Bret Schnitker, Emily Lane, Giulio Salgaro
October 22, 2024
Giulio Salgaro 00:01
So by scanning the QR code, the consumer must, must has the right to have all the information about the product.
Emily Lane 00:26
Welcome to Clothing Cooulture, a fashion industry podcast at the intersection of technology and innovation. I'm Emily Lane
Bret Schnitker 00:34
and I'm Bret Schnitker. We speak with experts and disruptors who are moving the industry forward and discuss solutions to real industry challenges.
Emily Lane 00:42
Clothing Coulture. Coulture is produced by Stars Design Group, a global design and production house with more than 30 years of experience.
Emily Lane 00:52
Welcome back to another episode of Clothing Coulture. Today, we are following up on a series of conversations that we've been having with regards to carbon neutrality. We had the opportunity while we were traveling to France this earlier this year for the AI Summit and the world retail Congress to meet Giulio Salgaro from Edmond Climate Network, who has been very invested in creating a solution that really is an answer to the EU's race to carbon neutrality and and their push for transparency. Today, we're kind of going to break down a little bit of what is on the horizon, some of those challenges and some of the solutions that are are being presented.
Bret Schnitker 01:44
Yeah the Green Deal and Europe is certainly ahead of the US with respect to the drive for all aspects of sustainability. Certainly, Europe, for a long time, has focused on carbon neutrality and carbon transparency. Now they're officially recognizing it in a variety of different products, and for those listening that that aren't familiar with it in Europe, it'd be great to hear from Giulio to you know, we've heard these terms thrown around, like digital passport and carbon neutrality, and if you could fill us in a little bit on on what that exactly means for someone that doesn't really understand it completely, and what the ramifications look like for Europe for 2026.
Giulio Salgaro 02:28
Yes sure, Thank you for for giving me the opportunity to share the experience that we have now matured in Europe with you. You know, as you anticipated, Bret, the European Commission has released multiple regulations in the field of sustainability. Actually, the the landscape is not represented by one big regulation, but is represented by multiple sub regulations, and these create a very fragmented landscape, and it is a little bit difficult right now for companies to effectively and navigate through them, Just to name the majority the main, most important regulations, we are talking about at least 10 different regulations. One is, as we anticipated, is the digital product passport, but the other one is the Echo, the Eco design of the product. Another one is the extended responsibility of the producer for the end of life of the product. Another one is the corporate sustainability due diligence directive. Another one is the corporate sustainability reporting directive. Another one is the green claim and textile labeling. So there are many.
Emily Lane 04:01
wow
Giulio Salgaro 04:01
There are many. Only indicated that few of them, the main one that and because it is very complex. So companies, as we, I have said before, are finding these landscape very difficult. And there are a lot of companies, and we are one of them, that we are providing solution for companies. Specifically, all these regulations have the goal to push companies to, first of all, measure their environmental footprint of their production. Secondly, to push them to reduce the environmental footprint, the impact on the on the on the environment, specifically the the you probably have heard. The term that is carbon footprint. Carbon footprint is the footprint that a company release during their operation in normally, the carbon footprint of a company is measured, at least based on the different kind of protocols. Specifically, I'm referring to the GHG protocol, Greenhouse gasses protocol is measured under three different dimension. One is the scope one, then there is the scope two and scope three, scope one, are they is the carbon footprint directly emitted by the company during their operation. So let's imagine that the company has its own facility to produce a specific product and release by doing this operation, greenhouse gasses. This is scope one second the scope is scope two is the- These represent the carbon footprint related to the energy that are acquired by the company in order to run the Euro operation. So this is a third party carbon footprint coming from the energy provider, and third, which is the main one, is the scope three. Scope three is the green is the carbon footprint coming from the upstream part of the supply chain and to the downstream part of the supply chain. So the upstream part comes from the goes from the raw material. Then there is the the activity to process the raw material. Then there are the part related to the material production and cutting and finishing the laundry, once we talk about apparel, till to arrive to the finished product. And later, there is the down part of the supply chain that related to the shipment of the product till to arrive to the hand of the consumers. Just to give a sense of what we are talking about, normally, companies, at least in Europe, so far, they have measured scope one and two emissions, which, unfortunately, it is a starting point, but normally based on different kind of studies, scope one and two represent no more than 10% of the total greenhouse gasses of the company. So that's why all these upcoming regulation in Europe, and most of them enter it will enter in force between 2025 and 2028 will push companies to measure scope three emission. So this is not only a matter of measure, but is a matter of pushing the companies to understand what are in details, the different kind of operations that are before the product arrive into their distribution center in order to actively reduce the carbon footprint, I take a pause because maybe I should my I stopped me when, because we can really go for hours, yeah,
Bret Schnitker 08:25
yeah, but that's fascinating. And when you when you look at that, I remember when California initiated prop 65 and then we're there were all these long regulations and the ability for, you know, both large and small companies to adopt all the requirements of Prop 65 was pretty overwhelming. You know, they finally made a, you know, I guess, a exception, or whatever, saying, Hey, if you can't fit all the prop 65 you're not totally positive. You at least have to post something saying, you know, your product does not comply with Prop 65 and and, you know, many times with regulations like this, sometimes they're so overwhelming for organizations to adopt,
Emily Lane 08:26
impossible to navigate really.
