Leadership? Vision, courage and a bit of folly.
Giulio Bonazzi is Chairman and CEO of Aquafil SpA, a leading manufacturer of Nylon 6 since 1969—both in Italy and globally—for the production of yarn for carpets and garments. The Group is a leader in the research of new production models for sustainable development. Under the leadership of Giulio Bonazzi, Aquafil SpA has come to be recognised as a global circular economy role model, rethinking—with transformative products and projects such as ECONYL® and Effective—the present and future of Nylon 6. For the leadership and the impact demonstrated over the years, Giulio and Aquafil have been awarded several rewards, including the “CEO Italian Awards 2019” (Forbes Italia and Business International), the ‘Radical Green 2016 Award’, and the ‘2017 Green GOOD DESIGN award’.
Giulio Bonazzi
Hi Giulio, it’s a great pleasure to host you for a conversation. Let’s start by talking about your journey at Aquafil, a company that your parents started many years ago. Under your leadership, Aquafil evolved from being a prominent player in nylon production to being recognised as a global circular economy champion. How would you describe such a journey?
It’s been an incredible journey, and I can only be thankful—of course—to my father and my mother who started this business several years ago. I personally started to work in Aquafil a few days after I graduated in Business Administration in Venice, at the end of July 1987. At that time, the company was not managed by family members, who were working in other parts of the group. So I had the chance to learn from very high-level professional managers, without the pressure of having to work with my parents.
Back then, Aquafil was a single-plant Italian company with a turnover of—translating into today's currency— around 40 million euro. We started to grow, building other plants and then going abroad, therefore becoming a so-called pocket multinational company. In 1995, we made the biggest acquisition in Slovenia, acquiring a company directly from the first round of privatisation of the Slovenian country. I moved there with my family - an incredible experience and opportunity. In the meantime, I had also worked in the United States and in Belgium, inside some of our customers' companies.
Coming to these days, the biggest change happened about 15 years ago when I realised that it was not a matter of if, but a matter of when, keeping doing what we were doing before, we would risk going out of business. We live on a planet that is a closed system, where materials are limited, and the appetite and taste of consumers is changing. We see that right now - people want to consume feeling good about it, and the legislation is also changing quite dramatically. For certain industries, it’s clear that if they don’t change and don’t become circular, the risk of disappearing is quite high.
“I realised that it was not a matter of if, but a matter of when, keeping doing what we were doing before, we would risk going out of business”
And how did this realisation translate, in practice, in the industry you are active in?
The material we are working on is nylon. More precisely, one type of nylon—because the are several types— which is nylon 6. Nylon 6 has the incredible possibility, which is limited to very few plastic materials, that it can be depolymerised. That is, to go one step back in the chemical chain, returning to its monomer. At that stage, you can purify the monomer and restart the process, without having to go many more steps back, which would be more expensive, energy consuming and polluting. In our case, it is quite efficient, and we have been able to realise a big change in our culture and our organisation, which is making everybody quite enthusiastic.
In 2008/2009, we launched this incredible project, called ECONYL® Regeneration System. We did it in the middle of the financial crisis, and we were so courageous not only to launch the project but also to open up our share capital to private equity to raise funds. At the time, the banking system was not so keen to finance any project, and if you were saying ‘I want to recycle’ they would look at you like a crazy person. Now everything seems easy, but it’s been quite challenging - there is no free lunch.
“If you were saying ‘I want to recycle’, they would look at you like a crazy person”
We have to change a world that has seen massive capital investments in technology that has been developed in the last 50-70 years, especially after the Second World War. So, if you now want to change the system, it takes time, a lot of money and a lot of research and development. And this is what we are doing. We are making as much as possible to develop technologies that are more in line with our culture and our philosophy of becoming a truly circular and sustainable company.
As you just mentioned, the project of ECONYL® perfectly exemplifies this transformation and change in philosophy. On a more technical side, how does the process of ECONYL® look like from the sourcing of the inputs to the processing up to the final product? First things first, where do you begin?
It’s quite a complicated process that we try to summarise in four steps to make it easier to comprehend. The first step is what we call ‘rescue of waste’. ECONYL® comes 100% from waste - we don't want to use any material or nylon which is not coming from recycling. And—out of this waste—at least 50% must be coming from post-consumer waste. This means that we also collect pre-consumer waste such us fabric scraps or plastic component. We are looking also for waste that was not recycled, possibly closing the loop by taking back products made by our customers.
When we speak of post-consumer waste streams, the two most important ones are old carpets, which is our major industry—and we need circularity in our industry—and fishing nets. For the latter, we see the recycling of fishing nets as an important achievement, because they are one of the most terrible ways of polluting our seas. About 10% of the so-called marine waste is coming from fishing nets, and it may be one of the worst, because it helps to keep together all the other plastic waste to create the infamous plastic islands, which are killing a lot of fishes and destroying marine ecosystems.
Fishing nets
Where do you procure such ‘waste’?
