Sustainable textile production and marketing
Sustainable textile production and marketing
Business Model Description
Creating garments in whose production responsible consumption and the environment are valued through the use of organic fabrics, recycling, promoting the circular economy, and providing employment for vulnerable groups with fair wages and continuous training.
Expected Impact
Building a fairer present and future by transforming the lives of women in vulnerable situations and being environmentally responsible.
How is this information gathered?
Investment opportunities with potential to contribute to sustainable development are based on country-level SDG Investor Maps.
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Country & Regions
- Region Lima y Callao
- Macroregion Sur
- Macroregion Selva
Sector Classification
Consumer Goods
Development need
The manufacturing sector represents 16.52% of the GDP for the year 2022(1) and employed 1.6 million people as of September 2022 (2). In December 2022, the fast-moving consumer goods sector experienced a decline of -8.3% compared to December 2021. However, over the course of the year 2022, the variation was -2.8% (3).
Policy priority
- Strategic National Development Plan 2050: The textile sector has high potential due to its growth (5)
- National Program for Employability provides training according to the requirements of the value chain of industries with high demand (13)
- National Program "Your Company", created to contribute to the productivity and sales of micro and small businesses (15)
Gender inequalities and marginalization issues
-The employment activity rate for women was 54.5% in 2020 and 63% in 2021, which is lower than that of men at 78.4% (9)
- Income disparities affect consumption patterns: Women's average income is 69.6% of men's income (10), and in 2021, men's labor income increased by 10.7% while women's decreased by 1.1% (11)
Investment opportunities introduction
- Mass consumption continued to grow by 11.0% during the second quarter of 2022 (30)
- The projection for the growth of the Peruvian economy in 2022 is 3.3% (14)
- Entrepreneurial MIPYME Fund promotes reactivation by allocating funds for business innovation, management improvement, and market access promotion (17)
Key bottlenecks introduction
-Inflation in 2022 was 8.56%. This reduces the purchasing power of the population (15)(16)
-Political instability limits investment opportunities in Peru (21)
-In 2020, the production of the fashion sector fell by -35.9%, and the volume of clothing imports grew by 54.3% during the pandemic, harming the industry (18)
Apparel and Textiles
Development need
The clothing apparel sector represents 9% of non-traditional exports and 1.7% of the GDP according to MINCETUR. Although the sector generates employment and income, the COVID-19 pandemic has affected its performance, recording a 32.1% decline in 2020. Therefore, the government promoted participation in international trade fairs to establish commercial contacts (27)(28).
Policy priority
- D.S. N° 004-2022-PRODUCE declares the textile and clothing sector in a state of emergency (31).
Emergency Plan for the Revival of the Textile and Clothing Sector, PRODUCE 2022 (32).
National Decent Employment Policy (PED), Supreme Decree No. 013-2021-TR (33).
Gender inequalities and marginalization issues
The textile sector predominantly employs women, with 61% of the economically active population (PEA) occupied in 2019 being women. In 2017, 80% of female textile workers were young women aged 18 to 24, often working in unfavorable labor conditions. The gender gap in the sector is evident, highlighting the need for improving working conditions (34).
Investment opportunities introduction
FAE TEXCO: Fund for the textile and clothing sector, which included guarantees totaling USD 20 million, considering loans of up to USD 26,000 for working capital, consolidation, and other purposes (20). Other funds such as the Capital Fund for Innovative Entrepreneurship (26) and the Entrepreneurial MIPYME were also added.
Key bottlenecks introduction
- The textile sector is growing rapidly but lags behind in technology, digitalization, and Industry 4.0 (x). This is further compounded by the high level of informality in various industry activities and the rising inflation, which directly impact production costs and customers' purchasing power (15)(16)(21).
Apparel, Accessories and Footwear
Pipeline Opportunity
Sustainable textile production and marketing
Creating garments in whose production responsible consumption and the environment are valued through the use of organic fabrics, recycling, promoting the circular economy, and providing employment for vulnerable groups with fair wages and continuous training.
Business Case
Market Size and Environment
> USD 1 billion
5% - 10%
According to a Fashion Revolution report, in 2020, Latin America was responsible for 9% of global sustainable fashion purchases. Another study by McKinsey revealed that 56% of Latin American consumers are willing to pay more for sustainable products (35).
