Do investments in sustainability really impact climate goals?

This week, Inditex followed dozens of other brands in the race to own round textile fiber supplies. In May this year, they secured a €100 million purchase agreement with round cellulose fiber recycling company Infinited Fiber Company (IFC), absorbing around 30% of the total round fiber recycling capacity. There is strong competition for ownership of these circular materials as brands seek to increase the amount of recycled content in their products. The other simultaneous “win” is promoting the sustainability credentials of their materials, if not products (more on that when I cover the Higg MSI in the coming weeks).

Inditex’s latest effort to gain a competitive edge in the circular fiber market is through a Series B investment raised from $30 million by startup Circ. Circ’s technology chemically recycles discarded clothing, separating the polyester and cellulose: a revolutionary innovation similar to that of its recycling counterpart, Worn Again. Most clothing is made from a blend of cotton and polyester, and Circ’s technology extracts the basic building blocks, called monomers, and supplies this raw material to fiber and textile manufacturers, replacing the raw. These monomers are synthesized in the polymers used in everyday textiles: polyester and cellulose, with the same quality as the raw ones.

But what are the quantities of fiber available from Circ and how much will Inditex have access to? During a video interview with Circ CEO Peter Majeranowski, he explained that Inditex’s investment does not provide access to fiber, but that a pull agreement similar to the one Inditex has with IFC is a possible next step. Inditex aims to switch all its polyester to sustainable or recycled by 2025, which makes this investment in Circ look critical (unless they switch to recycled PET from non-textile sources, which is still problematic). Madjeranovski shared that Circ’s output from its first large-scale commercial production facility, starting in 2024-2025, will be around 65,000 tonnes of recycled feedstock per year. Assuming that the waste input is 50% cotton and 50% polyester, about 32,500 tons of each feedstock monomer will be produced annually. That’s a drop in the ocean compared to the volume of material used by Inditex, I guess out loud, and Majeranovski agrees.

For years, I’ve reported in Forbes on brands’ investments in circular and low-impact materials, and my findings, including those above, raise a critical question: Is this investment in circular solutions coupled with operational changes in the fashion business, or are they isolated initiatives that ensure positive press coverage and a halo effect, while maintaining existing wasteful practices (which these circular technologies have no hope of addressing within the timeframe set for net-zero ambitions)?

What environmental difference can these investments really make when we still don’t know the comparative reduction in impact of round fibers versus linear fibers. I say this because circular raw materials are likely to reduce the impact in the extraction phase, but even recycled raw materials require energy to be processed into new textiles, which are then dyed and finished. The risk is that Inditex’s high-profile investment in Circ carries with it the assumption that circular raw materials completely override raw and even give brands license to increase production volumes, which would still be an environmental and social disaster in the current infrastructure.

I will make a slight digression here to say that fashion businesses are primarily marketing businesses – the majority of them do not own the production process or manufacture the products in-house – they source, then market and sell. Therefore, the phase of fashion waste that hurts brands the most is the end-of-life phase, where consumers dispose of clothes in dustbins, resulting in landfills, or second-hand clothing markets such as Kantamanto in Ghana (where 15 million pieces of clothing are thrown away every week).

This kind of very public waste is unsightly and risky for brands’ reputations; which is probably why they invest so much in circular materials from recycled clothing instead of renewable energy with their suppliers. This is despite the fact that renewable energy offers much greater potential for impact reduction and therefore much more hope for achieving net zero consumption targets.

To qualify this deduction, the calculable impact reductions from Circ fibers are not in the public domain, unlike the very calculable impact reductions of decarbonizing energy sources feeding the supply chain. But while Circ’s mitigation potential is private, Majeranowski explained that life cycle comparative assessments (LCAs) have been done to evaluate their circ monomers against extracting raw, and the results “look very favorable” for Circ. This LCA information was available to investors in this Series B raise, so it’s possible that Inditex looked at the projected reduction in impact per unit of recycled Circ compared to the virgin that their suppliers use. Perhaps this is an assessment they could perform if they entered into a purchasing agreement with Circ to quantify how Circ’s materials would break their aforementioned recycled fiber targets.

On reflection, it seems that for brands investing in circular fiber now provides a powerful marketing narrative that is more tangible to consumers (thereby gaining favor and bragging rights) than investing in renewable energy in the supply chain ; But this ultimately means that brands are not motivated to invest in addressing their biggest sources of environmental and social impacts, which occur in the supply chain during the creation of their products.

However, Majeranovski hopes that by channeling funds to recyclers like Circ, high-volume recycling facilities will be created, proving the success of circular technology and catalyzing the expansion of its infrastructure to the global south: “The results of Circ are [fed into] the very beginning of the supply chain and our customers are in the global south, but what pulls this [circularity demand] through brands and their consumers in the Global North.”

Indeed, the Global South is where Majeranowski wants to operate and Circ’s commitment to supply chain work is firm, but the investment will not flow there until the technology is proven in the Global North, which sees Circ to its first incarnation as a savior for the unsightly piles of post-use fashion clothing waste. Fashion brands tend to approach sustainability from the point of view of alleviating consumer disagreement or guilt around this waste. This is true even though the ultimate cost of this public investment in circularity hides the fact that they ignore the supply chain impact, which will result in overshooting all climate targets.

There is currently no public evidence that the circular fiber innovations that brands are investing in will have a significant impact on industry-wide emissions reductions within the net zero timeframe. Conversely, a focus on supply chain decarbonisation has a much more quantifiable, measurable and tangible impact reduction, but is not as marketable.

In fact, I am a strong advocate for innovation in low-impact materials and round fibers, as evidenced by my dozens of articles and interviews on the subject. However, I am not an advocate of brands using investment in such innovation as an isolated strategy and marketing tool to protect the relevance and reputation of their brand and to alleviate buyer’s guilt.

I feel the need to emphasize that the abatement potential of round fibers is currently unknown and has not been adequately modeled to account for the abatement potential in line with industry-wide targets. Conversely, the mitigation potential of implementing renewable energy in the supply chain is clear and quantifiable in terms of net zero goals – it just doesn’t meet brands’ marketing priorities and sales goals.

Is the investment in circular fiber important? yes Should this be the industry’s primary sustainability strategy? No. So why is this the primary strategy? Because brands, for better or worse, are currently directing a large portion of investment dollars, and they are going to solve the brands’ most pressing and societal challenges, rather than the industry’s that are in the supply chain that drives the products. that brands sell.

Leave a Comment