Regulations, supply chain risks push brands toward next-gen materials: BCG

March 20, 2025

Without accelerated investment, next-gen materials is projected to comprise just 8 percent of the total fiber market by 2030. Image credit: BCG

By Amirah Keaton

Luxury and mass-market fashion brands alike must act swiftly to scale next-generation materials, as demand for sustainable alternatives is expected to exceed supply by 2030, according to a new report from Boston Consulting Group (BCG).

Developed in partnership with global initiative Fashion for Good, Scaling Next-Gen Materials in Fashion: An Executive Guide provides a blueprint for industry leaders seeking to integrate innovative fibers and fabrics into their product offerings. It highlights key challenges in supply chain resilience, regulatory pressures and shifting consumer expectations, emphasizing the need for brands to collaborate in order to scale sustainable material solutions effectively.

“Scaling next-generation materials isn’t just about sustainability—it’s about staying relevant in a changing market,” said Sebastian Boger, global leader of the fashion and luxury sector at BCG, in a statement.

“But these materials won’t scale on their own—industry-wide action is key.”

Accelerating adoption
Materials account for 91 percent of the fashion industry’s emissions and up to 30 percent of cost of goods sold (COGS), making sustainable sourcing a financial and environmental priority.

Challenges such as climate-induced raw material shortages and geopolitical disruptions are already negatively impacting brands’ materials supply; extreme weather events, for instance, have impacted cotton and wool production, while geopolitical tensions have led to trade restrictions on key raw materials.

Despite this, most brands are unprepared to transition to more sustainable textiles. According to BCG, more than 80 percent of fashion brands lack comprehensive targets for sourcing cotton, polyester, nylon, man-made cellulosic fibers (MMCFs), leather and wool, each a key material in the current market.

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Next-gen materials, defined as “novel and innovative fibers and materials with desired improved environmental and/or social outcomes when compared with conventional options” – examples range from regenerative cotton to bottle-to-textile recycled polyester – could provide a solution, presenting an opportunity to drive both profitability and sustainability.

Growing demand from regulators persists. Policies such as France’s Extended Producer Responsibility (EPR) scheme and the EU’s push for greater recycled content in textiles are pressuring brands to transition to sustainable inputs.

Per the report, the strategic adoption of next-gen materials could lead to an approximate 4 percent reduction in COGS over five years, compared to inaction.

“The fashion industry stands at a critical juncture where next-generation materials are no longer just an opportunity but a business imperative,” said Katrin Ley, managing director at Fashion for Good, in a statement.

“The opportunity is there, but requires individual and collective action across demand, cost, and capital levers to bend the adoption curve.”

A pivotal moment for material transitions
Authors note that without accelerated investment, next-gen materials will only make up 8 percent of the total fiber market by 2030, up from 1 percent today.

A number of hurdles, including cost and capital, stand in the way of the transition. The report outlines how next-gen materials are currently priced at a premium, with adoption lagging due to supply chain fragmentation, though brands that fail to act now risk higher costs and compliance burdens in the coming years; those that are willing to take action have options.

A number of hurdles, including cost and capital, stand in the way of a material transition, though brands that fail to act now risk higher costs and compliance burdens in the coming years. Image credit: BCG

Internally, experts recommend companies secure supply through demand planning, invest in research and development and implement financing mechanisms to offset cost premiums. Externally, industry-wide collaboration can drive scale through shared supply chains, pooled procurement and joint investments in next-gen material innovators.

BCG and Fashion for Good emphasize that brands that embrace next-gen materials early (see story) can strengthen their competitive positioning in an increasingly sustainability-focused market.

“The transition to next-generation materials is both a challenge and an opportunity for the fashion industry,” said Catharina Martinez-Pardo, managing director and partner at BCG, in a statement.

“Brands that act now to embed these materials into their core strategy will win the next era of fashion.”

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Regulations, supply chain risks push brands toward next-gen materials: BCG

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