TCBL Policy Brief

JUNE 2019

Textile and Clothing Business Labs

TCBL Policy Brief The present policy brief reports the main findings of the policy environment analysis that has been conducted during TCBL project.

Building on landmark European plans regarding industry and competitiveness as well as on key policy documents specifically addressing the Textile and Clothing (T&C) sector, the brief provides bite-sized insights to all interested stakeholders situated in the T&C sector. In line with priorities lying at the core of TCBL, a close eye is kept on SMEs, which – in spite of being the backbone of Europe’s economy – often face significant obstacles.

The document is structured as follows: initially a ‘big picture’ of the policy environment in which TCBL operates is outlined and it is subsequently detailed through the analysis of the European industrial policy background, the identification of five key trends shaping the evolution of the overall European economy, and a discussion of the most prominent T&C-related policies. Finally, some concluding takeaways and opportunities are presented.

TCBL Policy Environment Overview The context in which TCBL is set up is the European industrial landscape (Europe 2020, Industrial Landscape Vision), represented by the wind blowing on the top of the picture.

STRATEGIC AGENDA FOR ETCI

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As the windmill converts the wind into power to crush grain or produce electricity, TCBL unleashes new creative energies to support European SMEs, making available an unprecedented experimentation playground that intends to significantly improve the prosperity of Europe’s diffused system of production.

EU Policy Background

EUROPE 2020 INDUSTRIAL LANDSCAPE VISION

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The windmill metaphor has been conceived with the purpose of succinctly representing the TCBL policy environment.

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As a matter of fact, the policy environment in which TCBL project operates is influenced by three prominent factors.

Emerging Trends at EU Level Emerging trends (social innovation, circular economy, smart specialization, industry 4.0, collaboration) shaping the overall EU industrial environment are depicted through the windmill. Specifically, the tower is associated to the ‘collaboration’ trend, which is considered of paramount importance in view of both the TCBL values and the recurrence of collaboration as enabling practice for the remaining four trends.

EU T&C-related Policies The windmill is the fulcrum around which T&C-related policies gravitate. T&C-related policies (Strategic Agenda for ETCI, Textile Regulation, TEX4IM, Ecolabel for Textile Products) are part of the general European industrial background (Europe 2020, Industrial Landscape Vision) and harness the potential of the key trends to ignite sectorial transformation.

EU Policy Background EUROPE 2020 (EU2020)

INDUSTRIAL LANDSCAPE VISION 2025 (ILV2025)

The EU2020 plan depicts the European Union’s ten-year growth strategy launched in 2010: it aims at creating the conditions for a smarter, more sustainable, and more inclusive socio-economic development.

The ILV2025 provides a comprehensive view of the European industrial system and aims to study how the industrial landscape is evolving, which are the main driving factors and how they are reciprocally related.

Circular Economy aims to “redefine products and services to design waste out, while minimising negative impacts” (Ellen MacArthur Foundation). The circular economy ambition goes well beyond recycling as it advocates the creation of a restorative industrial system aimed at designing out waste. World Economic Forum forecasts related to the circular economy estimate that shifting towards circularity could add $1 trillion to the global economy by 2025 and create 100,000 new jobs within the next five years. The European Union could benefit from an annual productivity improvement of 3% and a 7% GDP growth with respect to current development scenarios.

Emerging Trends at EU Level The policy environment of interest for the TCBL project – and, more in general, for the T&C sector at large – is influenced by five cross-industry trends currently shaping the evolution of the overall European economy.

Acknowledging the relevance of circular economy as a way to rebuild capital – whether this is financial, manufactured, human, social or natural – the European Commission has placed this topic at the heart of its policy agenda. In 2015, the Commission adopted an ambitious Circular Economy Action Plan, which includes measures meant to stimulate Europe’s circular transition, boost global competitiveness, foster sustainable economic growth, and generate new jobs. Four years after adoption, as documented by an extensive report recently published by the European Commission, all 54 actions under the plan launched in 2015 have now been delivered or are being implemented. Tangible outcomes at a European level have materialized. To further accelerate and expand the magnitude of impact, over the period 2016-2020, the Commission has stepped up efforts totaling more than €10 billion in public funding to the transition. Such an effort is complemented by sectoral flagship initiatives, such as the EU Strategy for Plastics in a Circular Economy (2018), which is the first EU-wide policy framework adopting a material-specific lifecycle approach: by 2030 all plastic packaging placed on the EU market will be reusable or recyclable.

