LOOPED IN with Carl Warkentin

Funding What Business Can’t: Inclusive Circularity through Philanthropy with Fernanda Drumond from H&M Foundation

• Carl Warkentin • Season 1 • Episode 8

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“Philanthropy isn’t just about giving — it’s about igniting. We step in where no one else can, absorbing risk, catalyzing innovation, and building ecosystems where businesses alone can’t go.”— Fernanda Drumond, H&M Foundation


Fernanda Drummond brings a refreshing perspective to the textile industry's sustainability challenges as Head of Collective Action at the H&M Foundation. In this illuminating conversation, she dismantles common misconceptions about philanthropy's role in creating systems change and reveals how the foundation operates as an orchestrator—not just a funder—of transformative collaborations.

Diving deep into the foundation's unique approach, Fernanda explains how they identify critical gaps where philanthropic funds can spark innovation and collective action. Unlike project-based interventions that create limited impact, the H&M Foundation implements comprehensive programs that simultaneously address multiple barriers. 

The shocking revelation that the textile industry is only 0.3% circular serves as a sobering backdrop to the conversation. Fernanda emphasizes that no single solution—whether circular business models, recycled materials, or sustainable fibers—will move the needle significantly when implemented alone. Only through orchestrated, multi-stakeholder approaches can we hope to transform this deeply linear system.

Perhaps most compelling is Fernanda's expanded definition of "just transition" beyond merely reskilling workers. Through programs like Operadita in Bangladesh, the foundation recognizes that garment workers facing automation need more than technical training—they need childcare, family support, safe transportation, and shifts in community perception to truly advance. This human-centered approach acknowledges workers as complete individuals with dreams, needs, and aspirations beyond their job functions.

For entrepreneurs and businesses developing circular solutions, Fernanda offers invaluable advice: recognize and include the millions already working in circular economies through informal sectors. These waste pickers, sorters, and collectors possess generations of knowledge that should be built upon rather than bypassed in our rush toward formalized circularity.

Connect with Fernanda on LinkedIn to share insights or learn more about the H&M Foundation's work in catalyzing inclusive circularity across the textile ecosystem.

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Carl:

Welcome to Lubdin, the number one podcast about circular economy and regenerative business models. We bring behind the scenes conversations with investors, founders and corporate leaders into the spotlight, exploring how to scale impact, build profitable business models and redesign our economy for a better future. So let's get started with today's guest. Our economy for a better future. So let's get started with today's guest. Welcome everybody for another episode.

Carl:

I couldn't be more happy and proud to sit together today with a very special person from the H&M Foundation. Fernanda is someone who brings together the world of humanitarian action, philanthropy and textile innovation, and does so with a clear mission to make the industry both socially inclusive and planet positive. Whether it's working with waste pickers in India or preparing garment workers in Bangladesh for the digital age, fernanda brings a holistic, equity first approach to the textile innovation. Fernanda, first of all, thank you for having me here in your beautiful office in Stockholm. We first met a couple of months ago at a conference in Rotterdam, where we were both on a panel together. And before we dive deep into your project, could you help our listeners understand what exactly the H&M Foundation is and what its mission? How is it structured and how closely is it connected to? The H&M Foundation is and what its mission, how is it structured and how closely is it connected to the H&M Group?

Fernanda:

Certainly. Thank you for asking and very nice to meet you again and thanks for coming here. It's a pleasure to talk to you and to everybody who is listening, so thank you. My name is Fernanda Drummond and I'm Head of Collective Action at the H&&M Foundation and we are a family philanthropy based here in Stockholm. We are a team of 22 people and we are actually a separate organization from the H&M Group because we're not a corporate foundation. We are a family foundation founded and funded by the Stefan Persson family, who are the main owners of the H&M Group. But we actually have a separate strategy, a separate budget, and we are here to support the whole textile industry to transform itself. We're here to support the textile industry to halve its greenhouse gas emissions every decade until 2050, while promoting a just transition for people and the planet. So we want to support the industry to transform itself, decarbonize, become socially inclusive and planet positive. Basically.

Carl:

And as a philanthropic foundation with such strong industry ties, how do you define your role in driving that change?

Fernanda:

Oh, that is a question we've been trying to answer since we were founded, but it's actually not that difficult now that we've been. You know, it's not so difficult to understand now that we've been operating for over 10 years. We've been, you know, it's not so difficult to understand now that we've been operating for over 10 years. So, since we have philanthropic funds, we have, we use, let's say, the power of philanthropy, which is the fact that we can absorb risks that other organizations can't. We can be very agile, we can focus on systems change and we can serve, you know, the common good. So we use that power of philanthropy mixed or together with our dna, the things that we really stand for, which is impact first and systems change and really being innovative in the methods and solutions that we can support. So we use all of that in favor of the public and of the textile industry. And that means that where we see that there is a gap, whether in funding or in coordination, for things to happen in the textile industry, that's where we come in. So I can be a bit more specific. There are several solutions or solution areas that we can support the textile industry with, and we play a big role in those, in being like the first igniting spark for change. We support, for example, innovation, but more specifically, early stage innovation, those who still don't have a proven business model. We can be the ones who are like you guys have an idea on the back of a napkin. We can support that. So, early stage innovation. We can support research that is usually unfunded, for instance, right and demonstration demonstrating to the whole industry these things that have worked and that others can take up.

