Although the fashion sector has made strong progress with its circular ambitions and collaboration initiatives, there is further potential in establishing new (and increasing existing) targets, implementing initiatives on a broader scale, and enhancing circular inflows and circular business models, says a new report.
THE REPORT: For an industry pressured by both margin and volume, the business case for a circular economy is urgent now more than ever before. With elements of best practices beginning to emerge, accelerating the transition to a circular economy is expected to come from harnessing collaboration to learn from those ahead—moving collectively at the speed of the fastest, says the report—From talk to action: Paving the way for a circular economy in the consumer goods and retail industry by KPMG International.
- The fashion sector scores high on ‘ambition and strategy’ and ‘goals and targets’ within the readiness assessment, and it has made strong progress with its circular ambitions and collaboration initiatives.
- Confident in its circular knowledge and resource allocation—with a willingness to onboard both internal and supplier operations into the circular economy—it continues to share good practices and champion collaboration to advance the circular economy.
However, the assessment highlights further potential and suggests some key actions:
Improving transparency: To become circular, circular design with material safety, durability, repairability, and value-preserving recyclability is a top priority; doing so without impacting aesthetics and functionality remains key.
- Transparency can be improved with clear communications for products and materials—specifically around the use of labels and verifying environmental marketing claims prior to use.
- Traceability can also be improved with Digital Product Passports (DPPs), enabling the design of ‘waste’ out of the system by providing information on a product’s composition and end-of-life options.
Increasing circularity of raw materials: As polyester and cotton remain primary raw materials used in the sub-sector, efforts to promote circular inflows should focus on these components.
- While the use of blended fabrics presents a significant challenge in effective textile recycling due to the inherent difficulties in separating materials, considering optimal material composition and recyclability earlier in the design process can enable more sustainable supply chains.
- Sustainability here should be bolstered by participating in ERP schemes, with insights shared from the already implementing food and beverage and consumer electronics sub-sectors.
Tackling overproduction through circular business models: As fashion companies increasingly partner with third-party collectors, sorters, and recyclers to meet increasing consumer sustainability demands, rental and resale markets continue to experience significant growth. Combined with widening repair options via both in-store and postal channels, this presents a double opportunity for fashion companies.
- First, by introducing demand-driven production to help reduce excess inventory.
- Secondly, by introducing circular models. It is within these underexploited value creation opportunities that improved designs for longer-lasting products and a reduction in overproduction can emerge.
KPMG’S C&R CIRCULARITY READINESS ASSESSMENT: This report highlights the progress made by C&R businesses in their transition to circularity. With a focus on six key circular economy areas, it presents a readiness assessment, sharing examples of good practices and offers recommendations for accelerating circularity at scale.
