Choosing circles over lines

Recent headlines have been focused on the energy sector to lead the global transition to a low-carbon economy. However, one sector that hasn’t been getting the attention it deserves is the consumer discretionary space. Current consumer spending habits are responsible for about 60-70% of global emissions. Consumerism has been deeply rooted in the current culture, but perhaps it’s time for some change. During the most recent Paris Fashion Week, a climate activist walked out onto the runway holding a banner stating consumerism = extinction. Although this might be a bold statement and doesn’t necessarily represent consumer sentiment, shoppers are in fact looking for more responsible alternatives in their day-to-day purchases. Consumers will thus need to have access to more recycled and reused products to satisfy their desire to make a difference and contribute to the circular economy.

The fast-fashion industry has been growing at a rapid pace and is expected to increase by 63% in 2030, which would be the equivalent to producing 500 billion t-shirts.1 The excess production is largely due to shorter wearing cycles. On average, consumers are buying about 60% more goods and are wearing them for 50% less time. As a result, they are simply thrown away, and 85% ends up in landfills.2 The Global Fashion Agenda recently published a new report about scaling the circular economy and the need to reduce barriers to mass recycling programs, specifically for textiles. In order to achieve this, fashion manufacturers need to focus on the following factors: their materials need to be used more, made to be made again, and made from safe and recycled or renewable inputs.

“Used more” entails producing goods that have greater longevity. It has long been known that certain companies count on planned obsolescence to push consumers to purchase more and boost sales consistently. However, there are benefits to higher quality and lower production volumes. Inventory levels can be limited, thus requiring less storage capacity and less inventory is thrown away or destroyed, minimizing fees paid to landfills and incineration facilities.

“Made to be made again” is a class of products that are manufactured to be disassembled at the end of their life-cycle with the aim of being repurposed or reused. The packaging component of the product is also meant to be minimal to avoid additional waste generation. Alternatively, it may be produced from reusable materials.

“Made from safe and recycled or renewable inputs” involves production that uses these inputs efficiently by optimizing resource consumption, as well as limiting or avoiding hazardous waste. Hazardous waste is often discharged into the environment, causing harm to both humans and ecosystems. Limiting the use of virgin materials is a key component, because it often leads to the irreversible degradation of the world’s limited natural capital.

Global Alpha currently holds two companies who are leading the way by innovating in the circularity of the fashion industry.

Asics

Asics is a global sports and lifestyle brand that manufactures a wide range of products. Since its beginning, the company’s ethos has been, A Sound Mind in a Sound Body.To achieve this, the company is also focusing on a sound environment. Earlier this year, Asics launched their Earth Day Pack, a collection of shoes made from recycled plastics using a circular manufacturing process. Through this method, the company was able to use the equivalent of 25,000 t-shirts to produce the entire shoe collection. Today, 95% of their new running shoes already contain some recycled materials. By incorporating circular manufacturing processes, they are able to help reduce their own footprint, while reducing the amount of waste sent to landfills. In the company’s most recent materiality assessment, stakeholders identified circularity as one of their top concerns in which Asics will use this as a guiding target to improve and shift their strategy to a cleaner and more sustainable one. Their VISION 2030 roadmap will help them achieve these specific goals. Some of these ambitions include creating a circular business model, both internally and externally with suppliers, as well as increasing the percentage of recycled materials within each of their products.

Coats

As a leading industrial thread manufacturer, Coats has been an example of what a company in the textile industry should strive to achieve. Sustainability is a core part of their operations, and as a key input for more than 30,000 apparel and footwear manufactures around the world, they are able to make a positive impact in numerous supply chains. Plastics account for a large part of their footprint, and this is where they are looking to make the biggest difference. Currently, the company’s threads are manufactured using 95% virgin plastic, but by 2024, they are looking to completely switch to 100% recycled plastic inputs. Additionally, they want to switch their energy consumption throughout their global operations to largely come from renewable sources.

Due to the company’s dedication to sustainability, they have been attracting many new customers who are looking to improve the quality of their suppliers. The company’s EcoVerde line, which came out in 2018, offers 100% recycled alternatives to virgin polyester by reusing PET water bottles. Since the line’s inception, they have recycled 240 million plastic bottles and avoided about 5600 tonnes of CO₂ in the process.⁵ Now that’s impressive! In our February 4, 2021 commentary, Untangling the threads of sustainability in fashion, we further highlight Coats’ focus on sustainability in fashion.

ESG is an integral part of Global Alpha’s company assessment and we reward companies that show excellent practices and take initiative to advance their sustainability journey. We will continue to look for leaders paving the way in the consumer discretionary industry, fighting climate change, and contributing to a positive future.

Have a nice day.

The Global Alpha team