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The Circularity Revolution Will Be Digitized. Here’s How to Take Part.

Karla Magruder, founder and president of Accelerating Circularity, is tired of hearing people describe the challenge of closing the fashion loop as akin to building a plane while flying it.

“I don’t like it because it’s not something that’s been done before,” Magruder, whose nonprofit shares its mission with its name, told Sourcing Journal.

An apter analogy, she insisted, is one relating to giving birth. “You have to birth something all at once, right?” Magruder said. “You can’t birth a leg or an arm and then hope to come back later and get the head on right. I know that’s a bit more graphic for some people—they can’t handle that—but it’s really true.”

And if one were to extend that metaphor further, it’s the digital ID that will serve as circularity’s doula.

“if you look at the barriers to circularity, it’s business model transformation, it’s operations, it’s policy, it’s customer behavior,” said Natasha Franck, founder and CEO of Eon, a New York-based company whose digital ID concept, known simply as Digital ID, helps companies such as Pangaia, Yoox Net-a-Porter and Zalando tag and identify items across their life cycles. “And with the deployment of digital IDs and the creation of an interoperable system of connected products, you solve for all of those.”

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It’s by plugging products into the Internet of Things using a physical trigger such as an NFC or QR code that, in turn, unlocks a cloud-based profile, that brands will be able to immediately see the commercial benefits of circularity, she said.

“Today, if brands invest in higher quality, longer-lasting, more durable circular products with great materials, they don’t have a way to capitalize on those investments once a product is sold, so it’s not creating this business model transformation incentive for brands,” Franck said. “With the digitization, that product becomes an intelligent asset that belongs to the brand. They can monetize that product and steward that product through new business models that generate revenue, customer relationships and data.”

This includes resale, where they can get a cut of profits by reintegrating a used dress or blouse into their ecosystem. Brands can take the guesswork out of authentication or generate new feedstocks through high-value recycling streams. With greenwashing a mounting concern, businesses can back up sustainability claims by using the digital ID as a convoy for various supply-chain data points, from supplier names to certification types.

“There have to be systems in place, and all the pieces need to fit together,” Magruder said.

The current challenge is deploying the data that brands already have in their product databases as part of this broader network. There are signs of momentum building: Last November, the Sustainable Markets Initiative’s Fashion Taskforce, whose members include Burberry, Chloé, Gabriella Hearst, Giorgio Armani and Stella McCartney, agreed to incorporate Eon’s Digital ID into the labels of new products. The idea, the initiative said, is not only to facilitate resale and recycling routes but also to deliver new schemes such as care and repair.

“If a brand is just creating a smart product on their own, and they’re not leveraging standards, they’re not designing for data and operability,” Franck told Sourcing Journal. “They’re not enabling their product IDs to communicate. They don’t actually have a connected product because it can’t connect to resale, to recycling, to the customer.”

Interoperability, she said, is essential to capturing 40 percent to 70 percent of the value of connected products. And until now brands haven’t had a framework—the birth plan, if you will—that shows them how to “install” within their products the ability to connect and communicate with different circularity applications.

On Wednesday, Eon and Accelerating Circularity will release this plan, one that they say can help the fashion industry transition from a “fragmented” linear system to a “data-driven” circular one where nothing becomes waste.

Funded by a Walmart Foundation grant, and developed in partnership with Target, Lululemon, Debrand, Lenzing, Unifi, Bank & Vogue, WM and others, the “Industry-Aligned Action Plan: Digital ID to Scale Circular Systems” is an effort three years in the making. But the document is less of a “why” than a “how to.”

“It’s like, how do you ID your product? What data should you include? What standard should you use? What are technology infrastructures that you can use? How do you embed an ID for washability? How do you set up your recycling partner?” Franck said.

For those who still need convincing, however, there are several “why nows” that make digitizing products an imperative rather than a nice-to-have. Today’s widespread mobile connectivity, for instance, has turned any cellphone into a handheld scanner. From a new business model perspective, creating a connected “product cloud” helps power Web3 applications, whether it’s associating an NFT with a garment or hooking it up to a video game. More crucially, digital passports are going to be required by policies such as the European Union’s Strategy for Sustainable and Circular Textiles and Sustainable Products Initiative, which want to see more accountability from producers regarding an item’s end of life.

Still, Magruder and Franck hope that the report serves as a call to action. Eon already built the open-source Circular Product Data Protocol that created a shared language. Now, everyone just needs to start talking to one another.

“It’s really important that those product IDs are embedded with the right information for circularity,” she said. “Otherwise, we won’t be able to capitalize on the transformative potential of this technology for circularity. It’ll just be like another thing.”

For Franck, establishing the infrastructure where data connections can flourish has another real-life parallel.

“It’s like building a highway,” she said. “Once you build that initial [stretch] to get to a store, then anyone else only needs to build a little [offramp] to get to their [own] store. It’s the first hurdle that is really complicated. And then other people can leverage that and it’ll be easier to funnel data everywhere else. But if we don’t have that initial setup, then we’re not going to get anywhere.”

The plan can be downloaded at www.eon.xyz/recycling.