Renewcell’s bankruptcy filing confirmed what fashion industry experts have long feared: like people, the fashion industry can’t—and won’t change—unless it has to.
Poised to transform the fashion industry from the inside out, Renewcell’s Circulose, a 100-percent circular, wholly recycled product made from textile waste, was the climate friendly alternative to replace fossil fuel produced, environmentally unfriendly fabrics. But higher prices and fashion brands’ inability to “effectively” integrate Circulose into their supply chains caused demand and fanfare to wane, ultimately culminating in Renewcell declaring bankruptcy.
But Renewcell didn’t fail; it solved the problem it set out to resolve. The fashion industry failed Renewcell.
Renewcell’s work accomplished everything the fashion industry needs to clean up its act, literally and figuratively. But the sad reality is that in fashion’s race to the bottom—and the bottom line—is all that matters. Innovation is no longer a market driver. Environmentally and socially invaluable, pioneering technologies and products that could eradicate the industry’s overproduction problem and the resulting culture of overconsumption it creates mean nothing when they cost a consumer more, especially when a fast-fashion T-shirt costs less than a New York Starbucks coffee.
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Renewcell’s only real mistake was giving the fashion industry too much credit. It overestimated the industry and the market’s ability to value right over wrong, and ultimately, to change and finally do the right thing. It’s the functional equivalent of complaining about a problem, and ignoring the solution being served on a silver platter because it’s “too difficult” to implement.
Circlose was the fashion industry’s chance to change from the inside out; to integrate circular raw materials into supply chains, reducing waste and environmental pollution. Instead, it chose financial profitability. Time and time again, the market chooses cash over consciousness, and rewards bad behavior because it can—all the while ignoring the true costs to people and the planet.
As Renewcell filed for bankruptcy, Shein dropped 10,000 more new styles. Of the 100 billion items it manufactures yearly, 60 to 70 percent go to landfill after one wash or wear. The Chinese e-commerce titan reported annual revenue of $30 billion in 2023—a figure expected to double by 2025. In two hundred years, those worn and discarded garments will still be sitting there, releasing toxins into the air, soil and groundwater.
The earth is mere tenths of a degree away from hitting the 1.5-degree Celsius threshold that represents a point of no return for irreversible climate change. If something doesn’t change, the fashion industry’s carbon footprint will comprise one-quarter of global allotted emissions. Yet, companies remedying the problem are filing for bankruptcy.
What message does this send sustainable fashion entrepreneurs and small businesses that identify as change makers? It’s certainly not, “Go for it.” It’s more like, “Run away.”
It’s time to stop rewarding bad behavior. Like other highly pollutive industries, the fashion industry must be regulated. We need the New York legislature to pass the New York Fashion Act, which requires fashion brands selling in the state to actually do what they say they will do: figure out their supply chain so they know who works for them and pay their garment workers due wages, reduce toxic chemical use and actually reduce their carbon emissions, as they promised their shareholders they would.
It’s time to ensure fashion brands are auditing their supply chains, paying garment workers fairly, and reducing their carbon footprints as their ESG statements and 10K filings promise. The fashion industry has proven the old adage true for decades—that promises are made to be broken. And without any external accountability and consequences, brands have and will continue to meet earnings goals at the expense of ESG commitments.
We need the Renewcells of the world, and other circular businesses, like fashion resale, rental and repair companies, who effectively operate as waste managers, to be valued by our capital markets for the civic duty they perform; and to reap the financial benefits of being problem solvers, not problem creators or perpetrators. We need the New York Fashion Act to level the playing field, revamp the industry, and finally affect change where and how changes happen: from the outside in.
Betina Baumgarten is an attorney and Fordham Law School alumna with an LLM in Fashion Law who works as as legal counsel in the fashion law and policy space. She currently serves as the Legal Advisor to The New Standard Institute.