Fernanda:

We can how do I say that? Enable collective action. This is my area here of expertise, which is how to get a lot of stakeholders, a lot of vectors, together to move the needle on specific issues using the power of the collective, because we know that we won't be able to change the textile industry, the economy, the world alone. No one can. No stakeholder can, not even governments. We need a lot of people to act together to be able to move a process that has been running like that, that way for a long time, right.

Fernanda:

So this is what we can do with our philanthropic funds Create the platforms for all these stakeholders to get together and act together. And I have a gazillion examples of this and we can come to that later, but I'll just continue on what we can do and offer for the textile industry, what we can do and offer for the textile industry. So, apart from collective action, we also support the creation and proliferation of insights and inspiration, meaning we can collect learnings from all different kinds of stakeholders, we create communication material from it and we spread it to different decision makers in the industry to change the narrative, to show what else is possible, how else is possible to do things. And lastly, since we are a philanthropic organization, we also provide relief and support in terms of disaster management to people who are vulnerable and victims of natural disasters, for instance. Wow, that's what we do.

Carl:

I couldn't agree more with what you said. No one alone can close the loop in the industries and make it a circular economy, because I realized that myself with the companies I founded before now with the initiative Circular Republic. It's also a non-profit initiative. So there we do exactly the same. We bring stakeholders across value chains in any industry together and act like as a third party, being able to be, as a neutral person, an orchestrator of these new ecosystems. So I totally understand that. On this podcast I have a lot of entrepreneurs and they are always very proud of trying to solve something with a business model where they say philanthropy is not enough, because I mean especially when you look at it from that point of view a lot of people make a lot of money in a bad way and then use a little bit of their profits to spend with philanthropy. Right, and I really love Andre Hoffman's quote, and I quote him quite a lot it's not about how you spend your money, it's about how you make it.

Carl:

So, there's a lot there, I believe as well, and these companies and startups that you know know try to build a circular business model that is also truly innovative and sustainable, because it's also in an economic way, and, on the other hand, I hear what all you do and I see as well that there are certain things that you cannot do from a beauty, business and forprofit point of view. So how do you face that and do you face sometimes these challenges or critical point of views as well when it comes to philanthropy?

Fernanda:

This is a very good question. I think we face very different roles that different stakeholders play. Of course, the businesses or, if we're talking about the fashion industry, right, the brands have a role to play. The garment manufacturers have another role to play. The governments have another role to play in creating policies. The EU has another role to play to also create and enforce policies.

Fernanda:

I think that we are taking up one of the roles that we saw that were missing, or not necessarily the role that is missing, but when we see gaps where we think that philanthropic funds can help, that's where we come in. So I don't think that we are trying to act in favor of any specific actor. We are actually just saying, oh, funds are needed for this, okay, this is not specifically a commercial activity for one or another actor, then we can help here, and that's exactly how our strategy was made. What are the gaps and opportunities out there that philanthropic funds can play? The igniting role, the beginning of the change, and that's where we come in.

Fernanda:

The quotation you said was super interesting and it reminded me of a quote by Paul Polman, the previous, the former CEO of Unilever right, unilever, yeah, I watched him at the Global Fashion Summit in Copenhagen and he said that no brand, no supplier, no garment manufacturer, no one in their sane mind would have built the textile industry ecosystem the way it is today. You know if they are sane. The textile industry the way it looks today is a result of many, many, many years, decades centuries, I want to say since industrial revolution. Right Of you know different networks that got together, different business opportunities that showed up over there, and then, more with globalization, more different business opportunities popped up and then it ended up being the way it is today. I don't think that anybody had the plan to do it the way it is right now or even had the foresight to realize that would be in the state that we are now. We now have very good understanding of what's gonna happen in the future if we continue like this, but there's probably a lot of signs that we're missing, so we don't really know what the future is gonna look like. We can only prevent, and that's why we are coming up with a circular business models, for instance. Right, we are trying out the solutions. So I love that Paul Pullman said that that no one in their sane mind would have designed an ecosystem like this.

Fernanda:

Our job now is to create and adapt this ecosystem so that it actually comes to serve people and the environment, and that's what we are here for In redesigning this ecosystem. The brands are doing what they can. The consumers should be doing what they can as well. Governments and policy makers should be doing what they can as well. And here we are. We can also do something, and this is what we do. We use the philanthropic funds we have in order to fund and start projects and connect to people to change the things that you know that need change, but that no one else is able to do it at that point I love your positive attitude towards us.

Carl:

It's really inspiring nice preparing for today, I obviously had a look at at some of your articles and speeches and you talk about the need to break silos and move beyond isolated interventions. What does it look like in practice when you apply an ecosystem or, as what you mentioned, a lot collective impact approach in your work?

Fernanda:

okay, this is my passion, so I could be talking about this for days on end so I'm going to start, for example, with the philanthropic world.

