Innovations emerging in the fashion industry present unprecedented investment opportunities worth USD 20-30 billion annually, according to a new study conducted by the Boston Consulting Group (BCG) and Fashion for Good. Sustainability is at the top of the fashion industry’s agenda, as leaders recognise the urgent need to move toward responsible practices under growing consumer and regulatory pressures, said the study, released here on the sidelines of the World Economic Forum’s 50th Annual Meeting.
A step change requires disruptive innovation in the form of new materials, processes, technologies, and business models, the study said, while underlining that the fashion industry has historically engaged in a cost-driven race to the bottom, giving little attention to radical new technologies. However, a perfect storm of innovation and opportunity is now forming, and investors, as well as companies that can capitalise on sustainability and impact-driven innovation, will transform the industry.
The study calculates that transitioning toward sustainability yields a USD 20-30 billion financing opportunity per year to develop and scale disruptive innovations. The latter case requires innovation to emerge at a faster pace before 2030, which in turn calls for investments to increase by a factor of three or more over their current levels. With its USD 2 trillion market size, the fashion industry offers major untapped opportunities for investors and companies. But, to bring the necessary solutions to scale, all players — fashion brands, supply chain partners, investors, and others — need to step up to accelerate innovation.
The clock is ticking for the industry to advance, and companies and investors that act boldly and rapidly will lead the transformation and ultimately win. “Disruptive solutions that can offer major leaps forward toward circularity exist today, and the opportunities to invest and scale them within the industry are vast. This seminal study provides powerful insights and a clear call to action for all players to collaboratively drive innovation,” said Katrin Ley, managing director of Fashion for Good.
As per the report, only a fraction of all available capital has been invested in fashion and textile technology, leaving many innovators stuck in a financing gap that hinders their ability to develop and scale their innovations. In fashion, nearly half of the USD 20-30 billion annual financing opportunity lies at the beginning and the end of the value chain, where raw materials and end-of-use solutions have the highest impact potential.
Boston Consulting Group is a global management consulting firm and the world’s leading advisor on business strategy. Fashion for Good is the global initiative that is here to make all fashion good. It is a global platform for innovation, made possible through collaboration and community. Its programmes are supported by founding partner C&A Foundation, co-founder William McDonough, and corporate partners adidas, C&A, Chanel, Bestseller, Galeries Lafayette Group, Kering, Otto Group, PVH Corp, Stella McCartney, Target, and Zalando, and affiliate partners Arvind, Norrona, Vivobarefoot, and Welspun.
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