This is a CTP of initiative: RIPESS/ Groupe Terre (Belgium)
Textile recovery, managed by Terre asbl (one of the 10 entities of Groupe Terre) is the flagship activity of the group, since it brings half of the total financial turnover and provides two-thirds of the total number of employments. Around 16 000 tonnes of textile are collected each year before being treated in one of the sorting centres of the group: the main one, which was inaugurated at the end of 2016 to deal with around 11.000 tonnes of textile, is located in Charleroi.
Terre asbl has been a member of the Belgian network RESSOURCES (on waste recycling) since its creation in 1999. More recently, it was a founding member of TESS (standing for Textiles within Ethics, Solidarity and Sustainability), a European Economic Interest Grouping (EEIG) aimed at pooling part of the tonnages of textile individually collected until now by several SSE organizations from Spain, Italy, France and Belgium (from Flanders, Wallonia and Brussels). Each enterprise contributes to TESS financing even though the financial contribution remains relatively modest, given the light feature of the structure. The main idea is to pool a part of each structure’s business tools so as to be able to generate a common profit from this pooling. This should allow TESS members to move from a very national or even local dimension to a more European or even international one. This is why this CTP is called “Scaling up in a globalized world”: it reflects a change in the dynamics of the promotion of SSE towards more economic synergy with other SSE actors.
It is worth insisting on the fact that the organizations do not pool their collections as a whole but just a percentage of them. Members of TESS have set a first target of 60 000 of textiles to be achieved. To do so, they have drawn a development plan with several steps, as explained François Malaise: “In this development plan, each enterprise shares a certain percentage of their textiles at the level of TESS during the first year, and the person in charge [ie. the director] has to sell these textiles on international markets. We have a stepwise approach, which means that we won’t meet the objective of 60 000 tonnes during the first year, so as to avoid that the person in charge of selling the textiles finds himself overnight with 60 000 tonnes of textiles to be sold on his hands”. Indeed, the volume of textiles dealt with by TESS is supposed to increase over the years.
As another interviewee, Salvatore Vetro (in charge of external relations for Groupe Terre) explained, the idea of creating TESS came first and foremost from a discussion they had with the Swedish giant H&M, following the launch of their recycling policy in 2013: “We had a meeting with H&M because they had started to give gift cards for people bringing used clothes. This represented a great competition for us, so we went to meet them to offer to collect this textile in case they did not know what to do with them”. However, and even though they did actually subcontracted a company to deal with the collected clothes, H&M declined the offer on the grounds of their willingness to deal with a single entity and not several ones: “They answered that, being a multinational spread all over Europe, they would not start dialoguing with small organizations in each country. They wanted a single interlocutor, which was actually a multinational in Germany to which they outsourced 100 000 tonnes of textile. We saw the threat miles away: if we did not do anything, our activity would ultimately disappear”. Consequently, they had to find a solution.
As Terre asbl was not able to manage this kind of tonnages (for the record, it deals with around 16 000 tonnes of textile a year), they had to find another way to bring together more textiles: “We saw only one solution, which consisted in using the force of SSE. We are not a multinational; we cannot invest in branches all over Europe. However, we have friends everywhere, friends who share the same ethics and want to work like us. So we went to find other SSE enterprises in Italy, France and Spain to explain the problem and show them that they were threatened as well”.
Once the future members agreed to join the project, the question of the legal status of this partnership was raised. They chose to create an EEIG because it was the only structure available. As François Malaise explains, “It was the only legal form which permitted to gather various actors from several countries in order to share a common economic activity. This kind of structures had always been used by classical economics. We chose to use it but we are going to use it with a different objective”. In the absence of a specific legal tool for SSE enterprises, or even for SMEs (as mentioned in the “related events” category), they had to resort to an EEIG, used by other transnational enterprises such as Eurostar, Thalys or Arte.
In this part, we will come back on the EU regulation of 1985 setting up the EEIG and on the failed proposal of the European Commission setting-up another legal tool for the cross-border activities of European Small and Medium Sized Enterprises (SMEs).
