Creating Real, Conscious, Sustainable Change in the Apparel Industry
What suffered to create the clothes on our backs? What toxic chemicals were used, unethical labor practices implemented, or natural resources exhausted?
These questions reflect a new paradigm taking shape, one that encompasses a growing demand for transparency, sustainability, and ethical practices in the fashion industry. As data surrounding the environmental and social impacts of producing apparel becomes more widespread, so does an increased scrutiny among consumers. Making clothing often comes with a non-financial cost—and more consumers are wanting that to change.
This growing awareness is also fueling the makers. The number of brands conceiving of more conscious ways to make clothing is expanding—and behind that innovation is Alante Capital. A venture capital fund, Alante invests in companies that are pathmakers in the drive to bolster social or environmental sustainability in the textile and apparel industry. The team seeks to fund innovative solutions to production, distribution, and enabling the circular economy. With sustainable fashion sage Eileen Fisher as its chief advisor and investor, Alante is finding burgeoning pioneers in the field and helping them succeed. "We believe that you need early stage venture money from investors who "deeply understand the industrial system an innovator is seeking to change," says managing partner Leslie Harwell.
Harwell's interest in fueling a more progressive apparel industry stems from her roots. Her maternal grandfather owned a cotton gin and general store, and her mother, whom she describes as "an early proponent of consignment and vintage," owned a clothing boutique. Harwell carried her clothing and retail heritage, along with interests in international relations, innovation, and technology, as she embarked on a career in finance. She worked at Credit Suisse for seven years, putting her energy toward finance in emerging markets and technology integration. During this time, she started seeing more venture capital funds focused on technologies that, "at scale could really have massive social or environmental impact," Harwell says. And that was a field she said truly resonated and it merged her skills and passions.
Harwell eventually positioned herself in the sustainability sector, landing the role of Vice President of sustainable finance at JP Morgan Chase & Co., a role she held for nearly three years before making the leap to join Karla Mora, founder and managing partner of Alante. Harwell's decision to join Alante—which she unpacked for us recently over the phone—was charged by what she says is a life-long passion for finding "scalable solutions for large, industry-wide issues."
"It is very clear that transparency is important and what comes from that transparency is very powerful," says Harwell.
A Q&A with Leslie Harwell
What ultimately led you to join Alante?
As part of the group that I was in [at JP Morgan] we were sector agnostic and asset class agnostic. The capital that we were investing tended to be in early stage venture funds. We were also doing advisory work more broadly within the firm that was client-driven. I started seeing different industries aggregating ideas and bigger problems that they saw as strategic issues for their industry, things that needed to have technology integrated in order for them change at the speed that was needed to keep up with their markets. They were at this intersection of sustainability, profitability, and a way of thinking about the future of their company.
I saw this happening across many industries. And with my personal passion for apparel and retail, that specifically started piquing my interest. I started hearing it more and more, the same types of issues from a lot of apparel clients. So I thought: I think there's something here. At that time a colleague of mine introduced me to Karla, who was on sabbatical in Costa Rica brewing up the concept behind this [Alante]. I had been thinking about my own career goals. I knew I wanted to move into a role where I had more ownership. I was, at first, a thought partner for her but at a certain point I started looking at some of the opportunities that were within the space and I started getting excited about what Alante could be. I'm very into multi-stakeholder partnerships, thinking about how you build an ecosystem, and how you can be a first mover within an industry. I saw the opportunity for that in launching an industry-specific VC fund. It brought together my passions for the apparel industry and technological innovation together with my financial background—with broader themes around new consumption behavior that had been driving my personal investments for several years. it brought all of that together in a way that I think could make my life mission. Karla and I spent eight months talking—and then I decided to join her.
What is the ultimate driver for Alante?
Karla and I are both systems thinkers. We believe that entrepreneurs need investors in early stages who can be collaborative within an industry to catalyze systemic change. There are a lot of actors working on that within this industry now and we are one part of that ecosystem. Having a theory of change is a different type of thinking for venture capital that is becoming more mainstream and clearly at the center of what we're doing.
How do you find the entrepreneurs and companies that you back?
One of the real reasons we wanted to bring in Eileen Fisher is because she was the ideal partner. She is so well renowned and respected in the industry. And frankly, any entrepreneur that is starting a company that is doing anything in or around sustainability in the apparel industry tries to find her. Eileen is very visible out in the front of her brand, and vocal around her commitment and support. We get a lot of incoming requests from entrepreneurs looking for funding because they respect Eileen’s integrity.
On top of that, we have strong relationships with many apparel companies of all sizes. Many of these companies frequently receive queries from startups that are too early for them to work with, so they'll send them to us. That strengthens our dialogue and understanding of what's useful and interesting for those brands and their suppliers. It also frequently happens the other way, where we will have met a startup and we think it might be interesting for the brand, so we'll make an introduction. It creates a virtuous circle in this ecosystem.
There are a couple of great accelerator programs. There's one called Fashion for Good, based in Amsterdam, that has a similar thesis to us except they support companies at a much earlier stage. They are a fantastic source for us. And then there are a number of early-stage accelerator programs in the retail tech and material spaces. For them, sustainability is not necessarily their driving force, but it is becoming more important to them and they are getting more incoming cohort companies that have that as part of their business model.
