The EU's Corporate Sustainability Directive Fails; Renewcell Files for Bankruptcy; Funding for Next-Gen Materials Surges; Reflaunt-DHL Partnership Forged
Welcome to Week/End, your quick-hit guide to this week’s sustainability news at the intersection of fashion, ethics, sustainability, and business. Stay in the know with Week/End and discover the latest developments in the fashion industry's pursuit of sustainability.
European Union Fails to Pass Directive Aimed at Holding Companies Accountable for Supply Chain Violations
After a four-year effort, the EU's attempt to implement the Corporate Sustainability Due Diligence Directive (CSDDD), also called the CS3D, has failed. The directive sought to make EU companies, with over 500 employees and more than 150 million euros in global turnover, legally responsible for social and human rights violations not only within their own operations but also across their subsidiaries and supply chains. Despite its intentions, the directive was voted down in a closed-door session.
Though the directive received provisional approval in December, once the final draft was released on January 20, significant opposition emerged from key EU member states, including Germany, Italy, and France who raised alarms over the directive's potential to financially strain businesses and diminish the global competitive edge of European companies. Critics contended that the directive's stringent requirements could impose undue financial burdens on companies, potentially putting them at a disadvantage compared to their non-EU competitors, who are not subjected to similar regulations.
The CSDDD is on a tight schedule for EU legislative approval, needing the European Parliament's nod by March 15 to be adopted before the June elections. The legal affairs committee (JURI) faces a March 7 deadline for its approval, though there's room for procedural flexibility for a later JURI decision. The impending elections pose a risk of altering the Parliament's makeup, potentially undermining support for the CSDDD and similar environmental initiatives. As it stands, the directive's chances of passing appear dim.
DHL Partners with Reflaunt to Launch Branded Resale Service, Offering Fulfillment and Shipping Solutions for Fashion Brands
DHL has entered into a strategic partnership with Reflaunt, a resale-as-a-service platform, to enhance its resale capabilities. Building on the success of a one-year pilot program in Poland, this collaboration aims to tackle the logistical complexities of fashion resale on a broader scale.
Benefiting from DHL's extensive global network of warehouses and offices, the partnership is equipped to manage the processes involved in handling pre-owned items, from inspection and authentication to listing for sale. Reflaunt's proprietary software, known for powering branded resale services for clients like Balenciaga, Net-a-Porter, and Ganni, complements DHL's capabilities by offering brands a seamless platform for managing their resale operations. This partnership allows returned products to be routed directly toward resale channels, enabling brands to monetize merchandise that would otherwise result in losses. In doing so, Reflaunt creates a resale channel that operates similarly to traditional ecommerce platforms, offering a profitable avenue for brands to manage their returned products and tap into the growing market for secondhand goods.
This latest development comes after an earlier announcement this year, where Reflaunt unveiled a partnership with recycling startup SuperCircle. Together, they aim to offer a sustainable end-of-life solution for items that can’t be resold in the market.
Textile Recycling Pioneer Renewcell Files for Bankruptcy
In December 2022, the Swedish recycler made headlines by shipping the first batch of Circulose, a recycled cellulosic pulp intended to transform textile waste into feedstock for new fabrics, from its industrial-scale plant. This development was celebrated as a significant step towards sustainable material innovation, offering an alternative to traditional, less environmentally friendly materials like leather, polyester, and viscose.
However, by October 2023, Renewcell encountered weaker-than-expected demand for Circulose. The company warned that it might not achieve its financial targets, and subsequently, on February 27th, 2024, the Stockholm District Court approved Renewcell's bankruptcy application, officially declaring the company bankrupt.
The news of Renewcell's bankruptcy triggered widespread concern and calls for action within the fashion industry, highlighting the situation as not just an individual failure but a systemic one, revealing the complex challenges of integrating new, sustainable materials into established supply chains.
Report: Next-Gen Materials Start-ups Raised Nearly $500 Million in 2023 Despite Industry Challenges.
