Environmental non-profit Canopy has launched a US $ 2 billion blended finance platform aimed at accelerating the adoption of circular textiles and reducing risks associated with growing pressure on global forests. The initiative comes amid mounting concerns over shortages of wood fibre, tightening deforestation-free supply chain requirements, and increasingly stringent regulations affecting the paper, packaging and fashion industries.
The move follows the release of a new research briefing by Canopy in collaboration with Finance Earth at the World Economic Forum. The brief said India’s e-commerce packaging and man-made cellulosic fibre (MMCF) textile segments, including rayon and viscose, are becoming increasingly reliant on imported wood pulp and recovered fibre. At the same time, climate-related disruptions, tightening global forest resources and evolving international due-diligence norms are heightening risks for India’s export-oriented industries.
It noted that paper production in Asia expanded by 60 per cent between 2000 and 2021, placing additional pressure on sustainable wood supplies. The study also highlighted climate stresses such as wildfires, droughts and competition for land use, which are constraining pulp availability and quality, leading to greater price volatility and increased exposure for Indian businesses.
The brief further pointed to regulatory compliance as a growing challenge. Emerging deforestation-free sourcing requirements in key export markets, including the European Union, could raise compliance costs and pose market-access risks for Indian textile hubs such as Tirupur and Ludhiana, as well as rapidly expanding packaging clusters serving sectors such as e-commerce.
Canopy’s founder and executive director, Nicole Rycroft, said forests were being pushed towards breaking point under current sourcing models. She said companies that remain dependent on traditional virgin wood supply chains face higher costs, increased supply risk and growing legal and reputational exposure, despite the availability of viable alternatives.
To address scale and financing challenges, Canopy’s US $ 2 billion platform is designed to catalyse commercial production of recycled and next-generation textile materials across major manufacturing economies. The platform will pool capital from governments, private sector partners, investors and philanthropies to de-risk early-stage facilities and accelerate market adoption.
By blending public and private finance, the initiative aims to unlock large-scale investment in sustainable manufacturing infrastructure and help build domestic value chains aligned with climate and circular economy goals. The approach reflects a growing consensus that innovative financing models are required to transform resource-intensive industries.
