This Startup Promised to Help Fashion Go Green. Brands Didn’t Want to Pay for It.

When a Swedish startup launched a new material made from recycled textiles in late 2022, the fashion industry hailed it as a game changer in its efforts to lessen its environmental impact.

Last month, the company, Renewcell, filed for bankruptcy. While some big retailers, including H&M and Zara, were enthusiastic backers, not enough brands committed to buying its material. Having misjudged how quickly the fashion industry would switch to more sustainable sourcing, the company was left with a costly factory running far below capacity.

The plight of Renewcell illustrates the fashion industry’s hesitancy in adopting new materials that may be better for the environment but typically cost more, at least in the short term. It is also another sign of how some companies are putting less emphasis on green initiatives amid a more challenging economic climate.

“There’s a disconnect” between some companies’ stated sustainability ambitions and what they actually do, said Tricia Carey , Renewcell’s chief commercial officer. “Fashion brands have the intention,” Carey said, “but many are lacking the road map to make it happen.”

Making clothes uses a large and growing amount of the planet’s resources. More than 100 billion garments are produced annually and that number is set to rise by one-third by 2030, according to the Ellen MacArthur Foundation, a nonprofit. It says the average garment is worn only 10 times before being discarded, often ending up in the trash . The fashion industry is responsible for as much as 8% of global greenhouse-gas emissions, according to the United Nations Alliance for Sustainable Fashion.

Fashion brands have come under growing pressure from consumers and regulators to reduce their environmental impact, posing a dilemma for an industry hardwired to keep increasing sales by churning out more clothes.

To burnish their green credentials, brands have encouraged consumers to repair, recycle or sell old clothes rather than throw them away. They have also invested in so-called next-generation materials that promise to use fewer resources and, in some cases, have the potential to be recycled again and again.

Inditex , the parent company of Zara, says it wants a quarter of the fiber it uses to be made from next-generation materials by 2030. To foster new materials, the company has worked with more than 300 startups, also including Renewcell, through a Sustainability Innovation Hub that it set up four years ago.

H&M says it wants recycled fibers to constitute half of the material it uses by 2030. The company has invested in more than 25 sustainability startups, including Renewcell.

So far, the uptake of greener material has been sluggish. Recycled materials made up 7.9% of global fibre production in 2022, down from 8.5% the year before, according to the Textile Exchange, a nonprofit that advocates the adoption of more environmentally friendly materials. Much of that came from recycled plastic bottles, with less than 1% of all fibre coming from recycled textiles.

That’s despite next-generation materials attracting more than $3 billion of investment over the past decade, according to the Material Innovation Initiative, with dozens of new-textile companies launched during that time.

Founded in 2012, Renewcell became the first chemical textile-to-textile recycler to start producing material on a commercial scale.

Its material is called Circulose, which is produced by treating old textiles with chemicals to create a cellulose pulp. This is dried into sheets, which fibre producers can then dissolve to produce viscose and other materials that are used to make clothes. Unlike mechanically recycled fibres, which fray and ultimately disintegrate, Renewcell’s chemical process breaks old textiles down to the level of individual molecules from which strong, new fibres are made. These can be recycled indefinitely via the same process.

With many fashion companies pledging to invest in new textiles to be more sustainable, Renewcell bet on strong demand for its material.

The company raised $158 million, mostly through a 2020 listing in Stockholm, and invested $125 million to convert an old paper mill in eastern Sweden into a Circulose factory capable of producing 60,000 metric tons a year.

Renewcell also outlined plans for two additional factories that would increase its output sixfold by 2030.

Besides Inditex and H&M, Calvin Klein and Tommy Hilfiger owner PVH committed to buying significant quantities of fiber made from Circulose.

But Renewcell hit a brick wall in talks with other big brands. In meetings, brand executives would often express excitement and agree to pilot projects, only to balk at placing commercial-scale orders, said Carey.

Jolts to the economy, such as Russia’s invasion of Ukraine, and shaky consumer confidence had made brands risk averse.

Would-be customers fixated on how fiber made from Circulose cost 20% to 45% more than the virgin fibers they typically bought, as well as uncertainty about integrating a new material into their supply chains, Carey said. Fiber typically accounts for about 5% of the retail price of a finished garment.

Renewcell needed its factory to reach full output quickly to become commercially viable, but it achieved only 30% capacity last year as anticipated orders failed to materialize.

By October, the company was running out of cash, and in January it laid off a quarter of its 130 staff. It filed for bankruptcy in February after failing to secure fresh investment.

Renewcell is now seeking a buyer to repay its debts and restart production.

The company’s predicament is a grim sign for a clothing industry that claims to want to transform itself, said Claire Bergkamp, managing director of the Textile Exchange.

“My hope is this will be a wake-up call for the industry,” she said.

Unless fashion companies commit to paying higher prices for new, greener materials, other fiber startups could also struggle, Bergkamp added.

While the transition from gasoline cars to electric vehicles has benefited from billions of dollars in subsidies, the move to new textiles has received practically no government support, making startups reliant on private funding.

That has left some big clothing companies, notably H&M and Inditex, shouldering a relatively large share of the burden of supporting new-material startups.

H&M invested in Renewcell in 2017 and was the first retailer to launch products containing Circulose. It currently sells around three dozen products containing the material.

The retailer wanted to invest more but decided not to commit more cash in recent weeks because of the lack of support from other companies, said H&M Chief Executive Daniel Ervér .

Earlier this month, H&M announced a new investment in Syre, a startup developing a polyester-fabric recycling process, and pledged to buy $600 million worth of its material over seven years—assuming it achieves commercial production.

