When she ran a company that sold US clothing labels in China, textile heiress Veronica Chou (曹穎惠) was a globe-trotting executive who made headlines for her socialite lifestyle and lavish 2012 wedding in Hong Kong. Now, she is trying to clean up the fashion industry.
A member of the US$2.7 billion family empire built by her father Silas Chou (曹其峰), the 36-year-old said that she is now devoting her time and money to start-ups that make one of the world’s most wasteful industries more sustainable.
In 2015, after selling the family stake in a Chinese joint venture with New York-listed Iconix Brand Group Inc for US$56 million, she started her own eco-friendly label, backing suppliers that are using innovative technologies to make materials and clothes.
“I’ve definitely changed my lifestyle and behavior,” said Veronica Chou, a mother of five-year-old twin boys. “We have to look at how to cut back consumption and make things that don’t harm the planet, but we have to consume; we need to clothe ourselves.”
It is a bold bet. Sustainable fashion is a sliver of the US$1.8 trillion global apparel industry, which has ballooned over the past decade amid a boom in low-cost, quick-to-market clothing championed by the likes of Zara SA and her father.
However, Veronica Chou is joining a growing list of start-ups seeking to key into shoppers who are concerned about the impact on the environment, a market ResearchAndMarkets.com said it expects to grow to US$8.25 billion by 2023.
The fashion business produces 20 percent of the world’s wastewater and 10 percent of carbon emissions — more than all international flights and maritime shipping combined, a UN report said.
It takes about 7,571 liters of water to make a typical pair of jeans, while the equivalent of one garbage truck of textiles is sent to landfills or burned every second.
“The industry is missing its own sustainability targets by a mile unless it changes course,” McKinsey & Company Inc senior partner Karl-Hendrik Magnus said. “This creates a huge advantage for smaller brands and players focused on sustainability.”
About 66 percent of consumers surveyed in a McKinsey study said that they consider sustainability when making a luxury purchase.
Still, only 31 percent of Gen-Z and 12 percent of baby boomers are willing to pay more for sustainable products, the consulting firm said.
Big brands have begun to respond, with Inditex SA’s Zara this year pledging to use 100 percent sustainable fabrics by 2025.
Hennes & Mauritz AB earlier committed to do so by 2030.
However, deciding which technologies and materials will succeed is difficult.
“It’s still fairly unclear which of the many great innovations that are in the market will scale and become dominant,” Magnus said.
Veronica Chou’s Everybody & Everyone brand offers clothes such as blazers made from fermented agricultural waste, or lounge pants woven from a wood pulp-based fiber that uses 50 percent less water and produces half of the emissions of a synthetic equivalent.
She is also pushing her family to invest in start-ups that offer solutions to climate problems.
“There are so few people out there legitimately putting their money where their mouth is when it comes to sustainability — Veronica’s one of them,” said Niall Dunne, chief executive officer of UK-based biodegradable plastics maker Polymateria Ltd, which Veronica Chou’s family invested in. “There’s a lot of greenwashing. She’s got a green mandate and knows how to do it.”
Veronica Chou’s grandfather started one of Hong Kong’s biggest knitwear companies, South Ocean Knitters (南洋針織公司). Her father would later transform the family business with early investments in Tommy Hilfiger and Michael Kors.
After earning degrees in communications and business from the University of Southern California, Veronica Chou used Iconix to bring US brands including Badgley Mischka and Madonna’s Material Girl to China.
She became a regular in celebrity gossip media, appearing in photographs with Britain’s Princess Beatrice and supermodel Naomi Campbell. Her wedding in Hong Kong to a Russian businessman included a custom-made replica of a Russian palace overlooking the territory’s famous harbor.
Born in Hawaii and based mostly in London, Veronica Chou is riding out the COVID-19 pandemic in Hong Kong and said that she is not the fashionista the magazines make her out to be.
She said she offsets all the carbon emissions from her travels and buys vintage apparel to promote reuse.
She is also pushing for more sustainable investments in her family’s portfolio, which includes early and seed-stage start-ups in telecommunications, media and technology through Novel TMT Ventures, an investment firm run by Veronica Chou’s half-brothers Bruno and Luis Chou that has more than US$70 million under management, according to Crunchbase.
Veronica Chou said that amount is considerably more now, but declined to disclose it.
She joins her father, brothers and sister on weekly video conference calls to discuss “all the deal flows” that they have come across.
In a typical week, they might look at 30 companies — reflecting an increase since the pandemic, she said.
“I’ll be the one asking what these potential investments are doing about the packaging, what about renewable energy,” she said.
The family has divested most of the fashion holdings that formed the foundation of the Chou fortune and is now focused on investing, she said.
Her sustainability focus helped steer family investments into start-ups such as Rent the Runway, which hires out designer clothes and is valued at US$1 billion after investments from Franklin Templeton Investments and Bain Capital Ventures.
The family also invested in The RealReal Inc, a consignment platform for second-hand luxury goods that is now listed with a market value of US$1.2 billion.
Novel TMT also invested in Modern Meadow, which is using biotech tools to grow leather in a lab. Veronica Chou, herself, is an adviser to New-York based start-up Perfitly, which lets shoppers try on clothes with a customized 3D avatar that cuts down returns significantly.
She said that family investments can be as small as US$50,000 or more than US$5 million for equity, with the goal of making a several-fold profit via a public share offering or sale.
“It’s profit with a purpose, it’s not charity,” said Veronica Chou, who was also a director of Karl Lagerfeld Greater China and continues to be an investor in the brand’s global business.
She said she sometimes funds companies that the family rejects, investing in earlier seed and A rounds.
She seeks out material sciences or innovations that are “regenerative” for the planet, have passed the research and development phase and are headed for commercialization. Her investment time frame is five to 10 years before exit.
“I get more excited about the earlier ones. They’re more ground-breaking,” she said. “We want to make sure these technologies scale and are being used as much as possible if we want to make an impact in the world. It can’t be just accessible by the elites.”
Veronica Chou’s Everybody & Everyone line debuted late last year but was pulled after the pandemic began and relaunched in September with a “Work From Home” range that features comfortable pants and tops made from biodegradable eucalyptus fiber.
Some sweatshirts are made with a recycled silver coating that is supposed to have anti-microbial and anti-odor properties. The brand also offers US$32 T-shirts made from reclaimed cotton and ocean plastic.
To help people reduce the size of their wardrobes, Veronica Chou offers clothes adaptable to different seasons, such as a US$288 calf-length puffer jacket made from 330 plastic water bottles that can be zipped off and worn short in warmer weather.
All items come in sizes 00 to 24, a range rarely offered by big brands, inspired by Veronica Chou’s “disordered eating” habits as a young woman when she and her girlfriends strove to look like super models.
While her father ran factories, Veronica Chou has none. Her brand is aimed at US consumers, and sales have come from every state, she said.
“The younger generation of consumers cares about the planet and cares about justice, whether it’s women’s rights, racial equality or climate justice,” she said. “There are conscious consumers who are willing to pay a little more for products that support their values.”
While the number of small eco-conscious brands is growing, most do not have Veronica Chou’s resources.
“It’s a competitive advantage,” said Janine Stichter, vice president and specialty retail analyst at Jefferies Group LLC. “The only companies that we see develop technological innovation in the industry are the big companies, like Nike. There aren’t many start-up brands than can do it.”
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