BCG: Sustainability opens door to investment opportunities in fashion
A report from Boston Consulting Group and Fashion For Good, a global platform that supports fashion-related endeavors, shows that investment opportunities in sustainability-related innovations are ripe – with estimates coming in at $20-30 billion annually.
Leaders in the fashion industry are all looking to solutions that will enable environmentally sustainable practices to synergize with financial sustainability. What this operating model looks like remains to be seen, but it will require innovations in materials, processes, technologies, and business models.
"While the first steps have been taken, fashion needs to embrace and accelerate innovation to future-proof the industry. Doing so opens up major untapped returns for those who can capitalize on the upcoming technological disruption," Sebastian Boger, a BCG managing director and partner, said.
The fashion industry currently has an approximately $2 trillion market size – meaning if there’s money to be made, it’s often big money. This money has typically been made as companies strive to drive down costs and offer the lowest prices to consumers, neglecting new technologies. When a culture demands environmental awareness, however, these new technologies become essential. Disruption, rather than cost, is what companies should strive for.
"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,” Katrin Ley, managing director of Fashion for Good, said. “This seminal study provides powerful insights and a clear call to action for all players to collaboratively drive innovation.”
According to the report, almost half of the $20-30 billion in annual opportunity lies at the beginning and end of the value chain, meaning raw materials and end-use solutions possess the greatest potential for impact. Consortiums and orchestration are also essential, as they allow organizations or individuals seeking to innovate faster and better access to new technology, support, and financing – while offering investors increased opportunities. Fashion brands, as well, can benefit from helping innovators develop and commercialize through offtake agreements, pilot projects, and direct investments.
