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How Fashion Can Close the Circularity Gap

The promise of true circularity—a concept that has proven to be both elusive and complex—is within the fashion industry’s grasp, a new study argues. It just has to massively scale up textile recycling first.

In fact, an influx of capital investment into existing recycling technologies and infrastructures could help the sector achieve 80 percent circularity by 2030, according to a report published Monday by Danish sustainability think tank Global Fashion Agenda and McKinsey & Company.

“Circularity is, we can all agree, fashionable these days, but it is a lot more than that—it’s a necessity,” said Peder Michael Pruzan-Jorgensen, interim chief impact officer at Global Fashion Agenda, at the online launch of “Scaling Circularity,” which combs through the lessons learned from the Circular Fashion Partnership, a project helmed by Global Fashion Agenda, in collaboration with the Bangladesh Garment Manufacturers and Exporters Association and Reverse Resources, and with the support of P4G, that seeks to capture Bangladesh’s post-industrial textile waste for the creation of new fashion products.

“The fashion industry will not be able to deliver on the Paris Agreement’s objectives without fully embracing circularity,” he added. “It is needed to get on a 1.5-degree pathway. It’s also necessary for a variety of reasons, including protecting biodiversity, reducing pollution, protecting water resources, and also to ensure a more equitable distribution of value creation. And that’s why the project in Bangladesh is important. We have to ensure that as we transition to a low-carbon circular economy, that it creates jobs and income that is more equitably distributed in developing and emerging markets.”

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The Apparel Impact Institute estimates that just over half of a supply chain’s greenhouse-gas emissions stem from material production. Yet despite brands and manufacturers establishing ambitious targets to slash greenhouse-gas emissions reductions and boost sustainable material use, less than 1 percent of textile waste is currently recycled into new fibers for clothing, according to the Ellen MacArthur Foundation.

“There are lots of reasons for this,” Pruzan-Jorgensen said. “It’s about policy frameworks that are not there. It’s about the technology that’s only now really being commercialized. It’s about reverse logistics, consumer attitudes, design imperatives, cost and a lot of other things that have made it difficult. And then there is the silver bullet paradox. It is ironic that the more we focus on the big opportunity, looking for the key that can unlock it all, the less likely we are to make progress. Because there is no one key that can unlock it all. It’s a series of steps, it’s a wide set of actors and it’s the diversity of partnerships and collaborations.”

Textile collection rates also remain low at 25 percent. For recycling to have a meaningful impact, they need to hit 80 percent. Ramping up capacity is another crucial element, as is increasing pre-competitive collaboration across different segments of the sector.

The Circular Fashion Partnership is hoping to shift the needle by rallying together 43 textile and garment manufacturers, 20 leading apparel brands, including C&A, Bestseller, H&M, Primark and Target, and 17 recyclers, including Cyclo, Lenzing, Renewcell, Infinited Fiber Company and Recover, which recently won the Ryan Young Climate+ Award at Textile Exchange’s Textile Sustainability Conference 2021. Since its debut last October, the initiative has been able to divert 1,102 tons of textile waste, or one-fifth of Bangladesh’s total output. By the end of 2021, it’s poised to surpass 220 tons a month.

Current technologies, including mechanical recycling, regenerative cellulosic, regenerative synthetic and thermo-mechanical synthetic, have the potential to deliver 75 percent textile-to-textile recycling into the system using the “three main” fabrics of manmade cellulosic, cotton and polyester fibers, said Corrine Sawer, associate partner at McKinsey & Company. The other 5 percent can involve feedstocks from other industries, such as recycled plastic bottles, though there might be some volatility on that front as competition for those materials increase from drinks giants with recycling commitments of their own.

“Critically,” all the main recycling technologies are “considerably” better for the environment across a raft of dimensions, including greenhouse-gas emissions, water depletion and land use, she added. Equally salient, all these technologies have the potential to be “economical and better value” than their virgin counterparts, and the only reason they’re not there yet is because they’re still “sub-scale.”

“Once we get to scale, which provides much better economics, on the manufacturing, on the raw materials, by our analysis, cotton, viscose and polyester recycling can all be better value and cheaper than virgin,” Sawer said. “And so our goal as a system is to try and attract investment to these recycling sectors to get to that scale. And to get to the point where recycled textiles are a much better option for brands and manufacturers than virgin textiles because they’re better for the environment and because they’re cheaper. So we need to get from this kind of adolescent stage that we’re currently at to a mature stage.”

Just scaling up the Bangladesh model to markets such as India, Indonesia, Malaysia, Turkey and Vietnam could reap a $4.5 billion opportunity for investors. If more barriers to scaling are overcome, recycling textiles could create a $10 billion to $20 billion “profit pool” by 2030, the study found.

“So this is a lot of what the Circular Fashion Partnership is trying to do is help build these markets, which can create jobs, create value for local economies, and drive the circular economy,” Sawer said. “A lot of focus goes on circular business models around resale and refurbishment, which are very important. But we really have to scale our recycling capability. And that means the technologies, the factories to do the recycling [and] also the other infrastructure to do the collection and sorting.”

There are also micro-hurdles that must be overcome. Textile recycling in Bangladesh, for instance, is “not a blank sheet,” Sawyer pointed out. Often the waste from manufacturing facilities is used for fuel or downcycled into insulation. Getting stakeholders in the informal economy on board, so they can continue to get profit or value from the system, or help reshape it, perhaps by lobbying for cleaner, cheaper energy sources so they’re not incentivized to burn their waste, is therefore important.

“We need to include these individuals, whose livelihoods depend on the informal waste management sector, in the transition,” she said. “And we need to assure the supply and demand. In order for an investment to be made at a recycling facility, they need to know that someone’s going to buy that waste.”