December 15, 2019
Small and Growing Businesses are a Key Driver of the Circular Economy

The current linear economy and its ‘take-make-waste’ approach is outdated

Globally, there is a growing consensus that the current economic system is no longer working for businesses, people or the environment. We take resources from the ground to make products, which we use, and, when we no longer want them, throw them away. Globally, an increasing number of organizations like the Ellen MacArthur Foundation are driving the agenda around the circular economy. Some of the big questions to transition towards this new economic system include:

  1. How to design waste out of the system?
  2. How to keep products and materials in use?
  3. How to regenerate natural systems?

Currently, 80% of environmental impact is determined at the design stage, calling for a new approach to product design. In order to increase the lifecycle of products and materials, there is a need to boost reuse, repair, and remanufacturing, and to create closed loop production systems. Last, the intent is to not only help restoring or protecting, but improving the environment through enhancing natural resources.

SGBs provide answers through product, process, or business model innovations

Around the globe, start-ups and small and growing businesses (SGBs) have been developing solutions to address some of these challenges. In order to build the ecosystem around circular textile and apparel, ANDE India has recently partnered with Intellecap’s Circular Apparel Innovation Factory (CAIF), an initiative with Aditya Birla Fashion and Retail and The DOEN Foundation as anchor partners, with a mission to build capabilities and an ecosystem needed for a transition towards a circular textile and apparel sector in India.

India’s textile and apparel industry is one of the world’s largest, and is a major contributor to global textile and apparel production. The industry currently employs more than 45 million people, and is thus the second largest employer in India, cotributing to more than 15% of the country’s export earnings and almost 7% of the country’s industry output (India Brand Equity Foundation, 2018). However, the question of sustainability looms over the sector: globally, the production of textiles results in the creation of 1.2 billion tons of greenhouse gases each year; the industry is the world’s second largest polluter, and estimates indicate its contribution to global climate change is peaking at 8.1% (Ellen MacArthur Foundation, 2017). More than 80% of textile waste generated is sent to landfills or incinerated instead of being recycled or reprocessed.

CAIF has so far mapped 300+ innovative SGBs that have solutions from alternative and sustainable fiber and yarns and processing inputs to new consumer-facing business and retail models. Examples include:

  • Canva Fibre Labs by Shikha Shah, an alternative fiber and a material science company that uses a proprietary technology to convert agriculture waste into textile fibers that are environmentally, socially, and economically superior;
  • Greensole, an enterprise focused on recycling discarded shoes to comfortable footwear, thus keeping the waste away from landfills, by upcycling and retailing footwear and working with large corporate entities to handle their waste footwear;
  • Reverse Resources, an enterprise that maps and traces textile leftovers from fabric and garment production to enable data sharing from source of waste to recyclers and builds efficiency of waste management and trading through digitalization and software as a service (SaaS); and
  • Stylumia Intelligence Technology Pvt Ltd, an enterprise with an ecosystem of SaaS products that aim to address the top challenges of overproduction, efficiency, and waste through a proprietary “demand-sensing” technology that uses big data at internet scale to efficiently decode the consumer demand.

It is CAIF’s mandate to help the industry identify opportunities for innovation and partnerships, facilitate collaborative prototypes and demonstration projects, build the market through building important market infrastructure, and convene the industry to build capabilities and engage in policy advocacy. This is a mandate that can only be fulfilled by partnerships within the industry and beyond, like the one with the Indian chapter of the Aspen Network of Development Entrepreneurs.

The circular entrepreneurship ecosystem needs support

Experiences from CAIF show how important ecosystem-building activities are to build the pathway towards a circular economy. In order to move towards a circular economy in key sectors, key challenges need to be addressed, not just in the textile and apparel sector India, but also in other sectors. Key difficulties include:

  • Industry awareness is low about opportunities that come with certain new product, processes, or business models. There is a need for interventions that help value chain actors understand the need for self-disruption, develop collaborative projects and together design the future.
  • Discovery of solution is a major bottleneck for value chain actors. While solutions exist, there is an information asymmetry on both sides that prevents collaborations to happen. There is a need to bridge the discovery gap.
  • Action on the ground is limited. While there are a lot of good intentions, there is limited experimentation and implementation, partly due to ongoing pressure to maintain competitiveness. There is a need for pre-competitive action on the ground and risk-sharing.
  • Scalable solutions are rare. While start-ups and innovators have emerged, many operate at a small scale. There is a need to help circular start-ups and innovators on their growth path.
  • A precompetitive industry platform is absent to co-develop and co-invest in solutions and to create a common language and shape the agenda around circular economy together. There is a need to create an opportunity for the industry to develop solutions together, share knowledge and work collectively towards a transition.

While Circular Apparel Innovation Factory is one SGB support initiative in the textile and apparel sector, we need more such initiatives to emerge in other sectors as well. Agriculture, food, e-waste, and electronics are just a few sectors that need collective action in India, and we need the intermediary landscape to emerge to support SGBs and innovators in these sectors.

Stefanie Bauer serves as Chair on the ANDE India Steering Committee. She has more than 12 years of experience in the field of innovation and entrepreneurship development in Europe, Africa and Asia. Her professional focus lies on process consulting and innovation and strategy development. Throughout her professional life, she has been engaged in a diversity of projects that aim at fostering innovation and change within organizations. She is currently the director at Circular Apparel Innovation Factory, an Intellecap initiative. She also chairs the India chapter steering committee of the Aspen Network of Development Entrepreneurs. Before joining Intellecap, she led a programme for German development agency GIZ on enterprise development in India, designing new initiatives in the field of impact investing, inclusive business and social entrepreneurship promotion. She is a trained consultant in systemic organizational development and creative leadership. As a visiting faculty, she teaches entrepreneurship and development at University of Bayreuth, Germany. She earned a master’s degree in development management from London School of Economics and a bachelor’s degree in applied African studies.