From linear to limitless: pioneering circularity within the fashion and luxury sector

Author: Kristina Ultimo

The Institute for Positive Fashion (IPF) sits at the heart of the British Fashion Council (BFC), and Deloitte is proud to support it as the Delivery Collaborator to the Institute for Positive Fashion (IPF) annual forum. The IPF Forum has become an integral vehicle for the BFC, championing industry practices and bringing together leaders from across the sector to ignite thought-provoking conversations, collaboration, and to transform future fashion business practices. The IPF Forum is designed to bring together peers across the industry to collaborate for collective outcomes and fast-track positive change, featured carefully curated panel discussions, workshops, and a series of keynote addresses, which explored how to accelerate a circular fashion economy in the UK.

Following the resounding success of the IPF Forum, we are reflecting on the insights gained from the Forum and our ongoing work in sustainable fashion, to collate key challenges within the circular fashion ecosystems and to help explore ways to overcome them.

Mind the gap: fashion’s circularity challenges

In the ever-evolving landscape of the multi-billion dollar global fashion industry, the concept of circularity has become a beacon of hope for a more sustainable future. However, the path is fraught with challenges that demand immediate attention.

Supply chain complexities: Fashion’s traditional linear supply chains optimised for speed, volume, and cost efficiency, pose a significant obstacle to the adoption of circular models. Transforming these complex systems requires a fundamental re-evaluation of operating processes, rethinking product design, and the integration of sustainability-centric recycling and waste management prices. The lack of visibility and traceability in global supply chains has stalled circular progress, making it imperative for the industry to address these issues. Furthermore, the industry has been faced with the complexity of navigating how to construct a viable and scalable clothing and textiles recycling infrastructure, establish quality control standards, and develop initiatives to drive consumer engagement with circular fashion systems.

Consumer awareness, behaviour and demand: While there is growing support for sustainability and circular initiatives, there remains a significant knowledge gap among consumers regarding circularity in the fashion industry. Bridging this gap is essential to shift consumer mindsets towards issues such as wastefulness, unethical labour practices, and resource depletion. According to our 2023 Sustainable Consumer research, more than half of the consumers stated that the commitment of businesses to climate change and sustainability can influence their trust in them, and 34% stated that their trust in brands would be improved if they were recognised as an ethical/ sustainable provider by an independent third party. Deceptive greenwashing marketing can make companies appear more sustainable which can potentially diminish consumer confidence and hinder overall progress towards circularity. Shifting consumer behaviour will require collective efforts to dismantle fast fashion culture while simultaneously making sustainable choices more convenient and accessible to consumers.

Lack of standardised regulatory and policy frameworks: As the fashion industry braces for regulatory changes such as Digital Product Passports (DPPs) and the Green Claims Directive , the lack of standardised regulatory and policy frameworks becomes a significant challenge. The 2024 IPF Forum discussed the need for preparation within the industry to adapt to these impending regulations. Fashion companies and consumers alike would benefit from clear, consistent, and supportive policies that encourage sustainability. Governments can play a pivotal role in facilitating this transition by developing a comprehensive framework that considers the environmental, ethical, and economic aspects of the fashion industry.

Closing the circularity gap

To close the circularity gap, fashion companies must embrace innovation, integration, and invigoration.

Innovate

Innovation serves as the cornerstone for simplifying and optimising the circular fashion supply chain. Using advanced technologies and processes can help streamline the collection, sorting, and processing of used clothing and materials. Incorporating blockchain, RFID, biomarkers and other smart technology can enable supply chain tracking systems and enhance transparency and traceability, making it easier to manage the life cycle of garments. Product design innovations, incorporating repair-friendly features, multi-wear options, and next-generation textiles, can influence consumer behaviour and drive interest in more sustainable choices. Innovation can pave the way for the development of new business models that engage with consumers on a more granular level such as rental or pre-loved models, diversifying revenue streams. From a regulatory perspective, governing bodies can incentivise innovation by offering grants, tax benefits, or subsidies for research and development in sustainable fashion. This encourages the fashion industry to explore and adopt innovative solutions that align with sustainability goals.

Integrate

The integration of circular practices into fashion companies' supply chain strategies is paramount for achieving a truly circular economy. This involves rethinking supply chains to accommodate practices like efficient collection, sorting, and processing of used clothing and materials to develop a digital thread connecting the end-to-end supply chain. By integrating circularity, companies can create efficient loops within their supply chains, simplifying the complexities of collecting and recycling materials. Companies can also integrate circularity into product designs, offering durable, versatile, and easily repairable or up-cyclable clothing to meet the changing consumer preferences. ‘Integrate’ also extends to collaborations with resale platforms and second-hand retailers, making circular fashion options more accessible and appealing to consumers to participate in the circular economy, thus aligning with consumer demand for ethical and eco-friendly choices. Integration can also play a role in overcoming regulatory challenges. Companies could incorporate ‘circular thinking’ into business operations to ensure they remain in compliance with evolving regulatory requirements. The fashion industry should strive to work collaboratively with regulators to set clear standards for environmental impact, ethical labour practices, and supply chain transparency.

Invigorate

Invigorating the supply chain involves creating a dynamic and responsive network that can adapt to the demands of a circular fashion system. Developing agile logistics networks that respond to fluctuations in collection volumes and locations is crucial to achieving this. Invigoration is also key in keeping the circular fashion ecosystem vibrant and appealing. Public awareness campaigns and educational programmes can inculcate a culture of conscious consumption, helping consumers make informed choices. Brands can contribute to invigoration by promoting the value of long-lasting, responsibly produced fashion and encouraging participation in circular processes such as repair, recycling, and second-hand shopping. In terms of regulations, invigoration involves reinforcing the industry's commitment to sustainability. Brands, collaborating with regulatory bodies, can introduce and enforce new standards and incentives that promote circular practices, setting clear expectations and actively monitoring compliance with environmental, ethical, and transparency regulations.

Transitioning the industry from linear to limitless

Navigating the shift from a linear to a limitless fashion and luxury ecosystem requires concerted efforts from diverse stakeholders, including Fashion & Luxury companies, suppliers, recycling facilities, policymakers, technology innovators, and consumers. In order to ensure sustained growth in the future, it is necessary to transform the current systems by investing in research and development, infrastructure, and systemic process changes. To address the complexities of circularity, it is important to establish public-private partnerships, industry-wide initiatives, and new regulations. It is imperative to take a long-term view of current business, consumer choices, and regulatory decisions, as the evolution of the fashion industry will depend on shifting strategic goals in the short and medium term to achieve the ultimate long-term objective.

Deloitte is proud to continue our association with the BFC and to support the Institute of Positive Fashion as the IPF Forum 2024 Delivery Collaborator.

Read the insights from the Institute of Positive Fashion Report 2024 here.
 

References

1. European Commission, 2021. Digital Product Passport: sustainable and circular systems

2. EU Legislation in Progress, 2023, ‘Green claims’ directive – Protecting consumers from Greenwashing https://www.europarl.europa.eu/RegData/etudes/BRIE/2023/753958/EPRS_BRI(2023)753958_EN.pdf