Kolon FnC’s Koika IBS-ESG Initiative in Full Swing

▷ Started construction of 'Circular Factory' in Mongolia and Vietnam to realize recycling of waste clothing - targeted to be completed in 2026

▷ Implementing a low-carbon paradigm by raising public awareness through manpower training and documentary production on circular fashion

Kolon Industries & Commerce (Kolon FnC) will begin full-scale implementation to realize the recycling of apparel waste in Mongolia and Vietnam.

In September last year, Kolon FnC formed a consortium with K.O.A., a social venture and subsidiary of the fashion impact business, to participate in the KOICA IBS-ESG Initiative, a public-private development cooperation business model run by the Korea International Cooperation Agency (KOICA). The initiative is part of KOICA's Inclusive Business Solution (IBS) program, which has been running since 2022, and aims to contribute to the achievement of the Global Sustainable Development Goals (SDGs) by supporting companies' ESG (environmental, social, governance, and other non-financial factors) management activities in developing countries.

For about a year after the MOU was signed, Kolon FnC and KOICA organized a joint research team composed of a group of external experts to conduct in-depth planning surveys in Mongolia and Vietnam. Based on this, a business execution plan was established, and the project will begin in earnest this year. The initiative consists of four main components: construction of Circular Factory, a pilot project for clothing waste recycling, training of circular fashion experts, and public awareness activities.

First, Circular Factory is a textile circulation center that collects clothing waste such as cashmere-only garments, leftover fabrics, and unsold clothing, sorts them by color and use, and conducts preliminary work for reuse - i.e., utilizing Textile to Textile recycling technology. KOA, a subsidiary of Kolon FnC, with know-how in the Mongolian cashmere business, will be in charge of execution, and construction will begin in Ulaanbaatar, Mongolia in 2025 with target completion by June 2026. Second, a pilot project for utilizing clothing waste is to develop prototypes made of recycled cashmere yarn produced through the above process at the Circular Factory and further to build a new brand specializing in circular fashion materials.

Third, in order to cultivate experts in circular fashion, the company will open circular

fashion courses and develop training materials at the Department of Textiles at the Mongolian National University of Science and Technology and the Department of Textiles at the Vietnam National University. To this end, Kolon FnC will organize a domestic industry-academia-research TF in the second half of this year to support the establishment of circular fashion courses tailored to each country. Fourth, to improve public awareness of the recycling of clothing waste, Kolon FnC plans to conduct various activities such as exhibitions and contests on the production and consumption of sustainable fashion in Mongolia and Vietnam. As a first step, Kolon FnC will collaborate with a local Mongolian TV station to produce a documentary on the Mongolian cashmere cycle to raise awareness of the need to recycle clothing waste and engage the general public.

“We believe that Textile to Textile recycling technology that turns waste garments into clothing materials will contribute significantly to the paradigm shift towards minimizing carbon emissions from the production and disposal stages of the fashion industry,” said Yoo Dong-ju, CEO of KOAI and head of the ESG Impact PU at Kolon FnC. ”Based on our know-how in the Mongolian cashmere business, we will further strengthen our business momentum by establishing a local subsidiary in the second half of this year.”