Swedish textile-to-textile recycling innovator Circulose is the first company to put a new financing model into action.
The Price Parity Toolkit has been developed by Amsterdam-based Fashion for Good and partners and is based on “premium decoupling” – a financial mechanism that separates price premiums for new materials early in the textile manufacturing supply chain. This allows materials to flow through subsequent tiers at the same price as conventional alternatives. Brands absorb the premium upfront and fund suppliers directly at the Tier 4 stage, eliminating the traditional compounding effect – often also referred to as “pancaking” – and reducing total product costs.
Next-generation materials like Circulose fibre are addressing complex sustainability and circularity challenges, yet the path to their mainstream adoption has been severely hindered by a fundamental economic barrier – price.
These materials inevitably carry significant premiums over conventional alternatives because they haven’t yet achieved economies of scale. The problem gets worse as materials move through supply chains, as each tier adds its own markup, compounding premiums from raw material to final product. This creates a vicious circle – brands avoid committing to the materials due to their price, preventing volume orders that would enable manufacturers to scale production and reduce costs.
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This joint initiative is led by Fashion for Good, with the support of catalytic funder Laudes Foundation, and with contributions from Canopy, Finance Earth, Circulose, Textile Genesis and legal partners Hogan Lovells and Pereira Tax Consultants. It will continue evolving with lessons learned from real-world applications.
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