The Textile and Fashion Industry: a very Un-Circular industry
By Eugene Looi | 30 June 2021
The fashion industry has been on an unsustainable trajectory in recent decades. For millennia, people wore and maintained the same clothes for a large part of their lives. Tailors have historically been specialists that maintained durability of clothes to ensure a slow aging process. Fast forward to the 21st century, tailors are often associated with suits we only wear a few times, while the use of clothes has gone from slow degradation to fast fashion.
The linear nature of modern clothes consumption is causing massive environmental problems along the value chain: from the resource-intensive production of materials like cotton and polyester; to pollutive manufacturing and fast retailers; and ending with unsustainable consumer behaviors.
The textile industry is ripe for disruption towards a more circular course. This blog reflects Mana’s interest in seeing Asia-based solutions lead the textile industry back on a trajectory towards closed loop production and consumption. Our previous blog “A snapshot into a more circular fashion industry” highlighted the general environmental and social issues associated with a linear fashion industry.
Significance of the issue in Asia
Asia represents a significant portion of the global textile market, albeit relatively more on the supply side compared to the demand side. In 2020, the global fashion market was valued at USD 1.5 trillion and Asia-Pacific made up 38% of the demand while it produced over 60% of global textile and apparel exports. As such, textile and garment waste in production and the supply chain is a more significant issue compared to post-consumption waste.
The rise of fast fashion has attracted a lot of investment into production facilities in Asia due to favorable production costs and fewer regulations surrounding the agriculture and production segments. Such growth has led to negative environmental impacts in the region on a number of fronts along the value chain.
Figure 1: Value Chain of the Fashion Industry
Water depletion during fiber cultivation
According to WWF, half of all textiles are made of cotton and it takes 20,000 liters of water to produce just one kilogram of cotton. India faces widespread water shortages but is also the world’s largest cotton producer. The amount of water spent in cotton production could have been used to provide 85% of the population with enough water to satisfy their daily needs.
Water pollution during dyeing and finishing
Fabric dyeing and finishing consumes a significant amount of chemicals. Due to lax enforcement of environmental regulations in many Asian countries, most of these chemicals are discharged into rivers. In China alone, textile production has generated 9.5 billion liters of wastewater, contaminating 70 percent of the rivers and lakes.
To ensure cheap production costs, textile production often entails exploitative and child labor, low wages, and excessive use of chemicals and pesticides, which poses health risks. Throughout Asia, garment workers usually receive extremely low salaries, which has been estimated to represent less than 2% of the profits earned by the fashion brands. These “unfair” wages deprive workers of potential improvements in their livelihoods.
Fashion waste due to overproduction
Overproduction happens at multiple stages of the supply chain. Most textile or garment manufacturers tend to overproduce clothes. There are several reasons for this, but a key driver is that clients require ‘buffers’ in their orders to hedge potential risks such as production errors. As a result, Fashion Revolution estimates that textile mills waste up to 25% of its yearly production.
Sustainable Fashion Asian Startups
To further the transformation towards sustainable fashion, innovations along the value chain are required to reduce emission and pollution during production, minimize unnecessary fashion wastage, extend shelf-life by repurposing pre-loved items, and recycle end-of-life items.
At Mana Impact, we have mapped some relevant players in the sustainable fashion space as illustrated in the figure below.
Figure 2: Mapping the Sustainable Fashion Landscape in Asia
We have also identified several opportunities for enterprises to drive sustainability in the fashion industry.
Opportunity 1: Production – Alternative Material, Dye & Dyeing Technology
As compared to the large global fabric market, the sustainable fabric market in Asia is small with few startups. In the field of material innovation in Asia, different startups are experimenting with solutions that convert feedstock such as food waste, bamboo, algae, or recycled plastics to fabric. To reduce the environmental impact of dye, Graviky Labs upcycles air pollution into sustainable inks while NTX is improving the dyeing process through its waterless colorization technology.