Fernanda:

Okay, now, historically philanthropic organizations, they work with a grantee or a partner in another country, with bilateral agreements, and they say you have a project, so here you go, I give you funds to do what you want to do. And this partner? They have a theory of change and they implement this project and then they report back on what happened, they evaluate the project and that's normally how things are done. And sometimes in the textile industry, in the business world, things also happen like this, with little projects to change things that that are the low-hanging fruits that can be changed. But with time the whole development industry and businesses got there as well are understanding that this creates limited impact. Let me illustrate this a little bit for you. Let's say that you're on a trip to Tanzania, in rural parts of Tanzania where there's a lot of poverty, and you come and you see in a school, these beautiful newly built toilets and hand washing stations, and you can see now that the children in this school and the teachers, they have access to improved sanitation, improved water sources, it's accessible to children with disabilities and it's working perfectly well, and all of this is done with by organizations who work with water and sanitation, but then you look at the building where the children study and you see over there that they don't have access to material for studying the teachers sometimes they can't come to work, so the children are just there. Sometimes the roads are not good enough for the children to come to school every day and simply people have to make do what they have, but the children sometimes don't even get an education because it's hard to even access the school. So this is what we're calling limited impact. You are enabling, for example, them to have toilets, but you're not dealing with the other barriers that they face for accessing education. And then we come and talk about equitable education and the gender in education. Yes, but all of these are the big barriers that keep children away from school in poorer areas of the globe, right? So what we understood some time ago was that we can't work with specific partners, only in specific themes. We can't just work with water and sanitation, we can't work only with gender or only with education. We have to work with all of this at the same time in order to break the barriers that keep people from lifting themselves out of poverty. This is one example. I'll come to the textile industry as well, or, more specifically, to businesses. But bear with me. So this is what we did in order to break the silos. We wanted to provide holistic support to a specific group of people, to show that you have to break all of the barriers and not just one. So we started.

Fernanda:

Back then it was a pilot, a pilot in India, in which we talked to waste picker families. We sent a group of ethnographers to live with waste picker families for one month to understand from them, the waste pickers, the people who live out of picking and selling waste. Right, we asked them what are the main? We understood from them, from living one month with them, the depth of the poverty they live and the depth of the barriers that they face in their daily lives. So they said, for instance, they are very poor. They depend on picking waste every day. They are invisible because people don't see or value them, and when they see, they could be facing violence. Right, they could be victims of violence. They don't have access to skills training for other professions if they want to. They don't have sometimes even enough buyers for the material that they pick. For instance, textiles is something that they didn't use to pick because there was no buyers. We are trying to change that, but this is one example and several other issues that they face in their daily lives.

Fernanda:

So instead of choosing one or other of these issues to deal with, we decided to fund partners who deal with all of them, to create systems change, to shift the power relations so they can have more agency to decide on their own lives. So we started partnering up with more collection centers who would buy the material that they pick, such as paper, plastic, metal and now even textiles as well. We partner up with people who can provide skills training for them. We partner up with organizations who work with the government to provide IDs for them and get access to social security and health care and all of that, etc. So this program it's called Samuhika Shakti and it means collective strength. It's been applied in India for now I want to say, five to six years, and we do this through a method, a methodology for collaboration, called collective impact.

Fernanda:

So that's the beauty of it is that we're not just getting random people who are working with random stuff to do this. We said you have to create this common agenda, have the same objective, a shared measurement system. Here it is, we're funding a backbone organization to fund all of this, to organize all of this, to orchestrate all of this. We funded the whole thing and then we later found co-founders for different parts, but we funded the whole thing to make sure that we would have the holistic impact that we're talking about the barriers, tackling all of the barriers at the same time. So this was our first attempt at not working in silos and it has worked beautifully well.

Fernanda:

I want to say that the results are quite beautiful. The waste pickers now have access to, for example, skills training for knowing how to sort textiles and how to collect textiles, and we found partners who can buy these textiles from the waste pickers and then collect more and more and more, and once they have a big amount of textiles, they can send it to recyclers in, for example, panipat, which is a big recycling hub in India. This program I told you about it happens in Bengaluru, bangalore, in India. And let me tell you about another beautiful thing that happened with the waste pickers once they got empowered to, you know, become the social entrepreneurs that they are. They started collecting more plastic PET, for instance, right. They started collecting more plastic PET, for instance, right. And then they found a social enterprise who buys all of this plastic and transformed this plastic into little I'm going to call it little pellets made of plastic and then sells it to button manufacturers.

Fernanda:

So there are international brands who then buy these buttons to put in their garments and these buttons come with the recycled plastic collected by the way speakers in Bengaluru. I'm going to give the example of the H&M group. All of the garments produced for the H&M group that are sold globally, these garments that are manufactured in India. They come with these buttons that are made from recycled material that is collected by the way speakers in Bengaluru. It's traceable, it's responsibly made. It's a very beautiful example of how procurement can be done in a way that supports people who are already working with inclusive circularity but are normally part of an informal economy but are now getting much more opportunities because of this willingness to work with better procurement practices. For instance, we call it inclusive circularity.

