A BCG report urges fashion brands to prepare for stricter sustainability regulations, offering a £100 million opportunity for those reducing virgin material use in favor of sustainable materials.
Fashion brands should prepare for upcoming stricter sustainability regulations and the growing demand for eco-friendly materials. There’s a potential £100 million opportunity for those reducing the use of virgin materials to enhance sustainability. This is outlined in the report led by consulting firm BCG in collaboration with Textile Exchange and Quantis.
The report identifies 35 new sustainability-linked regulations set to take effect globally over the next two to four years, ranging from import restrictions to product design guidelines and labeling requirements. It notes that only 19% of materials slated for production by 2030 meet “preferred” criteria, underscoring the need for sustainable raw materials. The report’s co-author, Jocelyn Wilkinson, Partner at BCG, emphasized the need for firms to develop strategies to reduce material supply shortages and stay ahead of regulations. Also, fashion brands must double down on carbon reduction while preparing for impending regulations.
Strategic Imperatives for Sustainable Materials
The report cites two primary reasons for getting ahead on this agenda. If brands fail to transition from high-carbon virgin materials could lead to products being barred from certain markets, This puts 8% of brands’ earnings at risk from non-compliance with new rules. Secondly, companies send signals to suppliers, farmers, and growers responsible for building the supply chains for eco-friendly fashion materials.
The report estimates that companies that increase their share of preferred raw materials in their portfolios can capture an average profit increase of 6% over five years. It provides the groundwork for monitoring progress and formulating action plans to meet targets. It also explains fulfilling regulatory requirements, identifying risks, and engaging more effectively with stakeholders.
The fashion industry has a significant role to play in combating climate change, water stress, and plastic pollution. The report stresses the sector’s potential to change its practices and reap economic benefits over the long term.
Six Principles for Establishing a Robust Materials Strategy
It sets forth six principles for brands to establish a robust materials strategy. These include:
- Investing in full traceability to understand the environmental impact of existing materials.
- Diversifying material portfolios to manage risks and ensure long-term sustainability.
- Strengthening relationships within the supply chain.
- Adopting a science-backed approach for decision-making.
- Creating a business case that benefits brands, suppliers, and the environment.
- Integrating knowledge, tools, and incentives related to raw materials strategies across the company.
Furthermore, the fashion and apparel sectors have a unique opportunity to tackle both challenges simultaneously. Additionally, they must enhance the supply of more sustainable materials to align the industry with climate goals.