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ESG Outlook: Material Exchange’s Dora Lality on Building a Responsible Digital Ecosystem

ESG Outlook is Sourcing Journal’s discussion series with industry executives to get their take on their company’s latest environmental, social and governance initiatives and their own personal efforts toward sustainability. In this Q&A, Dora Lality, chief legal officer and co-founder of material sourcing marketplace Material Exchange discusses building an ecosystem to support a more responsible industry.

Dora Lality Material Exchange
Dora Lality, chief legal officer and co-founder, Material Exchange. Courtesy

Name: Dora Lality

Title: Chief Legal Officer/Co-Founder

Company: Material Exchange Ventures AB

What do you consider to be your company’s best ESG-related achievement over the last 5 years?

Helping to improve ESG scores across the fashion and footwear supply chains is the best way for us to make the greatest impact. Material Exchange is the number one B2B material marketplace for footwear and apparel and, as part of our platform, we are building the ecosystem to support a more responsible industry.

We just launched our sustainability playbook that outlines our innovative search tool to simplify sourcing for sustainability. With the understanding that our users are being rated and ranked against their raw material sourcing, our guidebook also outlines how the tool maps to SASB (Sustainability Accounting Standards Boards) as well as to SDGs (United Nations Sustainable Development Goals).

How much do you look into a brand’s social or environmental practices before shopping?

All the time. Partly because ESG is such an important part of my work, but also because I’m so inspired by how brands are striving for sustainability. There have been so many new innovations in materials, efforts to steward water scarcity, and approaches to social equity in the supply chain.

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During World Ocean Day, we hosted an event to showcase one of our suppliers, Tide Ocean, that collects ocean-bound plastic and converts it into a new fabric. Shinola, the Detroit-based watch brand, was also part of the event, to launch a collection they made with the salvaged material. I love the story behind this material and tried to get one of the Ocean Creatures watches for my son, but they’d already sold out.

What is your personal philosophy on shopping and caring for your clothes?

I grew up in a very small village in Vojvodina [Serbia]. We were raised to take care of our clothes: my family saw clothes as a need, and they were against any unnecessary spending. We didn’t have the influence of fast fashion when I was younger; my grandma knitted our sweaters. These items were meant to be worn, yes, but also cherished. I have the same attitude now—I buy things that I know will last and that I can cherish. And yes, I prefer to buy sustainable ones.

How do you try to minimize the environmental impact of the clothes you buy?

Each year at Material Exchange, we organize a project around Christmas to collect clothes for the Red Cross. We also collect blankets and coats for homeless people with the Rotary Club. I’m most proud of our efforts in my own home: we re-purpose all of the clothing my son has grown out of so it can go on to be used by other children. Last year, we collected his newborn clothes and brought them to the hospital to help new parents who don’t have clothing for their children. I am eager to support any initiative which will help solve the problem of post-consumer textile waste.

Anything new you are doing to boost sustainability beyond the fashion industry?

Being raised in Vojvodina, many of the ‘sustainable’ habits being adopted by my team were part of my childhood. For example, avoiding plastic bags, turning off the water when we brushed our teeth, eating food from our grandmother’s garden, etc. I still keep those habits. I like to support the local food movement and dine at local restaurants, be thoughtful about my consumption, and spend as much time outside with my family as we can.

What is the biggest misconception consumers have about sustainability in fashion?

I think the biggest misconception consumers have is that sustainability is easy. Conversely, I think the biggest misconception our industry has is that it is difficult. Both are correct. Material Exchange is working to align those realities. One of the reasons I love working at Material Exchange is learning more about sustainability.

Our chief sustainability officer, Kelly Burton, also teaches sustainability at two top colleges (Harvard and F.I.T.) and she is working hard to simplify sustainability for the industry and to embrace the sustainability ecosystem for greater impact. That’s why users of Material Exchange can find materials under catch-all search terms like ‘Better Leather’ that include both well-known certificates (Leather Working Group) and smaller local initiatives (ChromeFree® Leather Alliance) that meet the criteria. So the industry can move faster toward transitioning to more environmentally forward, socially responsible materials and the customer can find more products that match their values.

What was your company’s biggest takeaway from the Covid crisis?

Covid presented Material Exchange with two great lessons. One, that adversity creates opportunity. The effect of Covid on tradeshows led to our partnership with denim show Kingpins and the great success we saw with the Kingpins Exchange. This also led to our recent acquisition of the agency division of Olah Inc. The second lesson we learned is that we are only as strong as our team. People are at the core of our success, and their health and wellbeing is key to that. With offices in India, China, Sweden, Armenia, Serbia and the U.S., it was a great exercise in being agile and flexible. I was amazed by how efficiently and seamlessly the teams navigated lockdowns and various disruptions. Another benefit of digitalization—it offers resiliency.

What is your company’s latest sustainability-related initiative?

We recently joined the UN Global Compact. Given the recent IPCC report, the COP26 event, and our dedication to a more sustainable industry, it seemed important to formalize our commitment. As participants in the UNGC, we are better equipped to guide the suppliers and brand users on the marketplace to source in support of their SDG commitments.

What is the apparel industry’s biggest missed opportunity related to securing meaningful change?

Transitioning to digitization. In our Digital Sourcing Survey, 47 percent of the brands and product developers we surveyed use 3D tools (like CLO and Browswear) but only 14 percent of suppliers can offer digital samples. We have scanning hubs in China and India and will open additional locations in 2022 to bridge this gap and accelerate the transition. Digital samples reduce waste, reduce supply chain disruptions, and support a more transparent industry.