The first point is to understand where products end their life after their first use. In the case of fishing nets, the easiest to be recycled are the ones coming from the aquaculture industry. Remember that 50% of the fish we are eating in this part of the world is coming from farming - it’s not coming from fishing. Carpets, on the other hand, are coming from the United States. In California, there is a so-called EPR (Extended producer responsibility) scheme to create circularity in the carpet industry. Instead of landfilling the carpet, they are able to collect and recycle them - for which you are entitled to get a certain amount of subsidies. It’s a circular tax trying to prevent landfilling. So this is the first step: rescue the waste and organise all the reverse logistics, because we still live in a linear world.
Right, so the first step is rescuing the waste. What happens next?
The second step is the recycling, which is basically made by two steps. The first one is the preparation of the waste, because a very little amount of waste that we find is pure 100% nylon. In a fishing net, for example, there can be 60%-80% of nylon and the rest is composed of other materials, which of course you have to separate. In a carpet, instead, the percentage is typically around 30%-40%. In the preparation phase, you need to try to extract as much nylon as possible that is not polluted with other contaminants. Then, through depolymerization, we decompose the nylon without any hazardous chemicals, solvents or materials, but just by applying temperature, steam and energy - when available 100% renewable. We also apply a little bit of a food grade catalyst to speed up the reaction.
The last step of the depolymerization is the purification of this material, which is made with our solvent-free proprietary technology. We don’t like solvents because they are difficult to handle and can be absolutely unhealthy. If you have a spill-out of this type of material you risk creating very serious problems to the environment and the safety of the people.
At this stage, ‘waste’ nylon is prepared, purified and depolymerized.
Yes. We now have a monomer so we can start to remake our product - a polymer that is exactly like the one coming from oil. It can be recycled an infinite number of times and gives endless possibilities for designers and engineers. Our product can either be a pellet for injection molding or a fibre for carpets or for textiles. Our customers can re-imagine any kind of product and can re-design - be it for fashion, sport applications, sunglasses, whatever they like. We have more than 1000 active customers, and at least another 1000 that are about to come during the coming months.
These numbers are a clear sign of how pioneering and high-quality your process is. You are also part of another consortium, called Effective. This time the mission is about producing a bio-based nylon. Could you provide an overview on this project? And what kind of bio-base are you looking into?
This is another vision that we have: to completely disconnect Nylon 6 from oil. Here we are looking at 30-50 years ahead. I know that sometimes to look so far from today may seem a bit crazy, but when you have to make these kinds of bigger innovations it’s difficult to just look at the next quarter or the next financial year. If I look into the future of the plastic industry, I basically see two lines of products. One is for packaging, so short utilisation time. In this case, I believe that biodegradable and compostable plastics may be a solution - always associated with a compost system at the end of the life-cycle, and not to be dispersed into the environment.
“Sometimes to look so far from today may seem a bit crazy, but when you have to make these kinds of bigger innovations it’s difficult to just look at the next quarter”
But if you need a durable and performing material, biodegradation is not the solution. You need to have something that lasts. Nylon is a super-performing molecule—in terms of mechanical performance—and we are perfectly conscious that recycling is not enough. This is because, even if you recycle 100% of nylon, there’ll be a growth in demand and in some applications nylon might stay up to 50 years. Moreover, the world population is increasing, so we’ll be needing more materials, not in Europe, but especially in those parts of the world that are currently developing. So, how do we support this kind of growth - again with more drilling? No, because oil is something that will become more and more scarce and expensive.
What’s the alternative you are proposing?
You should start from renewable sources. Nylon 6 has an incredible possibility because—even though traditionally it comes from oil and can be recycled infinitely—it can also come from renewable raw materials - which is exactly what project Effective is about. It’s a research work that Aquafil is making with a biotechnology company based in San Diego (California), which is called Genomatica. Together with them, we are developing a sugar fermentation system to create the monomer of Nylon 6, which is called caprolactam.
That should be, in our opinion, the primary source of nylon, which can be at a later point depolymerised and reused. In this way, we can close the loop and have full accountability. In terms of raw materials consumption, it will be a real change for the planet. December last year we produced the first 500 kgs in a pilot plant. So, we are demonstrating that is possible - now the challenge is to industrialise it.
That’s fantastic, and it clearly shows your systemic vision. As I stated at the beginning, Aquafil is now an Italian champion of circularity recognised worldwide. Zooming into the Italian context, how do you see the state of the circular transition in Italy, from both a technological innovation and policy perspectives?
Traditionally, Italy has always been quite innovative, active in developing especially luxury products. But, perhaps less famous, it is also very strong in conventional recycling technologies. We have a lot of plastic recyclers, for example, and a lot of technology for the recycling of stainless steel, like in the case of Friuli Venezia Giulia, where companies are licensing technology worldwide. Another very strong point of our country is the collection of garbage from our homes - the separation of the so-called humid fraction and its transformation in natural gas. This is, again, a very strong point of our country, with solid technologies that are further developing.
