Fashion for Good’s Price Parity Toolkit was developed with support from Laudes Foundation, Canopy and Finance Earth and uses an innovative financing approach (premium decoupling) to remove price premiums.
Fashion for Good explains that price is the main barrier for next-gen materials being adopted by the mainstream fashion supply chain, despite their ability to solve complex sustainability and circular challenges.
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It adds that next-gen materials currently have significantly higher costs over conventional materials because they have yet to achieve economies of scale.
Plus, the problem worsens as materials move through the supply chain as each tier adds its own markup, compounding premiums from raw material to final product.
It describes this as a “vicious cycle” with brands not committing to innovative materials due to their price which prevents volume orders that would enable manufacturers to scale production and reduce costs, adding: “Fragmented industry demand means no single player can break this cycle alone.”
How does Fashion for Good’s Price Parity Toolkit work?
The Price Parity Toolkit tackles this challenge by separating next-gen price premiums early in the supply chain, allowing materials to flow through subsequent tiers at the same price as conventional alternatives.
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By GlobalDataBrands absorb the premium upfront and fund suppliers directly at the innovator, eliminating the traditional compounding effect, often also referred to as “pancaking”, and reducing total product costs.
Fashion for Good points that textile-to-textile recycling innovator Circulose has put this model in action already and has secured partnerships with several brands using the price parity toolkit approach.
The toolkit includes step-by-step implementation guidance, expert-vetted operational guidelines for money flow management, legal risk mitigation, and traceability. The toolkit also includes real-world case studies across industries.
The initiative is led by Fashion for Good with support from catalytic funder Laudes Foundation, and with contributions from Canopy, Finance Earth, Circulose, Textile Genesis, and legal partners Hogan Lovells and Pereira Tax Consultants.
Fashion for Good notes that the toolkit will continue evolving with learnings from real-world applications and other premium-related solutions, which started in October 2023.
