The Data Divide: How Traceability Gaps Are Crushing Textile Recycling Economics

The relationship between feedstock quality and investment creates a proverbial chicken-and-egg problem. Investors demand predictable material quality and volumes before committing capital, while recyclers plead that they cannot guarantee these conditions without investment in better collection and sorting infrastructure.

Warmerdam offers a pathway through this impasse: "Recyclers can't guarantee feedstock quality or volume without upstream proof. So, to unlock investment, we need to start with traceability, not scale. The way forward is simple: make every material batch verifiable."

This approach represents a fundamental shift in thinking about recycling infrastructure development. Rather than focusing initially on processing capacity, the industry should prioritise creating verifiable data about material flows. "With blockchain backed, traceable data on fibre content and origin, recyclers can build predictable input pipelines. That's what gives investors confidence," Warmerdam explains.

Luna Aslan, Project Manager at Noosa, adds to the conversation, as she identifies the structural barriers: "The main barriers include high implementation costs, lack of standardised protocols, and fragmentation within the industry. Many players hesitate to invest in harmonised systems due to uncertain ROI and the complexity of coordinating across diverse stakeholders and regions."

The investment challenge is particularly acute for chemical recycling technologies, which require substantial upfront capital but cannot guarantee returns without reliable feedstock. Mechanical recycling, while requiring lower initial investment, still faces quality predictability issues that limit investor confidence.

Pushkarova highlights the broader ecosystem effects: "Without reliable data, recyclers struggle to assess material inputs accurately, which leads to inefficiencies, contamination, and ultimately, lower recycling rates. It also limits our ability to track the real environmental impact of circular claims."

The solution requires aligning incentive structures with verification rather than volume. "Incentives should reward verified data sharing, not just output volume. When brands and suppliers prove what's coming in, recyclers can plan. When recyclers can plan, investors can invest," Warmerdam argues.

This data-first approach could unlock significant capital. The textile recycling market is projected to grow, but investment remains concentrated in companies that can demonstrate material flow predictability. Creating industry-wide verification standards would democratise access to this capital across smaller operators currently excluded due to data gaps.

Current funding models for textile recycling infrastructure reflect the industry's fragmented approach to responsibility. Brands often develop proprietary collection schemes, governments provide sporadic support for specific technologies, and recyclers compete for limited funding streams without coordination. That’s how things stand—at the moment.

Warmerdam advocates for a fundamentally different approach: "Brands should help fund recycling infrastructure, but not through complex, brand-specific collection schemes. Recycling operates on a mass balance principle, not a per-brand traceability model. What matters is commitment to the output."

This mass balance approach recognises that effective recycling requires aggregating materials from multiple sources rather than maintaining brand-specific material flows. The French government's support for chemical recycling company Circ exemplifies this principle, providing infrastructure funding that benefits the entire industry rather than specific brands.

"If brands commit to buying verified recycled materials, they create the market signal recyclers need. In return, they should get access to transparent, traceable data that shows how materials flow, where waste occurs, and how impact is measured," Warmerdam explains.

Government funding plays a crucial complementary role. "Governments can amplify this by funding shared infrastructure, like the French government's support for Circ, and by tying policy incentives to proof-backed performance, not just pledges," he adds.

Then, there’s the issue of approaches. Adds Pushkarova: "We believe traceability must become a shared infrastructure, co-built by producers, recyclers, and regulators, not a competitive feature. Only then can we unlock its full potential for circularity."

The most sustainable funding model emerges from this collaborative approach. "In our view, the most sustainable model is one where funding follows data: those who can prove they've enabled circularity, through traceable sourcing, transparent reporting, or verified take-back, unlock financial or regulatory advantages," Warmerdam concludes.

This data-driven funding approach could resolve current market failures. By rewarding verified environmental performance rather than promises, it creates clear incentives for investment in traceability infrastructure while ensuring accountability for public and private funding.

Tailender

The textile recycling industry's economic challenges stem fundamentally from information asymmetries rather than technological limitations. While sorting technologies advance and chemical recycling shows promise, the absence of verified, traceable data throughout supply chains creates inefficiencies that undermine commercial viability. The path forward requires recognising traceability as essential infrastructure, not optional enhancement. By prioritising proof over promises and verified data over volume metrics, the industry can unlock investment confidence and create sustainable economics. This represents a paradigm shift from scale-first to trust-first thinking, where transparency becomes the foundation for both environmental impact and financial returns.