One of the biggest challenges faced by these companies is to ensure their competitiveness against traditional cotton, polyester, and industrial dye manufacturers. These materials have been widely used in the fashion industry due to their availability in large quantities, the ease of processing, as well as comfort level. Commoditization of these products has significantly driven down the cost of production. In the short run, it will be very challenging for startups in this field to compete with the existing products in terms of price. Policies such as a carbon tax on products that have a high environmental footprint will reduce the price advantage of commodity products and therefore enable new alternative fabrics to compete in a more level playing field, although investors and entrepreneurs alike should not hold their breath for regulatory enhancements in most of Asia in the short-run.
Opportunity 2: Reduction of Fashion Waste from Textile Scraps and Excess Inventory
The reselling of textile scraps or excess inventory from manufacturing facilities is another intriguing sector with opportunities for technologies or solutions to engender circularity in the fashion business. Some of the companies that we have identified in Asia in this space include Moreloop and Coxco that repurpose textile scraps and sample fabrics, while startups like Aikucun and Fine resell the leftover inventory at a discounted price.
This segment is, however, not without its own set of challenges. The fashion scrap supply is subject to seasonal trends and variations, which can disrupt the steady flow of uniform fabric in the time between fashion seasons. Furthermore, most fashion brands are worried about illegal sales of their designs and resort to destruction of the garments to protect their intellectual property. To overcome this, businesses need to consider designing a solution that can protect the IP of fashion brands during the distribution. Such solutions require a close relationship between the enterprise and the fashion brand to build the trust and confidence that any up recycling of such branded textiles is not abused or fall into the wrong hands.
Opportunity 3: Fabric-to-Fabric Recycling Technology for Post-Consumer Fashion Waste
According to the Ellen Macarthur Foundation, nearly three-quarters of all post-consumer textiles is either incinerated or disposed in landfills, and only 1% of clothes is recycled into new clothes. What makes it challenging to recycle fabric into new clothes is that cotton and polyester – a plastic-based material – cannot be easily separated, forming a barrier to recycling.
This in turn presents the market with a formidable challenge ripe for disruption. Recent technology developments have made us more optimistic: A technology developed by Hong Kong Research Institute of Textiles and Apparel (HKRITA) can dissolve cotton fiber to recover the cellulose pulp from polycotton. Additionally, new technologies from enterprises outside Asia such as WornAgain, Renewcell, Ervnu also have solutions that separate and recover cellulose fiber and polyester from textiles using different types of solvents, suggesting possibilities for more efficient fabric-to-fabric recycling in the future.
The primary challenge to the post-consumer recycling enterprises is that their solutions require capital intensive investments into equipment or production facilities. In some cases, significant amounts of research and development is required to develop the technology. Moreover, and similar to all commoditized industries, the cost to produce a unit of recycled fabric can be more expensive than virgin fabric. As such, the adoption of the recycled fabric will very much be dependent on the willingness of fashion brands and consumer’s willingness to pay for sustainable fashion products.
Opportunity 4: Platform Solutions to Repurpose Post-Consumer Fashion Waste
The highest number of startups in the sustainable fashion ecosystem in Asia are according to our observations platform business models, which range from high value garments rental to the resale of pre-loved items to reduce post-consumer fashion waste. Some of the players in this space include Style Theory, Air Closet, YCloset, Tinkerlust, Plum and Refash. Unlike material or technology innovation, platform business models require lower capital expenditure and shorter development period. As a result of these lower barriers of entry, this segment has also attracted many new players.
While the sector might be easy to enter, it is not as easy to create a thriving platform. The success of a platform hinges on low customer acquisition cost and efficient logistics planning, and many existing platforms in Asia such as Lazada, Shopee or Grab continue to be in the red and it is unclear when they will become profitable. For platforms in the fashion or textile sector, the user base will be much smaller than these large-scale players, and they would instead have to focus on providing tangible user value to become profitable.
While the sustainable fashion movement is gaining momentum globally and in Asia, it is imperative to note that the transition to a circular fashion industry cannot be driven solely by emerging innovation and tech-fixes. A truly transformative approach will require systemic changes, from designing and enforcing environmental policies and regulations that foster more sustainable practices in the industry, to collaborative initiatives that drive behavioral change.
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