Why Next-Gen Materials Are Fashion’s $19B Opportunity – And How to Seize It
The fashion industry is at a pivotal juncture, facing increasing pressure to reduce its environmental footprint and align with global sustainability goals. A new report by Fashion for Good and Boston Consulting Group (BCG), Scaling Next-Gen Materials in Fashion: An Executive Guide, offers a comprehensive roadmap for industry leaders to accelerate the adoption of next-generation materials.
This report highlights the critical role of materials in driving the fashion industry's transition toward a more sustainable future while addressing the challenges and opportunities inherent in scaling these innovative solutions. Let's explore more in this edition of GREEN Insights!
The Critical Role of Materials in Fashion
Materials are the backbone of the fashion industry, contributing to 92% of the sector's total carbon emissions and accounting for approximately 30% of the cost of goods sold (COGS). The environmental impact of materials extends across their lifecycle—, from extraction and processing to production and disposal. As the global demand for fashion continues to grow, the industry's reliance on conventional materials, such as virgin polyester, cotton, and leather, has become unsustainable.
Next-generation materials (NGMs), which include plant-based, recycled, and bio-based alternatives, present a transformative opportunity for the industry. These materials not only reduce environmental degradation but also offer economic benefits, such as cost savings and improved resource efficiency. According to the report, NGMs could represent 8% of the global fiber market by 2030, equivalent to approximately 13 million tons. While this represents a significant increase from the current 1%, it may still fall short of industry demand due to regulatory pressures, climate-related supply chain disruptions, and shifting consumer preferences.
Why Scaling Next-Gen Materials Matters
©Adidas | Adidas Announces 96% Of Polyester Used in its Products is Now Recycled Polyester
The adoption of NGMs is no longer just an environmental imperative; it is a business opportunity. By transitioning to NGMs, fashion brands can achieve a competitive edge, reduce costs, and align with consumer expectations for sustainability. The report highlights that scaling NGMs could lead to a 4% reduction in COGS over five years, compared to inaction. This financial incentive, coupled with the growing demand for sustainable products, positions NGMs as a key driver of innovation and profitability in the industry.
Strategies for Scaling Next-Gen Materials
Scaling next-gen materials requires a targeted approach centered on activating three key levers at the right time:
Demand: Consistent demand signals stabilize markets, attract investment, and provide the foundation for scaling next-gen materials. Brands can commit and uphold demand by defining demand planning, setting public targets, and implementing transition financing mechanisms.
Cost: Cost engineering, process optimization, and efficiency investments unlock economies of scale, driving affordability and adoption. Brands can drive process efficiency by establishing standardized fabric specifications and reinforcing relationships with nominated suppliers.
Capital: Strategic financing aligned with each phase of the adoption curve ensures sustained growth and scaling potential. Brands can unlock financing through joint development agreements, equity investments, and collaborative financing mechanisms.
These levers, deeply interconnected, hold the power to transform next-gen materials from innovations into mainstream solutions. It is this combined action—underpinned by a well-functioning organization, expertise, and resources—that will bend the cost curve, accelerate next-gen materials adoption, and define the winners in the next era of sustainable fashion.
Analysis of the Report
©Lululemon｜Lululemon products made from Mylo.
The report provides a detailed analysis of the current state of the fashion industry and the potential of NGMs to drive sustainability and profitability. It highlights the disparities in adopting material innovations among leading fashion brands and retailers, emphasizing the need for a structured approach to integrating next-gen materials into core business strategies.
For example, Adidas committed in 2017 to phasing out virgin polyester in favor of recycled alternatives by 2024, setting phased milestones such as achieving over 50% recycled polyester usage by 2020. Other notable brands, including Bestseller, Inditex, Kering, ON, and PVH Corp., have established specialized materials and innovation teams, working on strategic roadmaps and targets to scale next-gen materials effectively. These teams, typically composed of at least two to four dedicated experts, foster cross-functional collaboration to ensure strategic alignment and operational integration, transforming next-gen material concepts into market-ready products.
Implications for the Fashion Industry
In conclusion, the report highlights the critical need for individual and collective efforts to effectively scale next-generation materials. Brands must embed next-gen materials into their core strategies, define clear objectives, and create cross-functional innovation teams to drive adoption.
Simultaneously, collective initiatives—such as demand pooling and collaborative financing mechanisms—can significantly amplify impact, fostering a more rapid and widespread transition to sustainable materials. Together, these actions form a powerful framework for bending the cost curve, accelerating innovation, and shaping the future of sustainable fashion.
