Why Fashion Needs to Invest Differently If It Wants to Achieve Its Ambitious Targets

As a species, humans have been excellent at responding to challenges through our inventive capabilities. It is thus unsurprising that one of the most notable responses to the influx of regulations, targets and negative impacts is in technological innovations. Fashion for Good and Boston Consulting Group estimated in 2022 that innovations in the fashion industry to tackle sustainability related challenges were valued at $20-30 billion annually; in 2021, McKinsey reported that fashion companies invested 1.6-1.8% of their revenues in technology.

There are many areas where technological innovations have hit the headlines including in materials innovations (such as novel materials, using more or fully recycled materials), machinery and processes that reduce water or chemicals use (e.g. improved ways of creating denim products) or results in lower carbon emissions (3D printing and dry printing and recycling), and product innovation.

There is also blockchain which allows for greater traceability and transparency in the supply chain, from raw materials to factory, to the consumer and beyond. These examples are only a fraction of the tech innovations operating within fashion today, and they can certainly create more sustainable products, practices and ultimately a more sustainable sector.

The risk of an over reliance on tech as 'easy' solutions

There is no doubt that we have benefited from technological innovations, and that the sector has arguably benefited from it. However, the availability of tech puts us at risk of jumping at quick and easy solutions that are not systemic—ones that only tackle the surface of the problems and do not address them at their source. At best, they could provide only incremental “stop-gap” solutions, but at worst, could result in the sector taking “one step forward, two steps back”, or creating new problems down the road.

One example is the shift towards recycled materials, specifically from virgin polyester to recycled polyester (rPET). As consumer awareness grows on the harm posed by plastics staying in the environment, companies have been shifting to use more rPET, marketing these products as “sustainable” or “eco-friendly”. Demand for RPET is also set to triple by 2050.

Yet, this shift does not solve the problem of plastic pollution since rPET apparel has the same potential to pollute and leach microplastics into the environment; and thus, might provide only a false sense of comfort for consumers who think they can continue to buy at the same quantities. It is in fact just a tech “quick fix”, when the real problem—over consumption and over production—has not been addressed. Fast fashion, long accepted as the biggest culprit of the fashion industry’s negative impacts, is projected to grow into a $276.5 billion market by 2027.

Another model that has proven to be very attractive in the last few years is that of circularity. The Ellen MacArthur Foundation defines a circular economy for fashion as one that “creates better products and services for customers, contributes to a resilient and thriving fashion industry, and regenerates the environment.” It means building an industry that designs products to be “used more, made to be made again, and made from safe and recycled or renewable inputs.”

The idea of “closing the loop” is undoubtedly appealing—making products from recycled materials that can be used multiple times seems simple and logical. Circularity has invited huge amounts of investment, and estimates are that circularity in fashion could be worth up to $5 trillion. In materials innovation, we see huge investments in tech that supports recycling and “closing the loop”. In process innovation, there are machines that require less water, carbon emissions or chemicals.

However, it is not quite so simple for a circular economy in fashion to truly operate successfully. Despite all the buzz, a meaningful transition to a circular model has not quite materialised. The S&P Global Corporate Sustainability Assessment report 2022 assessed that while almost half of assessed companies have at least one circular fashion programme in place, only 31% have publicly committed to any aspect of the circularity business model. Even fewer are tracking on how much materials from those programs are actually removed from the waste stream.

...but circular innovations alone are not enough

Indeed, for a meaningful transition to circularity we need far more than just investing in tech solutions. Recent news about Renewcell—a Swedish textile recycling company that offers Circulose, a brand of material made out of 100% textile waste with high cellulose content—is a good example. Although it had major brands such as Levi’s, H&M and Inditex on board, the company announced that it was facing lower than expected volumes in October and November 2023.

