Is the circular economy really the answer to fast fashion?

The task of creating a circular fashion economy is widely recognized as crucial, given that a truckload of textiles is burned or buried every second, according to a global assessment by the Ellen MacArthur Foundation.

The charity has also calculated that not using clothing and not recycling clothing costs the global economy more than $500bn (£420bn) a year. The long-term price paid by the environment is likely to be much greater. Microplastics that leach into synthetic fibers in our clothes when washed have been found in human blood, placenta and recently in Antarctic snow.

Developments such as the EU’s 2015 circular economy action plan and the UK’s 2020 circular economy package have spurred many fashion retailers into action. The EU Strategy for Sustainable and Circular Textiles, published this March, also highlighted the importance for the industry of a credible long-term strategy for sustainability, recycling and waste management. In June, Boris Johnson even pledged £80m of public funding to help create a “circular fashion model”.

But critics of the fashion industry’s historically promiscuous practices argue that ‘recycling’ has become a buzzword, used by firms seeking to apply a green veneer over their continued wasteful ways.

Garment return programs have become central to driving the sector’s turnover. The charity Waste & Resources Action Program (Wrap) estimates that such schemes – adopted by H&M, M&S and Primark – prevented 620,000 tonnes of used textiles from ending up in British landfill in 2018. H&M has reported that its ‘Close the Loop’ initiative recycling and repair collected 18,800 tonnes of unwanted clothes – the equivalent of 94 million T-shirts – in 2020.

Juliet Lennon, program manager at the Ellen MacArthur Foundation, says: “Rental, resale, remake and repair have the potential to account for 23% of the global fashion market by 2030, representing a $700 billion opportunity.”

Retailers work with white-label services such as Yellow Octopus and I:CO, which sort clothes into categories for reuse or recycling, depending on their properties and material condition. In theory, such innovations are welcome, but not all collected clothes are suitable for each process. I:CO, a partner in H&M’s take-back program, recently reported that 8% of what it received was neither reusable nor recyclable and would therefore have to be incinerated.

More worrying is research published by Greenpeace in April, which claimed that no more than 30% of used clothes end up at the point of donation. Much of the remainder is sent to countries in the Global South, where it often ends up “in large landfills, on open fires, along riverbeds and washed into the sea.”

The Kantamanto Market in Accra, Ghana, illustrates the scale of this problem. About 15 million garments enter the market every week. Some of these could be used to support the local textile industry, but researchers estimate that 40% of the items are of such poor quality that they are considered worthless on arrival and are either buried or burned.

Viola Wohlgemuth, a campaigner for Greenpeace Germany, says that countries such as Ghana “don’t have the infrastructure to handle the large volumes of textiles that are coming in, even if they were all reusable”.

The large-scale disposal of unwanted textiles is creating a socio-economic and environmental crisis for local communities. The waste material is a health hazard, as its decomposition not only releases microfibers into waterways, but also produces dangerous levels of flammable methane gas.

Most circular claims are greenwashing. Less than 1% of the clothes produced are actually made from recycled textiles

The movement of clothes from one place to another is not circular at all. The practice simply shifts the burden to a territory with limited capacity to handle it and weaker environmental laws. Chile, for example, has long been a hub for used and unsold clothing from around the world. The port city of Iquique receives nearly 60,000 tons a year, but less than half of this material is bought by traders for resale. The rest is simply dumped in huge mounds in the surrounding Atacama desert, where it can take two centuries to biodegrade.

Wohlgemuth recounts a recent visit to Gikomba, Kenya, where he found himself walking along the banks of the Nairobi River and realized that they consisted mostly of piles of textile waste, from which clothes would fall and be swept downstream. Not surprisingly, such experiences have led him to conclude that “the system is not working.”

Transparency is key to encouraging participation in any sustainability initiative. A recent study by Wrap found that 42% of consumers considered it important to know the potential destinations of their donated clothing.

“When people return clothes, they expect these items to be reused, to raise money for charity or to benefit people who need them,” says Wohlgemuth. “They wouldn’t expect them to end up in huge, overflowing landfills in Africa.”

Some retailers operate incentive schemes that offer customers discount vouchers for donating used clothing, but such initiatives have attracted criticism for encouraging further consumption, which works against the circular economy. There has been “little evidence of plans to reduce fashion flow—a prerequisite for any meaningful circular effort,” Wohlgemuth argues.

When donating clothes or buying ‘sustainable’ clothing made from recycled polyester, consumers should proceed with caution, she adds. Regulations such as the Competition and Markets Authority’s green claims code are designed to prevent companies from making misleading claims, but she argues that “most circular claims are greenwashing”. Less than 1% of the clothes produced are actually made from recycled textiles.”

Sarah Gray, senior textile analyst at Wrap, recommends that companies build “a solid evidence base to ensure they can verify details on recycled content to ensure their recycling claims are true”.

True and effective circular initiatives require higher reporting standards on supply chain risks; efficient monitoring systems; investing in technology to increase transparency; and collection processes in accordance with the law.

Lennon believes that “economic and regulatory incentives are needed to increase the sustainability of circular business models, as voluntary commitments by industry leaders alone will not achieve the required scale”.

Retailers should also focus on sustainability. Any firm that is vocal about plastic packaging as part of its circular movement but does not publicly disclose the volume of synthetic material in its collections should reconsider its approach, for example. Doing so will be key to its long-term survival.

Unclear reverse logistics operations and half-hearted circular initiatives are leaving companies vulnerable to several ESG risks—and investors, if not consumers, are watching closely.

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