Carl:

I remember that word from our panel in Rotterdam. Thank you for visualizing this with these concrete examples. I think this is very helpful for everybody who's listening and who's not spending his everyday life in that area, so I realize how crucial that is. And H&M Foundation basically you are like an orchestrator, not just a funder, but maybe also like is that right? Like an orchestrator of public, private, social, entrepreneurial parts and bringing everybody together and creating these.

Fernanda:

Exactly. Very good summary. I should use that from now on.

Carl:

You said that disruption and collaboration are both in the DNA of the foundation. Is there an example of anything like an unexpected collaboration, something you know that really moved the needle?

Fernanda:

that was unexpected, maybe oh, that's a very good question. Um, I think the best example that I have is exactly this one from this program, samuhika shakti. Because this program started, or when I start explaining about it, you think, oh, my god, this is philanthropic word work. This is a a philanthropy giving money to NGOs in India working with people who come from from vulnerable groups, and so you might think what does that have to do with business? That's nothing. So they, a lot of people, don't see this as a how do I say? A business collaboration, or a lot of people don't think that this is related to their work. But I don't agree with that, because with this program, we have several programs, but with this program, for example, we added an element of innovation to it, in which we have an innovation challenge within Samuhiko Shakti, this program, in which we're looking for innovators who are using waste to come up with new solutions for, for example, circularity or innovations that can help to improve the lives of way speakers. So I'm going to give you an example of something that happened. You know these chips that we buy and we eat potato chips, for instance, or even instant noodles. This kind of plastic, it's a multi-layered plastic. It's very, very hard to recycle. It's a multi-layered plastic. It's very, very hard to recycle. So through our innovation challenge, we found an innovator who found a way to recycle these multi-layered chips packages and is now creating beautiful, fashionable sunglasses out of it. And this is definitely a kind of a disruptive collaboration, because you would never imagine that a philanthropic organization would end up being able to support different kind of solutions that come out of waste and come to provide different and socially responsible services for the fashion industry. So those guys in India they are fantastic Ashaya, they went into the Indian shark tank, for instance, and they are a beautiful example of entrepreneurship who really want to not only have a proven business model that comes out of circularity, but are also thinking of improving the lives of the way speakers and, more importantly, building on the knowledge of the way speakers to build their businesses.

Fernanda:

This is my main point here that I want to show for your listeners, and I come already to it now because I'm getting excited. When we're talking about disruption and collaboration and circular economy, I think the most important thing when creating new business models, when exploring new business models, is to remember that there are already many, many, many people in the world I want to say millions of people in the world who are working with a circular economy, but we normally forget that they are doing that or we normally don't think of them because they are the informal sector. And I'm talking about waste pickers, I'm talking about sorters, people who are, you know, hired for the day to sort different textiles, people who work collecting textiles from one place, like collecting garments in homes, and then bring them and sell them to someone else. Those are collectors, for example, right? Or agents. All of these people, a lot of them, are not people who come and they have a signed contract. No, they just see a business opportunity and they go and get things and sell things right. They are entrepreneurs and they have a lot of knowledge and skills in creating businesses, but also in sorting and recycling textiles, sorting textile and plastic connected to where we met here, right.

Fernanda:

So my request, my recommendation, is to everybody who is working with circular business models is look, when you start, do a mapping of who is already working with it and don't forget to include those who already have decades of experience working with it. Don't forget the informal sector, because I'm not saying this only because this is good for people and for the planet. But this is also important for your business, because the informal market if we don't include them, it grows in parallel to the formal market and it sometimes grows even bigger. So it's better that we join hands with the informal market and make things more professionalized. It doesn't necessarily always mean formalizing jobs, but it means working with the informal market so that we can all benefit from each other. Does that make sense?

Carl:

That makes sense. Thank you so much for pointing this out. Beautiful how philanthropy here enables entrepreneurship as well. So I really love that and that's what we talked about initially, right. So thank you for pointing this out, and I myself, and my wife as well, we're huge fans of India and of Indian people. We have a lot of friends from India. It's such a beautiful culture and so much energy, so thank you for bringing that vibe as well here to our conversation. Your recent article why Fashion's Future Must Be Fair powerfully reframes just transition as something much broader than reskilling. You said workers are also parents, citizens, humans or human beings with dreams and basic needs. How do you make sure these lived realities, not just job functions, are reflected in the projects you support?

Fernanda:

Oh my, this is beautiful and I'm so glad you brought up this article. So you remember that I mentioned and explained how we work with collective impact, right, and that was in India. So I'm going to give you another example now, which is a project we have in Bangladesh. So in Bangladesh, we did something similar project we have in Bangladesh. So in Bangladesh, we did something similar. We had a team of researchers talking to the women garment workers to understand the challenges that they face in their daily lives, because we see that a lot of women in Bangladesh are getting out of jobs because of automation and digitalization. A lot of the workforce in Bangladesh work with the seamstresses, right, we're using the machines in the assembling garments and a lot of them are losing their jobs due to automation. So we are, of course, we're concerned about that and we thought what can we do to support and to prepare the women for a future defined by automation? So, instead of, you know, being pushed out of the markets, they can join the market and, you know, help the ready-made garment industry in Bangladesh to grow and to thrive.

