Partner content by ING: Circular jeans – stitched for the future

Did you know that by 2025, the EU is changing the script? No more textiles are going to the landfill. Reusing material is part of the answer, but the real game changer is recycling. With Sanko leading the way for the denim industry, we've got a pivotal role to play. Are you guys ready to join this journey?

Welcome to the Uncovered Sustainability Podcast. I'm Katie Prescott, a business and technology journalist based in London. This podcast showcases how some incredible business projects were created sustainably by incredible people and the challenges that came with that, plus crucially, how they were financed. In this episode, we're tackling a massive challenge: how to make the textile industry, and specifically jeans, a huge sector with the power to make a great impact, more eco-friendly. We'll break down the problem of recycling blended material and tell you how Sanko, one of the world's biggest jeans manufacturers, is starting a whole new circular economy approach to textile production in Europe. But that's not all. We'll also delve into the European Union's mission to eliminate all textile landfill by 2025. And most importantly, how each of us can play a part in caring for our clothes and planet today. Well, I'm joined today by Anne-Marie Norland, who works on the Circular Business Development team at Sanko. Hi, Anne-Marie.

Hi, everyone.

Looking forward to hearing this story today. Thank you very much for sharing it with us. And Julia Schell and Joost van Dun, who work in Circular Banking at ING, and they're part of the team who helped Sanko make their plans.

Let's go.

Good afternoon, everyone.

We're going to set out what the issue is here for listeners who perhaps won't know anything about it and maybe won't even be aware of how much a problem textile waste is. So there are some extraordinary stats that show that Europe generates 15 million tonnes of textiles every year, and only 1% of that goes back into the textile value chain, which I guess means is recycled, essentially. Could you just sort of lay out why this is such a problem and how we've got to this state?

Over the years, we've been buying as consumers more and more clothing, garments, etc. But on the other hand, we also use those garments less. So that's meaning that we also provide a lot of waste and all of this waste is not directly being recycled.

But what's the challenge? I mean, why is such a small amount recycled when we know we're producing more and more?

So the, the challenge predominantly is, is in the blended versions or the blended textiles. So think of this as a smoothie. When you mix together bananas and strawberries and whatever else you're doing, you'll end up with a nice smoothie. Now, If I ask you to dissect it again and bring it back to strawberries and bananas, you're having a difficult time doing that, right? Think about blended textiles in exactly the same way.

It's so interesting. It's almost like the opposite of weaving, like you're trying to untangle all these threads.

Yeah, that's it. That's it. And that's where the challenge is.

Did you want to come in, Julia?

Yeah, I just wanted to add that demand really grows and we all want to grow and we all want to grow sustainable. And this is actually demand predicts that we have to all do something. Actually, the whole value chain of companies from manufacturing, from actually design, manufacturing, and then recycling. And that's why the big players, they're really thinking practically about like Suncor, about how we can fix it, what is needed. And that's why myself and Jost, we are so— we were curious and we deeply were involved together to look at this challenge actually in the industry, textile industry.

Yeah, it's a fascinating point about infrastructure because it seems in many ways that that goes to the heart of this. Joost, you're nodding. What is the current state of play in terms of the infrastructure facilities?

Yeah, as we just mentioned, there's already a lot of waste being generated after the usage of the garments, and therefore it sounds so logical, but apparently it's not that logical yet. All this waste also needs to end up in the right infrastructure for further processing. So at the waste mountain, so to say, first of all, it needs to be collected, of course, then it needs to be sorted. And then after sorting, part of it can be either reused or can be prepared for recycling. And especially this infrastructure needs to scale further to handle all the amounts of waste we have created with each other.

And I guess part of that is also the supply chain or what's called the value chain, the, the, the entire textile economy. Annemarie, what does that look like? And that must be quite complicated, never mind untangling all the threads of blended materials.

