Interview with Rogier Van Mazijk & Catharina Martinez Pardo
Rogier Van Mazijk & Catharina Martinez Pardo
Finance Director & Principal Fashion for Good & BCG respectively
When you talk of opportunities-who / which are the entities being considered to finance these opportunities? Are the stakeholders of this study also looking to approach financers for such innovations or is this just a study that could beget financers?
Mazijk: We mostly talk about financing solutions that have not yet scaled up- that means bank financing is generally not yet available to such innovators. Therefore, we are primarily looking for equity capital, which traditionally comes from venture capital investors, corporate investors (e.g. brands investing), and upstream (e.g. large polymer producers or manufacturers) investors. As this study is first of its kind, it can be used to increase awareness of this opportunity / problem, but can also be used to target individual financiers to get them to focus on this space. Already, Fashion for Good actively maintains dialogues with many investors globally to allow easy access to fashion tech opportunities.
Pardo: In an industry where even the biggest players alone cannot achieve the scale of change needed, all stakeholders must step up. To overcome the barriers to financing innovation in sustainable fashion, all parties must step up individually and collaboratively. Financing will flow into the fashion space if risk is manageable, returns are attractive, and impact is measurable.
Financing for these innovations comes from various sources, depending on the stage and type of innovation. Philanthropic, public and private investors all play a key role in providing the required financing to develop and scale innovation and at the same time can benefit from the greatly untapped financing opportunity.
The increasing need of the hour is circularity and to that end sustainability now is just step one in that direction. How many such proposals does Fashion for Good receive annually? Following this report, how easy do you think will it be to get the right and adequate financing?
Mazijk: Circularity is high on the agenda of many fashion brands and the industry in general. Financing the circular solutions is important, and there is a lack of financing available. It is unlikely that the significant gap will be filled without significant efforts of all stakeholder groups-this problem is not to be solved by one organisation or even one stakeholder group but requires true cross-industry collaboration. However, we believe this does not come without reward: those who will focus on innovation and make it a strategic priority will ultimately win.
Both sustainability and circularity mean disseminating the message to the end consumer. Any proposals towards this?
Mazijk: Circularity and sustainability are both increasingly marketable to consumers, given the increasing consumer demand for sustainable materials and increasing awareness of the severe environmental and social problems in the fashion industry. In the last decade we have already seen examples of how companies able to market sustainable / circular raw materials and production processes to consumers were able to capitalize on those in terms of brand building, sales and margins. This effect will only become stronger in this decade.
What about linkages with governments, fashion / textile stakeholders specially in the manufacturing hubs of the world like say Southeast Asia which need to work harder towards a circular process from seed to shelf and everything in between?
Mazijk: This industry has become very global and it has become impossible to consider one geography separately from another. That means that brand (or even consumer) preferences in the West have almost direct impact on the manufacturing operations in the East. Manufacturers and other upstream participants (material producers and chemical companies) are required to participate in this shift-fortunately most of the large operators are realizing this and investing time and financial resources in innovation focused on circularity and sustainability themselves, and / or developing solutions in collaboration with their clients (brands).
Pardo: Supply chain partners across all geographies as well as the public sector play a key role in our call to action. The public sectors: although regulatory action has begun to influence the industry's move toward sustainability, more is needed to provide a framework of policies and incentives that will drive systemic change. The public sector must increase its direct investments and support to catalyse investment from the private and philanthropic sector.
Supply chain partners in all geographies need to play a more active role. They have a natural stake in innovation, and they benefit from strategic partnerships with innovators in which they can offer expertise, access to equipment, capital, and, ultimately, an exit for the startup through acquisition.
This interview was first published in the February 2020 edition of the print magazine.
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