This is the second story in a two-part series about the circular economy in the Netherlands. You can find the first article here, and listen to more insights on the GreenBiz 350 podcast..
AMSTERDAM — Talk to anyone involved in this Dutch city’s thriving circular fashion community, and one name will inevitably come up within minutes: Fashion for Good.
In less than five years of existence, this little nonprofit has built a hub for circular fashion in the Netherlands and a global network of entrepreneurs, designers, brands, manufacturers and (increasingly) investors dedicated to ripping apart the existing fast fashion model and creating a less exploitative and more sustainable industry.
To accomplish this feat, though, requires transforming the way textiles and apparel are produced, in the places where they are produced, and right now that means Asia. To that end, over the past couple of years, Fashion for Good has laid the groundwork to support the growth of sustainable manufacturing, through an accelerator program and an investment fund squarely focused on the Asian continent.
In February 2020, just before the pandemic closed everything down, the organization kicked off its Asia Innovation Programme in Mumbai, which provides fashion entrepreneurs help with product and business development, mentoring and connections to brands and investors. At the same time, Fashion for Good and a group of investor partners also launched the $60 million Good Fashion Fund, a vehicle dedicated to financing disruptive production technologies in India, Bangladesh and Vietnam. Managed by the Dutch impact investment firm Fount, the fund made its first investment earlier this year, a $4.5 million loan to an Indore, India-based textile producer.
“Manufacturers are the ones who can really adopt the technologies, such as material recycling and dying technologies,” Katrin Ley, Fashion for Good’s managing director, told me when I met her in August at the organization’s headquarters. “They can also provide a lot of expertise to help startups advance their solutions.”
The historic building in Central Amsterdam that houses Fashion for Good’s offices is also home to its global accelerator and scaling programs; a co-working space for local entrepreneurs and organizations; and the Fashion for Good Museum.
Instead of starting with the innovator, we start by asking, ‘What is the big problem we’re trying to solve?’
Launched in March 2017, with founding partner Laudes Foundation (formerly C&A Foundation), Fashion for Good welcomed the first participants in its accelerator and scaling programs that same year. While everything moved online with the pandemic, Fashion for Good typically invites 10 to 15 startups per program each year to Amsterdam for nine months. The accelerator, the model for the Asia Innovation Programme, works in much the same way as its Mumbai-based counterpart, while the scaling program aims to help companies with a market-ready product achieve commercial scale.
To date, roughly 150 entrepreneurs in total have participated in the three initiatives, including 43 from the United States. Fashion for Good selects the participants based on whether their solutions address a problem identified by their manufacturing and brand partners, Ley told me.
“Instead of starting with the innovator, we start by asking, ‘What is the big problem we’re trying to solve?'” she said.
Shikha Shah, founder and CEO of AltMat, can attest to this. A participant in the first round of the Asia program, AltMat uses a mix of mechanical, chemical and enzymatic processes to produce fiber and yarn from hemp and agricultural waste — from banana farms, for example.
“The Fashion for Good program has helped us better understand what brands look for in an innovation,” Shah told me in an email. “It could be a science-backed impact thesis at one end and ease of execution at the other.”
Implementing and scaling sustainable fashion solutions can be particularly impactful in Asia.
Asian countries represented seven of the top 10 textile and apparel exporters in 2020, supplying products for established brands and fast fashion upstarts alike. And while clothing production has helped fuel the region’s economic rise over the last few decades, that growth has come at a great cost to its people and natural environment.
The apparel industry has a long, well-known history of subjecting workers — primarily women and including children — to dismal and unsafe working conditions in “sweat shops,” a reality that continues today. Moreover, in addition to producing 10 percent of the world’s greenhouse gas emissions, garment and textile manufacturing is responsible for local air and water pollution that often goes unchecked due to lax or poorly enforced environmental regulations.
The contamination of Asia’s (and now Africa’s) rivers is especially troubling. Textile and garment manufacturers across the region — in India, in China, in Bangladesh — often dump dyeing and finishing chemicals directly into local waterways, killing fish and other wildlife and leaving the water unsafe to drink for the communities that live in the area. Residents in and around manufacturing hubs such as India’s Tirupur share stories of rivers that froth, spewing white foam like a bubble bath, after it rains, and water so toxic it is unfit even for agricultural use.
All told, the fashion industry is responsible for 20 percent of the world’s industrial water pollution.
Manufacturers such as Pratibha Syntex, which supplies popular brands including C&A, H&M, Patagonia and Zara, are working to change this. Founded in 1997, Pratibha Syntex is a sustainably-oriented “farm-to-fashion” textile and garment producer that employs more than 6,000 people and works with a network of roughly 35,000 farmers.
With the $4.5 million long-term loan from the Good Fashion Fund, the company plans to replace machinery and purchase new equipment that will reduce water, energy and chemical usage.
“We are making a significant investment in state-of-the-art technologies to rejigger our processes and engineering,” Shreyaskar Chaudhary, the company’s managing director, told me in an email. “A substantial part of the investment is being used to implement advanced and sustainable technologies in spinning to produce ‘Vasudha Primo,’ a regenerative cotton yarn.”
The loan will also finance the expansion of the company’s solar energy system and the conversion of its the wastewater treatment plant to a 100 percent biological process, he said.
The fund’s founders chose to finance sustainability-oriented capital improvements for small-to-midsize manufacturers because patient capital can be difficult for these companies to come by, Ley said. The fund offers a payback period of five years on the loans, and a blended capital structure, with anchor investments from the Laudes Foundation and The Mills Fabrica, a Hong Kong-based incubator and investor. Rabobank invested in the fund in mid-2020, bringing the total size to roughly $20 million.
That is still only one-third of the fund’s target size of $60 million, which illustrates the need to significantly grow investment in sustainable fashion, not only for this fund, but also for startups in need of more patient venture capital dollars.
For her part, Ley characterizes the investment situation as improving but “job not done yet.”
“In the five years that we’ve been active in the space there’s been quite a shift. There are way more funds that previously didn’t look into fashion or where fashion didn’t fit into their portfolio,” she said, adding that Fashion for Good has 150 investors in its database.
With regards to the Good Fashion Fund, she has a pretty direct message for investors: “Call us.”