Finance Leadership In The Sustainable Fashion Revolution

In recent years, the fashion industry has been widely criticized for unsustainable business practices. But we may be about to revolutionize how we source materials based on reuse rather than new production. At the forefront of this exciting trend is his Circ, a sustainable fashion company. Circ’s Chief Business Officer, he spoke with Luke Henning about how he oversees the process of efficiently producing sustainable textiles, tracks sustainability information and raises critical funding. I was. In his role, he will need to combine financial expertise with solid investor communication and a vision of the industry’s new future. This combination will be increasingly needed by financial leaders working to build more sustainable businesses.

Jeff Thomson: Circ has developed a method of converting a linear system into a circular system to recycle fibers into virgin equivalent inputs for the textile industry. As Circ’s Chief Business Officer (CBO), how will you contribute to this strategy? What role will data play in realizing Circ’s mission? Although your background is in mathematics , how does data analysis affect your role?

Luke Henning: As CBO, I am responsible for external interactions with investors, brands and industry players. Working together as a tight-knit executive team to educate the industry, consumers and investors about sustainability in fashion, what it means to be circular, and ultimately how a polluting industry like fashion must be transformed. Create a message to educate about why it’s so important. I am often the voice of this message.

Apart from traditional data used in technical research and development, we use data to measure the environmental impact of our processes compared to traditional virgin product manufacturing. One of the most commonly used tools is Life Cycle Assessment. It takes into account various factors such as energy use and logistics to assess the process and ensure that it is net positive for the environment. This helps facilitate decisions such as the location of production assets.

We also work with data analytics when evaluating systems for tracking and tracking products. This is an important area because fashion is riddled with misinformation, counterfeits and misrepresentations. If a product is labeled as containing Circ materials, it does, and if it is marked as recyclable, we need to find a way to verify that it does. there is.

Ironically, I rarely use my math skills in my role. Heavy data analysis takes place in the engineering and scientific research aspects of the business. Most of my modeling is used for scenario analysis and review of capital tables and related topics, complex but not mathematically complex.

Thomson: Circ has set an ambitious goal of recycling 10 billion garments (equivalent to 10% of the global apparel market) by 2030. This will save over 10 million trees by 2030. It is more environmentally friendly as it is impractical to pass these costs on to the consumer. Who in the ecosystem pays for all green innovation? How can CFOs trade short-term investment needs for long-term profitability while maintaining cost efficiency? ?

Henning: As a society, we pay the price for our lack of green innovation. The costs are just masked. All that’s happening now is that direct financial costs have become more open and more likely to be directly attributed within the industry.

That said, the only way to truly change sustainability is to make the transition as painless as possible, or to force the transition through regulation and level the playing field. Circ’s process is designed to be cost-competitive with virgin products without subsidies when produced at full scale. As a function of the supply and demand dynamics of these materials, there is a significant premium for circular products and it will be many years before virgin materials can be replaced by circular products.

It is not easy. We are disrupting one of the oldest industries that played a major role in the Industrial Revolution. We know what we’re doing is capital intensive and “hard tech” usually takes longer which impacts return timelines. Efficient use of capital while de-risking and increasing value must be carefully considered when transitioning to a resilient enterprise. To attract capital, you need to ensure you have juice worth squeezing.

Ensuring supply of scarce commodities to mitigate regulatory penalties. Gain market share by enabling sustainable product offerings. And ultimately, the tech acceptance model is so big that companies that can capture market share with acceptable margins here will become industry giants.

Thomson: Capital markets are increasingly willing to fund promising sustainable business ventures. This summer, Circ announced that he has raised over $30 million in Series B funding from leading global apparel and venture capital firms, including Bill Gates-founded Breakthrough Energy Ventures. Can you talk about your role in these fundraising and how you were able to successfully communicate Circ’s vision and potential to investors? Should it be pursued? And what should the CFO of a company investing in such a venture look for?

henning: You need a strong, coherent message that clearly explains why you are the category leader in your field. Once this is done, investors will share opportunities with their networks and leads will start to build organically as funding is a numbers game. You need to get out there and talk to potential investors and don’t stop talking to new investors until the money is in the bank.

My role was primarily to facilitate relationships with these investors and conduct the first few conference calls with potential investors. You need to qualify your investors as much as they qualify you. Otherwise, you will be wasting your precious time. Once certified, a standard due diligence process follows. Sustainability stakeholders need to be able to answer her three questions: should we? will we be? “Can You Do It” deals with the art of what is technically possible. Is it even possible to do what you are trying? “Should” deals with the sustainability of the process. Is this more environmentally friendly than virgin alternatives? “Will” deals with the economics of the solution.

If you can’t compete on price or come close to alternatives, you’re going to have a hard time attracting enough customers to deploy at scale. You’re going to have a hard time raising the funds you need to build.

My instruction is very simple. Look for viable technology investments that match your long-term macrothesis and find the best teams to execute in that area. Expect zigzags in the venture world, and you need to have confidence in the people leading your organization and your ability to navigate uncertainty and pivot when necessary.