Sustainability & Circular Economy – Fashion Industry

Interview Transcript

Article | Sustainability & Circular Economy – Fashion Industry
22nd March 2021 Atheneum Team

Expert Profile


Sustainability & Supply Chain Director




Chisco’s 25 years in the fashion industry led him to a successful career in Inditex, Lacoste & Desigual. He is currently working to develop Inditex’s sustainability capabilities and sits as a Member of the Board of Advisors on the Ellen MacArthur Foundation, a key international organization promoting circular economies in business. He is also a lecturer for IED Barcelona.

Section 1: Current Strategy

1.1. How important is sustainability in your business?

Working in fashion specifically, fashion is the second most polluting sector around the world. For example, 1.5 trillion liters of water are used in the fashion industry each year. There are harmful chemical elements too, where 23% of all chemicals produced worldwide are used in the textile industry. In terms of sustainability, it’s just not something that you can do, but you have to do. It’s more of an obligation right now to do anything within sustainability. Even right now, there is no legislation to start encouraging more sustainability. For sure it will be developed, very, very soon. And for me, there is lots of hard work that all the companies will have to do before this legislation arrives.

Sustainability, it is the next big thing that all the companies have to do if they want to keep working in this sector.

For me there are two things that are very important. But the most important thing for me is the visibility. People talk about transparency, and transparency is about how much companies lie. Because, it’s not true to say that you have to be transparent in the business because sometimes you need to keep a lot of things for yourself. Visibility, and whether they think it’s more professional or not, it’s the first thing that fashion companies have to do. For the moment, some companies are very proud to say that they are switching to be sustainable, but that is because they are using more sustainable materials. The point is that we have to identify where in our supply chain there are stresses and not just showing who our suppliers are, I’m talking about the tier one, but also all the tiers, two, three, four, essentially all the companies along the supply chain that we are using for our production.

1.2. What are your current sustainability priorities?

The first priority is to try to clarify the supply chain. For the moment, all the companies will have just have clarity over who are there main suppliers, but we have little insight and knowledge about the rest of the chain. Breaking down and analyzing the supply chain is very, very hard work. If you think about your clothes, for instance, your shirt, maybe you are buying from a supplier but, who is doing the shirts? Who is doing the fabric? Who’s doing the buttons? Who’s doing the fiber? Who are the companies that are contributing to the production of the shirt? All the companies in the fashion industry, I can tell you that they don’t know about this level of detail in their supply chain. And this is very important.

You have to do it through the first tier, they have to inform you, and so on. If you have a supplier who is doing this shirt, you have to monitor them, you have to communicate to me who is the fabric supplier, who is the button supplier, who is the yarn supplier, who’s the fiber supplier? It’s very hard work in terms of compliance, but it has to be like that. Because you cannot say that you are not doing sustainability unless you do this kind of auditing and investigating. I am talking about something that is very, very critical, for instance child labor in your company. Because your first tier is not involved in any forms of child labor, however maybe the yarn supplier is using child labor and as the fashion company at the end of the supply chain, you don’t know. So, this is very critical.

It’s hard to say how fashion companies engage with suppliers over this. But the overall point is, if they are not doing this job, they cannot work with you. If they are not looking at sustainability in their supply chain, they cannot work with you. That’s the point. It looks hard, but it’s the only way that you can do it. You can permit yourself to be able to work with people who is not showing the willingness to work on sustainability.

The suppliers are only showing signs of change because of the pressure from their clients. They’re not motivated to change, to demonstrate this let’s say over the last 10 years, they have had further compliance after working with each of their clients. For example, we started to working on a big project in terms of hardware, chemicals, substances and all these fall under corporate social responsibility, CSR. Following this project, the supplier now have to do work in terms of compliance. They’re not listening to the forces encouraging sustainability. It’s an extra job about their business and they have to do it because we are pressing.

1.3. What are your current sustainability initiatives?

There are few examples of sustainability campaigns in the fashion industry. I think the most important thing I think we can bring attention to is about organizations who are more involved in developing the strategies. We are talking about SAC, Sustainable Apparel Coalition. We are talking also about OCA, Organic Cotton Accelerator. Also, the Textile Exchange, that they are doing all the things in terms of certifications. That certification is key. Also, inside the sustainability, the Global Fashion Agenda as well.