The term Social Innovation is an umbrella concept for inventing and incubating solutions to modern time challenges in a creative and positive way. Even if there is not a unique and universally accepted definition for social innovation, we make reference to the well-known Open Book of Social Innovation (Young Foundation), according to which “social innovations are innovations that are social both in their ends and in their means”.

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As we stand on the brink of a new industrial revolution driven by new-generation information technologies, the European Commission is highly committed to supporting industry digitization. Industry, in fact, is one of the pillars of the European economy: the manufacturing sector in the European Union accounts for 2 million enterprises, 33 million jobs and 60% of productivity growth. In recent years, the European Commission launched several policy packages meant to support Industry 4.0 developments. In 2013, the Commission created a Task Force on Advanced Manufacturing for Clean Production and the Strategic Policy Forum on Digital Entrepreneurship was set up in 2014. Moreover, in 2016 the European Commission launched the Digitising European Industry initiative, the first industry-related measure of the Digital Single Market package. Building on and complementing the various national initiatives for digitizing industry – such as Industrie 4.0, Smart Industry and l’Industrie du Future – the Commission takes actions along 5 main pillars: (1) European platform of national initiatives, (2) Digital Innovation Hubs, (3) partnerships and industrial platforms, (4) regulatory framework fit for the digital age, (5) preparing Europeans for the digital future. Overall, current EU plans are meant to mobilize up to €50 billion of public and private investments in support of the digitization of industry. Such financial support goes hand-in-hand with policy instruments as well as coordination and legislative powers to trigger further private investments in all industrial sectors and create the framework conditions for the digital industrial revolution.

Smart Specialization is about identifying the unique characteristics and assets of each country and region, highlighting each region’s competitive advantages, and rallying regional stakeholders and resources around an excellence-driven vision of their future.

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Industry 4.0 is a term applied to a group of rapid transformations in the design, manufacture, operation and service of manufacturing systems and products . The distinctive trait of such a transformation lies in automation and data exchange, which are enabled by ‘exponential technologies’ such as – inter alia – Cyber-Physical Systems (CPS), Artificial Intelligence (AI), and Internet of Things (IoT). These technologies are combining breakthroughs in a way that has no historical precedent in terms of velocity, scope, and magnitude of impact.

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The European Commission’s actions on social innovation stem primarily from the Innovation Union initiative (2010) and the subsequent Social Investment Package (2013). In a nutshell, these actions facilitate the inducement, uptake, and scaling-up of innovative solutions that are a source of growth and jobs while driving societal change. From the policy standpoint, social innovation finds its place in a broad range of initiatives that the European Commission has developed over the last decade. Examples in this vein are the European platform against poverty and social exclusion (2010), the Social Business Initiative (2011), the Innovation Partnership for Active and Healthy Ageing (2011), and the Collective Awareness Platforms for Sustainability and Social Innovation (2016). Such diversity is also reflected in the policy tools adopted: the spectrum encompasses funding instruments, networking initiatives, exploratory studies, competitions and tournaments, incubation and acceleration programs, etc. Acknowledging that social innovators come from all walks of life, the mission-oriented innovation paradigm recently theorized

by Mariana Mazzuccato intends to bring together different actors – public, private and third sector – and spur cooperation across different sectors. In particular, these players can work together in supporting innovative entrepreneurs and mobilizing investments through schemes (e.g., impact investing, blended finance) that take advantage of ‘patient capital’ provided by foundations and philanthropic entities.

It also means strengthening regional innovation systems, maximizing knowledge flows, and spreading the benefits of innovation throughout the entire regional economy.

Smart specialization brings together local authorities, academia, business spheres, and the civil society working for the implementation of long-term growth strategies supported by EU funds. To this end, the EU launched a wealth of initiatives. In this regard, the national and regional level is where the notion of Research and Innovation Smart Specialization Strategy (RIS3) was first introduced for the 2014-2020 programming period, defining it as a ‘conditionality’, namely a prerequisite in order to receive the earmarked funds of the European Regional Development Fund (ERDF).

The recommended policy-making process is based on a participatory procedure for identifying regional strengths and potentials, known as ‘entrepreneurial discovery’. National and regional authorities across Europe were supported in this innovative policy instrument by the Smart Specialization Platform (S3P), which makes available guidance material and good practice examples, informs strategy formation and policy-making, facilitates peer-reviews and mutual learning, and supports access to relevant data. This was followed by the launch of an EU-level initiative led by DG Growth called Smart Specialisation for Industrial Modernisation. Here the aim is to identify common thematic areas and promote collaboration among regions sharing similar sector priorities. One of the sectors identified in this context is indeed T&C, and to this end the sector association Euratex launched the RegioTex Initiative in 2016. Here the goal is to strengthen local and regional competencies in the sector in order to reinforce regional innovation structures and capacities as well as to establish effective European collaboration among regional actors.

