The Good Fashion Fund is redesigning a dirty industry
Putting pollution out of style
Rabobank invests in the Good Fashion Fund, which provides loans for sustainable technologies to clothing manufacturers in India, Vietnam and Bangladesh. The objective? Systematic change.
Looking for a new outfit? You may want to think twice before grabbing those gorgeous new shoes or trendy t-shirt. Because the production, transport, and use of the materials in the fashion industry have a huge impact on the environment. And that’s putting it mildly. The clothing industry is, in fact, one the world’s biggest polluters. But insufficient capital is often the root of the problem. There are expensive solutions available, but they have to be financed.
According to American clothing designer Eileen Fisher, the clothing industry is second only to the oil industry when it comes to polluting in the world. That may be a bit of an exaggeration, when you look at the research, but there is no doubt that it is doing damage. Rogier van Mazijk is the Investment Director of Fashion for Good, a platform for sustainable clothing innovation and the driving force behind the Good Fashion Fund. “The fashion industry is currently stuck in a ‘take-make-waste’ cycle that has devastating environmental consequences,” he explains. “Not to mention the enormous economic losses this causes. On average, we’re buying sixty percent more clothing than we did fifteen years ago, but keeping each item only half as long. Estimates also suggest that nearly sixty percent of all clothing items are incinerated or sent to the landfill within one year of production.”
Seventy million barrels of oil per year
According to Van Mazijk, the clothing and footwear industry generates eight percent of worldwide greenhouse gas emissions, and the manufacture of one kilogram of fabric creates around 23 kilograms of greenhouse gas. “Worldwide, almost a quarter of industrial water pollution can be attributed to the dyeing and processing of textiles. And these are just some of the environmental issues that the fashion industry, which still relies on fossil fuels, has to face up to. Take, for example, the production of polyester. Around seventy million barrels of oil are used each year, and it will be two hundred years before these biodegrade, while environmental pollution just continues unabated in all that time.”
For the environment, the so-called “upstream side” of the production chain, where raw materials are extracted, is the most damaging. Van Mazijk points out, “A great deal of water and energy is consumed, and greenhouse gas emissions are extremely high. The production of materials that cannot then be reused is also highly damaging. This primarily relates to fiber production and wet-processing, such as spinning, dyeing and finishing, including treatments to make fabric sturdier, more supple, or easier to iron. And, from a socio-employment perspective, the manufacturing process is highly relevant as almost all clothing is made by hand in low-wage countries.”
"The fashion industry has devastating environmental consequences"
- Rogier van Mazijk, Fashion for Good
Outdated technology
The good news is that people are hard at work on new, science-based technologies that will increase the sustainability of brands and manufacturers. However, to fundamentally change the production phase in the supply chain, it is crucial to accelerate the development and implementation of these “disruptive” innovations. Many of these technologies are only in the very early stages of development, according to Mazijk. "Fashion for Good has now evaluated over two thousand innovations in this context. We’re trying to create collaborations between the innovations, fashion brands, and manufacturers in order to accelerate the development of these technologies.”
“Many of the small and medium-sized companies in developing countries utilize very outdated technologies. They have no access to financing to buy new and more efficient machines. The fund offers these manufacturers the opportunity to implement state-of-the-art technology.”
Expansion capital
The Good Fashion Fund was created on the basis of a collaborative partnership between investors, financiers, FOUNT, and several parties from the industry, such as brands, manufacturers, and social and environmental experts. The fund focuses exclusively on Asian companies. Why? “Asia is one of the biggest producers and exporters of textiles,” explains fund director Bob Assenberg. “This is due to the ongoing search for ever cheaper workplaces, because clothing is always made by hand. As a result, most of the supply chains are now located in ‘cheap’ countries where there are fewer regulations in relation to the environment.”
But Asia is huge; clothing is manufactured from Turkey to Japan. Therefore, the fund, just like any other fund, requires a focus. With the sixty million American dollars the Good Fashion Fund is trying to raise, it won’t be able to support all of Asia. According to Assenberg, “We’re focusing on the countries that are currently expanding. Some countries have grown substantially in the past, but development is now levelling off. Take China, for example. Other countries, such as Vietnam, Bangladesh and India are growing rapidly in terms of export value, and there is an increasing demand for expansion capital.”
Systematic Change
The higher goal of the fund is to contribute towards (necessary) systematic changes within the clothing industry. By financing technologies that support significant reductions in the use of water, energy and chemicals, but also by improving working conditions in the factories. The fund offers long-term financing to clothing manufacturers and works with them to create an improvement plan for environmental aspects and social working conditions. “In this context, we focus on safety, health, discrimination, salaries, education, and growth opportunities for women,” says Assenberg. “The fund is clearly not big enough to change the entire industry, but we would like to demonstrate that investing in sustainability works and supports the changes that are vital for the industry.”
"Clothing is always made by hand"
- Bob Assenberg, Good Fashion Fund
The loan from Rabobank (which equates to a value of 6.2 million USD) is a welcome addition to the fund. “We’re delighted,” adds Assenberg. “Rabobank is a leading, innovative commercial bank that focuses on sustainable financing, making it an ideal addition to the two other investors who have a relationship with the fashion industry. Thanks to the differences in the types of investor, the fund has taken on a blended-finance character. This aspect can be put to good use to convince potential future investors and lenders to participate as well. We also expect the participation of a leading name such as Rabobank to have a positive impact on the recruitment of new investors and even new investments.”
On a final note, as a consumer, you may be wondering how you can contribute towards reducing the environmental damage caused by the clothing industry. You can, as Van Mazijk emphasizes, “Buy less clothing, buy good quality, buy organic, do your research, and use apps such as ‘Good On You’ to compare brands. Repair your clothing and take care of it so it lasts longer. And buy vintage clothing or swap items with your friends instead of buying new items. In short, you can make a difference through a combination of factors. And if you’re not sure where to start, visit the Fashion for Good Museum in Amsterdam and book a private guided tour. You’ll discover the stories behind your clothing and see the innovations of the future from close up.”
