We are increasingly focusing on global value chains
Circle Economy Foundation is an Amsterdam-based organisation focused on empowering decision-makers from the public and private sectors to develop and implement practical and scalable circular economy strategies and business models. The organisation does this by combining research, data, and digital tools for the greater good, with a specific focus on global value chains across sectors like textiles, built environment, agrifood and plastics packaging. Speaking to Fibre2Fashion, the Lead of the Textiles Programme Gwen Cunningham talks about the circular economy in the textile industry.
How does the concept of circular economy apply to the textile and apparel industry, and what are the main benefits it can bring to businesses operating in this industry?
The textile and apparel industry is a prime example of a linear economic model, which is notably wasteful and polluting. The current system heavily depends on the extraction of largely non-renewable resources to produce 100 billion garments that are used for an increasingly short amount of time before being discarded. In fact, between 75 to 85 per cent of all textiles end up landfilled or incinerated. Therefore, there is an urgent need for transformation.
The concept of a circular economy aims to reimagine and redesign our systems to ensure a fair and regenerative industry. This involves designing out waste and pollution, keeping products and materials in use for as long as possible through repair, remanufacturing, reusing, and recycling, while also striving to regenerate natural ecosystems that have been degraded over time, and ensuring that this new system operates in a fair and just way.
The benefits for businesses adopting circular models in the textile and apparel industry are manifold:
Supply Chain Efficiency: A circular economy can streamline the supply chain and reduce dependency on volatile raw material sources.
Financial Resilience: Brands can generate continuous revenue streams from a single item by adopting business models like resale or rental, rather than the traditional one-off sale.
Customer Relations: Adopting circular models can strengthen customer relationships, making the consumer a closer and more vital part of the business ecosystem.
Relevance and Social Impact: Embracing circularity resonates with the values of younger generations, and it can also create quality jobs that help people develop necessary skills.
Environmental Impact: Adopting a circular model can significantly reduce a business’s carbon footprint.
It is worth noting that the social implications of a circular economy are often less discussed. Circle Economy Foundation are working to address this, and have a dedicated programme ‘The Circular Jobs Initiative’, focussed on uncovering how circular economy interventions can help move economies and industries towards greater environmental sustainability in a fair and just way. This lens is also being applied to the work of the Textiles Programme. For instance, in 2021, the team conducted a study in the Netherlands, ‘Putting Textiles to Work’ , which examined how the Netherlands could achieve a 100 per cent circular textile industry by 2050, and the employment effects of the various pathways to get there. It found that prioritising the repair and reuse of garments could increase employment in the sector by 25 per cent, adding another dimension to the benefits of transitioning to a circular economy model.
What are the main challenges that companies in the textile sector face when transitioning to circular business models, and what strategies or best practices can help overcome these challenges?
We have been studying textiles waste, particularly post-consumer waste, since our programme was founded back in 2014. This area has been of huge interest to us, and we have conducted numerous manual sort analyses, to determine the nature and extent of post-consumer textiles. A manual sort is a research method in which we go into sortation facilities to collect data on post-consumer textiles. We examine the type of garment, its colour, fibre composition and the level of disruptors present, such as metal zippers, buttons, and prints. These disruptors are elements that recyclers see as contaminants, making the item non-recyclable. We may also look at the brand and sometimes the quality of the textiles. Our aim is to understand the true nature of textile waste so that we can explore what can be done to effectively recover it through repair, reuse and fibre-to-fibre recycling strategies and also pinpoint how we can adopt circular design practices that prevent textiles from becoming waste in the first place.
Through our research, we are seeing that the nature of post-consumer textile waste has been changing over time. Typically, in a sortation facility, roughly 55-60 per cent of collected textiles would be deemed rewearable while the rest would be non-rewearable. Rewearable textiles are suitable for reuse either domestically or internationally. They are considered rewearable not only because of their quality but also because they have a resale value in the secondhand market. On the other hand, non-rewearable textiles are those unsuitable for reuse, due to their quality and/or lack of a reuse end market. Non-rewearable textiles are fit for downcycling, wiping, refurbishment, fibre-to-fibre recycling and energy recovery. Lately, these percentage have been shifting across the industry and the proportion of non-rewearable textiles is overtaking the rewearable fraction items.