Social innovation, circular economy, smart specialization, and Industry 4.0 have a common thread running through them: they rely on the collaboration among different actors that interact and jointly develop new solutions, products, services, and, sometimes, generate brand-new business endeavors. Collaboration is, indeed, the glue that is needed for establishing whatever innovation ecosystem, regardless of sector and geography.

The European Commission recognizes collaboration as a key conduit for innovation-related knowledge flows. The European Commission’s Framework Programmes such as Horizon 2020 and the forthcoming Horizon Europe – which constitute an important share in R&D expenditures in Europe – epitomize this vision. In addition to finance impact-driven science and technology development, one of the main objectives of the Framework Programmes is to foster international collaboration among research organizations and private firms, both large and SMEs. The main idea behind this is that innovation often results from the interaction and cooperative efforts of different organizations devoted to the achievement of a common goal. Furthermore, there is no shortage of specific policies aimed to strengthen collaboration across actors, sectors, and regions. In this respect, worthy of attention is – inter alia – the European Cluster Collaboration Platform (ECCP). This is a service facility that promotes new partnerships between clusters fostering networking, transnational and international collaborations, and cross-sectoral cooperation in order to improve cluster organizations’ performance and increase their competitiveness. In addition, it helps clusters to access international markets and lets European cluster organizations profile themselves, exchange experience and search for potential partners for transnational cooperation.

EU T&C-related Policies Amid the plethora of European T&C-related policy documents, four of them have been short-listed in view of their relevance for TCBL mission and their alignment with emerging trends illustrated in the present policy brief.

TEXTILE REGULATION (EU) N. 1007/2011 The Textile Regulation (EU) No 1007/2011 on textile fiber names and related labelling and marking of the fiber composition of textile products was adopted in September 2011 and became applicable on 8 May 2012. The directive defines norms related to the fiber composition, determines the fiber names, regulates the presence of non-textile parts of animal origin, and defines an exemption applicable to customized products made by self-employed tailor.

Even if this regulation is extremely specific, it touches upon aspects that can be associated to the previously described emerging trends. The “specification of customized products made by self-employed tailors” can be associated to the Smart Specialization trend in which the promotion of local products is particularly encouraged and to the Social Innovation and Circular Economy paradigms where micro-entrepreneurs play an important role.

EU ECO-LABEL FOR TEXTILE PRODUCTS The EU Eco-label seeks to minimize the multifarious environmental impacts at each stage of a product’s life.

A number of criteria have been set at levels that promote products characterized by a smaller environmental toll. Moreover, these criteria have also been made available to be used on a voluntary basis by public administrations in the public procurement process: given that public purchases account for 15-20% of the EU GDP, making even a small improvement in terms of sustainability in such a process may contribute to generate substantial environmental impacts.

This action is specifically focused on the environmental sustainability of textile products. Circular Economy principles are thus in tune with this purpose. Along these lines, restorative and regenerative practices (e.g., upcycling, downcycling) of circular reuse have what it takes to capture untapped value and accelerate waste reduction.

A STRATEGIC INNOVATION AND RESEARCH AGENDA FOR THE EUROPEAN TEXTILE AND CLOTHING INDUSTRY (ETF) The Strategic Innovation and Research Agenda for the European Textile and Clothing Industry is the most recent (October 2016) T&C-related policy document currently published. It identifies four key innovation themes that will shape T&C industry in the coming future: (1) smart high performance materials; (2) advanced digitized manufacturing, value chains and business models; (3) circular economy and resource efficiency; (4) high value added solutions for attractive growth markets. Two additional themes are discussed as well, namely the need to invest in education and skills, and the importance of supporting and fostering situations of regional excellence in the T&C sector.

The strategic agenda makes reference to plenty of the trends identified: the need to focus on local production and to foster regional excellence recall Smart Specialization and cluster Collaboration practices; Circular Economy principles are the core concepts of the innovation theme 3, while innovation theme 2 goes hand in hand with Industry 4.0. Furthermore, the document emphasizes the need for userdriven design and product/service personalization, to some extent under the Social Innovation umbrella.

