Sustainable dyeing and washing technologies

November 2021

Indicative Return:

15% – 20%

Investment Timeframe

Short Term (0–5 years)

Ticket Size

Less than USD 500,000

Business Model Description

Energy efficient and environmentally friendly, sustainable manufacturing, dyeing and washing technologies for the textiles industry

Expected Impact

This IOA will reduce water consumption and promote energy-efficiency in the textile industry.

Regions

Central Anatolia Region, Marmara Region, Mediterranean Region, Aegean Region

Sector
Apparel and Textiles > Consumer Goods

Direct Impact SDGs:

Indirect Impact SDGs:

Sector
Consumer Goods

Development need: Turkey’s achievement of SDGs 3, 6, and 8 is increasing yet remains behind the target levels. The picture is grimmer with SDG 9 and 12 as attainment is stagnating or increasing less than the required rate. (1) The pandemic has also made it vital to produce essential consumer products such as masks & other PPE.

Policy priority: The 11th Development Plan, 2020 Annual Program and New Economy Program 2020-2022 target macroeconomically balanced, innovative, technological, productive and efficicency-focused growth. (2) (3) (4). The 11th Development Plan calls for promoting an integrated production structure, social responsibility and environmental awareness within the textile sector.

Gender inequalities and marginalization issues: Although there is no disaggregated data about women’s access to a basic goods basket in Turkey, on average, women in Turkey experience a gender wage gap of 15.6%. (18) It is estimated that for every single dollar a woman earns in Turkey, a man earns 2.27 dollars. (19) This implies a lower purchasing power vis-a-vis their male counterparts. Within the textile industry in the consumer goods sector, there is a high rate of informality among migrant and female workers. Informal workers within these sectors are usually paid below subsistence levels. (17)

Investment opportunities: 35% of millennial and 36% of Gen Z consumers state that they deliberately try to purchase clothes and products with “sustainable” or “environmentally friendly” labelling according to the Cotton Incorporated Lifestyle Monitor™ Survey. (15)

Key bottlenecks: Price fluctuations and other such macroeconomic trends present a bottleneck on the demand-side for consumer goods. The dramatic shift to digital platforms after COVID-19 has been leaving some producers out of the market, there is a need to increase the digital literacy of SMEs. Inadequacies or disparities in some regional transport infrastructure pose supply-chain constraints

Subsector
Apparel and Textiles

Development need: The fashion industry consumes around 79 billion cubic meters of water annually, accounting for over 10% of water consumption by all industry types. This is expected to rise 50% by 2030.(7) Due to COVID-19 restrictions, there was nearly a 70% decrease in the markets, and consumers turned to sustainable, environmental friendly and long-running products.

Policy priority: 11th Development Plan suggests that the production/use of technical textiles and energy-efficient production technologies is supported by the government. Companies are called to comply with environmental protection legislation and waste re-use activities and cooperate with other stakeholders in the value chain (in particular machinery, fiber and technical end-use manufacturers).

Gender inequalities and marginalization issues: It is estimated that there are approximately 1.5 million informal workers in the Turkish garment industry. (16) The garment industry is among the top three employment sectors of Syrian refugees. (17) Research shows that most of the migrant workers in the apparel and textile industry are informal and lack social security. Informal workers in this sector earn below the minimum wage. Syrian female workers reportedly earn 20% less than male Syrian workers in Turkey’s garment industry. (17)

Investment opportunities: 35% of millennial and 36% of Gen Z consumers state that they deliberately try to purchase clothes and products with “sustainable” or “environmentally friendly” labelling according to the Cotton Incorporated Lifestyle Monitor™ Survey. (15)

Key bottlenecks: Price fluctuations and other such macroeconomic trends present a bottleneck on the demand-side for consumer goods. The dramatic shift to digital platforms after COVID-19 has been leaving some producers out of the market, there is a need to increase the digital literacy of SMEs. Inadequacies or disparities in some regional transport infrastructure pose supply-chain constraints

Market Size and Environment
Critical IOA Unit

Number of people employed

The Turkish ready-wear and textiles sector is the second largest exporting industry in the country with over $17 billion in exports each year. The industry and its subsectors employ over 1.7 million people as of 2020 with the sector being as one of the key engines of growth and innovation for the country. (5) (9)

Indicative Return

15% – 20%

Investors already active in the Turkish textiles field estimate a 15% investment return, which can go as high as 50% depending on branding and innovation premium.

Investment Timeframe

Short Term (0–5 years)

Benchmark activities in this field point to a 3-4 year timeframe.

Ticket Size

Less than USD 500,000

Market Risks & Scale Obstacles

Capital – CapEx Intensive
Undertaking this kind of a sustainability transformation requires initial investments which might discourage operators.
Business – Business Model Unproven
Eco-friendly textile is often considered to be more expensive than the conventional textile. High pricing is limiting the market by niche market segmentation which creates a risk on company return.