Fernanda:

So we sent a team of researchers to talk to the women garment workers and understand the challenges that they face on their daily lives. So we could again provide a holistic support and tackle all of them at the same time. So I'll give you an example. So they managed. They reported I'm sorry they reported that they face, for instance, face, for instance, difficulties in accessing other jobs, such as becoming supervisors, becoming managers or going into operating machines that you know do more than just TCUing. They mentioned that sometimes their family members don't really support them from getting promoted in their jobs. A lot of them mentioned that they don't see other women being supervisors, so they didn't know they could dream of this. Some of them mentioned I barely have access to my own salary, so what else is it that I can do? So we decided to tackle all of these at the same time, as I mentioned, so through a collective impact initiative.

Fernanda:

Now this one is called operadita. It means undefeatable in the local language. The women then have access to partners or to services for, for example, digital financial literacy skills, training for hard skills for operating machines, but also soft skills for or sorry, I call them power skills for becoming managers. They have access to water and sanitation in their homes, child care facilities in the communities where they live and even access to I'm going to call it a perception change activities, which is activities towards the families and the community that shows women in other roles. That shows, you know, women who went for their dreams like a role model, women who can actually achieve different things than the traditional roles. So our partners over there are working even with, you know, mass communication, such as radio, soap operas on TV and so on and so forth.

Fernanda:

So this is an example of how we are promoting just transition, because a lot of the stakeholders in the textile industry they talk about just transitions, as in leaving no one behind. So they talk about reskilling and preparing people for circularity. Reskilling and preparing people for circularity, such as preparing women for circularity, for them to know how to operate in companies who work with a circular business model, and that's very important. Women should get access to skills, training, reskilling, but that's not the only thing that they need. They have all these other challenges that are preventing them from accessing these green jobs. So they also need to have support from their family members to be able to go for these jobs. They need to have safe roads to reach there. They need to have, as I said, the willingness, the understanding that they can't up this job. They need to have, perhaps, understanding of how to operate the machines that are needed for this. Just some examples.

Fernanda:

So this is what just transition means for us is making sure that people, whether garment workers or way speakers or anybody in the world they should have, there should be inclusion for them, inclusion for them to raise their voices. More than just inclusion, it's agency Agency is the capability to act on the things that matter for you, the capacity and the resources to have to raise your voice and get heard. Get heard and accountability, which means everybody, all stakeholders taking, really being responsible for the things that they should be taking care of. So government should do the things that they are responsible for. Brands should take care of the things that they are responsible for that they are causing, textile manufacturers also being responsible for the things that they are doing. Same thing with the consumers, consumers also being responsible for the consequences of their actions. So pretty much accountability for everyone, and all of these three principles are super important for guaranteeing what we call a just transition.

Carl:

Not easy to make consumers accountable for their actions, right? True, I wish we had a quick fix for that.

Fernanda:

There's no quick fixes for anything.

Fernanda:

That's why it takes decades to change a system. Nothing is easy to change. That's why I'm saying I think we're getting there. We're getting consumers more aware about what they are consuming Ourselves. I'm a consumer too, so getting myself more aware of what I'm consuming and what my partner is consuming, what I buy for my kid Even I we have a rule at home. I don't have many rules at home for my child, but there is one rule, which is whenever we buy something new, a new toy or a new piece of clothes or whatever it is, we have to be away with another, we have to donate something that we had at home before, just so that we don't accumulate a lot of stuff, no more cluttering.

Carl:

That's amazing. I love that rule Whenever we will have kids. I make sure we do the same.

Fernanda:

Well, I have to say I can't take credit for it. It was my husband who suggested it to me when I was buying new clothes, for instance. He used to say, but then you have to get rid of another of the same amount of clothes you bought. And I was like, okay, I understand. And then in time I started loving it. So now we do it for toys, for our kid as well, and so on and so forth.

Carl:

Wow, beautiful to raise your kid already with that awareness. In your article, you also point out that environmental and social justice are deeply linked. How does this play out, especially in places like you mentioned, bangladesh and India? Where climate and labor challenges overlap. And just because you just talked about education of women working there, before doing that, do you also take care that they generally have good work environment and fair payment and like safe working environment, or how much? Do you go into that as well?

Fernanda:

that's a great question. So these are two questions in one. So let me see when we we have been working with, I'm going to say with providing creating inclusive societies for a long time and also for creating environmental programs for a long time, but we used to work ourselves at the H&M Foundation in silos. It was only recently that we understood as well that if we're not going to work in silos with the projects that work in different countries, we shouldn't be working in silos ourselves either. So we actually decided to change our strategy and this is quite recent in which we decided that all the projects that we do or support decided that all the projects that we do or support, they need to look at the impact on people and the impact on the environment. So we started doing that, thinking that we were being very innovative because we are holistic. It's very hard to find people who are holistic.

