6 Ways to Drive Funding to Transform the Fashion Industry

In 2020, sustainability is at the top of the fashion industry’s agenda. The industry’s environmental and social impacts are well documented. Under growing consumer and regulatory pressures, industry leaders are recognising the urgent need to move towards responsible practices. The question now is how the industry will transform to achieve a sustainable operating model.

• Transformation of the fashion industry requires disruptive innovation, at scale, in the form of new materials, processes and business models.

 

• Funding is limited because investors are unaware and have little experience of fashion innovations.

 

• Financing will flow if stakeholders create the conditions for manageable risk, attractive returns and impact that can be measured.

An industry-wide call to action

Considering the enormity of the challenge the industry faces and the barriers that must be overcome to drive this transformation, industry-wide collaboration with six specific actions is required. Financing will flow into the fashion space if all stakeholders build towards conditions that provide for manageable risk, attractive returns and impact that can be measured.

1. An orchestrated and structured innovation process: At the macro-level, multi-stakeholder organizations must drive collaboration and create a cohesive, streamlined ecosystem that accelerates innovation. At a more targeted level, bespoke consortiums of brands, supply chain partners, innovators and investors with a common technology focus are needed to concentrate resources and de-risk investments.

 

2. Brand advocacy and hands-on support for promising technologies: Brands must signal to investors which innovations they are supporting and thereby de-risk investments. This can be through: co-developing a project or launching a pilot with an innovator, giving a volume commitment in advance, or directly investing into a venture.

 

3. Increased engagement and ownership from supply chain partners: Manufacturers and upstream operators, such as chemical companies or fibre producers, have a natural stake in innovation. They are best positioned to partner with innovators and offer expertise and access to equipment, as well as provide capital, or ultimately acquire successful innovators.

 

4. Innovators’ propositions; focused use cases and practical implementation plans: Innovators have to approach customers and investors with executable use cases, clear value propositions and more realistic implementation plans for commercializing their solutions.

 

5. Mobilizing more investment and new types of capital through investors and funders: Investors must advance their industry expertise and join forces with brands, manufacturers, and innovators to develop investment propositions that match their risk-return profiles. Also, new sources and vehicles of investment are needed, such as blended finance, combining public, private, and philanthropic capital.

 

6. Stronger policy framework and mechanisms to catalyse private investment: Regulatory action has begun to help influence the industry’s move to sustainability, but more is needed, to provide a framework of policies and incentives to help inspire systemic change. The public sector must increase direct investments and their support to catalyze investment from the financial and philanthropic sector.

As the fashion industry is transforming with the latest technology, you can also start adopting new trends. Consider integrating iDesigniBuy’s fashion design software to enable your customers to design their own products before purchasing.