According to a new report by the think tank Material Innovation Initiative, published on Tuesday, startups focused on developing sustainable materials—such as plant-based or lab-grown leathers, silks, and furs—raised $496 million in 2023. This marks an 8.6 percent increase from the previous year. This surge in investment comes at a time when global venture capital funding is experiencing a slump, with funding decreasing by 42 percent and deal count declining by 30 percent. Despite industry challenges and high-profile setbacks, the report underscores the continued importance of next-gen materials in advancing sustainability efforts and suggests that the upward trend in investments may signify a faster recovery for the next-gen materials industry.
H&M Group to Test Waterless Dyeing Technology in Partnership with Deven Supercriticals and Arvind Ltd.
H&M Group announces plans to trial Deven Supercriticals' Suprauno technology, a revolutionary waterless dyeing process that utilizes Supercritical CO2 instead of traditional chemical-driven methods. Collaborating with longstanding partner Arvind Ltd. in India, H&M aims to reduce water, energy, and chemical usage in textile dyeing. Previous prototyping has shown significant reductions in water consumption (76%), energy usage (67%), and chemical usage (90%) for poly-cotton blended fabrics.
This initiative aligns with H&M's sustainability goals, including a 56% reduction in greenhouse gas emissions and a 30% reduction in freshwater consumption by 2030.
Sustainable Apparel Coalition Rebrands as Cascale, Commits to Enhancing Sustainability Efforts
The Sustainable Apparel Coalition (SAC) has undergone a rebranding, now known as Cascale, to emphasize its dedication to collective action and scaling up sustainability initiatives. This move comes in the wake of the controversy surrounding its Higg Materials Sustainability Index (MSI), criticized for potential consumer misinterpretation and reliance on corporate-funded standards. Following a critical review prompted by a ruling from Norway's consumer watchdog, Cascale commissioned a third-party review by KPMG, which highlighted the need for improvements in data integrity and environmental impact assessment methodologies.
Despite its challenges, Cascale's Vice President, Andrew Martin, affirms that the rebranding and ongoing improvements to the Higg Index are not attempts to detract from past controversies but rather to confront and learn from them. Martin emphasizes the organization's dedication to the Higg Index, viewing it as a central element of their mission. He insists that the rebranding reflects a commitment to improving and refining the Higg Index rather than distancing the organization from the previous controversies.
The rebranding also signals Cascale's expanded focus beyond the fashion industry to include adjacent sectors like home furnishings and sports goods.
The RealReal Reports Historic Fourth Quarter Results, Achieving Positive Adjusted EBITDA for the First Time Since IPO
The RealReal, an online marketplace for authenticated luxury goods, reported a significant achievement in the fourth quarter, reaching adjusted earnings before interest, taxes, depreciation, and amortization (EBITDA) of $1.4 million, marking a significant improvement from the previous year.
CEO John Koryl attributes the improved financial results to a strategic shift towards the core consignment business model, emphasizing profitable supply and operational efficiencies. The company is on track to break even on an adjusted EBITDA basis in the current year, with a focus on enhancing technological capabilities and automation processes. Investors responded positively to the news, driving shares up by 18.6 percent in after-hours trading. Koryl also announced an updated capital structure, providing greater flexibility to execute the company's strategic vision and accelerate growth in 2024.
Newly Added Jobs on the SFF Job Board
Brooks Running, Sustainability Analyst, Seattle, WA, USA → Learn More
Aritzia, Sustainability - Director, Environmental Impact, Vancouver, British Columbia, Canada → Learn More
Calvin Klein, Manager, Sustainability, New York, NY, USA → Learn More
PVH Corp, Sustainability Internships (Summer 2024), New York, NY, USA → Learn More
lululemon, Product Sustainability Lead, Vancouver, British Columbia, Canada → Learn More
lululemon, Senior Manager, Climate Action, Vancouver, British Columbia, Canada → Learn More
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