Sasha Titchkosky: Koskela is generally doing pretty well, but I don’t think it’s any secret that retail has been doing it pretty tough this year. Multiple interest rate rises and a lapse in consumer confidence hasn’t been fantastic. What we have noticed however is that the consumers are really seeking us out. They are responding positively to our sustainability strategy and ethos, and are actively looking for Australian made products. IR: Koskela has committed to a fully circular business model by 2027. Can you discuss the motivation behind this objective?   ST: We have been measuring our carbon footprint for a number of years. What was really evident was that the bulk of our emissions lie [in] transport and getting our products to customers. The difficulty with that is, whenever we have a good year, our revenue increases and we sell more. As a result, our scope three emissions increase, which means we’re having a greater negative impact on the environment. It’s a real conundrum when you’re a product-producing business. The only way that we could start to break that nexus between growth and negative environmental impact is if we transitioned to a circular economic model. There are some key pillars to this. First, we have to design-out waste in our products, and look at how we can increase their lifecycle. We’re trying to keep Koskela products in circulation, in good condition and looked after for as long as possible. We’re also looking at what happens to these items at their end of life. Next month we’ll launch our ReHome project: Koskela’s new trade-in initiative where customers can bring back their old products in exchange for a credit voucher, and we can refurbish those items and offer them to new customers at a reduced price. We know there’s a lot of people who love Koskela’s ethos and values, but they can’t afford our products. This is potentially a really good way to offer them an opportunity to access our furniture. IR: You mentioned that you’re looking to design out waste. How do you plan to do that? ST: Yeah, so it’s a pretty difficult thing to do, but our designers have an incredible opportunity to influence [our] carbon footprints and emissions. This involves designing to sheet sizes, looking at how to make products repairable, and using materials with a recycling or biodegradable option that benefit the natural environment. This would ensure that the products don’t eventually end up in landfill. It’s also around using renewable energy sources. Seventy four per cent of our supply chain uses renewable energy in some form – either green energy or rooftop solar, which is great. We’re now working on the last 26 per cent of our supply chain, and seeing how we can transition this to renewable energy too. There’s also transportation, which is a big challenge. We’re waiting on some much-needed government policy and initiatives to encourage non fossil-fuel dependent vehicles and transport systems. IR: Once this comes through, will there be more pathways for Koskela to invest further in more sustainable transport initiatives? ST: Yes. Last mile delivery and EV vans are becoming more and more feasible. But transporting sofas and other large furniture from one part of the country to another forms quite a big part of our footprint.  For us, part of the challenge is designing products that can be more easily flat packed or transported in parts, and then assembling these items on location. IR: Fast furniture has been identified as a major environmental issue. Can you discuss how Koskela is tackling this, and how it’s ensuring that its products are durable, sustainable and – if there’s wear –can be repaired? ST: It wasn’t so long ago that furniture was passed down from generation to generation. It was never envisaged that you could put a piece of furniture on the curb and expect it to be picked up by council and shoved into landfill. It’s only more recently that this has become the norm. If you don’t want something anymore, or if an item is damaged, you just organise pick up and off it goes. It’s not your problem anymore. What we’re really trying to do is to encourage customers to take a bit longer when they’re making that decision about buying something as permanent as furniture. We want to encourage customers to really take the time to fall in love with a piece. Once they develop that emotional connection, they are far more likely to look after it, and ensure that it’s re-homed if it doesn’t serve their purpose anymore, or if there’s a change in their living circumstances. We’ve also been excited to see furniture coming back to us for re-upholstery. We’ve had sofas that are almost 20 years old, we’ve re-upholstered them, and they look brand new again. If customers don’t want to go down that pathway, we can at least ensure that the item finds a new home where it will be treasured. IR: Can you discuss Koskela’s goals in terms of the ReHome initiative? ST: We’re starting to see more brands taking charge of their own resale programs – particularly in fashion – which has been really good to see. In terms of our own goals, I think we’ll really see volume when we open this initiative up to our corporate customers. That’s where the bulk of our products have gone over the 23 years that we’ve been in operation. There’s urgency behind this initiative because in Australia, it’s estimated that about 35,000 tonnes of commercial office furniture ends up in landfill every year. We don’t have any statistics on the sort of residential or domestic side of things because we don’t have very good waste monitoring systems in Australia. It’s