What are some of the biggest things that need to change, or need to continue to change, for the textile and apparel industry to become more sustainable?
I think there's more capital coming toward these early stage companies. Because they're so early, many are going to take some time to commercialize and get to scale. And integrating new digital solutions will take time to implement. But we have seen a huge change and interest from large apparel companies to implement those changes, particularly where solutions increase efficiencies, reduce overproduction, and enhance resiliency in supply chains.
Companies themselves are taking impressive action in the absence of strong regulation around waste, environmental, and labor standards—both in the U.S. and abroad. We do think policy changes will begin to catch up, and can only help to bolster some of this behavior, and there has been substantial movement on the policy front in Europe. I don't think they need to happen immediately for implementation of new technology and solutions to be viable, but if we're talking about accelerating, policy and regulation is certainly part of the equation to make change happen fast.
Another thing that we have seen more of recently—which I find heartbreaking but also positive that it is being recognized—is more companies talking strategically about how climate change is actually a risk to their business. This makes it much clearer to investors the impact that environmental and social challenges can have on companies that have extremely complex global supply chains. Seeing more of that coming through, and being well articulated in legal documentation for investors, is super important.
You've also said that the consumer drivers are particularly interesting.
We have a very clear signal that there is a large and growing set of consumers that don't necessarily value newness. We have all sorts of platforms that are enabling us to share, resale, and better use the things that are made, whether it's clothing or otherwise. You need specialized platforms for that to make sense in the apparel world because preferences are more nuanced than electronics or buying a car on Ebay. As we see platforms like ThredUp and the RealReal start to become bigger, and as we see brands starting their own rental models (enabled by software platforms like Lizee, one of our portfolio companies, and CaaStle), it is clear that consumer behavior is rapidly changing.
People talk about consumers not being willing to pay up, or pay some sort of sustainability premium, but I think that oftentimes gets really oversimplified. Consumer behavior around apparel is really complex and you have a rich Venn Diagram of who buys what, how, and when and those things are constantly in flux. While there are options at all price points for new and pre-worn, there is actually an increasingly large group of consumers who are willing to pay some sort of premium or are currently luxury consumers and somehow there are sustainable options that are at a price-point that is really more palatable for them.
The whole landscape is much more nuanced than how it often gets boiled down. There is going to be a lot shifting around pricing and behavior, particularly as more on-demand manufacturing is enabled and companies can reduce overproduction and build more resilient supply chains in the face of an uncertain global environment. The economics of the industry are going to start shifting at some point relatively soon.
What do you see for the future of the apparel industry? Do you feel that an awareness around sustainability is becoming more mainstream?
On the industry side it is becoming both more mainstream and an imperative. However, nothing happens overnight and I think we're in a place right now where we're shifting. Consumers are seeing what greenwashing is and are becoming more aware. My hope—and what I do see happening—is that more companies are being more transparent about where they are currently and how they're going to achieve their goals. So instead of trying to act like everything they're doing now is perfect, and, for example, instead of finding some sort of fabric that they can tell a cool story around, they're actually saying: We have this fabric. It's better but it's still not great and this is what we're trying to do by this year and this is what we're going to do to get there.
Being able to tell that story in a succinct way to the people that care about it is important. That group of people that care is growing and companies are starting to see that in the mix. Brands are figuring out how to articulate how they are changing ways that are meaningful in all areas of the spectrum, from the people only caring a little bit to the people who deeply care. You have people all along that spectrum and as a consumer brand you have to respect anyone who is willing to buy from you. That is the way it is and if we think otherwise, we're doing a disservice to the power of industry.
What do you see for the future of impact investing?
My hope is that more limited partners, and more people who have the capital to invest in funds and managers, think about investing with managers who are thesis driven and systems thinkers. Impact investing is something that doesn't work against the existing venture capital infrastructure, it works with it. It provides a different angle and it tends to be that the managers building funds with intentional impact have diverse experience that enables them to assess opportunities differently and bring novel and valuable support to their portfolio companies in early stages. We need new approaches to provide capital to entrepreneurs that can help them grow in a way that's impactful to transitioning industries for a future world where we and future generations can thrive.
Across all major industries, not just the apparel industry, some of the large incumbents will likely go out of business, but I think it's more important that we look at what's inefficient, what it is in their business that is inherently harming our environment and creating a less stable future for societies and for our earth. [We need to] think about what the solutions are in a very practical way, and who is best positioned to develop solutions, while being mindful that these changes aren't easy and they're not going to be silver bullets to fixing everything.
It is important to spend time thinking about supporting asset managers who deeply understand the problems of a particular sector, and have the vision and execution ability to leverage an ecosystem and catalyze change.
To learn more about the work of Alante Capital, visit: alantecapital.com.
——
At The Conscious Investor, it is our goal to shed light on topics that we find interesting, inspirational, and educational. Therefore, this article is strictly for inspirational and informational purposes only. It is in no way intended to substitute for professional investment advice, professional financial advice, or general counsel. To the extent that an article features the insight, opinions, or advice of an expert or company, the expressed views are those of the cited person or company and do not necessarily represent The Conscious Investor and its employees or affiliates.