The $78 billion opportunity redefining fashion’s supply chain

The opinions expressed here by Trellis expert contributors are their own, not those of Trellis.

For those of us in the northern hemisphere, spring cleaning is here — and with that, a ritualistic purging of our wardrobes. Most discarded clothing and other waste textiles are currently destined for landfills and a slow decomposition into climate-damaging methane. 

But last season’s clothing can be more than just a trip to the local second-hand store or pollution; it can be next season’s styles thanks to circular manufacturing being one of the hottest fashion trends for 2027. 

Canopy has calculated that it will take about $78 billion in investments by 2033 to build the mills that can turn inputs (like waste textiles and agricultural residues) that would otherwise be burned or landfilled into high-quality paper, packaging and fashion fabrics. So far, approximately $1.5 to $1.8 billion has been invested. These next gen alternatives aren’t future fiction; they’re already on the market and ready to scale. Designers and brands such as GANNI, H&M, ZARA and Reformation are already integrating next gen textiles into their clothing lines. 

Scaling the production of these low-carbon next gen materials is an opportunity for companies to reduce sourcing risk and build resiliency into their supply chains and for high-carbon forests to be kept standing. 

A disappearing supply chain 

Most people are unaware that the fashion industry is a significant contributor to forest degradation. Each year, an estimated 300 million trees are logged to produce viscose and other rayon fabrics — contributing to extensive carbon emissions and strain on biodiversity. These tree-derived fabrics are in everything from everyday basics to luxury collections, mall retailers to boutique designers, embedding forest risk deep within fashion’s value chain. 

Conventional forest-based supply chains, like viscose and paper, are increasingly a relic of the last century. Once steady, these value chains are now exposed to regular climate-driven supply shocks, and tightening regulations are converging to create a riskier and more volatile outlook for fashion companies using conventional wood-based inputs in textiles and packaging. 

These pressures are expected to drive cost increases, supply disruptions and higher spending on compliance for companies that rely heavily on virgin wood. That’s because most of the “sustainable” wood supply is effectively spoken for and will not be sufficient to absorb future demand.

But proven next gen alternatives — made from recycled textiles, industrial food waste and agricultural residues — are ready to scale. These low-carbon, circular alternatives offer the industry a pathway to build supply resiliency while meeting business, performance and design demands.

Soft on the skin and planet 

Each tonne of next gen fibre — be it for paper or textile — delivers compelling environmental and social returns compared to its virgin wood counterparts, including:

• Up to 4 tonnes of CO₂ emissions avoided per tonne 
• Improved air quality — especially in rural areas 
• New income pathways for farmers and waste collectors
• Significantly lower impacts on biodiversity, land use, water and energy

For global brands, it also means more resilient, traceable and regulation-compliant supply in an era of tightening sustainability mandates. This is climate action that aligns with supply chain security.

There is currently no shortage of latent demand for next gen materials. More than 1,000 global brands, representing more than $2.4 trillion in annual revenue, are already committed to shifting their sourcing away from ancient and endangered forests and toward lower-impact alternatives including next gen. As supply disruption and regulations kick in, more companies are prioritizing circularity and resilient supply. 

But while demand is surging, supply is lagging. Proven technologies and abundant raw materials exist, yet the capital isn’t moving fast enough to build facilities that use the alternative inputs to wood. 

Turning on the investment tap

Material substitution represents nearly 30 percent of the climate solution, but currently receives less than three percent of climate-focused investment. That’s a golden opportunity for investors.

Although the materials sector has been less of a focus to date than renewables or electrification, the tide is turning. In the past 12-months, fashion tech company Circ announced it will build the world’s first commercial-scale mill capable of transforming blended polyester-cotton textiles into advanced recycled materials. Sweden’s Circulose is reopening its textile-to-textile pulp mill in late 2026, and numerous conventional Chinese viscose producers have leaned into next gen production for fashion clients that represent billions of dollars in annual revenues. 

The runway is clear. With proven technologies, committed brand partners, and abundant waste streams ready to be transformed, next gen textiles are no longer a niche experiment — they’re fashion’s smartest path forward. If we invest at the scale this transition demands, we can keep ancient and endangered forests standing, reduce waste and emissions, and redefine what the future of fashion is made of — not from the world’s last forests, but from yesterday’s waste.