The challenge they faced was that while the technology worked well and offered great potential for circularity, brand customers were only ordering and implementing Circulose into development or small batch capsule projects. The product needs to be implemented into main collections on a larger scale to secure commercial production opportunities. In other words, there was insufficient demand at scale for the technology to take off and to achieve the impact many had hoped for.

This is not a new phenomenon. For years, new technologies have struggled to ramp up from pilot or capsule collections to commercial scale due to higher costs for recycled materials and limited demand from consumers. Circulose for example costs about 50% more than conventional sources.

What does sector really need then, if not investment into technology? It needs more investment into understanding local contexts, better communications and relationships between brands and their suppliers to tell the full story behind tech-enabled numbers and data.

In conversations with numerous stakeholders in the sector recently as part of a new collaborative programme, Enabling Systemic Circularity in Fashion, the need to look beyond circularity came out strongly. While the key concepts of a circular fashion economy are worth striving for, they are neither sufficient nor perhaps even realistic. We want a fashion system that does not pollute or causes harm to the environment or people, minimises or eliminates waste, is resilient, and that regenerates and restores the environment.

This is not yet enough. On top of that, we also want responsible social practices that treat and pay workers fairly. We also want value to be better distributed amongst throughout the value chain. In other words, we need to define and work towards a “circularity +” model.

How do we get to “circularity +”?

Huge amounts of investment have been put into tech innovations and solutions, and most of the technologies that are required to say, reduce sectoral carbon emissions, already exist. As one journalist observed, “The technologies to make a big dent in emissions inventories already exist and could be added to by materials efficiencies and cutting over-production.”

The sector now needs to invest in initiatives that hold space for systems thinking. Systems thinking identifies the interactions between different parts of a system—in this case, fashion as an industry—and ensures that they deliver more than the sum of the parts.

If the sector wants to achieve the targets and goals it has set and shift towards a truly resilient, regenerative and responsible sector, then its stakeholders need to look at the fashion system as a whole, examine the interactions between the actors in the value chain, and take the appropriate actions.

1. Investing in truly understanding the systemic barriers and enabling conditions within a system that either support or hinder the scaling of innovations. Forum for the Future’s (“Forum”) project Enabling Systemic Circularity in Fashion launched in October aims to investigate why some innovations have been successful and how, and what blockers exist within the system.
   
   As we have seen, many well-intentioned innovations that have been proven to work face barriers to their scaling. Taking the time to understand why some innovations do well or why some do not manage to scale or achieve their objectives is important, so that the sector can amplify or accelerate the enabling conditions, and try to tackle the barriers to enable the sector shift at pace towards greater sustainability.
    
2. Exploring new ways of collaboration between value chain actors. Forum has also led a number of multi-stakeholder projects in the apparel sector, including Circular Leap Asia and Tackling Microfibres at Source. Through our engagements with industry stakeholders, one thing that has been repeatedly mentioned is the impact of relational dynamics between value chain actors—specifically between brands and their suppliers, where power is typically stacked in favour of brands.
   
   Whenever a problem needs to addressed or new regulation complied with, brands typically look to suppliers for solutions but may not be willing to bear a proportionate amount of the risk it takes to develop and implement these solutions. Innovations or solutions typically require financial and resource investment in purchasing new machinery, worker training, or new ways of working—all of which would result in a premium. Yet brands are often unable to accept the higher costs of innovations.

With the current dynamics within the sector, it is unsurprising that many innovations are not able to be adopted. The sector needs to invest in exploring new ways of collaboration and new ways for value chain actors to work together.

Different value chain actors can have very different views and approaches to circularity. Many brands sit in the global North while suppliers are mostly situated in the global South. Forum’s Enabling Systemic Circularity in Fashion programme offers the participating companies (both brands and suppliers) a safe space over the course of 18 months for open and honest conversations over why innovations have worked, exploring the systemic challenges that hold them back such as relational dynamics.

Without the opportunity for such open conversations, there is a real risk that the best technological innovations or solutions may get blocked by challenges deeply entrenched within the system.