At Lenzing, Innovating Traceability Technology
Founded more than 80 years ago, global fiber manufacturer Lenzing supplies the global textile and nonwovens industry with Lyocell, Modal & Viscose fibers. As a market leader, the Austrian company is well positioned to respond to growing industry demand for stronger certification of fiber provenance and full supply chain visibility.
Today, through its technologies, Lenzing can verify the origin of its fibers throughout the supply chain up to the finished garment, to enable customers to make conscious purchasing decisions.
BoF’s State of Fashion report, produced in partnership with McKinsey & Company, found that three in five consumers said environmental impact is an important factor in making purchasing decisions.
Lenzing created a four-pillar approach to build a transparent supply chain; track and traceability via the blockchain, supply chain planning and collaboration, an e-branding platform for fabric certification and licensing, and most recently, physical identification systems for their branded fibers.
Additionally, it uses renewable raw material wood — more than 99 percent of its wood comes from sustainably managed forests — to produce pulp for its fibers and valuable biorefinery products and co-products. The processing of the wood to cellulose and fiber supplies the energy it needs to run its production facilities.
Now, BoF sits down with Lenzing’s chief commercial officer Robert van de Kerkhof to hear about the latest iteration in the business’ bid for supply chain transparency, the intersection between technological innovation and sustainable fibers, and consumer and brand benefits.
Why does Lenzing believe traceability is important within the materials space?
The fiber, fabric [and] footwear industry — everything related to fashion manufacturing — is extremely polluting. McKinsey research reports that 38 percent of the fashion footwear greenhouse gas emissions come from raw materials.
It’s also very clear that a new generation of consumers are really much more aware about the environment. You have the Fridays for Future Initiatives, [mass] publicity, and famous stars really pushing for sustainability. From that perspective, the population seems to be ready for a change — and ready to [demand it]. Finally, you have fashion brands setting specific reduction targets. Those things can only be achieved if you know where your raw materials are coming from. They must ask, “How is that individual raw material contributing to my improvement?”
If you really want to make an impact, you need to start at the beginning. I always say, “there’s no such thing as sustainability without traceability.” Every garment consists of many different raw materials and, as fiber producers, we are really at the beginning of the process.
How significant do you believe it will be in building competitive advantage?
Ultimately, initial traceability will add costs. If [brands] believe that traceability will be a critical success factor to improve profitability, then they’re on the wrong track. If, however, [they] believe that they are doing the right thing — that allowing for traceability can enable you to make clear to retailers and consumers that the materials you are using are having a more [positive impact] — then the consumer can make a more conscious choice. Some are willing to pay more for that. That’s how you get a return on that investment, and that will help you to improve your profitability or to drive innovation, moving forwards.
How did Lenzing’s technology increase its transparency?
The textile value chain is long and complex, with multiple companies and countries involved. This is where the blockchain technology can make a big difference, as it allows you to understand exactly how many of your sustainable fibers is present at each stage of the value chain. As it’s blockchain-powered — where it is, who’s got it, or how it got there remains fully confidential and tamper-proof. This technology can also [measure] exact quantities, [preventing brands] from assuming the quantities of sustainable fibers. There has been legal action in the past against companies that made false marketing claims regarding the wrong ingredients. Blockchain technology can prevent any inaccuracy.
If you really want to make an impact, you need to start at the beginning. As fiber producers, we are really at the beginning of the process.
We believe that consumers are dependent on ingredient branding. We [seek to] provide consumers with a label of trust regarding sustainable fibers. Therefore, we’re backing e-branding tools. Where is this fabric being made? Which fibers are being used? Where is the fiber from Lenzing actually used in the value chain? In the future — I believe all these innovations will become very standard technology.
How are you engaging end-consumers?
If we understand consumer needs, we can actually address them. They rely a lot on our data, specifications [and] our auditing process. If they receive the wrong information, they might be buying into marketing claims that are not really true. That is why we are working a lot with different certification organisations. We’re providing data for this transparency, to support [consumers] at a brand and retail level.
Sustainability is an extremely complex task and subject. It’s not only the raw materials, it’s also the kind of production process that we use and the consequence of having our fibers blended with other fibers and fabrics that have been coated and finished. Sometimes, between us — the fiber producer — and the consumer, the whole value chain might follow six or eight different countries. By working together in the value chain, we can really make sure that improvement is felt at the consumer level.
Why did Lenzing choose a collaborative strategy to achieve its goals?
Firstly, as a publicly listed company, anything we do needs to be financed. We are very fortunate with our shareholder base because they’re supportive of our sustainability strategy. They are willing for us to make investments on the R&D side and also in both product and business model innovation. However, even then, when you then have the right products, you need to really make sure that you are driving transparency at a larger scale.
We’re providing data for this transparency, to support [consumers] at a brand and retail level.
We cannot just live in our own world — we need to work with certification organisations and with NGOs who are committed to driving the standardisation of the environmental impact of the value chain. We [collaborate] through organisations like the World Economic Forum, where we have world leaders both from industry and policy coming together. There is our blockchain technology with Textile Genesis that we’re supporting, this is also being invested in the World Economic Forum.
We also now look at [collaboration] completely from our own specific perspective. We need to work with other fiber producers. We need to work with other wood-based sellers, be that partial and direct competitors. We need to make sure that they’re setting the highest standards. An NGO called Changing Markets called for the whole viscose industry to raise the bar on production processes. Right now, they’re launching a campaign on fossil fashion, which is bringing attention to all the synthetic fibers and making sure that those people are now coming together and saying, “How can we improve the overall standard, not of an individual company, but of this kind of category of fibers?” Those are the initiatives we’re working on.
What lessons have you learnt on Lenzing’s own sustainability journey?
It’s a combination of internal and external challenges. When I joined Lenzing back in 2014, I called for more transparency and traceability. The initial response was, “No, we can’t do it, because we’re not perfect everywhere.” I had to change the mindset of many of my colleagues at that time and stress that it’s all about continuous improvement. We are where we are today, but we all know that we can be better tomorrow.
An external challenge can be financing these initiatives. There is not always an immediately clear business case for an investment. We may invest $200 million in cleaning up our processing in China and Indonesia, but we cannot guarantee higher returns, unless brands and retailers are willing to buy from Lenzing Indonesia because they know this production site is meeting the highest environmental standards. It’s a difficult business bet to make, because the majority of our competitors are not at that same standard. Now, we’re working to put safety and sustainability at the same level of importance, and the whole board is committed.
We have a very detailed sustainability report where we set 18 corporate targets that are really understood and lived by everybody. I believe that the whole industry is shaping up to that higher level of sustainability. Sooner or later, everyone will need to make these investments.
This is a sponsored feature paid for by Lenzing as part of a BoF partnership.
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