Fernanda:

But then, when we started studying Just Transition, we realized that the organizations and the people who work with Just Transition on the ground they never make the distinction between working for people or for the environment People who are there, you know, let's call it environment warriors, for instance, or people working for the rights of native groups in the Amazon forest, just giving some very radical examples. They don't make this distinction and they are the people who really have been for decades working for just transition, or even those who are working for just transition in terms of where the term started, which is the transition from a high-carbon economy to a low-carbon economy. So the production of energy right. Carbon economy to a low carbon economy. So the production of energy right? Um, with the idea was to take care of the people who are being dismissed by the, for example, the coal mines, right? Uh, there has never been only a focus only on the social impact of it, people. I think only us who are I mean the industry, who is funding specifically parts who make the distinction of what goes to the people, what goes to the environment. But in reality, we are all interconnected anyway. If we affect, if we destroy the environment and we don't have resources for us to use anymore, we are actually harming ourselves as well. We're harming people, so there's no way that we can separate these two.

Fernanda:

So the point here is to say that in our strategy and now in our operations and implementation, we make sure that we have always elements of impacting positively people and the environment in all of our projects. If a partner comes to us with a proposal and they are focused in only one of these, we're going to pass them this proposal through our Just Transition framework and we're going to see have you thought about how this impacts the water emissions on water, for instance? Have you thought about pollution? Have you thought about land use? And if their project impacts the environment in any way, let's say that their project is about social impact, right. And if their project impacts the environment in any way, we're going to have to reconsider that. We're going to have to whether bring in a third party to support them with this or, you know, not consider this project or work in different solutions, because we don't want to be working in silos. So we say that's why everything that we do should be holistic.

Fernanda:

Now, answering your other question about how we work with, for example, the women garment workers in Bangladesh, you asked if we first support them to get a fair payment or safe environments. I would say that this is difficult to explain because we, as I explained before, we don't work ourselves within factories themselves. Right. We support partners who work with garment producers or people who assemble garments, for instance, right. So, yes, we support that, but indirectly.

Fernanda:

We can't come to a garment producer and say you don't give fair payment, so now you've got to step up your game. We can't do that, and who would listen to us anyway? Right? Right, we do what we can as a philanthropic organization to support that, for instance, in Bangladesh now. We are working much more now with advocacy. Advocacy for, for instance, working with public policies so that they can increase the social security for workers, for workers, for that to cover, for instance, climate disasters or injuries done because of the changing climate. We are working with advocacy as well to support more garment manufacturers in Bangladesh to decarbonize. So we definitely support safer environment as well, for example, in supporting organizations to advocate for cooling mechanisms within the factories so it's not so hot, for instance, to work in a factory. So we do it.

Carl:

But, as I explained, it's indirectly, indirectly means we provide our expertise where we can, or partners with the expertise or even the funds for other organizations to play their role and support that so that we do all right, thank you for pointing this out, and I assume brands like h&m, which you're obviously you clearly made that right like you're not part of h&m group as a brand, but it would be the responsibility of the brands to make sure that in the factory where they produce they offer certain standards, I assume.

Carl:

I mean there have been scandals around, yeah, that a lot right like but, but is that, then, something that the brands in general, not not just H&M have to take responsibility for?

Fernanda:

So, just to start answering this, let's clarify one thing so the H&M doesn't have factories in Bangladesh or in India or in Vietnam, right? The H&M has suppliers. So there is many garment manufacturers in Bangladesh who then sell the clothes that they produce to H&M right, or sell to other brands as well. And it's these garment manufacturers they are their own independent organization, right? It's them who then employ people to work in their factories and they also have their own suppliers, for example, of raw materials or textiles. Those also employ people, right?

Fernanda:

So I would say that the responsibility for guaranteeing good jobs and fair wages and etc. Relies on everybody on the value chain. The brands can do what they can to incentivize their own suppliers to provide that fair wages and safe working conditions and so on and so forth, so they can choose who they work with, who they supply from right. The brands can support with programs or with different kinds of compensations who they're going to work with, so that they choose, you know, organizations who work with those principles. But so this is a way that they engage. But the people who employ the organizations who employ the garment workers, they also have their responsibility, and so do the governments where these companies are located.

Fernanda:

So I would say that, again, it's not something that one stakeholder can fix. It's something that the whole ecosystem needs to follow. So, in order to have fair wages, safe working environments, education, access to skilled training, all of this depends on specific roles that everybody in the ecosystem has. The government has to do their public policies to guarantee the rights of the workers. The companies have to comply to those policies. The brands they put on their own standards for working with these suppliers, the NGOs that work in these countries. They have a role to play to point out when the rights of the workers are not being met. So, as I said, the accountability here goes to everybody. Everybody has a role to play has a role to play.

Carl:

Even though I work within sustainability and circular economy in the textile industry now for over 10 years, I slowly begin to understand the complexity, especially when we look into these countries where most of the production is happening. I just had a meeting before we met today in stockholm with a brilliant mind from the apparel impact initiative who spend most of her life in these countries, and the complexity brings it that also. It's not solved by just like brands saying, hey, we require you now to have these and these standards, because it's also the suppliers, the sub suppliers. It's about how much are we going to pay for all of this, who's financing it, and so on. It's like, yeah, it's definitely a very challenging topic that cannot be answered or solved immediately, as you also pointed out In our panel discussion in Rotterdam.

