This study assesses the applicability of the Making Markets Work for the Poor approach, as described by Sida, to meet sustainability challenges in the textiles- and clothing industry in Ethiopia. While Sweden has been ranked one of the most sustainable countries in the world, exported emissions and impacts have stained this reputation. As Swedish corporations look to Ethiopia as a new potential sourcing market for textile and clothing products, this interview study uses systems- and scenario analysis to assess the applicability of the market system approach Making Markets Work for the Poor, M4P, to answer to the sustainability challenges in the market system of the textile industry in Ethiopia. The results reveal that while sustainability challenges are numerous in regards to economy, environment and society, governance is the central leverage point when addressing systemic change for sustainability. The study concludes that while M4P can address specific sustainability challenges within the system, such as market access for poor and workers’ health issues, the approach does not answer to the fundamental systemic problems. Instead, it builds on a focus on GDP growth, which this study shows to be part of the problem of neglecting environmental and social aspects.