R.I.P. Re:NewCell!
It hurts to see another poster-child sustainable solution company bite the dust.
“I regret to inform that we have been forced to take this decision to file for bankruptcy,” wrote a distraught Chairman of the Board of Directors, Michael Berg, earlier this week, explaining that Re:NewCell had not been able to secure sufficient liquidity and capital to ensure its operations going forward.
It was such a cool story, though! Back in 2022, everyone cheered at the miraculous transformation of a decommissioned paper mill in Northern Sweden into a factory with the capacity to process tons of textile waste into perpetually recyclable fibres. A school example of circular economy, Re:NewCell certainly ticks all the right boxes. Besides using your discarded jeans instead of cutting beautiful CO2-sequestering trees to produce its magic Circulose fibres, the process also eliminates the emissions that disposing of those pants would have generated, either by being incinerated or rotting slowly in a landfill somewhere. And don’t forget all the jobs created in that Northern community abandoned by other industrial giants like SCA.
You’d think any fashion brand with a serious claim to sustainability would be queuing for a piece of Circulose, a material that made it to TIME Magazine’s list of the 100 Best Inventions 2020. Some were. A partnership with Levi’s showed that substituting 30% of the cotton in the 501s had no visible aesthetic or functional effects on the iconic jeans. Filippa-K launched a winter collection replacing almost a third of the cotton and viscose with Re:NewCell’s product.
So, how could a multiple-prize-winning company holding the promise to transform fashion world’s wasteful ways suddenly run out of cash?
It is tempting, of course, to simply join the disgruntled choir of my fellow environmentalists, lamenting the lack of commitment from fashion brands, investors, politicians, and consumers. Everybody loves to pay lip service to sustainability, goes the argument, but once it’s time for action, cynicism prevails, and purses remain closed. For Wedonthavetime.org’s Ingmar Rentzhog, the collapse of Re:NewCell is another sign that it is time to ‘Move The Money’, i.e., strategically reallocate capital to finance the transition. In this particular case, he is convinced that H&M, one of the company’s top shareholders, could have done much more to support the struggling recycler and that institutional investors as well as the state could have stepped in.
It seems, however, that not everybody is prepared to put the onus for Re:NewCell’s financial faltering on the stinginess of fashion brands and society in general. “Time for someone to speak up – Re:NewCell’s bankruptcy is not about money,” writes Camilla Bergman, the editor-in-chief of Impact Loop (in Swedish). She claims that H&M’s VC arm hasn’t given up on investing in recycled textiles. Meanwhile, institutions such as the European Investment Bank are still quite eager to lend money to innovative impact companies in the Nordics.
There must be, in other words, alternative explanations for Re:NewCell’s untimely demise. Bergman ponders whether it was wise for the company to go public in the first place and mentions possible governance issues. Above all, however, she questions the business model itself: “One wonders how sustainable it is to a) produce clothes in China b) sell them in Sweden and Europe c) collect the excess that cannot be sold and d) ship them back to China for new production?”
Following her line of reasoning, I find myself reexamining the business case for Re:NewCell in my amateurish way. Could it be that the management just did a sloppy job fine-tuning its value proposition, I wonder? Admittedly, partnering with fashion(able) brands does create spectacular headlines, but perhaps it would have been wiser to rope in their suppliers in India and China instead. The day might come when fast fashion giants will be held accountable for their entire supply chain1, but until then, they tend to be as detached from the actual manufacturing of the fabrics that make the clothes they peddle as Sundsvall is from Shaoxing or Ahmedabad.
There’s hope, though. Ever since the bankruptcy, the trustee has been getting dozens of calls per day from potential buyers, I hear. Let’s hope that we’ll soon see a resurrected Re:NewCell and that the new Phoenix version will add improved business logic to the original enterprise’s innovative science and sustainable intentions.
1 That day just got postponed as the EU failed to approve the Corporate Sustainability Due Diligence Directive (CSDDD) yet again this week.
