While the fashion industry has pumped some significant investments into circular innovations, something happens along the way that stalls—or simply stops—these efforts from scaling or leveling up. This, perhaps, is why only 0.3 percent of all materials annually consumed by the sect are from recycled sources, as reported by the Circle Economy.
Forum for the Future, an international sustainability organization working to enable the “deep transformations” needed for a regenerative future, completed the first phase of a new project examining the fashion industry’s less-than-one-percent efforts made in its transition to a circular economy.
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That project is called Enabling Systemic Circularity in Fashion (ESCF): a pre-competitive industry initiative led by Forum working to “reconfigure” the sector’s value chains away from its current linear, extractive model to one that is socially and ecologically regenerative and responsible.
From July 2023 through last December, Forum convened a cohort of around a dozen supply chain players—including those from Reformation, Lenzing, Textile Exchange and MAS Holdings—for a systems change and future-focused program that investigated systemic barriers hindering circularity in the fashion industry.
“Value chains are complex systems, with multiple levels embedded within each other,” the report’s introduction reads. “Our goal is to support businesses to navigate their own capacity to lead, or contribute to the change required, and to support businesses and other stakeholders to work together in a more just, fairer and collaborative manner.”
Its resulting report, “Reconfiguring Value Chains,” is a “culmination and reflection” of the cohort’s “collective efforts and contributions” across the project, the Fashion for Good partner said, and identified insights deemed “critical” for the successful switch to sustainable systems.
“Circularity is becoming mainstream as a vehicle that can support this transition. It is no surprise, therefore, that investment is flowing into circular innovations,” Tamar Matalon, program director and board member of the Flotilla Foundation, said. “However, despite this increasing focus, the reality is we are far from seeing reconfigured fashion value chains that embody circular principles and deliver social and environmental outcomes.”
The first insight covered the lack of stakeholder alignment regarding critical climate goals—or the actions needed to reach them.
“Climate action is largely seen as simply the need to decarbonize, but for manufacturers, it may also include the adaption strategics such as managing heat stress on workers,” Forum said. “Without equitable processes for dialogue and empathetic buy-in from all stakeholders of what the goal of the system should be, fragmentation will frustrate progress.”
This same misunderstanding can be applied to circularity. While conventionally understood as “closing the loop” in material consumption and creation—the “dominating theme,” per the ESCF—this definition doesn’t account for the social or inclusive aspects within the value chain.
“The industry is in need of visioning to collaborate for collective action. Value chain actors share similar goals but face systemic issues and hurdles,” Carrie Freiman, Reformation’s senior director of sustainability, said. “There is a need for more industry alignment over shared challenges and building a roadmap to overcome them. Forum for the Future has the ability to convene partners for collaboration and provide the tools that enable this.”
The second insight suggested a monetary misalignment, with the various costs incurred during the transition to circularity being “unevenly distributed” throughout the value chain. More specifically, Forum found that the fiscal burden of the transition falls disproportionately on manufacturers—ultimately slowing down innovation and speeding up frustration.
“The industry needs to rethink engagement with consumers as key actors in the value chain,” Forum said. “The sector cannot wait for market demand for sustainable products to grow if the sector is to transform to a circular one with the urgency required.”
The third insight found finance and policymakers falling short of inclusive and effective dialogue with critical value chain actors. When ESG-focused finance doesn’t cast a wide enough net, the project found, regulations are perceived as benefitting brands and retailers more than other stakeholders.
“Forum for the Future empowers us, as different actors across the fashion value chain, to break out of the constraints of daily operations to address the challenges on the path to circularity,” Anett Sóti, Yee Chain Group’s global sustainability and circularity manager said. “Through systems thinking, futures tools and strategic design, they foster collaboration across the value chain and enable us to develop solutions for a truly circular and equitable fashion system.”
Using these insights, the group of industry actors developed some hypothetical concepts to tackle the systemic barriers knee-capping circularity. These ideas included a cross-functional regulatory alliance, value material royalties and a circular fashion hub.
“The ESCF project convened a group of enthusiastic people in the industry and created a spacious platform to accommodate the problems and possible solutions,” Ma Hau Ming, corporate quality and sustainability manager for Crystal International Group, said. “We got a chance to conceive the journeys to achieve circularity in the industry and express our visions to strive for the next accomplishment. Although the thoughts may be still imaginative, there will be ways to become pragmatic.”
The theoretical alliance would overcome power imbalance dynamics and help foster communication as an industry for regulation. The cohort said that “reconceptualizing industry coalitions” to challenge the status quo ensures everyone’s voice is heard, which regulation is stronger for.
“As different tiers are separated from each other due to geographic constraint, what we lack are opportunities to talk and cooperate,” one project partner said in the report. “Gathering different voices could better represent the apparel industry’s supply chain.”
The second prototype, value material royalties, simply places value over product in novel ways, while the third solution explores circular fashion hubs. This would function as a closed-loop ecosystem fostering rapid development and innovation with all the relevant players in close quarters.
“Low-hanging fruit is really to start from our already existing cut-waste, specifically the 90 percent and above blends prior to moving into post-consumer waste,” one project partner said in the report. “Fun fact: there is enough cut-waste—currently—to make circular material for the capacity available until 2030.”
