What hampers fashion innovation scaling?

Despite the fashion industry’s current boom in innovations that tackle its biggest problems like textile waste, reliance on fossil fuels, harmful dyes and more, the pace of scaling is trailing behind. In a new report, the denim supply chain platform and think tank Transformers Foundation has identified three main barriers as well as three opportunities.

The deep dive report “Unlocking Equity in Innovation: Balancing the Scales in Supply Chain Partnerships” addresses the critical need to scale sustainable solutions—such as next-gen materials and bio-based dyes—to reduce fashion’s environmental impact. Despite a boom in startups, systemic barriers like knowledge gaps, misaligned expectations and uneven risk distribution stymie progress.

The industry urgency: redefining the innovation pipeline, fast

The report is based on interviews with 32 global stakeholders across the fashion supply chain, representing manufacturers, innovators, fibre producers, technology providers, brands and retailers, investors, consultants, multi-stakeholder initiatives and nonprofits.

The fashion industry faces significant climate pressure, with textile processing accounting for 55 percent of its total emissions. Current projections suggest a combined loss of 65 billion US dollars in export earnings for major manufacturing regions by 2030 unless climate adaptive measures are taken. While many brands have made bold ESG commitments, the report notes a worrying trend of companies pushing back deadlines due to geopolitical and economic instability.

Barrier #1: Misaligned expectations, knowledge gaps and financial struggle

A fundamental hurdle is the mismatch between the “fast” pace of fashion and the “slow” reality of innovation. Innovators, often coming from academic or scientific backgrounds, are frequently industry outsiders who lack the necessary supply chain connections or technical understanding of manufacturing realities. Conversely, brands have often outsourced their technical production roles, leaving them without the internal expertise to manage complex R&D cycles.

Innovators face a severe funding gap between the pilot stage and commercial scale-up, often referred to as the “Death Valley Curve”. While seed funding is relatively abundant, capital for industrial-scale facilities is scarce. Startups often run out of financial runway just as their technology is ready for market deployment. This is compounded by brands that expect “cost-neutral” switches to new materials immediately, ignoring the initial investment required to reach economies of scale.

Barrier #2: Suppliers as undervalued value creators

Suppliers are the linchpins of innovation, providing the “sweat equity” — time, human capital, and technical networks — required to test and validate new concepts. However, they are rarely compensated for this R&D work and are often excluded from strategic decision-making, finds the report. Many large vertical mills reinvest 2 to 6 million US dollars annually in their own in-house R&D departments, yet they frequently shoulder an uneven portion of the risk when external pilot projects fail.

“A lot of [manufacturers] are five years ahead of brands when it comes to sustainability. But the problem you have today is the disconnect, because the brands have maintained a culture, mindset and belief that this part of the world is underdeveloped, which is completely wrong. What suppliers in this part of the world have been able to transform, adapt and innovate is absolutely mind-blowing,” stated one expert.

Barrier #3: Insufficient brand commitment

The report points to “innovation tourism” — where brands engage in small-scale pilot projects or capsule collections for marketing buzz without long-term commitment — as a major obstacle. Without volume commitments from brands, suppliers and investors are hesitant to take the leap. Brands often spread their risk too thin by piloting several solutions rather than focusing on a few strategically to help them reach scale.

Far from wanting to point fingers at brands and retailers or to label suppliers as victims, the report rather seeks to unpack and identify the complex, often conflicting priorities. The three barriers also provide opportunities, which are discussed below.

Opportunity #1: Closing knowledge gaps

To align the industry, the report suggests bringing top decision-makers, including C-suite and family owners, into innovation mandates to ensure stability regardless of personnel changes. Face-to-face engagement is also critical; innovators must visit factories to understand the practical implications of their designs, and brands should facilitate these connections. Additionally, the democratisation of impact data and open-source assessment frameworks could help all stakeholders determine which partnerships are feasible.

“If you get the six biggest brand owners, and the six biggest suppliers in the world, and they sit at the table, and you begin to have a conversation as a peer group, [you could] align about what you want to do, and how you want to make the business healthier, make it more sustainable for everybody, and how we share risks and responsibility across these supply chains,” said a research consultant on going straight to ownership level.

Opportunity #2: Securing scale via offtake agreements

The report highlights offtake agreements, that is legally binding commitments to purchase specific volumes of output over a set period, as a key tool to unlock project financing. Leading examples include Lululemon’s ten-year deal with Samsara Eco and H&M’s 600 million US dollar agreement with Syre as well as agreements between Ambercycle and Inditex, Ambercycle and Ganni, Infinited Fiber Company with Patagonia, Spinnova and Puma and others. They signal market demand and provide the financial security necessary for innovators to build commercial-scale facilities.

“If we are the only one who is investing in them, then [we have] first clauses, confidentiality and exclusivity so that we get some time to benefit from the innovation before it can be commercially available for everyone else. Because it’s a very thin margin industry, and we are not a philanthropic organisation,” explained the representative from a vertical denim manufacturer about incentivising suppliers to partner with startups.

Opportunity #3: Embracing pre-competitive collaboration

The report champions “fiber clubs” and demand pooling as mechanisms for brands and suppliers to collaborate pre-competitively. By aggregating demand from multiple brands, innovators can overcome minimum order quantities (MOQs) and reduce initial unit costs. This collective approach distributes risk and helps move entire product categories toward new standards more quickly than individual brand efforts.

“If you’re able to pool the smaller volumes together and remove the barriers of minimum order quantities [MOQs], we are able to pull enough volume that an innovator can give the same price points they could at higher volumes. This means that all brands and retailers can access these materials with reduced premiums and bring them into their supply chain faster,” commented a representative from an innovation platform.

Conclusion: A blueprint for systemic equity

The report concludes with the notion that for innovation to succeed as a climate solution, fashion must move away from its traditional top-down, transactional dynamics toward a new economic model built on trust and collective risk-sharing. In addition, the industry must recognise that transformation at this scale requires time, investment and an honest reckoning with historical power imbalances. Lastly, only through equitable partnerships that value supplier expertise and long-term resilience can the sector meet its 2030 targets.

To help stakeholders take action, the report ends with three “innovation readiness checklists”, one each for suppliers, brands and retailers and innovation startups. A glossary supplies a useful review of key terms while case studies and quotes provide fresh input.

The complete report can be accessed via the Transformers Foundation website.