Poor environmental and social practices are common across the apparel industry. Over the past 30 years, Non-governmental Organizations (NGOs) have steadily pressured buyers to make sustainability improvements in their supply chains. Yet, literally billions of dollars, and many attempts at new environmental standards, codes, monitoring, and capacity building programs have failed to drive significant progress in environmental performance. Against this pessimistic backdrop, an 11-year old initiative—the Sustainable Apparel Coalition (SAC)—has developed the leading strategy to drive sustainability within the global apparel industry. Its major initiative has been the Higg Index: a suite of six data tools. The Facility Environment Module (FEM), now in version 3.0, is the annual assessment of an apparel facility’s environmental management capabilities, procedures, and plans. This report is the output of a four-year analysis of the implementation and effectiveness of the FEM v2.0. This report analyzes whether the standards, measurement, verification, and learning processes advanced through the FEM improve the environmental performance of the apparel industry. The study covers quantitative data analysis of all FEM v2.0 data, a survey of a select sample of facilities, and case studies of eight facilities in Bangladesh and China. Our overall conclusion is that the FEM is having foundational, but not transformative impacts as it still lacks critical incentives to change factory practices. If factories were to receive more or fewer orders based on their FEM score, there might be sufficient internal incentives for improvement. Yet this internal mechanism is only likely to be successful if there is external transparency and accountability.