This for me is a little bit more of a marketing initiative. In Paris, the fashion accord that they did in France, I think two years ago. I mean, I don’t like very much that one. I think it’s quite a marketing thing. But SAC, OCA and Global Fashion Agenda is less so. And something that is very important, that is a part of the visibility, is the circular economy. And I mean, the champions for that are Ellen MacArthur Foundation, they are doing very good.

Section 2: Future Strategy & Challenges

2.1. What changes will be made to the operational model to further sustainability?

In terms of operations, the point is, we won’t work with suppliers who do not have clarity over sustainability within their supply chain. This is the point when it comes to improving sustainability in the industry. In the past, you used to start to work with someone because they have a nice product and it has good pricing and a good delivery time. Now, this is not possible. If they’re not doing that part of the business, they will not be able to work with the company.

This is one change that will be very important. And I think, also there is more that can done in terms of the customer’s involvement. They will have to be further involvement in all the information about the garments. So, SAC is working also on an index where they are covering the sustainability rate of the garments. And I think this is very important to the fashion industry as well. When you are going to buy one garment, same as when you are going to buy food right now, you can have a clear idea what is the situation of this product.

2.2. How will technology such as IoT, AI/ML, product innovation help move towards a circular economy?

First of all, in order to use new technologies, you need to motivate an internal change. Afterwards, maybe you can use all these new technical systems like block chain. But it’s not a question of what technologies can be used. First of all, people have to change their mind.

With regards to using recyclable materials, it’s a point about the circular economy. Another problem in the fashion industry, and we have several issues in fashion, is the visibility and the transparency. We are producing a lot of waste, waste in many different ways. We are talking about the stocks, the liabilities, the leftovers of the fabric. And also, in terms of consumption, the quantity of garments that people are throwing away into the waste every day. So, it’s very important that all this waste is dealt with, from the very beginning, we have to think about things in a circular way.

Manufacturer’s readiness to use recyclable materials depends on how far a company has progressed in that first step, where they take the step to motivate internal change, that is how they start to develop this new model. I have to emphasize that we have to invest in technology. Not in terms of the system, but into technology to make use of the recycled materials.

Recycled materials could be as good as the brand-new materials. For instance, you can feel that already for some of them. I can tell you that recycled polyester is pretty good and recycled polyamide is very good. But for instance, cotton recycling is not good at all, we also do have a solution for the viscose. It’s not recycled, viscose. And so, we have to invest in developing technology for that.

2.3. What would be the impact of achieving targets?

People are saying that most impactful way to make a change comes from the fabric. So, if you are taking care of this, at the end you have the main thing at least covered or addressed. Talking about the rest of the business, it’s already being done like solar panels to the factories where the people is stitching. But this is not what sustainability is in the fashion industry? What is going to do more sustainable, sustainable fabrics or more solar panels? There’s much more important sustainability elements you are meeting if you are taking care of where the fabrics are coming from. So, these are the main things, fabrics, raw materials.

Development of technology in the raw materials space is where we really need more investment to achieve more impact. This is a really technical thing; we are really talking about is rethinking about the materials we have been using, what we will be doing is changing the fabrics that have been used for thousands of years. But now we have to rethink again, how are we are going to use cotton that we know in 20 centuries time when we will be making clothes another way. So, this is very important. We really want the same result, but we have to think again how we are going to do it. So, people I think do not realize that this is the new way of thinking. It’s like the new industrial revolution.

2.4. What are they key challenges for developing a circular economy?

One thing is the liabilities in the stocks that we have in our shelves for the sales and everything. Which is the excess stock that brands have left over after that season ends. The other is the leftovers from the fabrics in the factories. And the other thing is all the garments that people are not using anymore, only 15% of clothing is recycled and donated and clothes makes up 5.2% of the waste in landfills. Because they have so many garments, other clothes, they’re just thrown away.

I think people want the final picture immediately. They’re not thinking as they should be doing, where they are investing into solutions one by one, which is what we have to do. So, if one company wants to say that they are sustainable, and to do so they are buying organic cotton and then they conclude and say that that’s it, “I’m sustainable.” But they are not thinking behind why they have to do it. What are the farmers doing? What is this country doing? Where is this cotton coming from? We have to think from the very beginning to the final thing, that it’s being sustainable or more sustainable. But right now, it’s the opposite. Currently people think now this is unsustainable, and look for a solution, but they should be asking themselves let’s see what we can do to be sustainable.