Indicative Return
5% - 10%
20% - 25%
Business plans for opening a textile clothing brand achieve a return on investment between 20% and 25%. (6)
Investment Timeframe
Medium Term (5–10 years)
Investments in the textile sector are primarily in capital goods, resulting in a simple payback period for projects of around 8 years
Ticket Size
< USD 500,000
Market Risks & Scale Obstacles
Market - High Level of Competition
Market - High Level of Competition
Market - High Level of Competition
Market - High Level of Competition
Impact Case
Sustainable Development Need
Promoting domestic manufacturing becomes essential for growth, as the increasing imports of clothing, with their attractive prices in the market, pose a challenge to local competitiveness in the textile industry (11).
Contributing to increasing income in vulnerable sectors through technical training and skill development is crucial. An example of this is the work that has been done with incarcerated individuals, providing them with technical training to facilitate their reintegration into society (12).
The textile industry is among the most polluting, emphasizing the urgent need to provide sustainable alternatives in this sector (37).
Gender & Marginalisation
The female workforce is primarily concentrated in the commerce, services, and manufacturing sectors, but women still earn less income compared to men. (16)
A significant percentage of women do not have their own income, or their average income is lower than that of men. Therefore, efforts are being made to reduce this gap by strengthening their productive capabilities and autonomy. (10)
Expected Development Outcome
Promote greater responsible local consumption by increasing income for vulnerable individuals or groups, such as incarcerated women or artisan women from Andean communities, fostering economic independence and empowerment.
Gender & Marginalisation
Many times, societal conditions, primarily due to cultural factors, lead to women having fewer growth opportunities. In response to this, the proposal focuses on reducing the gender wage gap in women and strengthening their capabilities for autonomy and leadership.
Primary SDGs addressed
12.2.1 Material footprint, material footprint per capita, and material footprint per GDP
12.2.2 Domestic material consumption
The textile industry, responsible for 10% of the total global carbon emissions, as reported by the United Nations, also has an environmental impact through its water usage, accounting for 20% of the world's total water consumption.
Currently, Peru lacks legislation specifically addressing textile waste. Consequently, the industry must proactively adapt to the principles of the circular economy model.
10.2.1 Proportion of people living below 50 per cent of median income, by sex, age and persons with disabilities
51% of the people in monetary poverty are women.
By the year 2030, the goal is to reduce the proportion of the population living in poverty to 10.9%.
Secondary SDGs addressed
Directly impacted stakeholders
People
Corporates
Public sector
Indirectly impacted stakeholders
Corporates
Public sector
Outcome Risks
An inflationary crisis that minimizes the purchasing power for non-essential products.
Increased competition due to the greater influx of lower-priced imported products.
The need for more labor time due to increased production, which may not allow for a balance with family, cultural, educational, and other aspects of life.
Impact Risks
Restrictions and/or market limitations that may prevent the extension of the employment relationship.
Impact Classification
What
Restrictions and/or market limitations that may prevent the extension of the employment relationship.
Risk
Increase in inflation leading to rising production costs and a reduction in their market share
Contribution
To the attainment of better incomes for individuals and their families.
Impact Thesis
Building a fairer present and future by transforming the lives of women in vulnerable situations and being environmentally responsible.
Enabling Environment
Policy Environment
National Development Strategic Plan 2050: Drives programs to enhance capacity, digital skills, and technical assistance for productive self-employment (5).
Productive Innovation and Technology Transfer Centers (CITE) contribute to the improvement of productivity and competitiveness in small and medium-sized enterprises (Mipyme) and productive sectors (9).
The "Reactiva Perú" program aims to provide a quick and effective response to the liquidity needs that businesses face due to the impact of COVID-19.
Since its establishment in 2011 until June 2021, Innóvate Perú has funded over 5,500 projects with a total of S/1,300 million (4).
(MIDIS) Haku Wiñay/Noa Jayatai Program provides technical assistance and financial support to rural families to help them develop sustainable productive activities.
Financial Environment
Financial incentives: The Peruvian government granted tax facilities due to the health crisis. These included postponement of income tax declaration and payment, extension of the declaration and payment of the temporary net asset tax, release of withholding funds, and more.