Bret Schnitker 08:29
well. It's challenging. You know, with, you know, we've been talking about supply chain transparency for years in our industry, and just tracing, you know, minerals and metals and, you know, all these things to source have been really, really complicated. There's just, there's just not a lot of, you know, there's not a ton of ability to do that through a very complex and vast supply chain globally. And so it's interesting, you know, whenever we talk about sustainability, and we talk about, you know, eco friendly initiatives. We have to recognize this is a journey. I believe that it starts a little messy, but you've got to start. You just can't ignore it. And the great thing that you guys have is you've got a way to help. Part of the process I can imagine as a company sits down and hears this, as you've so eloquently stated this, they're like, How the hell am I going to do that? And so why don't you talk to us a little bit about what your software does in this very complex situation?
Emily Lane 10:21
Yeah, how you go about quantifying all of these various phases?
Giulio Salgaro 10:25
Absolutely, absolutely sure, as we say, that we have, we are Edmond Climate Network is a digital company that operate in the field of sustainability. I have an experience of more than 20 years in the fashion industry, and together with my with my colleagues, we have created a system, a digital platform, actually, that really is focused on fashion. As we say, the measure, the carbon footprint, is a very complex exercise, so we decided to be vertical on fashion because fashion production is very complex supply chain. People that are not familiar with the fashion industry, maybe they think that is something very, only very simple, but in reality, is one of the most complex industry in the world. Our solutions allow companies to immediately have an understanding of what is their impact in their supply chain. How we do it? We did it. We have created multiple different software. Each software is dedicated to one product category. So we have a software for pants, a software for denim, a software for shirt, software for dresses, software for sweaters, software for footwear, handbag. Why? Because each single product has its own production process during these years, we have mapped every single production process of every single product categories, and we have performed multiple multiple measurement about the carbon footprint of the different kind of equipments that are normally used in this phase of production, based on these we have, we have created metrics between the data that we have collected from the field of production field with the different values of life cycle assessment database and industries that that are available. And also based on our research and making a long story short, companies that are normally producing the item by leveraging on a third party supplier, they can start at the very beginning of their design process of the item. So based on their sketch, on the sketch of their product, and indication of the materials they can inject, all this information about the shape, about the gram per square meter, about the different kind of materials they are using, about the sourcing hub, about the different kind of transportation they are using, from point A to point B, and immediately, the software can measure in a precise way the carbon footprint of the product. And these give the possibility to the company to immediately adjust the materials or the sourcing apps or the shape of the product, or the components like bottom zip or whatever, in order to select the one and the options that are provided automatically by The software in order to immediately reduce the carbon footprint. And this is something that the company can immediately do by themselves with the data that they have available. And you know, normally during in the field of carbon measurement, we the data that are used are divided into big family, primary data and secondary data. Our software are capable to manage both of them. What is the secondary data and the primary data? Let's say that the companies know that a certain phase of production I don't know, for instance, for instance, fabric production is done in China, but they don't know exactly the name of the sub supplier, because they do not have the visibility on the name of the sub supplier. In this case, our software can give immediate. Directly the data using the secondary data, because our software goes so much in detail of the sub steps of the of each process, we can use a secondary data and obtain reliable data in them when the company knows the name of this supplier and can have the information about the primary data of the energy consumption or specific indication of that specific step. They can override the secondary data with primary data. But at least they can have immediately the calculation, just to give a sense where today, the business model is based on leveraging on consultants that help the company to perform the calculation normally. Because I was on the other side of the, let's say, of the line, and because I was part, I work a lot of years for for multinational company, and we hire consultant and a consultant to produce to elaborate one calculation for one product category. They normally take three to four weeks and cost a lot. In our case,
Bret Schnitker 16:16
that would be crazy.
