What you probably already know: Sustainable fashion’s popularity is rising around the world, but several persistent myths stand in the way of mass adoption. The Circular Fashion Innovation Network says the global fashion industry stands at “an inflection point” as many investors still perceive sustainability as a niche movement. The group notes that fashion remains a chemicals and materials industry “ripe for dysfunction;” that major brands increasingly adopt and scale sustainable apparel solutions; that sustainable fashion brands have and will continue to attract investment and exit opportunities; and that specialized investors are stepping in while traditional VCs miss out on opportunities. The “transformation of the fashion industry represents one of the most significant untapped investment opportunities of our time.”
Why it matters: “When I tell people I invest in sustainable fashion, I often encounter skepticism,” says study author Irene Maffini, who has invested in 16 companies in the textiles industry. “These reactions reveal a fundamental misunderstanding of what fashion truly is, and why it represents one of the most compelling investment opportunities of the past decade.” Sustainable fashion is a $2 trillion global industry with significant commercial potential, even though many potential investors generally buy into the five persistent myths listed above. The report notes that a “diverse ecoystem” of investors is emerging and compares sustainable fashion to the early days of cleantech.
What it means: Sustainable fashion contains several growing and lucrative segments, including the conventional and secondhand apparel markets, rental fashion, repairs and alteration, textile recycling and dyes and processing. The report says the clean beauty and organic food sectors represent “powerful precedents” for sustainable fashion’s growth trajectory. H&M Group Ventures, for instance, the corporate venture capital arm of H&M Group (operator of several major global brands) is among the leading strategic investors, with different 17 investments in companies working in the sustainable fashion change. Several successful exits have also occurred, including IPOs from ThredUp, The RealReal, Rent the Runway and Allbirds, as well as M&A activity from the likes of Poshmark and Depop.
What happens next: The report recommends establishing a Sustainable Fashion Investment Fund in the United Kingdom, (a leading adopter of sustainable fashion); an investor coalition; an innovation strategy; and an international showcase, especially leveraging London Fashion Week to spotlight UK innovations globally. One investor says consumers must drive the change. “I’m not saying it’s niche. It’s not niche at all,” says Eva Tarasova, investment director at London VC and private equity firm Wharton Asset Management. “I think it’s just the consumer who is not educated enough to drive the change.”
