BCG: Sustainable Materials Could Reshape Textiles Industry

Materials form the bedrock of the fashion industry, influencing the design, texture and functionality of every garment while also shaping a brand’s identity and consumer appeal.

The Scaling Next-Gen Materials in Fashion report by Boston Consulting Group and Fashion for Good underscores the profound environmental impact of materials, which contribute to 92% of the industry's 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 acts as a strategic guide for industry leaders, providing clear, actionable steps to develop material strategies, mitigate risks associated with next-generation technologies and support the growth of innovations that could transform the future of fashion.

The key takeaway? Businesses must embrace 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.”

Introducing BCG & Fashion for Good

Fashion for Good is dedicated to driving collaborative innovation within the fashion industry.

Its Innovation Platform brings together brands, manufacturers, innovators and investors to collectively transform the sector, helping new ideas and technologies move from niche concepts to mainstream adoption.

Fashion for Good’s initiatives are backed by founding partner Laudes Foundation, co-founder William McDonough and corporate partners including 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 collaborates with leaders across business and society to address critical challenges and unlock major opportunities.

How climate change & global instability are reshaping fashion

The fashion industry is under increasing pressure due to climate change, textile waste, geopolitical uncertainty, stricter regulations and growing competition for raw materials. These challenges reinforce the urgency for innovation and a transition towards sustainable solutions.

Climate change is making natural fibre supply more unpredictable. Rising humidity levels contributed to Pakistan’s cotton production plummeting to a 30-year low of 5.6 million bales in the 2023–2024 growing season, also impacting fibre quality.

In Mongolia, extreme weather conditions have driven cashmere prices up by 11–18%, while severe drought in Australia is expected to cut wool production by 30% compared to pre-drought levels.

Geopolitical uncertainty is disrupting global supply chains, challenging established sourcing models across the fashion industry.

The war in Ukraine has interrupted the flow of raw materials from Asia, leading to delays, rising costs and higher textile prices, all of which contribute to inflationary pressures.

Meanwhile, additional tariffs on Chinese imports imposed by the US are further complicating the global trade landscape and exacerbating sourcing challenges.

Increasingly stringent regulations are forcing companies to strengthen their sustainability efforts and adapt their business models.

This includes implementing traceability systems, redesigning products for circularity and developing more advanced sourcing strategies.

The Netherlands has set a target for consumer clothing to contain at least 5% textile-to-textile recycled content by 2027, with annual increases of 2–3%.

In France, the Extended Producer Responsibility scheme for textiles imposes fees of up to US$0.06 per garment — averaging around US$0.01 — for products that have not been designed to minimise environmental impact.

Growing demand for polyethylene terephthalate (PET) bottles from the packaging sector, driven by stricter food and beverage industry regulations, is increasing competition for key raw materials.

Within the EU, plastic bottles must contain at least 25% recycled content by 2025, rising to 30% by 2030. This intensifies the demand for PET, which is also a crucial resource for textile recycling and reuse.

Next-generation materials offer a way for brands to navigate these challenges, helping them comply with evolving regulations, meet consumer expectations and unlock opportunities for sustainable growth.

Next-gen materials & creating a sustainable future for the textiles & apparel industry

The expansion of next-generation materials will largely driven by textile-to-textile recycling solutions, which are set to gain a significant share of the market across man-made cellulosic, natural and synthetic fibres.

This growth is being propelled by the industry’s increasing commitment to recycling technologies, alongside tighter legislation focused on waste management and circularity.

Advanced recycling methods, particularly chemical recycling, utilise a diverse range of waste feedstocks.

The effectiveness of these solutions depends not only on the core technology but also on the sophistication of pre-processing steps integrated into their systems.

Recycling innovations that can efficiently process a wider variety of waste feedstocks are seen as more advanced than conventional methods, as they produce high-quality materials while reducing reliance on virgin resources.

Partly biosynthetic materials are already available, but fully biosynthetic alternatives face several challenges, including performance limitations, supply chain compatibility issues and difficulties in the dyeing process.

Fully bio-based PET remains costly and complex to manufacture at scale.

By 2030, nearly 13 million tonnes of next-gen materials could enter the market, accounting for approximately 8% of total fibre production. However, the BCG report highlights that without a strong and coordinated effort, access to these materials may remain restricted to a limited number of brands.

Next-generation fibres and materials are defined as novel and innovative alternatives that offer improved environmental or social benefits compared to conventional options.

These materials are still in the early stages of commercialisation or development and require further technological advancement and cost reduction before widespread adoption can be achieved.

Meanwhile, preferred existing fibres and materials consistently deliver lower environmental impacts and greater benefits for climate, biodiversity and human well-being.

While these solutions are already commercially viable and can be integrated into current supply chains, broader systemic challenges—such as pricing and supply chain transparency — must still be addressed to enable large-scale adoption.

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