Mar 18, 2024
by Karl Smith
Who Controls Progress? H&M, Inditex and the Corporate Future of Change
by Karl Smith
Mar 18, 2024

“Follow the money.” That’s what inside informant Deep Throat says to Bob Woodward in the 1976 film “All The Presidents Men.” And, while the original exchange – taken from the book of the same name – has a much less snappy version of the conversation, the logic remains sound. With much-feted Swedish textile recycler Renewcell having filed for bankruptcy last month, it also remains pertinent advice.

With questions still unanswered, there’s very little left to but follow the money.

Now, to be clear, we’re not suggesting – and we’re certainly not alleging – any kind of conspiracy here. We’re just looking to fill in the blanks – and there are, most certainly, blanks.

Let’s start with some good news. Less than two weeks after the collapse of Renewcell – in which H&M Group was a major investor – the Swedish corporation announced a huge investment in a new company; a polyester recycling operation called Syre. Not only was H&M putting up $600 million USD, but it was also an official co-founder.

On the face of it, this is all positive: a new outfit stepping up to fill the hole left by Renewcell and given the finance it needs to push that operation forward seems like a much-needed move after all the chaos and uncertainty. And that’s not exactly untrue – we need innovators, and we need brands who are committed to working with them. But it’s also this notion of commitment which raises questions here. H&M was committed to Renewcell, after all; had not only invested capital but had made promises to buy-up huge amounts of its flagship CIRCULOSE Pulp as soon as it was ready. And yet Renewcell still failed, making record-low sales of CIRCULOSE and encumbered with huge amounts of stock it was unable to shift.

These, clearly, are parts of the circle that simply will not square.

“This is what we’ve ended up with – an industry notoriously resistant to change, to putting planet over profit, more in control than ever of the speed at which that change now happens and more responsible for holding itself to account.”

And H&M aren’t the only ones. Inditex – the parent company of Zara and other global brands like Bershka and Massimo Dutti – made a similar commitment on buying CIRCULOSE toward the back end of 2023. In a recent conversation with Head of Brand Shannon Welch, in fact, she told FUTUREVVORLD this was one of many reasons to be positive about Renewcell’s future.

Whether this commitment was honoured or not, we can’t say with any certainty. Nor can we confirm whether similar commitments to buy recycled polyester from U.S.-based innovator Ambercycle were met. What we can say, however, with absolute certainty, is that Inditex has now invested more money in Infinited Fiber – a company which, along with erstwhile rival H&M and asset management business TTY Management, it remains one of the largest shareholders.

What does this mean? Well, on the one hand, it could mean absolutely nothing. But, even if that is the case, it still poses vital questions about ownership, and whether corporations should hold so much power when it comes to change.

However, while alleging nothing at all, there is also the possibility that, when taken together, all of this could point to something.

That Syre – and its circular polyester material – launched with what feels like such little fanfare seems strange. As does the fact it was ready and waiting to go, so soon after Renewcell’s collapse, when H&M was seemingly so entwined and heavily behind the beleaguered innovator. There’s nothing wrong with backing multiple chances at progress of course, it’s something to be lauded even – especially in the corporate world. But with Renewcell’s issues being so firmly anchored in uptake, knowing that H&M had the capital to make noteworthy purchases of CIRCULOSE, further pushing that material into the supply chain and – perhaps even more importantly – into the public consciousness, in the way that GANNI does so well, it feels like the company’s passion for progress rings a little hollow. Especially when that progress isn’t entirely under its control.

The same goes for Inditex, of course, which was very quick to invest capital in Infinited Fiber – an innovator that, for the record, certainly does deserve investment – makes clear that it could also have taken stronger measures with its purchasing power when it comes to Renewcell.

None of this, of course, is it suggest that H&M, Inditex, or the other mega-brands involved in these deals deliberately allowed Renewcell to fall into ruin in order to usher in a corporate-owned vision of progress in the fashion industry. But it does seem that this is what we’ve ended up with – an industry notoriously resistant to change, to putting planet over profit, more in control than ever of the speed at which that change now happens and more responsible for holding itself to account.

Now we have Syre. Now we have a bolstered Infinited Fiber. And, while such powerful investment in innovation feels like a positive, the shape that now takes is less clear.

For now, though, Renewcell is eyeing up new owners – and it’s likely they’ll get one. But for the company to get what it needs – to be picked up wholesale and taken private, insulated from the slings and arrows of stock panic and shareholder reports – that owner would likely have to be a fairly large corporation itself, leaving us to pose more or less the same questions all over again.

But one question remains most pertinent of all: can we – and should we – really put progress in the hands of those with the most to lose from real, systemic change?

Whatever the answer, we’re about to find out.