The Council Regulation n°2137/85 of 25 July 1985 on the European Economic Interest Grouping (EEIG) was aimed at fostering economic development by offering a smoother functioning of a common market offering conditions analogous to those of a national market. The idea was to provide natural persons, companies, firms and other legal bodies with a better legal framework allowing cross-border economic cooperation. The purpose of the grouping is described as such in article 3: “The purpose of a grouping shall be to facilitate or develop the economic activities of its members and to improve or increase the results of those activities; its purpose is not to make profits for itself”. As it is aimed at overcome barriers to the development of current activities, it cannot be used in order to develop new ones: “Its activity shall be related to the economic activities of its members and must not be more than ancillary to those activities”. It should also be formed by at least 2 entities from separate EU countries, which are entitled with the same power of decision over the structure (ie. one member, one vote), the grouping being subject to the legislation of the country in which it is officially based. However, criticism appeared regarding the cumbersome procedure involved by this statute, the impossibility to make profits in principle and the non-inclusiveness of SMEs specific needs. Calls for reforms became more and more recurring over the years.
As a consequence, the EU Council adopted in 2001 a Statute for a European Company (entered into force in 2004), in order to facilitate mergers between different member states companies, the establishment of a European holding company and/or a European subsidiary. However, two features went against the possibility for Groupe Terre and its fellows to adopt this statute: 1) the European company takes the form of a company with share capital (which goes against the philosophy of Groupe Terre); 2) this capital should be at least of 120 000€, which constitutes a barrier for SMEs. As a consequence, the European Commission proposed in 2008 a revision of the regulation including new provisions aimed at enhancing the competitiveness of SMEs by facilitating their establishment and operation in the Single Market. The main idea was to reduce compliance costs on the creation and operation of businesses arising from the disparities between national rules both on the formation and on the operation of companies. It was also about providing SMEs seeking to act beyond borders with a flexible legal tool. However, following years of blockade in the Council of the EU on an agreement, the proposal was finally withdrawn in 2014. This can help explaining why founding members of TESS were obliged to resort to the EEIG status.
As we have seen, the creation of TESS was first and foremost driven by the perceived necessity of uniting in order to cope with competition and the oligopolistic feature of the recycling markets. In that sense, the roots of TESS can be conceptualized as a struggle for survival in a globalized and profit-driven economic world, dominated by a limited number of large companies.
As Salvatore Vetro explains, “In the line of arguments that pushed the creation of this EEIG, there was obviously the acknowledgement according to which we represented a higher tonnage together but also the idea according to which we were going to differentiate ourselves from the big multinationals”. Conscious of their impossibility to compete directly with recycling giants, members of TESS acknowledged rapidly the necessity to position themselves on the market, by showing a clear social added-value.
One way to make it visible is to create a label based on the tracking of the collected textiles: “We are going to create a quality label which informs everyone who gives a garment that the latter will be recycled and resold in the framework of a sustainable chain respecting SSE ethics (from collections to sales in small African villages for example). Today, between 85 to 90% of collected textiles (by us or by our partners) step inside a purely private economic branch at one point because we need to sell them so as to pay our workers’ wages. Only 10 to 15% of the textiles are sold in our shops and selling by ourselves is the only way to keep track of the textiles we collected”. The idea is to imagine complete ethical pathways, involving partners in the South. A significant part of the collected textiles could be commercialized and exported to Africa, Asia or Latin-America.
However, this objective requires first the development of SSE structures (eg. sorting centres) both in Europe and in Southern countries. In the latter, the sorting centres will forbid child labour and provide locals with decent wages, social security. Some already exist (eg. Groupe Terre has a sorting centre in Burkina-Faso, the French partner has one in Madagascar) but others have to be developed in order to foster the ethical pathway. Nevertheless, it would be unrealistic to think that the ethical circuit will concern the collected textiles as a whole. As explained by François Malaise: “this will only concern a part of the deposits; we will not be able to label everything. This will allow us to develop an entirely SSE pathway for a part of our textiles”.