decentralised and fragmented, and no one’s keeping track of the amount of product that’s going to waste IR: Can you discuss what you think is required from governments and businesses to reduce the amount of furniture waste? ST:  If the industry doesn’t get their act together and tackle this problem, it will be up to governments to legislate. But I think [governments] could also provide some carrots as well. Regarding government procurement of furniture, they spend millions of dollars every year purchasing furniture. As such, there’s a need for better procurement guidelines which focus on locally produced products, and products with proper repair and refurbishment programs embedded into the company’s offerings, I think that would help to drive innovation and change. Another significant problem is that, over the years, Australia has gradually offshored its manufacturing capacity, and we’ve lost a lot of that technical skills and ability to do that repair work. There needs to be a greater investment in training programs, and immigration programs that bring people who have those skills into the country. IR: Koskela has outlined goals of a fully circular business model by 2027, and producing zero carbon emissions by 2035. Do you have any year-on-year benchmarks in the leadup to these dates, and how Koskela will be accountable to them? ST: When we had a different government in place, there was a lot of discussion about whether to set a target or have the plan first. My opinion is that you need to have the target in place in order to create the plan. We haven’t got a fully mapped out program because there are a lot of variables, some of which aren’t in our control. But the way we want to hold ourselves accountable is by publicly reporting how we’re travelling. We’re hoping that by sharing our failures and our successes – with the industry more broadly as well as with our customers –  there are learnings and insights that other businesses can take. We also have goals around recycled content and materials that we’re working on, for instance with foam steel. For the latter, we need the government to get their skates on and to start incentivising the green steel industry. There’s a lot of activity still being done in terms of research, but the opportunity to push ahead and commercialise some of those activities needs to be adopted, because it has the ability to be a game changer for Australia. It’s ridiculous that we have these natural resources that we export to China, so they can make the steel which we import back in again. It just makes no sense at all. With foam, it is a fossil fuel dependent product, and there are other interesting materials that we’re looking at as a full, or partial replacement. IR: Tell me more about your goal of have 90 per cent of all products either made out of recyclable materials, or able to be recycled. ST: This is a difficult one, for sure. It’s a two-pronged approach. We’re looking at new materials that are using waste as an input material, and are making sure that they’re part of a closed-loop system. We recycle our steel, which is already a pretty well established process and industry in Australia. The only problem is that we can’t use a lot of recycled steel in our products because it’s not of a grade that is acceptable to consumers. So it’s not as perfect in its appearance, which is difficult. But it does have a really long lifecycle, and it can be recycled, and then it can go into things like structural beams and be used in the building industry. There’s other things like textile waste, that’s all able to be collected. There are now a couple of really interesting companies that have been set up in Australia, and are setting up. For instance, there’s a really new manufacturing plant that will be able to reprocess textile waste. So part of what we’re doing is making sure that all of our manufacturers are collecting all of that textile waste at the time of manufacture. It’s also about us offering to do the same, and ensuring that our materials end up at these facilities. Materials like foam can also be reprocessed and turned into carpet underlays. There is a lot happening, but one of the bigger problems – and one where I’d love to see relevant companies put more effort into – is recycling laminates. It would be great to see them start to tackle this issue and to look at how they can start embedding more recycled content into their laminates, and also to offer take-back schemes and things like that too. IR: How have customers responded to Koskela’s sustainability initiatives, and do you think they’re becoming more intentional with their purchasing habits? ST: Over the years, I’ve definitely seen the rise of the intentional consumer. But I think initiatives like ReHome will help us cater to customers who are committed to doing the research, and putting their money where their beliefs are. We’re definitely seeing more and more people of all different generations embark on that journey, and they are more concerned about where they’re spending their money, which has been really exciting to see. In terms of the industry. I think we still have quite a long way to go. A significant challenge is that it’s  more expensive to make products in Australia than overseas at the moment. At some point, I think there’ll be a need for government policy to propel the industry forward. In particular, [there’s a need to] look at chemicals used in certain furniture products which are dangerous, and bad for the environment at the end-of-life. We don’t really have any sort of standards around issues like this in Australia.