This shift presents challenges as sorters already struggle to find financially viable end-markets for the non-rewearable fraction, due to a combination of diverse reasons, but mostly related to market saturation of global second-hand textile trade and lowering quality of textiles reaching sorting facilities. High value textile-to-textile recycling, while a popular topic, is not yet well-established or scaled to the level needed, and only one per cent of used clothing is currently recycled back into new clothing This is particularly topical in Europe where a mandate requires all EU member states to separately collect all textiles by 2025. The mandate does not yet specify what should happen to these textiles once collected, nor does it address how to maximise their value in a manner that is fair and equitable for all involved in the supply chain. In order to effectively recover textiles at the end of use, we need to build more advanced and integrated systems to collect, sort, repair, reuse and recycle.
The underdevelopment of the end-of-use supply chain also impacts apparel brands who are trying to champion circular design, but often end up having what I call ‘circular intent in a linear world’. We support apparel brands in building internal knowledge and capacity around circular design and circular business models through our training programme On Course. Here, we train design and product development teams on how to create durable, recyclable, and minimally wasteful products. However, the risk is that their intent falls short if there is no infrastructure to practically collect, sort, and reuse or recycle these products at their end of life. This lack of infrastructure is a significant systemic challenge, hindering the actualisation of good circular design intent on a company level.
Of course, it is not just about having technical knowledge on circularity; it is also about rethinking ways of working. Circularity impacts multiple departments and requires cross-departmental collaboration. Brands must understand where internal capabilities end and where external expertise is needed. For instance, implementing a rental or resale business model requires expertise in areas like collection, cleaning, sorting, repair, and second-hand merchandising. Building this new value chain is a massive undertaking that necessitates strong external partnerships and collaborations.
Another key challenge that brands face is knowing where to start. Circularity is a multifaceted concept, requiring a tailored approach based on a brand’s customer base, market, price point, and internal capabilities. Brands face many choices in operationalising circular concepts, and it is an effort in itself to determine a focused approach based on evidence, rather than merely mimicking what other brands are doing.
Are there any specific regulatory frameworks or policies in place that support the adoption of circular economy practices within the textile sector, and how can companies leverage these policies to drive their sustainability efforts?
This is an excellent question, and we have already touched on one upcoming regulation, which is the mandated separate collection of textile waste in Europe. Another significant policy gaining attention is Extended Producer Responsibility (EPR), a cornerstone of the EU’s circular textile strategy. EPR is transformative; France, for example, launched its EPR scheme for textiles and footwear in 2008. The scheme includes the Eco-modulation of fees, introduced in 2012, which lowers levies for products made from durable or recycled materials or those with environmental certifications. These fees encourage better production practices and can be reinvested in the supply chain, potentially funding new collection systems, recycling facilities, or repair services.
While the concept of EPR is sound, its effectiveness hinges on the details. A well-designed EPR should aim to extend the lifespan of textiles and incentivise the reduction of new textile production and consumption. One current debate is whether EPR fees are adequate enough to really move the needle on encouraging eco-design and whether they will be sufficient to build the end-of-use infrastructure needed, at the scale required. Another critical issue is the assumption that extending a garment’s lifecycle will reduce the need for new purchases, and the total volumes produced and consumed, which is not necessarily the case.
Moreover, there is an ongoing conversation about how to make EPR schemes globally accountable. Funds generated through an EU EPR scheme are generally restricted to the EU, but there is increasing recognition that these resources should also support countries dealing with Europe’s textile waste, such as Ghana or Kenya. Therefore, more and more discussions are focusing on the equitable global distribution of EPR funds.
As for how brands can engage with these policies, the key is to get involved early in the policy design process. We recently held a webinar with brands and policy experts, and the advice was to stay engaged and provide input while these regulations are still being formulated. Given that we are in the early stages, there is ample opportunity for companies across the value chain to shape these policies before they are set in stone.
So, the policy landscape is still evolving, but its impact will be profound, making early engagement crucial for companies.
In the context of the textile sector, what are some emerging trends or innovations that hold potential for advancing circular economy practices, and how can businesses stay informed and adapt to these trends?
As mentioned before, one emerging development in the textile sector is the integration of social considerations into circular economy practices, a factor often underrepresented in current strategies. A compelling example is the United Repair Center, a collaboration between startup Makers Unite, the Amsterdam Economic Board, and Patagonia. The initiative not only extends the life of garments by offering repair services to brands but also focuses on training individuals who are distanced from the labour market, such as young adults with a refugee background. The centre aims to complete 300,000 repairs and divert 100 million kg of textiles from landfill within the next five years while also training 300 newcomers. I strongly encourage companies to consider business models that merge both environmental an social goals.
