Fashion for Good has launched the Price Parity Toolkit, with support from Laudes Foundation, Canopy, and Finance Earth. The framework introduces an innovative financing approach called “premium decoupling”. Its goal is to remove price premiums from the supply chain, helping the industry adopt lower-impact materials faster.
Next-generation materials can solve tough sustainability challenges, but high prices slow their adoption. These materials cost more because they haven’t achieved economies of scale. The premiums increase as materials move through supply chains. Each tier adds its own markup, making final products more expensive. This creates a cycle: brands avoid using these materials due to their high costs. They then order less volume, which prevents manufacturers from scaling up. No single player can fix this problem alone.
The Price Parity Toolkit addresses this challenge with premium decoupling. This mechanism separates the price premiums early in the supply chain, allowing materials to flow through tiers at the same price as conventional options. Brands pay the premium upfront and fund suppliers directly at Tier 4. This eliminates the “pancaking” effect of compounded markups. As a result, total product costs decrease.
Circulose, a textile recycling innovator and Fashion for Good alumnus, is testing this model. They have partnered with several brands using the toolkit approach. The toolkit provides step-by-step guidance for implementation, including operational guidelines, legal risk mitigation, and traceability solutions. It also features case studies from different industries.
Innovators and brands can explore the toolkit and apply it to specific materials. Fashion for Good will assist brands in proving the business case, as well as also helping innovators adapt the mechanism for their materials.
