation to study the impact of showing respondents a short educational video (treatment) as a reconciling mechanism. We find that Price is the main driver of choice, and that without treatment, consumers are insensitive to environmental attributes. Our study further reveals that the impact of environmental constraints on profitability is a function of the associated attribute salience and cost structure, and that retailers can manage trade-offs for low levels of constraints. Finally, we find that showing respondents a short educational video shifts attribute importance, increases WTP, and consequently eases the profitability-environmental impact trade-off. For retailers and policymakers, our results provide a more detailed understanding of consumer preferences and WTP for environmental attributes, in addition to a clear hierarchy of importance. Furthermore, we provide valuable empirical evidence on the impact of environmental constraints and treatment to develop fair regulations. Finally, our methodology and results provide a strategic decision support tool for managers.

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