Giulio Salgaro 16:18
And if you change something, for instance, if you want to change of that pair of shoes, the kind of ladder from cow ladder to sheep leather, everything starts from zero. In our case, you can do everything in few seconds and and you can have a certified data because all our software are certified based on the most important and recognize international profits.
Bret Schnitker 16:43
That's amazing.
Emily Lane 16:48
So what will this look like for consumers? You know, we've got this digital passport coming into play. You've got the option to be able to provide more visibility behind the the the impact, the climate impact, or carbon, carbon usage. How will the consumer be able to understand the rating and what is, what is required for the importer into the you EU, to share with the consumer.
Giulio Salgaro 17:23
This is, this is the fundamental questions of the discussion, because, you know, and this is also in line with the green claim directive of the European Commission, you know, starting From July 2023, so, starting from a month ago in Europe, of course, there is a rolling, rolling period for companies to be compliant with that. But you in, at least in Europe, you cannot anymore advertise. Let's talk about a shirt that is a sustainable shirt, sustainable material, eco friendly production. They cannot anymore advertise this product without specifying, in reality, with concrete, scientific data, what we are talking about. Let's image today a consumer. You are in front, you are going to a department store and you are in front of two different model of shirts, both of them, they have the same shape and one, but there are two different brands, one saying that is done with The 15% recycled cotton and producing China ship with, I don't know, vessel, another one is done with the 30% polyester, recycled, and is water friendly, meaning that production process does not consume too much water, but is shipped with, I don't know flight, and they are produced in Bangladesh, Pakistan and Romania, both of them, they are claiming that are sustainable, but the consumer, they don't know. So the important is to base everything on a number. So if you are, let's imagine the same situation, and you have in front this the two shirts that we are talking about. One is saying that is eight kilo CO2, and the other one has produced in daily production process, 15 kilo of CO2. Okay, now it's better. The consumer can immediately understand that all the effort of companies in order to be more sustainable at the end of the production process, one generate eight kilo of CO2, and the other one emitted 15 kilo CO2, so the two. Two between the two. Of course, one is better than the other, and everything has to be measured based on scientific based target, SBTI.
Giulio Salgaro 17:23
Is that rating going to be on a hang tag, on an interior label? Where's that?
Giulio Salgaro 20:18
Yes, the digital product passport, despite today, the regulation is not clearly indicating the way on how the information must be transferred to the consumer. But today, the most the most common, recognized and adopted solution by companies, is a QR code that is displayed on the product. Can be a QR code applied on the labeling or an on a handtag of the product, but anyway, has to be something that can immediately catch by the consumer. Normally, today, everyone has a smartphone, so by scanning the QR code, the consumer must, must has the right to have all the information about the product, meaning on the product, on the QR code, or through the QR code, the consumer should be capable to understand from where the raw material has been picked from, from where, where the raw materials or raw material has been manufactured. Can be one country, two countries, depending on the different kind of steps during the production process, what had been the transportations used to move the product till to the consumer, the packaging, the sustainability on the packaging, the microplastics that are released by the product During the usage during the laundry phase, not only during the production, but especially later, once the consumer wash the garment, and, of course, the carbon footprint. So all this information is to be summarized in one data. The data is the carbon footprint of the product. So the consumer will decide,
Emily Lane 22:24
and so you mentioned, it'll get a rating. What does that? What would be like a good rating, and what would be a like? Somebody would go, Oh, my God, that's terrible. Sure.
Giulio Salgaro 22:33
You know, this is a question that a lot of our customers are pleasing to us, and you know our our reply is, is that is, is the following, at least in Europe. But you know today, once you go to a grocery store and you want to buy some food, I don't know, whatever, at least there is on the etiquette, the indication of the calories of the food. And you today, you are used of that because now, today is already, I don't know, 10, 15, years, that there is this regulation to indicate the calories of the food, so the level of sugar, the level of fat, the level of oil. And now the consumer is used to understand if there is a high level of calories. And they said, Oh, wow, this. We are talking about no 500 calories for for this food, food, maybe it's too much today, the field, the fashion industry, is compared to food 15 years behind, meaning that is difficult today to say If a pair of pant should be five kilo or 10 kilo, because today, no one is measuring is a journey, as Bret said, so maybe in two years from now, once the company has started measuring everything, we will understand what is the acceptable level of every single garment,
Bret Schnitker 24:21
and we'll see progression.
Giulio Salgaro 24:22
Sorry, Bret?