It is actually, yeah. It's not something that any of us can do on our own. So the entire value chain is interconnected, and at the same time, it's very individually based. So all of us have to start working together in order to solve it. So it's the steps before yourself in the value chain and the steps after. So if I look at Sunkow, if we want to recycle textile waste, We are dependent on the infrastructure that's available within the market. Now, in some countries that's more readily available and better built up. In other countries within the EU, it's either non-existing or still needs to happen. Then at the same time, if you look at the other end of the spectrum from our side, which is the consumers, a lot of consumers don't know that even if garments are significantly damaged or sort of non-usable, they can still be used for recycling. So what usually happens from a consumer perspective, if it's damaged, you throw it away, you throw it with your house households trash instead of going through a collection bin, because everybody thinks that the collection bins are for reuse only. But collection bins are also for recycling because when collectors take away that textile, they sort through it and say, okay, part of it is for reuse, which is then resold or through vintage stores or whatever it is that they're reusing it for. And the other piece will then end up in recycling. If the piece that normally goes into your household bin doesn't reach the recycling, it goes through incineration. Incineration or landfill. So there's a massive amount at this point that needs to be redirected from landfill or incineration back into recycling.

What I found incredibly striking reading in ahead of this was the European Union's plan to try and eliminate all textile landfills by 2025. I mean, that's, you know, a year and a bit away. And hearing the stats about the, how little we recycle, that, that feels sort of impossible. I'd love to hear your views on that. Julia, do you want to start?

I think most of the companies, they will go through the enormous transition, and this is just the beginning, and we need to speed up to accelerate. So this is really a tremendous transition that companies will go through in the whole value chain. That's why value chain is so crucial here, because they need to cooperate with each other to make this change.

Anne-Marie, what's your view, representing a business at the front line of all of this? I mean, 2025, is that actually achievable?

So on the one hand, existing players in the market need to scale up because they need to handle a lot more volume come 2025. And on the other hand, there's a lot of countries that don't even have the infrastructure yet. It's going to be a huge challenge. I mean, the EU placed a directive to every country in Europe By 2025, you're no longer allowed to do this. But they are counting on the industry and on the larger industry players to make it happen. It's not something they have the answer for. They're expecting the answer to come from us, consumers, brands, producers. The entire value chain needs to deliver on the answer with the rules and regulations being framed by the EU and government.

Well, it feels like a very good time in the podcast then to hear what your solution is and what you've been working with ING on.

As I said, it's a very independent, sort of like siloed value chain. And one of the things that we need to address together is the solution of textile recycling. And we can't do that alone. So we reached out to ING, asking them to open up their network because they've got a larger network of clients and connections, et cetera, to start that discussion. And at the same time, what we've been working on as a company is actually building, yeah, a re— what we internally call a recycling hub, uh, in Turkey where we can recycle different fractions of textile waste. So not only cotton and polyester, but also the blended materials, cotton and polyester, which we do with, um, yeah, our inventions or developments within the industry that we've either invested in or through our own development with our own research and development team located in Turkey. So we've actually created what I think is quite a unique recycling hub that focuses on almost, or can handle almost 70%, 60-70% of the textile waste being polyester, cotton, or anything in between. Whereas the majority of recycling facilities throughout the world either focus on one specific piece of the puzzle, And Julia, I guess that's key to this really, is to unlocking this puzzle, trying to connect as many people as possible.

And that should be connecting right parties. And it's amazing that all the companies we talked, I think, to more than 50 companies, most of them, they were so surprised. It was something unique that bank would be starting these discussions with the companies on this topic on absolutely non-transactional, non-competitive basis. We were even challenged with, what is your role there as a bank? And actually, this facilitator role turned to be quite crucial, not in building the relationship with Ana Maria and Sanko as such, but actually to support the companies, the major players in Europe to succeed in their journey. And this is something that was an eye-opener, I think, for me as a banker, that we could do that. Of course, the issue is complex and it's not always you come up with solutions, but we could actually put the right parties together to challenge the topic and to come up with connections that are so needed.

Gijs, could you give us an example of some names? Like, what sort of companies were you connecting?

