This week, Inditex followed dozens of other brands in the race to own circular textile fiber supplies. In May this year, they secured a €100M off-take agreement with circular cellulose fiber recycler Infinited Fiber Company (IFC), absorbing around 30% of the recycler’s total circular fiber capacity. There is steep competition to gain ownership of these circular materials as brands strive to increase the quantity of recycled content in their products. The other simultaneous ‘win’ is promotability of 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 advantage in the circular fiber market is by investing in the Series B $30M raise by startup Circ. Circ’s technology chemically recycles discarded clothing, separating out polyester and cellulose: a breakthrough innovation similar to that of its recycling peer, Worn Again. Most clothing is produced from a blend of cotton and polyester, and Circ’s technology extracts the foundational building blocks called monomers, and supplies this raw material to fiber and textile producers, replacing virgin ones. These monomers are synthesized into the polymers used in everyday textiles: polyester and cellulose, with the same quality as virgin ones.
But what are the fiber volumes available from Circ and how much will Inditex be able to access? During a video interview with Circ’s CEO Peter Majeranowski, he explained that Inditex’s investment does not secure access to fibers, but that an off-take 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, making this investment in Circ look critical (unless they switch to recycled PET from non-textile sources, which is still problematic). Majeranowski shared that Circ’s output from its first large-scale commercial production facility, launching in 2024-2025, will be around 65,000 tonnes of recycled raw material per year. Assuming that the waste input is 50% cotton and 50% polyester, around 32,500 tonnes of each raw material monomer would be produced annually. This is a drop in the ocean compared to the volume of material used by Inditex, I assume aloud, and Majeranowski agrees.
I’ve reported for years at Forbes on the investment of brands in circular and low-impact materials, and my findings, including those above, raise a critical question: Is this investment in circular solutions being paired with operational changes in fashion businesses, or are they isolated initiatives, providing positive press coverage and a halo effect whilst upholding 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 truly be making when we do not yet know the comparative impact reduction of circular fibers versus linear ones. I say this because circular raw materials will likely reduce impact in the extraction phase, but even recycled raw materials require energy to be processed into new textiles that are then dyed and finished. The risk is that high-profile investments by Inditex in Circ brings with it the assumption that circular raw materials entirely cancel out virgin ones, and even give brands a license to increase production volumes, which would still be an environmental and social disaster in the current infrastructure.
I’ll take a slight diversion here, to say that fashion businesses are primarily marketing businesses—the vast majority do not own the production process or make products in-house—they source, then market, and sell them. Therefore the phase of fashion waste that hurts brands the most is the end-of-life phase, where consumers throw clothing in bins, leading to landfills, or in second-hand markets like Kantamanto in Ghana (where 15 million pieces of thrown-away clothing end up every week).
This sort of very public waste is ugly and reputationally risky for brands; which is probably why they are investing so heavily in circular materials from recycled clothing, instead of renewable energy with their suppliers. This is the case despite renewable energy offering far more impact reduction potential, and therefore much more hope of achieving net-zero targets.
To qualify this deduction, the calculable impact reduction from Circ fibers is not public, in contrast to the very calculable impact reductions of decarbonizing energy sources powering the supply chain. But despite Circ’s impact reduction potential being private, Majeranowski explained that comparative Life Cycle Assessments (LCA’s) have been done to assess their circular monomers versus extracting virgin ones, and the results “look very favorable” for Circ. This LCA information was available to investors in this Series B raise, so it is conceivable that Inditex could have examined the projected impact reduction per unit of Circ recycled raw materials compared to the virgin ones their suppliers are using. Perhaps this is an assessment they might conduct if they do proceed to an off-take agreement with Circ, to quantify how Circ materials would chip away at their aforementioned recycled fiber targets.
It seems, on reflection, that for brands, investing in circular fibers now provides a powerful marketing narrative that’s more tangible for consumers (thereby winning favor and bragging rights), compared to investing in renewable energy in the supply chain; But what this ultimately means is brands are not motivated to invest in solving their biggest sources of environmental and social impacts, which happen in the supply chain during the creation of their products.
Majeranowski is hopeful, though, that by plowing funds into recyclers like Circ, high-volume recycling facilities will be established, proving the success of the circular technology and catalyzing the expansion of its infrastructure to the Global South: “Circ outputs are [fed into] the very beginning of the supply chain, and our customers are in the Global South, but what pulls that [circularity demand] through is the brands and their consumers in the Global North.”
Indeed, the Global South is where Majeranowski wants to operate and Circ’s commitment to working within the supply chain is resolute, but the investment won’t flow there until the tech is proven in the Global North, which beholds Circ to its first incarnation as a savior for fashion’s ugly piles of post-consumer garment waste. Fashion brands tend to tackle sustainability from the point of view of alleviating consumers’ dissent or guilt around this waste. This is true despite the ultimate cost of this very public investment in circularity obscuring the fact that they are ignoring their supply chain impacts, which will amount to an overshooting of all climate targets.
There is currently no public evidence that the circular fiber innovations brands are investing in will have a significant impact on emissions reductions industry-wide within the timeframe set for net-zero. Conversely, a focus on decarbonization in the supply chain has far more quantifiable and tangible impact reduction but is not nearly as marketable.
