When she ran a company that sold American clothing labels in China, textile heiress Veronica Chou was a globe-trotting executive who made headlines for her socialite lifestyle and lavish 2012 wedding in Hong Kong. Now, she’s trying to clean up the fashion industry.
A member of the $2.7 billion family empire built by her father, Silas Chou, the 36-year-old said she's now devoting her time and money to start-ups that make one of the world's most wasteful industries more sustainable. After selling the family stake in a Chinese joint venture with New York-listed Iconix Brand Group Inc. for $56 million in 2015, 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,” Chou said. “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’s a bold bet. Sustainable fashion is a sliver of the $1.8 trillion global apparel industry, which has ballooned over the last decade amid a boom in low-cost, quick-to-market clothing championed by the likes of her father. But 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 expects will grow to $8.25 billion by 2023.
The fashion business produces 20% of the world’s wastewater and 10% of carbon emissions — more than all international flights and maritime shipping combined, according to a United Nations report. It takes about 2,000 gallons 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,” said Karl-Hendrik Magnus, a McKinsey & Co. Inc. senior partner. “This creates a huge advantage for smaller brands and players focused on sustainability.”
About 66% of consumers surveyed in a McKinsey study said they consider sustainability when making a luxury purchase. Still, only 31% of Gen-Z and 12% of baby boomers are willing to pay more for sustainable products, according to the consulting firm.
Big brands have begun to respond, with Inditex SA's Zara this year pledging to use 100% sustainable fabrics by 2025. Hennes & Mauritz AB earlier committed to do so by 2030.
But 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," said McKinsey's Magnus.
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% less water and produces half of the emissions of a synthetic equivalent. She's 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 is one of them,” said Niall Dunne, chief executive officer of U.K.-based biodegradable plastics maker Polymateria Ltd., which Chou’s family invested in. “There’s a lot of greenwashing. She’s got a green mandate and knows how to do it.”
Chou's grandfather started one of Hong Kong's biggest knitwear companies, South Ocean Knitters. 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, Chou used Iconix to bring American brands including Badgley Mischka and Madonna's Material Girl to China.
She became a regular in celebrity gossip media, appearing in photographs with Princess Beatrice and super model Naomi Campbell. Her wedding in Hong Kong to a Russian businessman included a custom-made replica of a Russian palace overlooking the city's famous harbor.
Born in Hawaii and based mostly in London, Chou is riding out the pandemic in Hong Kong and insists she's not the fashionista the magazines make her out to be. She says she offsets all the carbon emissions from her travels and buys vintage apparel to promote reuse.
She's 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 Chou's half-brothers Bruno and Luis Chou that has more than $70 million under management, according to CrunchBase. Chou says that amount is considerably more now, but declined to disclose it.
Chou joins her father, brothers and sister on weekly video conference calls to discuss “all the deal flows” that they’ve come across. In a typical week now, 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 $1 billion after investments from Franklin Templeton Investments and Bain Capital Ventures. The family also invested in the RealReal Inc., a consignment platform for secondhand luxury goods that is now listed with a market value of $1.2 billion.
Novel TMT also invested in Modern Meadow, which is using biotech tools to grow leather in a lab. Chou, herself, is an adviser to New-York based start-up Perfitly, which lets shoppers try on clothes with a customized 3-D avatar that cuts down returns significantly. Chou says family investments can be as small as $50,000 or more than $5 million for equity, with the goal of making a several-fold profit through a public share offering or sale.
"It's profit with a purpose, it's not charity," said Chou, who was also a director of Karl Lagerfeld Greater China and continues to be an investor in the brand's global business.