On Thursday 23 April 2020 Quadia held its first webinar as part of its contribution to the Fashion Revolution Week, alongside the infographic it published.
The one-hour session was moderated by Quadia’s Communication lead Astadjam Bamanga, with the intervention of François Souchet, Lead of Make Fashion Circular at the Ellen MacArthur Foundation and Marion Schuppe, Impact Investment Manager at Quadia.
(re)Watch the webinar and/or read the summary below!
In a sector driven by a linear operating model where overproduction and underutilization reign supreme, we sought to understand what opportunities and successful examples exist and how collective action could be taken.
Ethical fashion, sustainable fashion or circular fashion? The terminology would depend on the key element that is to be addressed: social conditions, overconsumption or materials use. Circular fashion may be seen as a way to create a more sustainable and ethical sector within the means of one planet, by decoupling growth to resource extraction and waste production
The 3 pillars of Circular Economy in the Fashion Sector
1. Developing business models that enable extend the life cycle of clothes based on high-quality eco-designs and services such as reselling, rentals, recommerce, refurbishing.
2. Clothing made to be made again. What will the end of life of a clothing material look like? Developing the technologies and infrastructure that will need to be in place in order to close the loop once clothes are not usable anymore.
3. Using safe & renewable resources.
Examples of initiatives towards more circularity in textile from leading players
Product: Adidas or Napapijri experimenting on mono-material products. Transforming a product such a shoe that would require 16 different material into one that uses a single material while retaining its full capabilities. The rationale behind the company was not only about bringing more circularity but also how they can manage the end-of-life by getting back the materials after a few years.
Business models: across the industry more and more experiments are being done: recommerce, refurbishing, etc. Bank & Vogue looks at finding value from the materials collected in the industry working in partnerships with brands such as Converse and H&M. These types of collaboration enable the scale up and acceleration of positive transformation in the entire sector.
Circular Textiles is an opportunity for investors
- A growing significant market…: It is worth over EUR 170b in Europe and it is growing. Even better, the circular textile sector is growing even faster. The global online clothing rental market and second-hand apparel market are expected to post respectively a CAGR of nearly 11% and 17% during the period 2019-2023, according to the latest market research report by Technavio vs. the fashion industry global CAGR of 2.5%.
- …driven by strong consumer demand: 56M women bought secondhand products in 2018, an increase from 44M in 2017, according to ThredUp Resale Report 2019.
- Significant economic role as clothes are part of our daily lives as are home textiles. In Europe, this sector plays also a significant role in the European manufacturing industry, employing 1.7 million people. The sector accounts for a 3% share of value-added and a 6% share of employment in total manufacturing in Europe. Europeans spend in average 5% of their budget only on clothing.
- But also, a damaging social and environmental impact on our society: 26 kg of textiles per person and per year in average in Europe, while 11kg of textiles per person are discarded every year; 12% of global fashion is collected for recycling, and <1% of this is used to make new clothing; 4th worst industry for use of primary raw materials and water, pressuring the biodiversity and soils; 8.1% of global GHG emissions generated by the Apparel and Footwear Industry, eq. to the total climate impact of the entire EU.
- Increased public interest. Governments have also identified the trend and need for a circular textile sector. France is already banning the destruction of unsold garments. The European Union included in its European Green Deal 2050 Plan a wide strategy for Textiles focused on circularity, that will be released in 2021.
· Triple value returns. We consider that a circular and regenerative company are able to create economic value while creating social and environmental value and vice versa. Thus, we expect attractive financial AND impact returns.
A sector that can thrive and further the regenerative economy
All along the value chain from a resource used to make textile to the management of the garments’ end of life, all the way through design, manufacturing, selling and caring of clothes, because the sector is facing many different social and environmental challenges at every step of the current linear value chain.
Technologies and product innovations as well as process and business model innovations based on a strong inclusive fair governance to address all of them are needed.
We need to produce better and fewer clothes from virgin materials. There are many solutions to invent, develop, implement, scale-up and roll out around reselling business models, sharing platforms, repairing, repurposing, taking back, restoring, developing new bio-based materials to support the growth of the sector while contributing to a regenerative economy based on inclusive fair value chains, limited optimized use of natural resources and zero-waste systems.
Covid-19 Impact
Though it’s hard to say what may come out of this current crisis, there are a few things that the situation is putting into perspective.
· First, all the steps of the value chain are hardly hit by the crisis: from retailers closing down shops and dealing with unexpected huge inventories all the way down to textile and clothing manufacturers with unpaid bills and laying off millions of vulnerable workers.
· Second, the need for more collaboration across the industry to work on the supply chain as we have seen how fragile its management can be.
· Third, it has highlighted the importance of positive actions, when manufacturers can divert their production to providing sanitary gels or masks.
· Finally, the resilience of companies is now seen as more important than ever. Businesses that do not depend on complex international supply chains are more resilient in these times of crises in terms of production and supplies while multi-channel distribution businesses are growing online. Different business models can be thriving even though more time is needed to assess their resilience.
Quadia and the circular textiles industry for a regenerative economy
In addition to the two companies in the portfolio, The Renewal Workshop and Ananas Anam, Quadia has been tracking over 100 innovative companies in Europe and in the US working in the circular textile area all along the value chain, some examples:
Brands: 1083, Hopaal, MUDJeans, Ecoalf
Circular Business Models based on reselling, renewing, repairing, repurposing, rental: The Renewal Workshop, Dresswing, Patatam, Circos, Lizee
New bio-based materials for easy-to-recycle garments: Ananas Anam, Mycotex, Algalife, Pyrates, Econyl
Recycling & end of life technologies to develop new yarns from discarded textile: Resortecs, Infinited Fibers
Other data-based technology: Lablaco
Quadia’s focus is on circular business models and materials that can be enablers in the value chains. We seek to invest in companies that have it in their DNA to contribute to a regenerative economy and are able to anticipate the rebound effect.
Besides funding through strategic minority investments with a ticket in between EUR 1-5m, we bring to investees:
- Support in the setup of impact objectives and roadmap based on an efficient useful impact reporting framework
- Flexibility in the investment tools and support in the long run, also with investment top-ups
- Our network and ecosystem as our goal is always to create synergies in between all the players to accelerate the transformation
- Expertise and knowledge in the sector, based on our activity as a European investor with access and connection to many companies in many different countries, we can bring this international overview and understanding of the sector and the trends
- Willingness to create positive impact through the entire investment period and at the exit that we aim on the value chain