I am, in fact, a strong advocate for low-impact materials innovation and circular fibers, as demonstrated by my dozens of articles and interviews on this topic. However, I am not an advocate for brands’ use of investments in such innovations as a siloed strategy and marketing tool to protect their brand relevance and reputation and alleviate shopper guilt.
I feel the need to press the point that it is not known what the impact reduction potential of circular fibers is right now, and it hasn’t been adequately modeled to explain the potential to reduce emissions in line with industry-wide targets. Conversely, the impact reduction potential of implementing renewable energy in the supply chain is clear and quantifiable with respect to net-zero targets–it just doesn’t suit brands’ marketing priorities and sales targets.
Is investment in circular fibers essential? Yes. Should it be the primary sustainability strategy of the industry? No. Then why is it the primary strategy? Because brands, for better or worse, currently steer much of where the investment dollars go, and they go to solving brands’ most pressing and public challenges, not those of the industry which reside in the supply chain that makes the products brands sell.
Tense diplomatic relations may not impact trade, investment ties between India, Canada: Experts
NEW DELHI: The tense diplomatic relations between India and Canada are unlikely to impact trade and investments between the two countries as economic ties are driven by commercial considerations, according to experts. Both India and Canada trade in complementary products and do not compete on similar products.
“Hence, the trade relationship will continue to grow and not be affected by day-to-day events,” Global Trade Research Initiative (GTRI) Co-Founder Ajay Srivastava said.
Certain political developments have led to a pause in negotiations for a free trade agreement between the two countries.
On September 10, Prime Minister Narendra Modi conveyed to his Canadian counterpart Justin Trudeau India’s strong concerns about the continuing anti-India activities of extremist elements in Canada that were promoting secessionism, inciting violence against its diplomats and threatening the Indian community there.
India on Tuesday announced the expulsion of a Canadian diplomat hours after Canada asked an Indian official to leave that country, citing a “potential” Indian link to the killing of a Khalistani separatist leader in June.
Srivastava said these recent events are unlikely to affect the deep-rooted people-to-people connections, trade, and economic ties between the two nations.
Bilateral trade between India and Canada has grown significantly in recent years, reaching USD 8.16 billion in 2022-23.
India’s exports (USD 4.1 billion) to Canada include pharmaceuticals, gems and jewellery, textiles, and machinery, while Canada’s exports to India (USD 4.06 billion) include pulses, timber, pulp and paper, and mining products.
On investments, he said that Canadian pension funds will continue investing in India on grounds of India’s large market and good return on money invested.
Canadian pension funds, by the end of 2022, had invested over USD 45 billion in India, making it the fourth-largest recipient of Canadian FDI in the world.
The top sectors for Canadian pension fund investment in India include infrastructure, renewable energy, technology, and financial services.
Mumbai-based exporter and Chairman of Technocraft Industries Sharad Kumar Saraf said the present frosty relations between India and Canada are certainly a cause for concern.
“However, the bilateral trade is entirely driven by commercial considerations. Political turmoil is of a temporary nature and should not be a reason to affect trade relations,” Saraf said.
He added that even with China, India has acrimonious relations but bilateral trade continues to remain healthy.
“In fact, bilateral trade is an effective tool to improve political relations. India must make special efforts to increase our bilateral trade with Canada,” Saraf said.
India and Canada have a strong education partnership. There are over 200 educational partnerships between Indian and Canadian institutions.
In addition, over 3,19,000 Indian students are enrolled in Canadian institutions, making them the largest international student cohort in Canada, according to GTRI.
According to the Canadian Bureau for International Education (CBIE), Indian students contributed USD 4.9 billion to the Canadian economy in 2021.
Indian students are the largest international student group in Canada, accounting for 20 per cent of all international students in 2021.
Benefits of educational partnerships are mutual and hence the current situation may have no impact on the relationship, Srivastava said.
Apple supplier Foxconn aims to double India jobs and investment
Apple supplier Foxconn aims to double its workforce and investment in India by next year, a company executive said on Sunday.
Taiwan-based Foxconn, the world’s largest contract manufacturer of electronics, has rapidly expanded its presence in India by investing in manufacturing facilities in the south of the country as the company seeks to move away from China.
V Lee, Foxconn’s representative in India, in a LinkedIn post to mark Indian Prime Minister Narendra Modi’s 73rd birthday, said the company was “aiming for another doubling of employment, FDI (foreign direct investment), and business size in India” by this time next year.
He did not give more details.
Foxconn already has an iPhone factory employing 40,000 people in the state of Tamil Nadu.
In August, the state of Karnataka said the firm will invest US$600 million for two projects to make casing components for iPhones and chip-making equipment.
The company’s Chairman Liu Young-way said in an earnings briefing last month that he sees a lot of potential in India, adding: “several billion dollars in investment is only a beginning”.
Taiwan election: Foxconn’s Terry Gou taps star-powered running mate
Last month, Foxconn’s billionaire founder Terry Gou said he would run for the Taiwanese presidency in next year’s election, as an independent candidate.
He said the ruling and independence-leaning Democratic Progressive Party (DPP) was unable to offer a bright future for the island and left Foxconn’s board following his decision to run.
The firm operates the world’s largest iPhone plant, in the city of Zhengzhou in Henan province.
Foxconn to double workforce, investment in India by ‘this time next year’
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