So, on the one hand, you need to think about the producers of garments, like Sanko, but also the large fashion brands, the retailers, and on the other hand, on the downstream side of the value chain, also the collection companies, the sorters, the recyclers, which are typically smaller companies compared to the large brands who operate on a global level. We see that the collection, sorting, and recycling market is much more scattered and consists of more smaller companies. So therefore, it was really nice to connect all those parties to each other.

Anne-Marie, we said at the beginning that only 1% of textiles in Europe are recycled. In your plant, what can you do? How much percentage, what percent can you recycle?

It's still only fractional. I mean, we're scaling up in the plant to be able to recycle about 200,000 tonnes of textile waste by the end of next year. That's the goal. But if you look at the whole, that's fractional of what is ending up as textile waste globally. So, Percentage-wise, I think at that point we add maybe, what, 1% to the total. But we've got a vision on the horizon that might actually change that percentage slightly more higher. So yeah, it's still marginal, but we're working on that. We've got a bigger plan in place.

And what stage are you at in terms of building the facility itself?

At the moment, it's already at 60,000 tonnes, approaching 70,000. So next year is going to be around, like I said, 200,000 tonnes. So we're going steady into the direction, and we set ourselves some ambitious targets, and we're constantly adjusting our ambitious targets because we think we should, as a large industry player, one of the largest— Sanko Textile and its subsidiary or division ISKO, which is one of the largest providers of textile fabric worldwide— we also think we have a responsibility to address some of the issues that happen in or are existing in the textile industry. So with that mindset, we actually started this road. We started this development or this transition about, I think, 8 years ago or so with all of the small steps. And one of the challenges that we had when we tried to incorporate recycled material into our products, we found that if the value chain is disconnected, so if it's purely recycling for recycling, and with no specific knowledge on what happens with the fibres afterwards, you'll end up with an inferior product. And so from that knowledge, we decided as a company, we said, okay, in order for textile to benefit from textile-to-textile recycling, you need to have a player in the market that has the knowledge on how to use it. So how to spin recycled fibres into yarns again, how to use recycled yarn into fabric again, in order to create that additional value that brands are looking for, because nobody's waiting. I mean, I'm pretty sure nobody wants to step back from comfortable jeans that have a little bit of stretch in there to jeans that don't have any stretch in there.

Very interesting hearing you all talk about this, because it's not exactly what I expect from a banking transaction. It doesn't sound like a, you know, sort of straightforward deal. I'd love to hear your reflections on that, Joost, and how it compares to other things that you've done and worked on.

Yeah, this is indeed the slightly different. And what we typically do here is we're more one step ahead at the moment than we're normally joining a, a finance opportunity, so to say. It's more here first about connecting the value chain, and then we see specific opportunities arising between different parties in the value chain or on just a single company level. And of course, there we want to contribute. But we just didn't want to sit and wait what is happening, but we want to be part of it and also to understand better what our clients are working on and which challenges they are facing currently.

Julia, has it changed your perspective of the textile industry, perhaps personally how you shop, how you think about clothes?

Definitely.

I think this experience was really extraordinary to open the eyes on the whole situation. And also, I look at it from a personal impact perspective, that organization that we are working for together with our key partners, we can actually be able to make a change there. So starting from understanding of a challenge, which is very complex, to realizing an opportunity that we can contribute to.

And how about you, Annemarie? Has working on this— I mean, clearly you're in the industry, so perhaps it's a little different. But how has it made you change your perspective?

So there's like a huge commitment, not only from me, but from the entire team. You want to see this happen. You know you're at the forefront of something that can create an enormous positive change within the industry. So it's almost like you want to see your baby walk out the door. And I know that's a little bit quick, so it still needs to crawl first, but we've got the crawling phase, we've got the first hub up and running, and you kind of want to see what comes next. And so for me, it's really important to see how this develops, not only from our group's perspective, but also how this is going to be perceived from the industry perspective. And yeah, I think it's, for me personally, it's been a really interesting ride to see with my colleagues who are responsible for various pieces of the puzzle, how much commitment there is to make sure that circularity within the industry is going to happen, whether it's today or tomorrow, but there's going to be a turning point that will be significant.

It's an interesting point about changing perceptions in the industry. Because you are one of the biggest players and you've got the clout to do that. How have your peers, how have other companies in your sector responded?