Carl:

You pointed out that the textile industry is only 0.3% circular, yes, which is staggering um I worked with circle economy from amsterdam before with our initiative circular republic on the circular gap report and the first circularity gap report on a city level for munich even those numbers are really crazy, but 0.3 is another level, so that is quite shocking.

Carl:

Obviously, um, I would love to pick your brain on on that situation and what we can do to pick your brain on on that situation and what we can do about that. But mostly, maybe we can quickly talk about the project in india that you're about to launch or at launching at the moment around circularity, and can you share a bit more about that project sure I would love to share more.

Fernanda:

So, yeah, that, yeah, that's a good way to start the conversation on circularity. That is only 0.3% circular. So it's actually. This data came from the Circle Economy, the circularity gap report for the textile sector that they launched, and they did a brilliant study trying to understand how the material that is out there in the garments, how does it come back to the industry, or does it even come back to the industry, and that's the result that the textile industry is only 0.3% circular. And it was shocking and heartbreaking at the same time, because to me, this shows that the textile industry is not circular, it's linear, it's very linear, and that means we have a very, very, very big job to do. If we want to make it circular, it's going to require all these stakeholders that I mentioned before to work together to make it happen. So it's quite sad, but it also show us that the magnitude of the problem it's bigger than what we thought. So we have to work harder on this. So it's what this textiles Circularity Gap Report showed us is that there is not just one thing that needs to be done. The report shows six different scenarios analyzing what would happen to the environmental and social impact of the textile industry. If we chose one specific solution or another or another so six different solutions what would happen to people and the planet then? So this report shows it's very nice, it shows. One of the scenarios is, for example, if we use more locally made fibers or natural fibers, or if we have circular business models, or etc. There's six different solutions and the result is that the impact if we choose one scenario only, the impact is going to be very limited. Or another scenario limited impact as well. Or another scenario limited impact. Well, or another scenario limited impact.

Fernanda:

The only way that we could reach a good enough scenario to start even talking about circularity is if we apply all of these solutions all together. And that means that when we are creating circular business models, we have to think about we can't work in silos, we can't work only on, you know, collecting the textiles. We are going to have to look at collecting the textiles. Where do they go after that? Where do they end up after that? We're going to have to look at using locally sourced materials. We're going to have to look at, you know, all of the solutions that you see around on sustainability, that the companies, that the big brands that the garment manufacturers are doing around sustainability. We're going to have to do all of those together Together even to achieve an economy, a green economy, an economy that is low carbon and that is, you know, that helps people to thrive basically.

Fernanda:

So I would say that we don't have an answer on how to do that. We're doing what we can to support all of these kinds of solutions and, in order to maximize our impact, we definitely support more initiatives that are related to reducing greenhouse gas emissions, so related to decarbonization. So we play that role, but we need everyone else to play their role to make to really transform the textile industry. So we are actually right now trying to understand how can we support this ecosystem in India, called this city in India, called Panipat, to support a thriving textile economy globally. So I'll give you an example.

Fernanda:

I'll illustrate more of what Panipat is. So it's a town in India that already works with circularity for at least three decades more than that, I believe. So they receive textiles from abroad, they receive textiles from abroad, they receive textiles from the industry, from post-industrial waste, and they receive post-consumer waste as well in this town. Are you familiar with the terms post-consumer waste? Of course, yeah, yes, let me just be a bit more clear for those who are listening.

Fernanda:

So they import garments or shredded pieces of clothes.

Fernanda:

They use, you know, the textiles that are not used to make garments but that is wasted from the factories. They use that and the clothes that the consumers dispose of. They collect all of that there as well. It ends up in this big industrial complex that is Panipat, and over there there's a lot of different types of recyclers, mostly mechanical recyclers, who downcycle the products into, for example, blankets that are sold worldwide or sent to organizations that work with disaster relief, or they create blankets to be sold in the local market, and so on and so forth. But this place, this in Panipat, it has big manufacturing hubs that are big companies, formal companies who are completely ESG compliant, but they also have some home units, some people who are hired to do some work with their families, to weave new threads and then suddenly create more fabric here and there. So it's a complete mess that was born very organically about 30 years ago I'm saying 30, but is this right as in? You know, when you think that you know, 1970 was 30 years ago.

Fernanda:

That's why I'm rethinking here, but anyway, decades ago. So in Panipat there is a lot of men and women working with sorting Gazillions of textiles that come into their hands every day. And these women, I'm going to say now the women who are there sorting textiles that come into their hands every day. And these women, I'm gonna say now the women who are there sorting textiles, they put colors here, they put white here, they put you know, linen there, cotton there, polyester there. So they, some of them, work only in shredding, taking out the zippers and throwing them out so that only the textile part can be recycled. So they work in very difficult conditions. Sometimes they work where, for example, the textiles are bleached and a lot of them don't have any kind of, you know, personal protection equipment. So they breathe and their skins are pretty much in contact with that air that is full of chemicals, for instance. So it's difficult working conditions. Sometimes they don't have anybody who leaves their children with, so the children are just there roaming around in this industrial setting. A lot of the waste water that is used there is, you know, disposed in nature without the complete, proper chemical treatment it should go through. So the situation in Panipat is very interesting because they are a big player in the circular economy. They've been doing it for years. Many brands source textiles from them, recycle textiles from them.