Demand for recycled polyester is already established, with material made from recycled bottles already commonly used to make clothes. But textile-to-textile recycled polyester is similar to Circulose in that the technology is untested at scale.

To drive a shift to next-generation materials, other companies need to invest and commit to buying new textiles at scale, Ervér said.

“H&M alone cannot provide the scale that is required,” Ervér said. “The industry needs to commit.”

Former New Hampshire Gov. Chris Sununu delivered a warning to Treasury Secretary Scott Bessent during a recent visit to Washington: Already-high airfares will surge if the war in Iran doesn’t end soon.

Sununu, a Republican who represents some of the biggest airlines as president of the industry group Airlines for America, has for weeks sounded the alarm to Trump administration officials about the economic fallout from high jet fuel prices. The war, Sununu has argued, must come to a close soon, or things will get worse.

Administration officials have gotten the message.

Privately, President Trump’s advisers are increasingly worried that Republicans will pay a political price for the rising fuel costs, according to people familiar with the matter. Many of those advisers are eager to end the war, hoping prices will begin to moderate before November’s midterm elections.

The fallout from the U.S.-Israeli attack in late February has slowed traffic through the Strait of Hormuz, a vital shipping lane, triggering a sharp increase in oil, gasoline and jet-fuel prices.

That means consumers are grappling with high costs ahead of the summer travel season, as they consider vacation plans.

Sixty-three per cent of Americans said they put a great deal or a good amount of blame on Trump for the increase in gas prices, according to a new poll conducted by NPR, PBS and Marist.

More than 8 in 10 Americans said struggles at the gas pump are putting strain on their finances.

Jet-fuel prices roughly doubled in a matter of weeks after the war began, and they have remained high. Airlines have said that will add billions of dollars of additional expenses this year, squeezing profit margins.

U.S. airlines spent more than $5 billion on fuel in March—up 30% from a year earlier, according to government data.

Carriers have been raising ticket prices, hoping to pass the cost along to consumers, and they are culling flights that will no longer make money at higher price levels.

In March, the price of a U.S. domestic round-trip economy ticket rose 21% from a year earlier to $570, according to Airlines Reporting Corp., which tracks travel-agency sales.

So far, airlines have said the higher fares haven’t deterred bookings and they are hoping to recoup more of the fuel-cost increases as the year goes on.

Earlier this week, Trump said the current price of oil is “a very small price to pay for getting rid of a nuclear weapon from people that are really mentally deranged.”

Secretary of State Marco Rubio told reporters that if Iran got a nuclear weapon, the country would have more leverage to keep the strait closed and “make our gas prices like $9 a gallon or $8 a gallon.”

Trump has taken steps in recent days to bring the war to an end. Late Tuesday, the president paused a plan to help guide trapped commercial ships out of the Strait of Hormuz, expressing optimism that a deal could be reached with Iran to end the conflict.

Crude oil prices fell below $100 a barrel on Wednesday, after reports that Iran and the U.S. are working with mediators on a one-page framework to restart negotiations aimed at ending the conflict and opening the strait.

Sununu said Trump administration officials are conscious of the economic fallout from the war: “They get it…and I think that’s why they’re trying to get through the war as fast as they can.”

But he cautioned that it could take months for prices to return to prewar levels.

“Ticket prices won’t go down immediately” after the strait is fully reopened, Sununu said. “You’re looking at elevated ticket prices through the summer and fall because it takes a while for the prices to go down.”

Since the initial U.S.-Israeli attack in late February, Sununu has met in Washington with National Economic Council Director Kevin Hassett, representatives from the Transportation Department and senior White House officials.

A White House official confirmed that Hassett and Sununu have discussed the effect of increased fuel prices on the airline industry. The official said the conversation touched on how the industry can mitigate the impact of high jet fuel prices on consumers.

“The president and his entire energy team anticipated these short-term disruptions to the global energy markets from Operation Epic Fury and had a plan prepared to mitigate these disruptions,” White House spokeswoman Taylor Rogers said, pointing to the administration’s decision to waive a century-old shipping law in a bid to lower the cost of moving oil.

Rogers said the administration is working with industry representatives to “address their concerns, explore potential actions, and inform the president’s policy decisions.”

A Treasury Department spokesman pointed to Bessent’s recent comments on Fox News that the U.S. economy remains strong despite price increases. The spokesman said Treasury officials have met with airline executives, who have reaffirmed strong ticket bookings.

“We’re cognizant that this short-term move up in prices is affecting the American people, but I am also confident, on the other side of this, prices will come down very quickly,” Bessent told Fox News on Monday.

The war has already contributed to one casualty in the industry: Spirit Airlines. Company representatives have said they were forced to close the airline because the sustained surge in jet-fuel prices derailed the company’s plan to emerge from chapter 11 bankruptcy.

The Trump administration and Spirit failed to come to an agreement for the company to receive a financial lifeline of as much as $500 million from the federal government.

Transportation Secretary Sean Duffy has argued that the Iran war wasn’t the cause of Spirit’s demise, pointing to the company’s past financial struggles, as well as the Biden administration’s decision to challenge a merger with JetBlue.

Other budget airlines have also turned to the federal government for help since the U.S.-Israeli attack. A group of budget airlines last month sought $2.5 billion in financial assistance to offset higher fuel costs, and they separately wrote to lawmakers asking for relief from certain ticket taxes.

This Startup Promised to Help Fashion Go Green. Brands Didn’t Want to Pay for It.

Many clothing brands say environmentally friendly materials are key to their future, but uptake has been sluggish

Administration officials have spoken to the airline industry, which has voiced concerns about the rising costs.