BCG: Can Next-Gen Materials Make Fashion Sustainable?

Materials are the foundation of the fashion industry shaping the design, feel and functionality of every garment, as well as defining the brand’s narrative and its appeal to consumers.

Boston Consulting Group and Fashion for Good’s reporting Scaling Next-Gen Materials In Fashion report highlights the significant impact of materials on the industry’s environmental footprint, accounting for 92% of emissions through extraction, processing and production.

“The fashion industry is at a pivotal moment—next-generation materials are no longer just an opportunity but a business imperative,” says Katrin Lay, Managing Director of Fashion for Good.

“The takeaway is clear: early adopters will secure a strong competitive edge in the future market.

“The time to scale is now."

The report serves as a blueprint for industry leaders, outlining actionable steps to build material strategies, de-risk investments in next-gen technologies and contribute to scaling innovations that are set to redefine the future of fashion.

The main message? Businesses must adopt next-generation (next-gen) materials. 

“Materials drive both cost and environmental impact in fashion, yet most brands don’t have comprehensive sourcing strategies,” explains Catharina Martínez-Pardo, Managing Director and Partner at Boston Consulting Group.

“Our latest report with Fashion for Good highlights three levers that can help scale next-gen materials:

• “Demand – Stronger commitments from brands to stabilise supply
• “Process & Cost Efficiencies – Reducing costs through innovation and scale
• “Capital – Investment to accelerate commercialisation

“By acting now, brands can lower COGS and build a more resilient, cost-effective supply chain.”

The partnership between BCG and Fashion for Good

Fashion for Good is an organisation focused on collaborative innovation in the fashion industry. 

Its Innovation Platform connects brands, manufacturers, innovators and funders to jointly transform the industry and to bring new ideas and technologies from niche to norm. 

Fashion for Good’s programmes are supported by founding partner Laudes Foundation, co-founder William McDonough and corporate partners, adidas, Arvind Limited, BESTSELLER, Birla Cellulose, C&A, CHANEL, Inditex, Kering, Levi Strauss & Co., Norrøna, ON, Otto Group, Paradise Textiles, Patagonia, PDS Limited, PVH Corp., Reformation, Shahi Exports, Target, Teijin Frontier and Zalando.

Boston Consulting Group partners with leaders in business and society to tackle their most important challenges and capture their greatest opportunities.

The impact of climate change and geopolitical shifts on the fashion industry

The fashion industry faces mounting challenges including climate change, textile waste accumulation, geopolitical turbulence, tightening regulations and commodity competition. These challenges highlight the need for innovation and a shift towards sustainable practices.

Climate change is making the supply of natural fibres volatile. Increased humidity contributed to Pakistan’s cotton production falling to a 30-year low of 5.6 million bales in the 2023–2024 growing season, along with a decline in fibre quality. Extreme weather in Mongolia has raised cashmere prices by 11–18%, while severe drought in Australia is projected to cause a 30% decline in wool production levels before the drought.

Geopolitical turbulence is disrupting global supply chains, challenging traditional sourcing patterns across the fashion industry. 

The war in Ukraine has disrupted raw material imports from Asia, causing delays, rising costs, higher textile prices and inflationary pressure. Further tariffs on Chinese imports have been imposed in the US, adding another layer of complexity to the global trade landscape and intensifying sourcing challenges.

Tightening regulations are increasingly compelling companies to build sustainability capabilities and adjust their business models by requiring traceability capabilities, changes in product design and advanced sourcing strategies. 

The Netherlands aims to achieve 5% textile-to-textile recycled content in consumer clothing by 2027, with an annual increase of 2–3%. 

France’s Extended Producer Responsibility scheme for textiles establishes fees of up to US$0.06 and averaging to US$0.01 per garment for products that have not been designed to minimise environmental impact.

Commodity competition is intensifying demand for polyethylene terephthalate (PET) bottles from the packaging industry due to the stricter regulations in the food and beverage industry. 

Within the EU, plastic bottles must contain at least 25% recycled content by 2025, increasing to 30% by 2030. This creates a competitive landscape for PET resources, particularly as these materials are also in demand for recycling and reuse in other industries, such as textiles.

Next-gen materials provide solutions to navigate these challenges, helping brands meet prerequisites, evolving regulations and consumer expectations while unlocking opportunities for sustainable growth.

How can next-gen materials support a sustainable future for fashion?

The bulk of next-gen material growth is expected to come from textile-to-textile recycling solutions, which are poised to gain significant market share in man-made cellulosic, natural and synthetic fibres. This momentum is driven by industry prioritisation of recycling technologies and the increasing focus of legislation on waste management and circularity.

Next-gen recycling, particularly chemical recycling, utilises diverse waste feedstocks. The ability of solution providers to handle these materials depends not only on the underlying technology but also on the sophistication of preprocessing steps integrated into their systems.

Solutions that demonstrate the capacity to process a broader range of waste feedstocks effectively can be considered more innovative than standard recycling methods. It is expected to dominate next-gen material growth by producing high-quality outputs and reducing reliance on virgin resources.

Partly biosynthetics are already available, but 100% biosynthetic options face challenges, including issues such as limited performance, supply chain compatibility and dyeing constraints. Fully bio-based PET is still expensive and complex to produce.

By 2030, there is the potential for nearly 13 million tonnes of next-gen materials to enter the market, representing around 8% of the total fibre market. The BCG report emphasises that access to these materials will remain limited to some brands without a strong, coordinated effort.

The report defines next-generation fibres and materials as novel and innovative fibres and materials with desired improved environmental or social outcomes when compared with conventional options. 

They are currently in early stages of commercialisation or development and require further technological advancement and cost optimisation for widespread adoption. Preferred existing fibres and materials deliver consistently reduced impacts and increased benefits for climate, nature, and people compared to conventional equivalents through a holistic approach to transforming production systems. 

These solutions are commercially established and can be seamlessly integrated into existing supply chains from a technological perspective, but potential systemic challenges (such as price or supply chain integrity) to drive scale still need to be addressed.

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