Another crucial development is the advent of garment technologies, including digital garment tags like QR codes, NFCs and RFID. We have seen a shift from concept to implementation across many brands, largely facilitated by the development of a standardised data protocol. This collaborative effort provides a common set of criteria for emerging garment technologies. Brands that begin to integrate and test these technologies on a small scale are likely to benefit as early movers, especially as this trend is expected to gain momentum rapidly in the coming years, once regulation necessitates adoption.
This well-rounded approach, incorporating both social responsibility and technology, will likely be a game-changer for the textile industry’s efforts towards a circular economy. Businesses can stay informed and adapt to these developmentsby considering such holistic models and investing in emerging technologies.
How does Circle Economy Foundation work with businesses and organisations to promote circularity in global value chains?
Circle Economy Foundation engages in a range of activities to promote circularity in global value chains, focusing on three main areas: Analysis, Action, and Scale.
Analysis: We conduct cross-sectoral and transnational scientific and applied research to develop actionable roadmaps and solutions. For instance, our Circularity Gap Report initiative has developed a methodology to measure global circularity, which is now being applied at a national level and sectoral level. By creating comparative metrics, we can better understand each country or sector’s circular performance and suggest targeted actions or strategies based on their specific circumstances.
Action: Following this analysis, through capacity development, training, and pilot projects, we actively support the implementation of circular economy interventions with our partners. For example, the ‘Switching Gear’ project involved working with apparel brands to design and launch circular business models. Another example is the development of the Fibersort project, which developed and commercialised an automated sorting technology that can sort post-consumer textiles based on fibre composition and colour, using NIR.
Scale: Finally, we then take the insights and methodologies we have developed and disseminate them widely for greater impact. Even though we are a small Amsterdam-based organisation, our projects have a global reach. For instance, the Sorting for Circularity project that we ran in Europe, together with Fashion for Good, is now being replicated in the US and India.
We are increasingly focusing on global value chains, a transition facilitated by our involvement in the ‘SWITCH to Circular Economy Value Chains’ project. The five-year programme is implemented by UNIDO in partnership with Chatham House, Circle Economy and the European Investment Bank. The objective is to support micro, small, and medium-sized suppliers, particularly those in the value chains of larger EU multinationals, to adopt circular economy practices. This has led us into a range of sectors like plastics packaging in Morocco, textile garments in Bangladesh, and potentially electronics and IT in Egypt.
So, in essence, Circle Economy Foundation is moving beyond sectoral expertise to adopt a more global value chain approach, whether it is in textiles, built environment, agrifood, plastics packaging or beyond.
What strategies or tools do you offer to measure and assess the circularity of global value chains? How do you help companies identify areas for improvement?
The Circle Economy Foundation is primarily focus on assessing and improving circularity at the value chain or national level, rather than working one-on-one with individual companies. Our approach aligns closely with the strategies I have previously outlined, which involve analysis, action, and scaling up.
One key tool we offer is in the realm of capacity building. Our training programmes aim to empower internal teams within organisations. Increasingly, we adopt a ‘train the trainer’ model. The idea here is to equip a small group of people within an organisation with specialised knowledge on a particular subject, such as circular design. These individuals then become in-house trainers who can pass on their knowledge to colleagues. This enables the organisation to build its own capacity for circular practices, making it self-sufficient in that regard.
The goal of our capacity-building efforts is to eventually make companies so proficient in circular practices that they can continue to drive progress on their own, reducing their need for external consultation and support.
What are your future plans?
The interest in the circular economy has grown exponentially over the past decade, far beyond what I personally could ever have initially imagined. It is no longer a niche topic discussed only by a select few; it has become a subject of dinner table conversations and boardrooms worldwide. Our aim at Circle Economy Foundation is to continuously challenge the status quo by asking difficult questions about what comes next.
In recent years, we have focused on shedding light on under-explored issues within the circular economy space. For example, we have looked into the social dimensions and the concept of a just transition, as well as the potential negative rebound effects of adopting specific circular strategies. While it may seem counterintuitive for an organisation like Circle Economy to explore these areas, it is crucial to critically examine our assumptions about the benefits of this model and design and lead this circular transition with the utmost intent and rigour.
Moving forward, we plan to continue probing lesser-understood or known aspects within the realm of circularity. We also aim to continue to expand our reach beyond Europe, focusing on building meaningful global partnerships. The intent is to allow these international collaborations to shape both our work and approach. As we proceed, expect to see an increased emphasis on value chain aspects and continued expansion into key sectors.