TEXTILE CLUSTERS FOR INDUSTRIAL MODERNISATION (TEX4IM) The Tex4IM partnership is a sector-specific initiative endorsed by the ECCP. It aims at bringing together the main European textile-based clusters in countries/regions where the T&C industry represents a significant share of the national/regional economy. The resulting alliance works to enhance innovation capacities, business models, knowledge and skill levels and other key competitive factors that will determine the future of European T&C sector. New synergies created are going to extend T&C companies competitiveness at international level, paving also the way for newly conceived textile products capable of carving novel market niches.

As the initiative is ultimately meant to build up bridges and to trigger technological and business synergies with other sectors or regions, it goes without saying that it is perfectly aligned with the Collaboration trend.

Furthermore, from the environmental standpoint, this initiative bolsters Circular Economy principles while, in terms of innovation approaches, user-driven design (Social Innovation) is backed as game-changer in widening market opportunities.

Lessons Learnt from TCBL SOCIAL INNOVATION •

Social production spaces (i.e. FabLabs, sewing cafés) can effectively engage communities, while actual production can more effectively take place in the emergent Social Factory model.

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There is a very strong component of social innovation on the retail side (sharing economy).

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Social experiments in TCBL have an important community dimension through which knowledge embedded in lost territorial production systems can emerge.

CIRCULAR ECONOMY •

A real shift towards a circular economy requires a collective, systemic intervention to transform the structure of the market.

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The circular economy is an issue of entrepreneurial culture as much as it is a technical question of organizing material and energy flows.

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The regional innovation ecosystems surrounding individual TCBL Labs highlight the territorial dimension of the circular economy.

SMART SPECIALIZATION •

The regional dimension is important not only for manufacturing ecosystems but also for the promotion of innovation dynamics.

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The main barrier encountered (e.g. within RegioTex) is in the different ways Smart Specialization priorities have been selected in each of the EU’s regions.

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Regional innovation policy continues to emphasize infrastructural investments over ‘softer’ policy approaches linked to social innovation, circular economy, and other emergent trends.

INDUSTRY 4.0 •

Mainstream IT solutions explored in TCBL proved to be designed for the top-down management of large corporations and judged irrelevant by the majority of TCBL Associates.

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Several of the Industry 4.0 technologies encountered in TCBL appear to be embedded in an ‘automation’ logic following a linear production model. This is in contrast with the idea of ‘human’ circular value chains and knowledge-based competitiveness.

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If Industry 4.0 is going to have a positive impact on the T&C sector, many aspects of the way the IT market serving the sector is currently structured will need to rapidly adapt.

COLLABORATION •

TCBL as collaborative research project has benefitted significantly from this policy model.

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One key feature of TCBL was its openness – the Labs and Associates external to the consortium played as important a role as project partners – in strong contrast with the closed and often self-referential partnerships that are more typical in collaborative R&D.

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Transnational and multidisciplinary collaboration, when it works with concrete action as did TCBL, uncovers barriers and contradictions in local practice and national legislations with important policy implications.

Textile and Clothing Business Labs

TCBL is a project co-founded by the Horizon 2020 Framework Programme of the European Union Grant Agreement Number 646133

TCBL Project TCBL – as EU-funded project and global movement with responsible innovation in its DNA – supports initiatives and solutions for building a fair and sustainable Textile and Clothing industry in Europe. This passes through the experimentation with innovative business models facilitated by a EU-wide network of Business Labs that provide concrete enabling services to European small and micro-enterprises. All this results into an integrated innovation ecosystem that taps into the significant opportunities usheredin by new digital technologies, emerging production schemes, groundbreaking business models, and valorization of the untapped artisan know-how. tcbl.eu/about-tcbl-project

TCBL Consortium

Municipality of Prato Italy German Institutes for Textile and Fiber Research – Center for Management Research Germany LINKS Foundation Italy Skillaware Italy Oxford Brookes University UK Imec Belgium Tavistock Institute UK Materials Industrial Research & Technology Center S.A. Greece Waag Society Netherlands Huddersfield & District Textile Training Company Ltd UK eZavod Slovenia Consorzio Arca Italy Unioncamere del Veneto Italy Hellenic Clothing Industry Association Greece Sanjotec – Centro Empresarial e Tecnológico Portugal Clear Communication Associates Ltd UK tcbl.eu/tcbl-ecosystem/partners This policy brief is realized by Business Model Innovation Area of LINKS Foundation, an applied research center specialized in high impact innovation based on ICTs. linksfoundation.com