Bret Schnitker 24:23
I mean, we'll see and we'll see progression. We'll see that at one point it starts here, and as sustainable initiatives get adopted, we'll see that that 10 kg pant might move to eight, and eight may move to six. Or, you know, I think it's
Emily Lane 24:38
Here's where I get confused. You know, we're talking about the carbon impact, but there's other ecological impacts as well, where there's a little bit of conflicting initiatives.
Giulio Salgaro 24:56
Of course, so far, we have focused on carbon, of course, into our softwares that there are also, I mean, the possibility to measure the water consumption, for instance. But you know, once we talk about chemicals, for instance, because in Europe, at least, there is the reach that is the registration, evaluation, authorization and conflicting hazardous chemicals, very strict regulation. Every single chemical comes from petroleum oil, and so we can measure them based on CO2. So they it is true that CO2 is not only the this, the unique element that we need to consider. Of course, there are other like water consumption, for instance, but based on the coming, upcoming regulations of Europe, there is another level that we need to add to our discussion. Based on our software, we can measure the environmental impact of the software, and we cover everything, and the company are safe. Are safe with that. On the other side, the European Commission asked companies to audit the factories on the different suppliers that are used because, you know, even if you are producing a pair of pants that produce half of the carbon footprint compared to another factory, but on this factory, you are not compliant in terms of safety, in terms of labor, child regulation, in terms of health regulation. Of course, this is not possible, and this is not good at all. So companies are required, at least big companies at the beginning. So companies that are that pass certain thresholds, at least in Europe, are required, starting from, let's say mandatory, starting from 2027 but most of the company are now starting today in in performing audits they have they are required to report to first understand every single step in the production process. Today, the majority of the company, unfortunately, they only know the tier one supplier, so from where they receive the product, but they have no full visibility on the suppliers that are behind them, and so they need to go through the supply chain, understand every single step of production, who is doing what, and perform audit in order to verify the compliance of the work done the final, what we are envisioning. We are talking about, of course, the digital product passport. What we are the final, let's say ideal digital product passport will be a document that will incorporate everything, the environmental footprint of the product and the let's say a score that needs to be identified the rules on based on how we determine the score of the production of the supply chain. So let's say a pair of pant. Will have three kilo of CO2 and score a in terms of sustainability is like in in us at the restaurants that there are the score of the or the restaurants in terms of cleaning. You know, if I'm not mistaking A B C D. If you go to a restaurant that has a A, you immediately see the A at the entrance. If you go to a restaurant that maybe is not the D C, maybe you don't see the score, but this kind of thing.
Bret Schnitker 24:56
Yeah, this is where it gets confusing, because cotton being. A very thirsty crop being hydrophilic, and polyester, you look at those two things, some studies have said that a cotton shirt will use about 4.6 to 4.8 kilograms for carbon usage, and polyester will be about 5.3 they're almost the same, but when you look in terms of carbon use, right? But when you look at these other initiatives, like micro particulates filling landfills, polyester clearly has more damage to the environment than a cotton garment will. So measuring it this is, this is absolutely a great question, because this tells you that are kind of further advises what a complicated landscape we're dealing with, because if you're simply measuring by carbon usage, then you're not really telling the whole picture, because there are some initiatives that are more eco friendly for the for the world that use more carbon. And so how do you wrestle with that? Giulio.
Bret Schnitker 30:39
So that makes a lot of sense. And as we talked about earlier, this is a journey. It's going to start somewhere. People are going to figure things out, and that's great because, you know, Edmund is going to have this ability to now incorporate all these other facets, probably as that future continues, because as someone picks up your software, they're going to want that to be kind of comprehensive. It is amazing that you know, when you talk about what you've put together, how long did it take you to compile? I mean, it just sounds like a monumental task. Giulio.
Giulio Salgaro 31:15
It look a lot of time, and it's not finished because, because just this week, we have talk on how to improve and modify the software in order to be compliant with the upcoming regulation. So it is, it is. It has been a very long journey. Of course, this is something that we start years ago. In doing it is already three years that we are working on elaborating the collecting information, the database, and we sell the software in SAS, meaning software has a distribute as a service. What does it mean? This means that every time that based on our research, we find a new material, an updated version, an updated production process, we immediately inject this information into the software, the responsibility to keep the database and the information updated and compliant is our responsibility, and we are very proud, because once we have created this, those set of software, and we are elaborating new one, we have asked a third party, a third party auditors, TV Ryland, that is very it is an international company to audit and verify if our software are compliant with international standards and regulations, and we are proud to say that all our software today, they receive positive assessment in terms of GHG Protocol, in terms of IZO, so IZO, 14 zero, 14, zero, 64 and 67 and PASS 50, which are the most complex and robust international standard on carbon accounting. How they do the audit process is very long, not because it takes a lot of time from our side, but for instance, I just to give a sense of the powerful. How powerful are our software? We give to the auditor the access to our new software. For instance, I don't know, handbags or luggage, and they perform the calculation of a specific product that we decide together. They ask us to create they perform the calculation based on the traditional way so looking to the life cycle assessment database, performing research, and normally, they take three to four weeks to arrive to their own number, and then they use our software. They put information into our software. In three seconds, they obtain the result. And if the result is not different from is arranged between five to 7% they said, okay, the result your software is good. So we are talking about the three to four weeks compared to three four seconds. So just to give a sense.