Sustainable Development Need

It is estimated that the fashion industry consumes around 79 billion cubic meters of water annually, accounting for over 10% of water consumption by all industry types. Water consumption by the textiles industry is expected to further rise 50% by 2030.(7)

A cotton t-shirt requires 2,700 liters of water to be produced, which is equal to 900 days worth of drinking water. (8) Reducing water consumption via energy efficient & environmentally friendly, manufacturing, dyeing and washing technologies would have a significant level of effect on SDG 6.

Gender & Marginalisation

It is estimated that there are approximately 1.5 million informal workers in the Turkish garment industry. (16)

The garment industry is among the top three employment sectors of Syrian refugees. Informal workers in this sector earn below the minimum wage. Syrian female workers reportedly earn 20% less than male Syrian workers in Turkey’s garment industry. (17)

Expected Development Outcome

Reduce water consumption via energy efficient & environmentally friendly, manufacturing, dyeing and washing technologies would have a significant level of effect on SDG 6. A cotton t-shirt requires 2700 liters of water to be produced, which is equal to 900 days worth of drinking water. (8)

Increase energy efficiency and reduce waste water through an energy efficient & environmentally friendly dyeing and washing technologies which aligns with the essential goals of 11th Development Plan of Turkey.

Gender & Marginalisation

Increase female, rural, or inmigrant employment and income level in the textile industry through formal work opportunities

Primary SDGs addressed

6 – Clean water and sanitation

6.4.1 Change in water-use efficiency over time

Current Level13.6 USD per cubic meter (2017) (14)

8 – Decent Work and Economic Growth

8.4.1 Material footprint, material footprint per capita, and material footprint per GDP

8.4.2 Domestic material consumption, domestic material consumption per capita, and domestic material consumption per GDP

Current Level1.3 kg per unit of GDP (2017)(14)

18.7 metric tons per capita (2017) (14)

9 – Industry, Innovation and Infrastructure

9.2.1 Manufacturing value added as a proportion of GDP and per capita

Current Level%16.9 (2019) (14)

12 – Responsible Consumption and Production

12.6.1 Number of companies publishing sustainability reports

13.3.2 Number of countries that have communicated the strengthening of institutional, systemic and individual capacity-building to implement adaptation, mitigation and technology transfer, and development actions.

Secondary SDGs addressed

Directly impacted stakeholders

People
Communities living close to manufacturing areas and water disposal sites, factory workers through the decrease of toxic material in production
Gender inequality and/or marginalization
female, rural, or inmigrant employment and income level in the textile industry
Corporates
Local companies working on conventional textile manufacturing

Indirectly impacted stakeholders

People
Sustainability-focused consumers
Corporates
Retailers, logistics companies

Outcome Risks

A short-run increase in prices for sustainable/responsible textiles products might repeal consumers

Impact Risks

Alignment risk

Stakeholder participation risk

Impact Classification

B—Benefit Stakeholders

What

Reduced water consumption in textiles.

Who

Denim manufacturers, the textile industry and more than 1 million people employed in textiles sectors and subsectors are expected to benefit from this cost-effective solution.

Risk

Low Risk high pricing might limit its accessibility for a wider segment of the population.

Impact Thesis

This IOA will reduce water consumption and promote energy-efficiency in the textile industry.

Policy Environment

11th Development Plan: Government encouragements to companies producing/using technical textiles in an environmentally sustainable way, using optimum technology.

The Ministry of Environment and Urbanization sets out the Zero Waste Standards and best practice guidelines fo sustainable production in the textile industry

(2020 Presidential Programme): The 2020 Presidential Programme calls for economic growth and production standards to be aligned with environmental sustainability

Financial Environment

Financial incentives: EBRD Sustainable Energy Financing Facilities: Credit lines with technical assistance, loans vary between a few € 100.000 and a few million Euros. (13) The Technology and Innovation Fund established by the minsitry of industry and technology, with a budget of 350 million TRY

Other incentives: İzmir Development Agency plans to launch a 25 million TRY support program for energy and water efficiency projects, >TURQUALITY® is a brand support program, covering all processes from production to marketing, sales to after sales services

Regulatory Environment

Eco-label regulation: Eco-label environmental friendly manufacturing in textiles which limits the type of dyeing materials used and aims to decrease the amount of toxicity. (10)

Zero-waste regulation: builds a zero-waste management system to protect environment, human health and all resources, aligned to SDGs. (11)

Waste Management Regulation: aims to reduce the use of natural resources and sustain waste management through ways such as reducing waste generation, reuse, recycling, and recovery of waste. (12)

PRIVATE SECTOR

WiserWash, ISKO

GOVERNMENT

Ministry of Environment and Urbanization, Ministry of Industry and Technology, TSKB

MULTILATERALS

EBRD, EIB, IFC and other regional or international development institutions

NON-PROFIT

Istanbul Apparel Exporters’ Association, Turkish Clothing Manufacturing Association, TEMA,