H&M invests in ‘cir­cu­lar poly­es­ter’

07 Mar H&M invests in ‘cir­cu­lar poly­es­ter’

Posted at 10:27h in Financial Times by
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 Investment Summary 
  • H&M has teamed up with private equity group TPG and the investor that star­ted bat­tery group North­volt
    • to roll out factor­ies designed to reduce fast­fash­ion’s car­bon emis­sions.
  • The world’s second-largest cloth­ing retailer, TPG and Var­gas have com­mit­ted about $60mn
    • to Swedish start-up Syre
      • to build a fact­ory in North Car­o­lina to reduce poly­es­ter emis­sions by up to 85 per cent.

 

  
  • The global tex­tile industry is respons­ible for up to 10 per cent of global emis­sions,
    • and makes little use of recycled mater­ial or waste.
      • Oil-based poly­es­ter rep­res­ents about 54 per cent of the global fibre mar­ket
        • and only about 1 per cent of it is cur­rently recycled.

 

 Vargas 
  • Var­gas,
    • the Swedish investor that has star­ted North­volt, H2 Green Steel and heat pump group Aira,
      • is aim­ing to decar­bon­ise swaths of European industry.
        • Syre fol­lows its play­book of secur­ing a big cus­tomer such as H&M as a lead­ing share­holder
          • North­volt had Volk­swa­gen
            • and using off­take agree­ments to secure large parts of future pro­duc­tion.

 

 H&M 
  • H&M has signed a $600mn deal with Syre to buy enough of its pro­duc­tion in the next seven years
    • to cover about half of its total need for recycled poly­es­ter.

 

 Context 
  • EU rules are push­ing fash­ion groups to take action.
    • H&M had backed Renew­cell, another tex­tile recyc­ling start-up, but it went bank­rupt last month.
  • There isn’t enough sup­ply of altern­at­ive tex­tiles for us today.
    • For the big trans­form­a­tion for us and the rest of the industry, we see a need for more innov­a­tion.
  • The Swedish cloth­ing group cur­rently sources its recycled poly­es­ter from plastic bottles.
    • But such mater­ial — rPET poly­es­ter — could only be used once
      • whereas Syre’s cir­cu­lar — or cPET — poly­es­ter could be reused and turned into new products.

 

 Syre 
  • Syre will need “a couple of bil­lion dol­lars” to fin­ance the planned con­struc­tion of 12 factor­ies
    • in North Amer­ica, south­ern Europe and Asia.
  • He added that the start-up would turn to other fibres, with cot­ton the next “obvi­ous” tar­get
    • because it accounts for more than 20 per cent of the global mar­ket.
      • Cot­ton rep­res­ents about 60 per cent of H&M’s mater­ial needs,
        • while poly­es­ter accounts for about a fifth.
  • Syre is aim­ing to pro­duce 3mn met­ric tonnes of cir­cu­lar poly­es­ter by 2032,
    • equi­val­ent to a mar­ket share of about 3 per cent
  • It is look­ing at sev­eral indus­tries.
    • sig­ni­fic­ant poten­tial in the auto­mot­ive sec­tor where car­makers
      • use poly­es­ter in products such as seat cov­er­ings and airbags,
    • home interi­ors for products
      • such as sofa cov­er­ings and car­pets.
  • Estim­ated that using cir­cu­lar poly­es­ter would add $0.50 per gar­ment in cost

 

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