Bret Schnitker 34:47
that's unbelievable, a question. So PLMS have evolved a lot in our industry, Project Lifestyle Management Systems, and there's a lot of information that some of the better companies are putting into that, all of the trims, all of the, you know, all the bill of materials, all the fabric. Many times there's calculations in terms of all the Full Grade, you know, consumptions and all of that. Does your software today plug into a PLM so it can pull that information automatically and then give a score much quicker, instead of manually inputting all that information today.
Giulio Salgaro 35:26
This is a very good question, and the replies, Yes, our software are equipped with an API access programming interface, and not my end these API is API, rest is technical technical name is capable, and we are capable to connect with every kind of repository. Can be a PLM, can be ERP, can be BI so based on from where the information is available, we can connect with those database and pull the information, meaning the company can automatically pull the information. And this is the more, the most sophisticated way to use the software, so connecting directly with the database, the second way that our customers are using to use our software is to upload massively a very simple Excel file. So they maybe they collect the information by themselves, and then they upload the file. This is also useful, because unfortunately, in the majority of the company we are talking with, we are talking with the sustainability, the sustainable Corporate Sustainability Department, which is more sensible to these projects, and they normally say, We love your software, but we need to find a way to do not involve our IT department, because our IT department will not give any kind of priority over the next few years. So that's why this is, unfortunately, probably one of the common things across companies. So they gave, they asked us the possibility to upload an Excel file. And of course, we gave them the possibility to upload Excel file. So and then, of course, there is the possibility for small businesses, and maybe Mom and Pop, a small laboratory that made it they don't have a sophisticated IT department to manually input the data. As we said, normally, big, medium, big companies are interfacing our software with their ERP or PLM.
Bret Schnitker 37:55
That's wonderful. That's that makes a, you know, you look at this task and you think that's an impossible task, and what you guys have done and put things together this way has really allowed people to step into this journey a lot easier, and then, you know, implement all these other things. You know, in America, we're seeing and we're always behind. I hate to say that, but we're always behind on the sustainable train, but we're finding more and more companies that are focused on wanting to make the change to more sustainability. There's more technology every day to make it easier, and it's fantastic to be able to speak to you. Let people know about Edmond Climate Network. How do they get a hold of you? Let's say this really trips their trigger. They really want to be able to connect and implement that software for themselves. Can you give people some information on where to get a hold of you so that they can take the next step? Absolutely.
Giulio Salgaro 38:56
You know, the most common way for them to reach us is to go on our website. So www.edmondclimate.com and book demo. We organize the demo, we share all the information or on LinkedIn. Edmond Climate Network, we are also present on Instagram. So of course, we are available. We are using all the different kind of networks, available and social media. And they can, of course, email me directly. We will find a way to share but but if they click on book a demo with us. They can immediately receive a confirmation of the of the demo to be done, or receive materials everything.
Bret Schnitker 39:52
Thank you. You're based in Ticino, Switzerland.
Giulio Salgaro 39:56
We are based in Ticino in Switzerland. One thing that we. Have not said, I have not said today, is that we, we have been capable to perform these, these and elaborate those software, not because we are, let's say, alone. We are working in partnership with the University of Southern Ticino of southern Switzerland, Switzerland, and we are part of the Swiss Innovation Park. Swiss Innovation Park is one of the most important institution in Switzerland for research, and we are proud to say that we are inside this kind of network, so we have a long term relationship with the university. So we leverage on researcher. We have students with us, and we are we are very happy about of staying in Switzerland and working with Switzerland.
Emily Lane 41:00
That's great. Thanks, Giulio, thank you for joining us today. Congratulations on this, as Bret put it, montumental achievement, and we'll make sure in our show notes to provide information on how people can find you to learn more. Once again, thank you for joining us on this episode of Clothing Coulture. Do not forget to subscribe to stay apprised of upcoming episodes.
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