Fiscal incentives: In Peru, there is already a promotion of B corporations or impact-driven companies, and this sector is growing rapidly. These companies often benefit from reduced administrative procedures for their establishment and operation.
Regulatory Environment
Law N° 29337 that establishes conditions for competitiveness
The Consumer Protection and Defense Code is a set of regulations aimed at protecting and defending consumer rights. These regulations are designed to improve access to appropriate and suitable products and services in the market.
Law No. 30709 that establishes measures for protection against discrimination.
Marketplace Participants
Private Sector
ESTRAFALARIO, Polleras de Agus
Government
PRODUCE, INPE, MIDIS, MIMP, MINCUL
Multilaterals
Kunan
Non-Profit
NESsT and the Wiese Foundation provided funding and guidance to strengthen the retail channel and business expansion for Peru Champs.
Public-Private Partnership
Intercorp Group
Target Locations
Region Lima y Callao
Macroregion Sur
Macroregion Selva
References
- (1) INEI (2023). Informe técnico de producción nacional diciembre 2022.
- (2) INEI (2022), Comportamiento de los indicadores de mercado laboral a Nivel Nacional
- (3) BCRP (2023). Notas de estudios diciembre 2022
- (4) PRODUCE (2022), ProInnóvate celebra 15 años impulsando empresas innovadoras en todo el país
- (5) PCM (2022), Plan Estratégido de Desarrollo Nacional al 2050
- (6) ESAN (2018) Plan de negocio para la creación de una marca de ropa
- (7) CAL (2022). Manual de eficiencia de inversiones en la industria textil
- (8) RETAIL ACTUAL (2022). Tendencias 2022
- (9) PRODUCE (2020), Centros de Innovación productiva y Transferencia Tecnológica (CITE)
- (10) INEI (2022). Perú Brechas de Género 2022
- (11) INCECOPI (2021). Boletin de noticias
- (12) INPE (2018). Programa de Carceles Productivas
- (13) MTPE (2022). Programa Nacional para la Empleabilidad, Memoria Anual 2021
- (14) MEF (2022). En el 2022 la economía peruana crecerá 3,3% - Nota de Prensa
- (15) PRODUCE (2022). Programa Nacional Tu Empresa - Nota de Prensa
- (16) MTPE (2022). Demanda de ocupaciones a nivel nacional 2022
- (17) MEF (2023). Fondo MIPYME Emprendedor - Nota de Prensa
- (18) INCECOPI (2021). Boletin de noticias
- (19) BANCO MUNDIAL (2021). The long shadow of informality
- (20) GOB.PE (2022). Amplió vigencia del Fondo de Apoyo Empresarial al sector Textil y Confección - Nota de Prensa
- (21) Estrafalario
- (22) Perú: Perfil de la Población en Situación de Vulnerabilidad Económica 2021
- (23) Cárceles productivas en el Penal de Mujeres de Chorrillos
- (24) Sostenibilidad, la clave para el sector textil
- (25) Fundación Wiese (2020). Fondo Emprendedor.
- (26) COFIDE (2022). PRODUCE Y COFIDE lanzan fondo de inversión - Nota de prensa
- (27) SNI (2020). Producción del sector textil y confecciones
- (28) PRODUCE (2021) Promoción de la industria textil
- (29) IPSOS (2023), Opinión sobre la Gestión Pública Para Perú.21 - Enero 2023
- (30) KANTAR (2022). Consumo masivo continuó creciendo durante el segundo trimestre del 2022
- (31) EL PERUANO (2022). DS 004-2022-PRODUCE. Declara en emergencia el sector textil y confecciones
- (32) EL PERUANO (2022). R.M. N° 00194-2022-PRODUCE Plan de Emergencia para la Reactivación del Sector Textil y Confecciones
- (33) GOB.PE (2021). D. S. N° 013-2021-TR. Política Nacional de Empleo Decente
- (34) SIN.(2021). Industria textil y confecciones. Marzo 2021
- (36) ARTESANOS (2023). Artesanos peruanos, situación crítica
- (35) SIMALCO (2022): EL FUTURO DE LA MODA EN LATINOAMÉRICA ES SOSTENIBLE
- (36) Ray and Nayak (2023) Marketing Sustainable Fashion: Trends and Future Directions
- (37) IFC (2023) Strenghtening Sustainability in the Textile Industry