The Consumerisation of Climate (Part 2)

Issue 95 l Eka’s Weekly Roundup (Tuesday 22 October)

Oct 22, 2024

In this series on the Consumerization of Climate, we’re diving into three key sub-themes: circular consumption, sustainable brands, and enabling technologies.

This week, our focus is on sustainable brands: companies rethinking how products are designed, produced, and consumed to reduce their environmental impact.

We’re looking at two examples within fashion & footwear: Patagonia and Hylo. These two companies are innovating on material design in order to meet changing sustainable consumer demand.

What consumers care about (TLDR: price, functionality, sustainability) 🗞️

Consumers are looking for sustainable alternatives for each of their products*. Each core consumer category has seen an emerging sustainability pioneer:

Note - we’ve emphasised Patagonia & Hylo as they feature in the case studies below.

*Consumers are willing to switch to more sustainable brands if (in decreasing order of importance):

They are price competitive or cheaper than the incumbents.
They are price competitive or more expensive than the incumbents but have better functional performance.
They are more expensive than the incumbents and are more sustainable.

This is the rough decision matrix which consumers will face in both of these categories. This is obviously very crude and there are lots of switching combinations, but is the simpler form of the decision matrix.

I want to flag a few caveats here.

Zara buyers wouldn’t switch to Patagonia too because it’s a different offering (fast fashion vs. higher quality outdoor wear isn’t exactly a substitute. But it is still ‘mainstream’ fashion and in order to have sustainable fashion we need to have a Zara-like player at scale which is developing sustainable fashion. That’s why we’ve put it here but there isn’t a perfect solution.
Allbirds & Hylo buyers might not have previously been Adidas buyers, which is a similar argument to (1). There might be a distinct consumer category within sustainable footwear, but over time this should become mass as the sustainable option becomes more obvious. This also means that there might be some interplay between Allbirds & Hylo given they’re going after similar customer segments.

At Eka, we believe that all large consumer categories will have at least one large sustainable brand winner. We’ve backed Hylo in footwear, and other service companies like Byway which is transforming the way consumers travel.

Let’s now go deeper into Patagonia & Hylo and see what sets them apart.

Patagonia: putting sustainability the core of fashion 🌍

Patagonia is the iconic sustainability brand. Patagonia is known for its high-quality outdoor gear, and increasingly also its gilets worn by workers in professional services (Soho - we’re looking at you!).

Patagonia has a few initiatives across its business including:

Material Innovation: Patagonia uses recycled fabrics, organic cotton, and innovative, eco-friendly materials like Yulex natural rubber in its wetsuits. 100% of their down is responsibly sourced (see below).
Circular Economy Commitment: Their "Worn Wear" program encourages customers to repair, reuse, and recycle their products. By keeping items in circulation longer, Patagonia helps reduce the demand for virgin materials, cutting down on carbon emissions and waste. This ties into our issue last week on circular economy.
Activism: Patagonia is as much an environmental activist as a brand, often donating profits to environmental causes and using its platform to advocate for systemic change in areas like public land protection and climate policy.

McKinsey wrote an interesting profile on Patagonia last year titled: Patagonia shows how turning a profit doesn’t have to cost the Earth, which was an interview with Patagonia founder Yvon Chouinard.

On a more personal note, I’m a huge fan of their climbing vests & jackets and have bought these on multiple occasions from Worn Wear and charity shops across the UK. The performance genuinely feels in a different league compared to the other outdoor clothing companies.

Hylo: a fresh take on sustainable footwear 👟

Like Patagonia, Hylo is reimagining how products are made, with a focus on sustainable performance footwear. Hylo produces sneakers made from natural materials that are both biodegradable and sourced from renewable resources.

Their strategy includes:

Bio-Based Materials: Hylo uses materials like recycled PU foam, recycled polyester, and natural rubber which reduces the carbon footprint associated with traditional footwear manufacturing.
End-of-Life Solutions: To close the loop, Hylo offers customers the opportunity to return their worn-out shoes, which are then recycled into new products or repurposed. This program is called Hyloop and was launched earlier this year.
Low Carbon Impact: An average shoe is responsible for roughly 14kg of CO2e. The Hylo range of shoe is closer to 6-8kg of CO2e per shoe depending on the model.

Hylo is carving a niche in the market for consumers who want performance, comfort, and durability without compromising on sustainability.

What’s next for sustainable brands

While sustainable brands are gaining momentum, challenges remain across pricing and performance. Scaling up the use of sustainable materials, efficient supply chains, and maintaining cost competitiveness while prioritizing environmental goals can be difficult. This is why the Shared Value model interests us the most, i.e. understanding how impact and economics can come in lockstep.

Looking ahead, we expect that more brands will follow in the footsteps of Patagonia and Hylo, developing sustainable alternatives in their respective industries. As more companies embed sustainability into their operations, consumers will have greater access to high-quality, sustainable options.

What to watch in the consumerisation of climate…

In the next part of this series, we will delve deeper into the enabling technologies that are supporting the shift toward more sustainable consumption, including innovations in logistics, energy, and waste.

For now, it’s clear that sustainable brands are no longer a niche category. Instead, they’re becoming the future of consumption. Whether it’s through innovative materials, circular business models, or deep environmental commitments, companies like Patagonia and Hylo are reshaping the way we think about consumer goods.

As always, feel free to reach out if you’d like to discuss this further at estia@ekavc.com 🌱