Author: Lara Pizzato

In brief:

• The fashion industry is struggling to move beyond the pilot phase with innovative, low-impact materials, which are essential to future-proof businesses and can help meet sustainability goals.
• New regulations focusing on reducing the environmental impact of raw materials are driving the need for brands to adopt alternative, low-carbon materials. 
• Strategic investment in innovative materials can provide significant financial benefits and help brands mitigate risks associated with traditional raw materials. 
• Effective communication and collaboration with start-ups, alongside robust environmental assessments and strategic planning, are crucial for successfully integrating sustainable materials into fashion products. 

The fashion industry is no stranger to creativity. Yet when it comes to finding innovative solutions to the environmental crisis, brands seem stuck in a never-ending pilot phase. Low-impact alternative materials are gaining traction as part of the industry’s response to calls for sustainability, but not at the speed or scale the planet requires.  

And that’s not to say there’s been a lack of good intentions. Brands let out a collective sigh of dismay when news broke this year that one of the most promising material innovators had filed for bankruptcy. This blow to the industry’s innovation momentum begs the question: Are innovative materials — and the innovators and startups behind them — really something the industry should be banking on? 

The answer is an emphatic “yes”. Rather than back away, fashion brands need to double down on innovation to future-proof their businesses. The development and demand for lower-impact raw materials versus virgin conventional ones is a particular area to prioritize. And not just because mushroom “leather” shoes or lab-grown fiber sweaters are de rigueur on the runway, but because the industry’s livelihood — and our planet’s — hinge on parting ways with “business as usual.”  

Materializing risks spark material innovation opportunities

Keen to use regulation to reduce the industry’s environmental impact, policymakers seem to have fashion in their sights. Over the next four years, more than 35 new pieces of legislation will be introduced around the world, including import restrictions on garments deemed to be fueling the climate crisis, product design guidelines and new labelling requirements. Much of this regulatory focus will be on raw materials, since they can account for up to two-thirds of a brand’s climate impact.¹  

As brands prepare to meet future regulations and embrace sustainability, innovative, next generation materials have emerged as a promising piece of the puzzle. Using circular, 100% recycled, bio-based or lower carbon footprint materials can significantly reduce the environmental impact of a fashion brand and support the more than 85% of brands that have made public decarbonization goals.²  

Pivoting away from conventional materials may also be a smart business move. The latest analysis by BCG, Textile Exchange and Quantis estimates that brands acting now to secure a supply of alternative, low-carbon raw materials will be able to capture an average 6% profit uplift after five years. Further, the modelling suggests that a fashion brand that turns over $1 billion a year has the potential to tap a cumulative opportunity of approximately $100 million over five years. These regulations could put 8% of EBIT at risk for brands that don’t adjust their portfolio of raw materials. 

The environmental crisis – which is rapidly accelerating changes to our ecosystems, growing conditions and harvest quality – continues to jeopardize the availability, accessibility and price of conventional raw materials. Fashion brands are increasingly acknowledging the need to act swiftly, and many have already begun to explore the world of material innovation. 

However, there are several examples of big fashion brands that have taken the leap to invest and help scale up innovative start-ups, only to find major economic and logistical hurdles that are too big to overcome. Navigating the market and vetting potential solutions can be a minefield, so it’s no surprise that real progress has given way to an endless cycle of pilot programs that hardly ever take off. But how can brands change that? 

Without a robust strategy, even the most promising partnerships and well-intentioned pilots can crumble. Going ‘all in’ on innovation to support the creation of the materials of the future means going beyond simply developing a small collection of garments to appeal to the eco-conscious consumer. There must be a strategic commitment to going further, past a pilot phase to ensure security of supply at the scale required to fulfill all purchasing and planetary commitments.  

Creating an ecosystem of innovation

Innovation moves fast, so brands need to act decisively while ensuring they lean on the right expertise. Though it’s easy to be dazzled by start-up innovators showcasing their solutions, brands must be pragmatic about deciding which path to take regarding alternative materials. When assessing their potential, skipping out on the environmental assessment piece is risky business. Robust data analysis and sound science should inform strategy and help develop an approach that makes sense to a business and its product portfolio.  

Start by strategically selecting the focus area where innovative materials can truly add value and make a difference over the long-term. As part of this process, it’s critical to conduct screening environmental assessments both dynamically and repeatedly for continual improvement within your R&D process. Ensure you have enough quality data to base your decisions on in the early stages of screening and account for the fact that materials may perform poorly in initial environmental assessments. Economies of scale will address those issues down the road, so forecast accordingly. After screening assessments have given the brand and its supplier a sense of direction, more in-depth analyses can help eliminate any blind spots, such as simply transferring a product’s impact to a different part of your value chain.  

With such a wealth of interesting and potentially game-changing solutions in an increasingly crowded alternative-raw-materials market, fashion brands must do their due diligence. For instance, make sure that the start-up with which you are interested in partnering has a sound business model and the capability to scale before moving forward. To be viable, the innovator’s business model must serve the brands. That said, brands must also be willing to take on some of the risk through volumes and purchasing commitments. The innovation journey must be truly collaborative; since investments in new technology will be required, brands should be willing to invest alongside their supply chain partners — who also need a seat at the table.

It’s also important to ensure expectations are managed carefully. New materials may not perform in the same way and with the same qualities as conventional materials, so keeping an open mind and being patient is critical. It may be necessary to keep investing in improvements and further testing.  

Communicate carefully and claim clearly

Effectively communicating your innovation journey is almost as important as the journey itself. As with any fast-moving R&D activity, engaging with start-ups and innovators can get complicated. At the start, there’s often limited data and achieving scale can take time. By keeping your stakeholders up to date with transparent, precise and intentional storytelling, you’ll buy yourself time. Alternative materials might not yield immediate results in terms of environmental impact, so it’s important that your communications are nuanced and capture not only the positive, scalable potential for your materials, but also the limits of what can be achieved.  

Excitement for the potential of alternative materials should never give way to greenwashing, or over-selling sustainability in product claims. Speak to the true, quantifiable benefit of the material — don’t promote it as “green” or “eco-friendly” just to drive consumer demand. Brands should be sure to seek support where needed, since the story can make or break the success of the endeavor.  

Don’t be deterred: We need innovation in fashion like never before

The widespread shift to lower-impact materials has the potential to change the conversation in fashion. The challenge of finding the right partners to solve the supply-demand conundrum should not be a deterring factor in embracing innovation. In fact, as the BCG and Quantis market analysis confirms, there’s a significant first-mover advantage on the table when it comes to raw materials, since only 19% of materials are expected to be low impact in 2030. 

In plotting out a robust strategic approach to innovation investment, you’ll have the clarity and confidence to look further ahead into the near future (rather than focusing on immediate returns), where you’ll achieve efficiencies of scale and be able to seriously turn the dial in reducing fashion’s environmental footprint forever. 

By taking a pragmatic, science-based approach to materials – integrating next-generation materials where they truly add value, vetting innovators and their solutions, taking risks and communicating with care – brands can solve the innovation enigma and fast-track sustainable transformation. 

¹ Recent Quantis analysis project examining the impacts associated with Tier 4 to Tier 2 within the corporate carbon footprints of fashion and apparel brands.

² BCG analysis based on 36 fashion and apparel organizations, including brands and parent organizations, representing more than 10% of the industry’s revenues.