Sustainable raw materials are key to future apparel profitability
3-11-2023
SUSTAINABLE RAW MATERIALS ARE KEY TO FUTURE APPAREL PROFITABILITY
Non-profit Textile Exchange, business strategy firm Boston Consulting Group (BCG) and sustainability consultancy Quantis claim apparel brands can increase net profits by 6% through closing the raw materials gap with sustainable sourcing.
The report also cites 85% of
leading fashion brands publicly declaring plans to decarbonise their supply
chains as well as 35 pending pieces of sustainability-linked legislation due to
come into effect in the next two to four years, as drivers of this change.
The report titled Sustainable Raw Materials Will Drive Profitability
for Fashion and Apparel Brands argues that apparel brands need to
take significant steps today to increase the share of raw materials from
sustainable sources.
The report says brands that
succeed in securing sustainable sources for raw materials will see an average
6% increase in net profits over a five-year period. It estimates that a fashion
brand working at the top end of its model, with $1bn in annual revenues, has
the potential to tap into a cumulative opportunity of an estimated $100m over
five years.
Jocelyn Wilkinson, BCG partner
and co-author of the report says: “Fashion and apparel brands face a two-part
challenge: they must double down on driving carbon reduction while preparing
for upcoming regulations. Success on both counts relies on a robust strategy
for preferred raw materials—one that helps brands lock in a supply of
sustainable materials for the future. Putting that strategy into immediate
action promises to pay off.”
The report argues that despite
pledges and targets set across the fashion industry, Tier 4 suppliers have yet
to receive a strong enough signal that brands will commit to and invest in
preferred raw materials. It says this means that raw materials producers lack
the incentive to take on the risk associated with increasing their supply.
Philipp Meister, global lead
for fashion and sporting goods at Quantis, and co-author of the report says:
“Fashion and apparel brands needs 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. This will require brands to
rethink product portfolios, strengthen supplier relationships and build
company-wide engagement – all of which could take years.”
Last year’s Textile Exchange
Material Change Insights Report revealed that participating
brands were using 50% sustainable materials in their portfolio compared to
44% the year prior.
In October 2022, British
department store John
Lewis committed to more sustainable sourcing of cotton, cashmere and polyester
under new targets in a bid to achieve zero-deforestation.
By Just Style
Copyright © 2021 Powered By AEC Egypt