For years, sourcing strategies have been driven largely by cost and speed. But after navigating a pandemic, unpredictable geopolitical disruption, volatile energy markets and erratic trade policy, many apparel companies are beginning to rethink what resilience looks like. As uncertainty becomes permanent, long-term access to stable, traceable fiber supplies is emerging as a strategic priority.
In a discussion with HGI, Beth Jensen, chief impact officer at sustainability non-profit Textile Exchange, discusses why leading brands are investing further upstream, how preferred production systems can strengthen long-term supply security and where the financial case for those investments is gaining traction. She also explains why traceability, supplier partnerships and new approaches to measuring sourcing performance may become increasingly important as fiber markets face continued challenges.
HGI: From your perspective how are companies these days, especially U.S. brands and retailers, making decisions as they relate to fiber?
BJ: In general, there have been numerous shocks of late, starting with a pandemic, that are leading to a lot of uncertainty in the marketplace. It has been a challenge for a lot of companies to make good decisions in the face of that uncertainty like that caused by U.S. tariffs. That’s been a cost shock, but this type of uncertainty is becoming the new normal, and so we also believe that now more than ever is the time to invest in materials from preferred production systems, which can create more supply chain stability in the long term. And when we refer to preferred production systems, we mean those that deliver reduced impacts and increased benefits for climate, nature, people and animals against the conventional equivalent, through a holistic approach to management and transformation.
The companies that are able to ride the waves of uncertainty are the ones who are doing things like investing in tracing back to the origin of their materials, building relationships across their supply chain, putting long-term agreements into place and creating a diversified sourcing strategy from preferred production systems for both natural and recycled materials. That’s versus leaning heavily into something like virgin fossil-based polyester, which we know can be a challenge based on the price of oil and everything that’s been happening related to that and [the fact that] we’re moving away from virgin fossil-based sources of materials anyway.
HGI: We know in this industry cost is often the driver of a lot of decisions. So, when we talk about the companies that have been able to really adopt the preferred production systems or move in that direction, are they eating the additional costs associated with it? Or have they found ways to kind of find parity? What’s been the strategy there?
BJ: I don’t think there’s any one strategy. All of the companies that are doing this well are finding different business cases for it. The companies succeeding have been able to continue investing in those supply chains are the ones who really see the long-term business and supply chain resiliency value of sourcing from these systems versus constantly chasing the lowest-cost material.
Textile Exchange did research back in 2023 in partnership with BCG and Quantis, where we tried to put some initial estimates around demand for sustainable raw materials. What we found is that the demand for sustainable raw materials is going to outstrip supply by as much as 133 million tons by 2030. That same research then found that the brands who are getting ahead of this could capture an estimated average of 6% net profit increase over five years. The companies that are finding ways to embed sourcing from preferred production systems into their sourcing strategies, even though in some cases the cost might be more than the conventional alternative, are seeing the math play out in the long term.
One example is with natural materials like cotton or wool. If the farmer uses regenerative agriculture approaches, it brings all sorts of benefits that actually end up reducing costs for that production system in the long term, such as better resiliency to extreme weather events like droughts and floods because the soil quality is better. They’re using less synthetic pesticides and fertilizers, which lowers their input costs on their farm.
HGI: Do you know whether the companies that have been able to make those investments are primarily private versus public, because quarterly reporting can be detrimental in a lot of cases?
BJ: I wouldn’t say it’s a blanket across the board that only private companies are seeing these benefits. I know of examples of many public companies actually doing a great job of investing as well. However, as you say, the quarterly reporting and the expectations of constant growth that is particularly related to extraction of new, often virgin fossil-based materials to make new products is a huge challenge. You have to be able to make that case for supply chain resiliency particularly in those publicly traded companies. We’re seeing a lot of talking and thinking about this. There are a lot of publicly traded companies and private companies that have set impact targets. In the current economic climate and uncertainty, recognizing this as a business and supply chain resiliency opportunity is where we’re seeing a lot of successful companies are focusing right now.
HGI: We wrote about how Victoria’s Secret is partnering directly with farmers to support exactly what you’re talking about with the wool farmer in Australia. Are you seeing more of that, and how does that work?
BJ: One of the things we absolutely recommend as a starting point is for brands to know where their supply is coming from, and build relationships across the supply chain, and all the way back to what we call tier 4, the raw material producers. The question is, do you actually know the farm group or which recycler where your materials are coming from? Then from there you can start to build relationships with those suppliers and explore longer-term agreements so that the suppliers have that assurance of the demand, which then enables them to more easily invest in new practices and those preferred production systems. Otherwise, they’re taking on a lot of risk. So, something like long-term offtake agreements is a huge step.
The other thing we recommend is standards and certifications, which help ensure traceability.
HGI: Sometimes the industry does what needs to be done in the crisis, and then falls back into old habits. What do you think the industry could learn from the impact the Middle East crisis is having on polyester, for example?
BJ: No one has a crystal ball.
These types of shocks are actually a good thing because as the price of oil goes up, that means the price of virgin polyester is going to go up and potentially narrow the gap in the cost with a recycled version of that same polyester. We want to move toward textile-based recycled fibers and materials, but there is always the risk, of course, that the industry just falls back into its old patterns. That’s really where we are stressing this resiliency of supply message.
Policy has a part to play in this as well. Policy needs to be done in a way that strikes the right balance of aspirational and realistic. If done well, policy could help level the playing field to more permanently close that gap between something like a virgin fossil-based polyester and a more preferred version of recycled polyester.
But building relationships across the supply chain is also one way to mitigate those geopolitical shocks and uncertainty.
HGI: Have you seen any changes in terms of how sourcing executives are compensated that would support the change you’re describing?
BJ: I don’t have any specific examples of this offhand, but certainly incentivizing not just executives but team members is one strategy that generally has been spoken about for a number of years. I do think there’s something here about starting to integrate the thinking around the financial impact resiliency of supply and risk mitigation actually have on your business.
Textile Exchange is working to put some of that tangible financial modeling against what that transition to preferred production systems may look like, and there are examples of companies who are thinking about that now already internally for their own sourcing decisions. So, bonuses for decision makers at brands is one potential strategy, but it’s more broadly, as an industry in general, how do we think beyond just the altruistic benefits of sourcing from preferred production systems and the reduction in climate impacts, reducing textile waste and creating benefits for producers working in these supply chains, to couple that with actual financial data and modeling within businesses? Textile Exchange is working on how to translate these messages into financial language that really resonates and shows the value in that tangible way.
This story originally ran as part of HGI’s 2026 Fiber Outlook Report. To learn more about how geopolitical conflict, shifting trade policy, climate risk, new sustainability regulations and evolving consumer expectations are affecting how natural and man-made fibers are produced, sourced and priced, download the report here.