Since TESS has just started its activities last year, anticipation is of upmost importance. Its creation was mainly driven by 3 complementary objectives: 1) to get traction on the waste market in order to suffer less from its fluctuations; 2) to challenge in a visible way the current social and economic system by proposing a concrete alternative at the European level; 3) to avoid outsourcing and keeping sorting centres in Europe.
Regarding the first objective, the interviewee explains that “the waste market is acting like the commodities markets, which means that it can be very fluctuating. At one point, we came to realize that we were small players on this market because of globalization. Since we weigh less and less, we may suffer all the more from these fluctuations”. Indeed, recycling markets are characterized by strong price volatility. However, joining forces can help moderate revenue peaks and valleys by allowing the negotiation of long-term contracts that feature price floors or other revenue/risk sharing agreements. As the H&M example in the “co-production” part showed, one precondition for this kind of cooperation is that the volume of used textile at stake is high enough. In that sense, regrouping forces can be understood as a survival strategy.
It can be also understood as a way to go further in the promotion of an alternative system based on Social and Solidarity Economy (SSE) principles (eg. solidarity, participative governance, transparency etc.), by joining other initiatives also involved on these issues in their respective countries. Even though promoting alternatives at the local or regional levels is of upmost importance, Groupe Terre has been convinced for quite some time that working at the European level is inescapable (on this issue, see another CTP called “Integration into networks”).
Members of TESS are also seeking to fight unemployment by providing jobs to unqualified people, as the interviewee explains: “The textile sector generates jobs accessible to people who do not have degrees. Clearly these jobs are low-skilled but this is a sector which requires a significant workforce”. Above all, it is aimed at ensuring that these jobs, covering the entire supply chain, are created in Europe, and not in low-income countries or gateway countries: “While it is quite easy to keep the collecting jobs in Europe because we need to be here to collect used textile, we cannot say the same for sorting centres. We have to fight if we want to keep them in Europe. Today, some enterprises collect used textile in Europe before sending it to sorting centres in Dubai (made of imported labour from Pakistan or Afghanistan) and send it back to Europe once sorted”. The main idea is to develop an ethical supply chain which respects not only the human but also the environment, as explained in the previous category.
As TESS has just started its activities, it is difficult for our interlocutors to draw lessons. However, François Malaise notes that its members can benefit from exchanges of practices and experiences, since these organizations come from several European countries with different histories regarding textiles recycling: “We have a different level of maturity. In Italy, they still do not have sorting centres. On the contrary, we already have them, so we are trying to help the Italians to open some in order to generate stable local jobs. French people are far more advanced for their part. This means that coordination is needed”. This coordination can take the form of support in the development of projects, as well as a temporary loan of infrastructure: for example, Terre asbl makes its massive sorting centre of Couillet (evoked in the “content” part) available to other TESS members which do not have access to one.
Terre asbl could also draw lessons from its experience with Solid'R, a belgian ethical label for social-economy enterprises that are active in the field of recycling, collecting and sales of used textile and goods. This label had been created in response to competition as well, but this time in response to the presence on the recycling market of private players operating under a pseudo-humanitarian cover: for example, a Belgian private company called itself Curitas, leading to confusion with the charity Caritas (in order to make ordinary people believe that they were helping a charity when giving clothes). The links between TESS and Solid’R do already exist, through Forum Ethibel, a Belgian non-profit organization in the field of sustainable and ethical audit and certification, which performed social audits for members of both organizations. After an intense and fruitful collaboration, Forum Ethibel announced that the five European social enterprises of TESS (Terre asbl, Oxfam Solidarité, Consorzio Farsi Prossimo, Fondació Formació I Treball, Le Relais Est) had passed the audit with no or few remarks. For Terre and Oxfam Solidarité, this approval was not a big surprise since they had both already received the Solid'R certificate by Forum ETHIBEL.
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