Fernanda:

But nobody really talks about this specific hub and it's growing because the quests right, the demand for circular textiles is growing, but at the same time you see a lot of people who are still not given the proper working conditions or the environment is also still suffering, because you know a lot of that. Those activities are overlooked. So what we are doing there is that we are studying. Is this something that philanthropy can support? Can we support a thriving circular industrial hub in which people have good working conditions and good lives apart from their jobs? Also, the other impacts on the environment are looked at in a way that is still super profitable for you know the organizations that work here.

Fernanda:

I don't mean that we mean to bring benefits for these organizations or profits for these organizations. We can't In our operations we can't support commercial activities. But is there something that we as a philanthropic organization can help to start over there that proves that this can actually be done, in which the local partners get what they need, they prosper, but also the people who are working there also prosper. The environment over there can also prosper. So this is what we're looking at in India. So, apart from working with you know the program that I mentioned before, mangaluru, of supporting way speakers we're looking into how can we support the textile industry, who already exists over there, to transform itself to be socially inclusive and planet positive. That's what we're looking at. We don't have a name for that yet and, for all of you who are listening, if you have insights to share with us on this, please do get in touch.

Carl:

We are still learning, I mean I have so many more questions, um, but we need to at one point come to and so, but this is a interactive podcast which means people can share their questions, and when we have a lot of questions that it makes sense, you know, I will share them with you. And if it makes sense that we sit down again and talk about them, then I think that's even great, and then we, we have an interactive audience. I think that's beautiful. So we will definitely get back, uh, to that. If you could redesign, you know and you talked about it before like no, no sane person would have set up the system as it is. If you could redesign the textile system from scratch, what would be your like? Couple of first steps or non-negotiables?

Fernanda:

Oh, what a beautiful question.

Carl:

It's a tough one. Yeah, it is.

Fernanda:

And I wasn't prepared for that, so I can give a beautiful answer, you know. So it's going to have to be from the top of my mind.

Carl:

Yeah, it doesn't need to be perfectly thought through right, it's just like what comes in your mind. What do you really think this will be one of the first things you would take care of.

Fernanda:

Oh, how nice. So I have to say that I am not a specialist in the textile industry or in fibers, for example. I work, as I said, here as head of collective action, so I am good at talking and listening to people and to finding solutions for us, for them to partner up, but I do, as I said, listen to people. So I think that if we were to redesign the textile industry, I would think, for example, of supporting the design phase of the garments, because we know that, for example, circularity has to be thought from the very beginning, from the design phase right. The mix of products that are put in a, the mix of fibers that are put in a product, really matters for making it more circular and for it to be able to be recycled later, right. So I would look into that. I would look into even the production of fibers. How can we make sure that the people working in the production of the fibers are receiving, going through a just transition? Let's say so farmers in the cotton fields or people producing polyester fibers, linen fibers and so on and so forth. And then I will go further. Once textiles are produced and they go through the wet processes, my goodness, the wet processes are the most energy-consuming processes in the textile industry. That's where most greenhouse gas emissions come from.

Fernanda:

In the textile industry is in the wet processes, the process of dyeing the fabrics right. The steam that is needed for that process is very energy consuming, which means we use a lot of electricity or other forms of generating power, which emits a lot of carbon. So I would definitely look a lot into that. How can we do that using green energy in a better way that is still, you know, affordable for the garment manufacturers?

Fernanda:

And then, going further, I would definitely look into how well the people who are working in the assembly part of the value chain, which is the men and women assembling clothes do they have good working conditions, fair wages, access to career advancement, whatever career advancement that they want? Do they have good living conditions? Do they have? Are they happy? What else can we do, what else should be done for them to make sure that they are happy? And then from there the clothes go into being bought and then from there, the clothes go into being disposed. So they also look into how can we make sure that the clothes that are, First of all, wear the clothes. You have as much time as you can? And when it can't be worn anymore, can it be resold so that somebody else can be happy wearing, you know, your jeans jacket, and then after that, let's find a way to send it back to the textile industry so that it can be recycled. So you see, I just described the whole value chain, so I couldn't choose one, but the whole thing needs to be redesigned.

Carl:

I could not agree more, Fernanda. This is exactly my point and what I'm trying to do as well. So thank you so much for this beautiful answer. Thank you so much for this really inspiring conversation. You really pointed out great things that most of the entrepreneurs and activists that I'm normally talking to are not so aware of. So really, thank you so much for shining that light on this area. So thank you very much.

Fernanda:

Thank you very much for listening and for everybody else who is listening. Please do get in touch. You can find me on LinkedIn Fernanda Drummond, h&m Foundation.

Carl:

Then I will link your contacts in the show notes and then everybody can reach out. So thank you very much.

Fernanda:

Perfect, thank you.