Well, some have been very— they've responded very enthusiastic. I mean, they've been very sort of like overwhelmed with the possibility of what we are trying to bring to the market. So that's really good. You see also a little bit of reluctance here and there because one of the things that The value chain also needs to do at least the, like say the brands and the retailers. For them, it's basically a game of securing their raw material in order for them to make garments. And in the future, due to all of these legislative changes, et cetera, brands and retailers are being forced to increase their intake of recycled material within their garments, within their collections. And so what you see developing at the moment is, is a huge pressure on demand, but there's not so much the ability to deliver on that demand. So any party that brings recycled materials to the market that can actually be fed into the textile industry is welcomed with open arms, provided of course we can keep the cost down, because that's one of the key aspects within recycling is that we can't blow up cost aspects because then the consumer still doesn't buy the products.

And this is something that's come up again and again as we've done this podcast series. It is difficult because we're in the middle of a cost of living crisis. We know inflation has been soaring. We're in the aftermath of the pandemic. It's an incredibly difficult period for a lot of people. And I imagine, Anne-Marie, as you try and juggle the, as you say, you know, demand for the sustainability angle with cost, that does present quite a headache.

It does. It's a fine line. You're trying to bring something to the market that everybody can benefit from. So not only sort of the designer brands, and we've all seen some of the wonderful things that happen on the upscale of the textile industry or the fashion industry. And if we can't help with a solution, then ultimately we can't bring enough volume to the market for it to be a circular change.

Thank you very much. Houston, Julia, I'd love to hear your reflections now on what might come next. Where do you see the project going? How big could it be? And how many more of your partners do you think you could get involved? Julia, do you want to start?

I think we are just starting, and this is a very exciting period. I think whatever we do as a bank, as an international bank, will depend on our clients, on our partners, what they they, where they stand in the transition and how we can support them. And this is, I think, the crucial to tailor it to the Annemarie needs and others' needs to really to see what kind of impact we can do together. And this always been, I think this event was so successful because it was tailored and based on our clients' needs and the right parties were put together. So there definitely will be a follow-up. I cannot say definitely what is next, but the fact that international bank like ING can really play important and crucial role of facilitator to put the right parties together and unleash the network, this is something what proven to be very successful and really appreciated by the key clients like Sandco. So this is something we definitely will look into, and this is an eye-opener for me as a banker as well.

Joost, do you agree with that?

Oh yes, definitely. And also wanted to say, I find it fascinating to see how the industry now moves from However, for a couple of years there, the, the focus was also on sustainable source of cotton, which is of course very relevant, but now also on the use of recycled materials in the production of new garments, because by that you also solve the enormous amount of textile waste we're generating with each other. So there are multiple solutions for that, but this is a very important one. So yeah, really happy to see those developments and also all the work Annemarie and her team at Sunco are putting in it. With regard to ourselves, yeah, we are happy to support this transition. I think it's important that those more sustainable products become the norm, and in that sense that we also have a more level playing field for all the companies using recycled materials, and that it can compete with virgin materials in a strong way.

Thank you. Thank you very much, all of you. It is the most fascinating story, and I think, as you've all said, It does feel like we're still very much at the beginning of this transition, and it'll be very, very interesting to watch that 2025 date when it comes around to see just how much of that percentage we've managed to change and whether the dial really has shifted. But it feels like all of your work just puts the whole industry on a completely different trajectory. The concepts of reuse and recycling are closely related. But reuse has its limits because fabrics obviously eventually wear out. Now in the EU, there are new laws pushing for change into how textiles are handled. Sanko, a global leader in denim and textiles, is taking a significant step towards reducing textile waste by doing large-scale recycling in Turkey. And that involves breaking down raw materials and providing them to manufacturers to create completely new products. It's a first and major step to less textile waste and making a circular clothing economy that's more local for everyone. Society is transitioning to a low-carbon economy. So are ING's clients, and so is ING. The bank finances a lot of sustainable activities, but still finances more that's not. See how they're progressing at ing.com/climate.