The new financing model could finally break the cost barrier blocking next-generation sustainable materials from scaling.
Swedish innovator Circulose has become the first company to operationalise the Price Parity Toolkit, a breakthrough financing mechanism developed by Amsterdam-based Fashion for Good and partners. The model tackles the biggest obstacle facing next-generation fibres: price premiums that balloon as they move through the supply chain.
At the heart of the toolkit is “premium decoupling” — a mechanism that separates the cost premium at the very start of the supply chain (Tier 4) so that the material can then move through later tiers at the same price as conventional materials. Instead of premiums compounding, brands pay the difference upfront and fund suppliers directly at the earliest stage. This eliminates the notorious “pancaking” effect that has made circular and bio-based materials significantly more expensive by the time they reach consumers.
The need is urgent: despite their environmental value, next-gen materials like Circulose carry higher costs due to lack of scale. Brands hesitate to commit to volume orders because of the price, but innovators cannot reach economies of scale without those orders — a cycle the toolkit aims to break.
Circulose has already signed several brand partnerships under this approach. The toolkit provides step-by-step instructions, money-flow management, legal safeguards, traceability, and real-world case studies. Contributors include Fashion for Good, Laudes Foundation, Canopy, Finance Earth, TextileGenesis, and legal advisors Hogan Lovells and Pereira Tax Consultants.
Both brands and material innovators can apply the mechanism to specific materials, with Fashion for Good offering direct support to build the business case and adapt the model.
If widely adopted, the Price Parity Toolkit could unlock true scale for circular fibres — bringing the industry closer to cost-competitive, mass-market sustainable materials.