At this point, if we truly want to progress—which is a necessity—we need basically two things in our country. The first is a regulatory framework that supports this transition. Especially at the beginning, when you are making these incredible efforts, you need support from a financial standpoint and an understanding of what belongs to whom. This is the case of EPR schemes, like the carpets’ one in California or the Norwegian scheme for plastic bottles. I don’t like any linear tax, but I very much love circular systems, where every industry is responsible for the waste the industry is creating. We are enjoying the profit, so we need to be responsible for the waste at the end of use-life.
“We are enjoying the profit, so we need to be responsible for the waste at the end of use-life”
And what is the second change Italy requires?
The second point is from a technological standpoint, and it’s something that we can see that has been developing more and more in the last decade: a stronger connection between companies, universities and research centres. Italy has always had a very strong tradition in fundamental research - who can forget about the incredible people and Nobel Prizes in physics and chemistry? Now we also need to develop this into more applied research with the industry, by connecting universities with manufacturing companies in order to develop more efficient and better technologies for the environment.
I always like to say that if we want to change the world, we need three things. The first one is legislation. The second one is education. And the third one is ecodesign, because we need to redesign products and processes in order to re-engineer them in a circular way. We have to design products with end-of-life in mind. When you have trash, you have lost.
“When you have trash, you have lost”
Now I wish to ask you something about a recent discussion between Aquafil and the Ellen MacArthur Foundation. Not to create any sterile polemic, but rather to focus on one element on which you have come to disagree in the past months: the role of green credits allocations and mass balance.
Yes, that’s a very delicate argument. The first time we decided to be a member of the Ellen MacArthur Foundation it was maybe too early - we were too advanced in comparison to the other members. We were a company that was already fully devoted and we were already collaborating with our industry to change the way we make products. So, we were not too happy with what we could get out of it, and we decided to leave.
Quite recently, we are seeing a lot of big companies joining the club, and big companies sometimes want to change, sometimes are simply trying to buy time. Because the bigger you are, the more difficult it is to change. I’m not blaming them. If you have to change a company like Aquafil, you have to think in terms of 10-20 years. With a company 100 times bigger, by 2050 you are not finished yet, so you need to buy time - legislation and consumers are pushing you and you need to make advocacy.
“Big companies sometimes want to change, sometimes are simply trying to buy time”
Let’s come to the point of disagreement.
Recently, we saw a document parented by the Ellen MacArthur Foundation that made me angry. It was about mass balance together with the allocation concept. That, in my opinion, is the death of the circular economy and sustainability, because you are able to transform whatever you like from fuel. But, in the end, fuel is fuel - it’s not a material. I’m not generally speaking against mass balance, but it must be apples with apples, and pears with pears.
If you look at organic cotton, there has been a lot of cheating. All of a sudden, the quantities of organic cotton were growing 10 times more than the actual production of organic cotton. If you speak with many luxury brands, they have always been very much against this idea - they say they don’t want to have anything to do with mass balance because it is too easy to cheat. Cheating and greenwashing are something that we have absolutely to avoid, because they’re damaging those who are making things for the better. Through credit allocation, you can transform a dead leaf into a beautiful strawberry. But, in the end, leaves are leaves, and fruits are fruits. And plastic is plastic - fuel is not plastic. This is not serious.
“Cheating and greenwashing are something that we have absolutely to avoid, because they’re damaging those who are making things for the better”
Very clear. Staying in the fashion industry, what do you see as the most promising innovations towards a zero-waste, circular fashion? What about the trend of leasing clothes rather than selling them?
The sharing economy is a good point if it is associated not with helping people to consume more, but to consume what is necessary. I have to confess that I am a fashion addict, and I love to buy something new every season, but if the sharing economy helps to further increase fast fashion, I believe we are going in the wrong direction. The main point is: what are you sharing? Where is the piece of clothing that you are sharing going to end up? If it’s going to landfill, it’s nothing good. If it’s designed in a way that is taken back and properly recycled, then I like it. And let’s not forget the basic rule of sustainability: first of all, reduce the use of materials; second, reuse the product; third, repair; and fourth, recycle. If we use recycling like mass balance and credit allocation to help people to consume more, that is plain wrong.
As a last question, in this period we often hear the need for leadership. What does leadership mean to you? What leader have you strived to be?
If you really want to change things, you need, first of all, a vision. Second, you need to be a bit crazy, because if you stop in front of the profit/loss or financial statements, you don’t have the courage to launch certain investments that may look like not being so profitable. Aquafil is going to become a regenerative company, working to close the loop in several industries, and helping companies to connect with consumers that want to buy responsibly and feel good when they buy something that is beautiful. If you don’t sell beautiful products, nobody wants to buy them - but we need products that help to preserve this beautiful planet. We live in a place that is so beautiful that we can’t just destroy because through this we can make more profit.
What makes me not only hopeful but also super excited are the young generations. I see a big click in their minds - they are so different from us, and I am very much hopeful that in 10-20 years, tomorrow’s consumers will also force those who don’t to change, whether they are politicians, big companies or SMEs. Young generations will make them change.
October 2020
A conversation between Giulio Bonazzi & Emanuele Di Francesco
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