Dive Brief:
- The supply of sustainable materials could fall short of demand by as much as 133 million tons by 2030, according to a new report by Boston Consulting Group, Quantis, and the nonprofit Textile Exchange.
- About 85% of top fashion brands, when ranked by sales, have promised to reduce their climate impact, per the report. Raw materials form about two-thirds of this impact for fashion brands, so the shortfall of sustainable materials would scupper those promises.
- More than 35 new laws related to sustainability are set to come into effect in the next two to four years, the report notes, and brands that fail to comply could lose revenue due to fines or products not being allowed on the market.
Dive Insight:
In light of the predictions, the report offers potential pathways for companies looking to stay ahead of material shortages.
Brands that are able to source their way ahead of the shortfall could see their profits increase by as much as 6% over a five-year period, thanks to increased growth, advantages on prices, and avoiding regulatory penalties, based on the report’s model.
As the report indicates, both international regulations and brands have embraced the need to reduce climate impacts, with both regulations and brands often aiming for a 45% reduction in emissions that come from producing fibers and raw materials by 2030. This aligns with the reductions intended to avoid catastrophic global warming, outlined in the 2015 international treaty on climate known as the Paris Agreement. But with the current supply chain, report authors say brands won’t be able to meet those goals or comply with regulations that adhere to them.
To comply with this target, brands must convert nearly all of their raw materials to ones with a reduced climate impact, the report states. But raw materials producers are lagging when it comes to shifting their production to less impactful methods. In the report, the authors focused on the top five raw materials used in the fashion industry, which include cotton, wool, cow leather, man made cellulosic fibers such as viscose, and synthetic materials such as polyester.
The report estimates that by 2030, 19% of these materials will be among those that will help brands reach their targets. These materials include sustainably sourced, renewable primary raw materials that can be replenished faster than they’re depleted, or sustainably sourced recycled raw materials.
The report notes that one prominent driver of the problem is the unwillingness of brands to pay more for raw materials.
“When brands are focused only on reducing costs related to raw materials, they leave innovators, farmers, and growers unable to provide the necessary supply of preferred materials; consequently, brands face the materials gap and can’t adapt to the new regulatory landscape,” the report states. “And, inevitably, brands and the industry at large will significantly miss their climate targets.”
The authors recommend six concrete ways for brands to get out ahead of the predicted shortfall, including making their supply chains traceable and transparent and diversifying their current portfolio.
“Fashion and apparel brands need to take immediate action to invest in the supply of preferred raw materials, thereby securing resources and transforming their business models for a sustainable future,” Philipp Meister, global lead for fashion and sporting goods at Quantis, said in the press release.
Such actions include “building longer term contracts and commitments to ensure suppliers secure revenue for the period of time needed to implement more sustainable solutions and see a return on investment, paying premiums to those with the ability to provide preferred materials, and investing in the development and scaling of more innovative materials,” Meister added in an email to Fashion Dive. “Some brands might also decide to finance part of the production costs more directly, or support access to low interest loans or public funding to ensure sustainable practices can be implemented.”
