In the dynamic world of fashion, a pressing challenge has emerged: a looming shortage of sustainable raw materials. A recent report underscores that unless fashion brands exhibit deeper commitment and allocate increased investments, the industry is on the precipice of a staggering 133 million-tonne deficit in the supply of eco-friendly materials by 2030.
The journey toward sustainability in the fashion industry largely hinges on a significant surge in the use of low-impact raw materials. This includes regenerative cotton and recycled polyester, both pivotal in aligning with impending sustainability regulations and decarbonization goals. Numerous leading fashion brands find themselves compelled to pivot their choices regarding raw materials.
However, the current trajectory paints a grim picture. There’s a stark shortfall in the supply of recycled polyester and regeneratively farmed cotton to cater to the escalating demand. A recent analysis, conducted jointly by Textile Exchange, Boston Consulting Group (BCG), and Quantis, paints an alarming picture: without substantial investments and unwavering commitments from fashion brands, the industry is poised for a daunting 133 million-tonne deficit by 2030, ushering in new and formidable business risks.
The fashion sector is standing at the threshold of an impending wave of government regulations. Over 35 new pieces of legislation related to sustainability are expected to come into effect worldwide by 2027. These regulations are poised to have far-reaching implications, affecting every facet of garment production, from design and manufacturing to marketing and disposal. They intensify the pressure created by the industry’s voluntary environmental targets, urging a swift shift toward raw materials that seamlessly align with climate objectives.
Yet, while the supply of low-impact raw materials is predicted to reach 30 million tonnes by 2030, marking a 30 percent increase compared to 2021, the demand is projected to outpace supply significantly, as indicated by the analysis by Textile Exchange and BCG.
Conventional raw materials remain deeply entrenched due to well-established supply chains and cost structures. Transforming this deeply entrenched system demands not only time but substantial investments at every level. Transitioning a farm from conventional to organic practices is a prolonged process, typically taking about five years. Implementing regenerative practices, the industry’s latest buzzword, adds complexity due to the lack of a clear definition and standardized measurement criteria. Additionally, substantial upfront investments are required to develop manufacturing capacity for new materials and innovations in textile-to-textile recycling.
This reality translates into higher costs for low-impact materials compared to their conventional counterparts, posing a formidable challenge for brands striving to elevate their sustainability quotient. While some major brands, including H&M Group and Inditex, are making significant investments in low-impact materials and committing to drive market change, these efforts alone do not incentivize most raw material suppliers to embrace the risks associated with altering their operational methods.
These challenges are glaringly evident in the struggles faced by businesses attempting to introduce new materials to the market, exemplified by the recent change in leadership at Swedish textile recycler Renewcell, a result of weaker-than-expected sales.
The risks confronting the fashion industry transcend mere reputation damage; the impending wave of legislation carries significant costs for non-compliant companies. These costs could manifest as penalties and fees, including those associated with textile waste disposal, which are expected to be higher for materials with a greater environmental footprint. Brands may also face the risk of losing access to certain markets if they fail to demonstrate the alignment of their materials with regulatory rules. This could potentially put up to 8 percent of a brand’s earnings before interest and tax at risk within the European Union.
On the flip side, brands that proactively secure access to low-impact raw materials could potentially see a substantial boost in net profits. This hinges on the assumption that stricter regulations impose substantial burdens on non-compliant businesses and early adopters can secure materials at competitive prices.
As regulations and corporate commitments drive the fashion industry to confront its environmental impact, the strength of supply chain relationships will become a make-or-break factor for brands. Companies that offer suppliers long-term commitments, enabling them to invest in expanding the supply of low-impact materials, will reap the rewards in the future.
Furthermore, there is an urgent need for brands to deepen their understanding of the origins of their materials and develop clear strategies to support climate objectives. These changes must not exist in isolation within sustainability departments; sourcing teams and senior executives must align with long-term objectives that may take time to yield results and are not instantly marketable.
In summary, the fashion industry stands at a pivotal juncture in its quest for sustainability, with the demand for sustainable raw materials escalating at an unprecedented pace. The sector must embrace comprehensive changes, substantial investments, and unwavering commitments to construct a genuinely sustainable future. Failure to do so could have dire consequences, both for the industry and the environment.