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What are the biggest challenges in sustainable textile production?

Domenic Schindler ·
Raw cotton threads are transformed into sustainably woven fabric using recycled yarn and plant stalks under natural daylight.

The biggest hurdles to sustainable textile production are high transition costs, a lack of supply chain transparency, intensive water consumption, growing regulatory requirements, and an inadequate recycling infrastructure. These hurdles affect textile companies of all sizes, but especially small and medium-sized enterprises, which face cost pressures while also having to comply with legal requirements. The following sections examine each of these hurdles in detail and show where digitalization can help.

What are the costs associated with transitioning to sustainable production?

The transition to sustainable textile production requires significant upfront investments: new machinery, certified raw materials, training, and process adjustments can quickly add up to six-figure sums. Added to this are ongoing additional costs for organic cotton, recycled fibers, or water-efficient dyeing processes, which are often more expensive than conventional alternatives.

Specifically, costs arise in the following areas:

  • Raw materials: Sustainable materials, such as GOTS-certified cotton or recycled fibers, generally cost more than conventional alternatives.
  • Mechanical Engineering: Energy- and water-efficient systems often require new purchases or costly retrofits.
  • Certifications: Audits and certifications such as GOTS, Bluesign, or Oeko-Tex involve annual fees and the effort required for compliance.
  • Personnel and Training: Employees must be able to understand and apply new processes.
  • Documentation and Reporting: Sustainability reports and supplier verification documents tie up administrative resources.

In the long run, these investments can pay off: energy savings, lower water costs, and a stronger market position among sustainability-conscious customers are tangible benefits. However, for many businesses, the path to achieving this is financially challenging, especially if they do not take advantage of incentive programs or if the ROI is difficult to calculate.

Why is traceability in the textile supply chain so difficult?

Traceability in the textile supply chain is so difficult because it often involves five to ten stages that span multiple countries and continents. Each stage—from raw fiber production through spinning, weaving, and dyeing to garment manufacturing—involves different suppliers with varying documentation standards.

Many suppliers still rely on paper documents or proprietary systems that do not automatically integrate with the buyer’s systems. This leads to gaps in information: Where exactly does the cotton come from? Under what conditions was it dyed? Were chemicals used in the process that violate sustainability standards?

The so-called Tier 2 and Tier 3 levels—that is, suppliers to suppliers—are particularly problematic. Here, digital connectivity is often completely lacking. Even companies that know their direct partners well often know little about the upstream stages. Yet for credible, sustainable textile production, it is precisely this complete transparency that is necessary—both toward customers and toward regulators.

How does water use affect the sustainability performance of textile companies?

Water use has a significant impact on the sustainability performance of textile companies because textile production is one of the most water-intensive industries in the world. Dyeing processes, finishing, and washing consume large amounts of water and, at the same time, generate wastewater contaminated with chemicals.

Two factors are relevant to the sustainability assessment: pure water consumption and water pollution. Companies that manufacture in water-scarce regions or engage in chemical-intensive wet finishing contribute significantly to regional water shortages. This is increasingly being taken into account by customers, investors, and regulatory authorities.

Those looking to reduce their water usage can rely on closed-loop systems, low-water dyeing technologies, or digital monitoring systems that track consumption in real time. Such measures not only reduce the environmental footprint but also lower operating costs. Operational Data Collection can help continuously measure consumption levels and identify opportunities for savings.

What regulatory requirements must textile manufacturers meet?

In 2026, textile manufacturers will have to comply with a growing number of regulatory requirements, including the EU Supply Chain Due Diligence Regulation, the EU Taxonomy, the German Supply Chain Due Diligence Act (LkSG), and industry-specific sustainability reporting requirements under the Corporate Sustainability Reporting Directive (CSRD).

Specifically, these regulations require:

  • Due Diligence Requirements in the Supply Chain: Companies must identify, document, and minimize risks to human rights and the environment in their supply chains.
  • Sustainability Reporting: The CSRD is requiring more and more companies to prepare detailed ESG reports.
  • Product Labeling: Proposed EU regulations on digital product passports will require textile manufacturers to transparently disclose the origin of materials and their recyclability.
  • Chemical Regulations: REACH regulations restrict the use of certain substances in textile finishing.

The cost of compliance is rising significantly. Those who have not established digital processes for documentation and reporting will find it difficult to meet these requirements efficiently. This is especially true for Textile companies With complex supply chains, structured data management is therefore not an optional extra, but an operational necessity.

How does the lack of infrastructure for textile recycling hinder the circular economy?

The lack of recycling infrastructure significantly hinders the circular economy in the textile sector because, to date, there has been virtually no industrial capacity to sort and process used textiles in sufficient quantities and of sufficient quality to return them to production as secondary raw materials. There is a wide gap between aspiration and reality.

The problem begins with collection: Used textiles are often collected unsorted, and a large portion of them end up being incinerated or exported instead of serving as raw material for new textiles. Technologies for chemical recycling—which truly recover fibers to their original quality—are not yet available on an industrial scale.

Added to this is the variety of materials: Blended fabrics made of polyester and cotton can hardly be separated economically using current technology. For a functioning circular economy in the textile sector, standardized sorting systems, scalable recycling technologies, and close coordination between collection points, recycling companies, and textile manufacturers would be necessary. These elements are currently still lacking in large parts of Europe.

What role does digitalization play in overcoming these hurdles?

Digitalization plays a central role in overcoming the challenges of sustainable textile production because it creates transparency, automates processes, and provides the data necessary for compliance, resource efficiency, and the circular economy. Without digital tools, it is nearly impossible to meet these growing demands.

Specifically, digitalization helps in the following areas:

  • Supply Chain Transparency: Digital supplier portals and EDI systems enable automated data exchange across multiple stages of the supply chain.
  • Resource Monitoring: Real-time monitoring of water, energy, and material consumption makes potential savings visible and measurable.
  • Compliance Documentation: Integrated ERP systems capture all relevant process data and facilitate the preparation of sustainability reports.
  • Product Traceability: Digital product passports can only be created using a unified database provided by a modern ERP system.
  • Recycling processes: Digital platforms can track and coordinate material flows, laying the foundation for circular production models.

Digitalization alone cannot solve the industry’s structural problems, but it is the foundation upon which sustainable textile production works in practice. Those who invest in digital infrastructure today are laying the groundwork for tomorrow.

How update texware Helps with Sustainable Textile Production

Here at update texware, we have been developing software solutions specifically for the textile industry for more than 40 years. Our solutions help you overcome the specific challenges of sustainable textile production:

  • texware/ERP: Our modular ERP solution integrates all areas of the business, from materials management to shipping, and provides the data foundation for sustainability reporting and supply chain transparency.
  • texware/MES: Production control tracks consumption data in real time and helps you reduce resources such as water and energy in a targeted manner.
  • texware/Monitoring: Our digitalization platform connects machines and processes and makes operational data available for efficiency and sustainability analyses.
  • texware/EDI: The communication platform connects you with suppliers and retail partners and facilitates the digital exchange of data throughout the entire supply chain.

Since 2025, we have been actively involved in projects related to textile recycling and the digitization of circular processes, because we are convinced that software is a key component of a more sustainable textile industry. Would you like to know how our solutions can make a concrete difference in your company? Please contact us and we'll show you what's possible.

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