Canopy bore witness to the journey of Renewcell, the commercial textile-to-textile recycling facility that aimed to change the fashion industry from the inside out—but ultimately failed, filing for bankruptcy in February.
Despite these challenges, the forestry nonprofit and next-gen innovation champion believes there is much to be learned from the demise of the Swedish startup, considering Canopy worked deeply with Renewcell ever since the Circulose producer signed onto the CanopyStyle policy—an initiative that works with brands and retailers to ensure sustainable viscose sourcing—in 2015. From there, Canopy worked with Renewcell’s management teams, brands and supply chain partners throughout each step of its journey.
As a result, the environmental nonprofit has released “Renewcell: A Springboard Not a Hurdle,” a detailed “lessons learned” report outlining how its analysis shapes its work—and that of the sector—moving forward.
“This has been a powerful learning moment for all of us within the sector and broader movement as we strive to ‘fail forward’ and build a smoother runway for other next-gen innovators ready to scale,” Canopy said in a blog post, noting that these insights have been gleaned from its own observations of working day-in and day-out with Renewcell, brands, producers and from conversations with partners throughout the value chain. “We offer them as a starting point for all of us to engage more effectively moving forward, as new next-gen alternatives look to scale.”
The Canadian organization’s insights were garnered from its own observations as well as those of brands and partners throughout the value chain. Canopy is offering these insights as a starting point for the industry to progress as next-gen alternatives look to scale.
“We invite you to use [these reflections] as collective lessons for us all, regardless of your role within the value chain, as we forge ahead toward a circular and lower-carbon fashion sector,” the report reads. “As is often the case when changing complex systems, there are a lot of intersections of entangled problems. We have endeavored to tease these out to provide a more simplified view in.”
The report begins by acknowledging that, though Renewcell moved on an “ambitious timeline,” building a commercial mill and commissioning it are two distinct phases that each present their own set of challenges.
“Building a next-gen facility is a multifaceted endeavor—one that entails finding an optimized site in close proximity to next-gen feedstock and, ideally, with some existing infrastructure to serve as a lattice for development,” Nicole Rycroft, Canopy’s founder and executive director, told Sourcing Journal. “From there, one has to secure the financing needed to actually build—the biggest challenge there, when working with emergent tech, is how to effectively de-risk the investment for potential financiers.”
Though Renewcell was able to cultivate letters of intent to purchase and secure investments, the commissioning phase (getting the mill to operate at full scale and consistently meet product specifications) brought a new set of challenges. Transitioning from pilot-scale to commercial production required more time and resources than anticipated, resulting in batch processing that had knock-on effects down the supply chain, ultimately leading to variations in technical performance.
While Renewcell optimized its pulping process to produce the best quality possible, other supply chain tiers had to, repeatedly, adjust their processes and machinery to accommodate the changing inputs.
“After all, supply chains are more accustomed to dealing with conventional wood fibers and Circulose was, effectively, a brand-new input for them. Renewcell ultimately did consistently produce quality products on par with conventional materials, but, as we all know, first impressions are important,” Rycroft said. “Industry actors expected Circulose pulp to perform like conventional wood pulp from the get-go; when it didn’t, it created a false impression that the pulp didn’t perform well writ large, when actually, it just required a few tweaks in the production process.”
Ultimately, the supply chain needed significant time to adjust to this new material, with each actor in the chain—from viscose suppliers to spinners to fabric producers—requiring weeks or months to adapt their processes, extending the overall timeline. Additionally, Rycroft continued, Renewcell’s launch into the market was “misaligned” with brands’ design cycles and budgetary timelines, preventing timely market pull-through.
“Financially, Renewcell’s initial runway was insufficient to cover the extended period of low returns typical of early-stage commercialization. The financial cushion didn’t account for the time needed for market adoption and high initial costs,” Rycroft said. “Furthermore, as a publicly traded company, Renewcell faced heightened scrutiny and financial pressures and investor impatience, exacerbating their financial instability at critical moments.”
To avoid similar pitfalls, Rycroft recommended that future ventures establish “prudent” timelines, build in adequate financial cushions, avoid the pressures of being publicly traded in the early stages and work closely with supply chain partners to “synchronize” efforts.
“Saving the planet and turning a profit are not mutually exclusive,” she said. “But scaling from pilot plant to mill infrastructure with a new technology requires the innovator to bring the supply chain and market along in a way conventional players don’t need to.”
