Luke Smith
Premier Miton Global Sustainable Growth Fund Assistant Manager
The rusting fishing boat lies on its side
For information purposes only. The views and opinions expressed here are those of the author at the time of writing and can change; they may not represent the views of Premier Miton and should not be taken as statements of fact, nor should they be relied upon for making investment decisions.
The rusting fishing boat lies on its side, whipped by the salt laden wind from the Kazak plains seemingly miles from the nearest drop of water.
The image is a well-known one, lying between Uzbekistan and Kazakhstan, the Aral Sea was once the world’s fourth largest freshwater lake, a lake that boasted a thriving population of fish and provided for communities in both countries the body of water stretched across.
While the lake was salt water, the rivers that fed it were fresh water. In the 1950’s the Soviet Union began using the rivers to irrigate the surrounding agricultural area with the purpose of boosting cotton production.
To this day, most of the once thriving Aral Sea is a desert and the fashion industry is linked to the environmental devastation in this Central Asian inland sea. The crop being grown with the river water is cotton. A hugely water intensive crop, with one cotton T shirt using up to 2,700 litres of water according to the University of Waterloo.
The cotton industry was not sustainable in the long-term. As the Aral Sea receded, salt flats spread for more than 50 miles. Winds picked up the salt and deposited it over agricultural lands, spoiling some of the fertilized and irrigated soil. The desertification of the Aral Sea was a catastrophe that provided irrefutable evidence of the damage being done to our planet by the fashion industry.
But is there an alternative?
Fashion is costing the planet and we as clothing consumers can demand change from the fashion corporations. But what does real, meaningful change look like? Whilst greenwashing has made us believe that any old cotton t-shirt has been produced with both us and our environment in mind, we can say with complete certainty that this is untrue.
Conventionally grown cotton is extremely damaging, and the way in which it is grown is completely unsustainable on a planet with finite resource, for example 27 million tons of cotton are produced a year, the same as 27 t-shirts for everyone on Earth (Source: theworldcounts.com). A whopping 20,000 litres of water are needed to make a t-shirt and a pair of jeans using cotton (source: Kleiderly.com).
These startling figures have led to the fashion industry to become the 2nd or 3rd most polluting industry in the world — depending on who you talk to.
Looking wider this is not just a cotton problem, it is a resource allocation problem, and simply not buying cotton will not change anything fast. So, what will and who will?
Fashion’s race for new materials
The good news is that leading fashion brands, such as H&M and Zara, are pursuing a raft of initiatives to adopt recycled textiles but giving one of fashion’s major materials a sustainability makeover still requires billions of dollars’ worth of investments and deeper, longer-term commitments to scale.
Amongst the innovative companies in the race for new clothing materials is Renewcell, a Sweden-based textile-to-textile recycling company. Renewcell provides an alternative raw material for textile production that replaces resource-intensive material such as cotton or petroleum-based material such as polyester.
Industrial evolution?
The company’s core process recycles the cellulose in used cotton textiles and makes sheets of pure, natural and biodegradable dissolving pulp, which is then used as a raw material for manufacturing textile fibres. The pulp sheets are packaged into bales and shipped to be made back into natural textile fibres.
This can be used in several industrial applications. Currently, it is used in textile production in the garment industry, where demand for sustainable material is high and increasingly driven by increased consumer awareness.
“Up until now, the fashion industry has relied on growing more cotton, using more water, spraying more chemicals and pumping more oil to be able to lower prices and sell as much as possible. The modus operandi has been bigger, faster, cheaper and more wasteful,” says Patrik Lundström, CEO of Renewcell.
The process behind the product
The process starts with worn-out clothes. It is based around Renewcell’s ability to upcycle textile waste. Renewcell takes clothes that cannot be sold again, preferably cotton clothes, which are then shredded, de-buttoned, de-zipped and de-coloured. Contaminants, like plastic polyester, are taken out. What remains is cellulose, which is dried to produce sheets, which are then shipped off to be made into natural textile fibres again.
After years of advanced research and development, Renewcell has emerged as the first known company with the patented technology to produce a dissolving pulp that enables textile production from 100% textile waste. The end product can replace the use of virgin cotton and petroleum-based polyester materials, which have large environmental footprints.
View from the ground up
Founded by innovators from Stockholm’s KTH Royal Institute of Technology in 2012, Fast Company named ‘’Renewcell’ as one of the World’s Most Innovative Companies in 2021. After building its pilot in Kristinehamn, Renewcell partnered with leading global brands such as H&M and Levi’s. Renewcell listed on the Swedish stock market in late 2020, with the money raised earmarked for a massive expansion of capacity. Since then, the company’s first industrial scale plant has been built in Sundsvall, Sweden.
Core to our philosophy as investors, is maintaining an ongoing dialogue with the management of the companies in which we invest, particularly with those businesses that we class as ‘disruptors;’ nascent companies that have the potential to do big things.
Renewcell is one such business, and now that pandemic is well behind us, I took the first opportunity available to travel to Sundsvall and see the process first hand. Sure enough, I witnessed stacks of bales of old clothing being fed into machinery to be converted into a versatile dissolving pulp that can fit into existing fibre supply chains.
One key observation was the suitability of the location and the room for production to grow. The facility is situated within a large paper production site owned by Svenska Cellulosa AB (SCA). Given the decline in that industry, SCA has scaled back production considerably in recent years, providing an opportunity for Renewcell to occupy now vacant buildings, whilst taking advantage of the existing infrastructure, such as the nearby harbour, as the business builds scale. If the company can successfully produce the targeted 120,000 metric tonnes capacity in the near term, further expansion is planned.
In October 2022, Renewcell announced that the facility was commercially operational and then in late December, announced that it had shipped its first produce from the Sundsvall facility to a customer; both important milestones as the ramp up in production continues.
Changing fashion for good
In the coming decade, the global middle class is expected to grow, driven by economic development and rising living standards in India, China and other emerging markets. It is expected that, in line with more developed economies, rising disposable incomes will cause an increase in fashion consumption. Lots of these consumers will be within Generation Z and for an environmental, social and governance (ESG) focused investor the social change that Generation Z may bring about is exciting.
With an eye to climate change, the fashion industry needs to shift to circularity. In its bid to make the fashion industry embrace reuse, Renewcell’s technology can be an important factor in reaching the EU’s target for waste reduction, as well setting the tone for the development of the European recycling industry.
The company can supply commercial volumes of 100% textile-to-textile recycled materials and is now scaling up to meet the growing demand, bringing to life its vision to really change fashion for good.
