Fashion companies are feeling increasing pressure from consumers, regulators and investors to improve their sustainability footprint. More and more of them are therefore relying on closed-loop models.
This shift also brings with it opportunities and challenges in terms of due diligence as companies build additional relationships with recycling, collection and sorting operations beyond their usual supply chains.
This was one of the issues discussed at the OECD Due Diligence Forum in the Garment and Footwear Sector, held in Paris on 16-17 February.
Mauro Scalia, director of sustainable business at European textile association Euratex, said about 16 pieces of legislation are currently being worked on to improve the textile sector, which he described as “exciting” and “challenging”.
Only about 1 percent of the 7.5 million tons of textile waste generated in Europe each year is recycled, Scalia said. The goal is to recycle 2.5 million tons of fiber-to-fiber by 2030. “That’s a clear goal that we have,” he said, but it requires “a new infrastructure and a new value chain” that is calculated to require about 150 to 250 additional facilities for collection, sorting and other processes.
That means the industry is heading into “uncharted territory,” according to Scalia. Because the value chain is getting bigger and fashion companies are starting to work with business partners with whom they hardly had anything to do before, for example with those from the sorting and chemical industries.
The urgent need for training and qualification
The transition from linear to circular models will bring new challenges, agreed Maria Luisa Martinez Diez, director of public affairs at sustainability program Global Fashion Agenda. For this reason, she said, “there is a need for training and education” to ensure due diligence is being carried out and to minimize the risk of unemployment and exclusion.
According to Martinez Diez, this includes training in technical skills, which teaches how to operate and maintain new devices, but also digital skills. But also training workers to use modern, data-driven systems, which are increasingly used in the circular fashion industry, for example in the recycling of fibers.
The Global Fashion Agenda launched the Circular Fashion Partnership in Bangladesh in 2020 to do just that, thereby supporting the development of textile recycling in this country. The Circular Fashion Partnership has now brought together 80 manufacturers, nearly 20 recyclers and 20 global brands. The project will continue until 2025 and has since been expanded to Vietnam and Cambodia.
Tobias Fischer, head of the textile recycling department at the Swedish fashion giant H&M, also stated that the industry is facing new challenges resulting from stricter legislation and changing consumer behavior. “We see a lot of business opportunities, but where there are opportunities, there are also risks,” he said.
“It’s mostly a question of reskilling,” he agreed, as companies begin to partner with new operations in less formal sectors. He also noted the importance of addressing human rights in areas where these are currently poorly regulated.
“We’re working with our foundation on some projects in India where we’re looking at how to get the garbage collectors into the more formal industry,” he said, adding that it’s an important process that “some will take time”.
The issue of people collecting the garbage was raised frequently during the forum. It is an area that can be dangerous not only because of the physical work involved, but also because it is often infiltrated by criminal gangs, both in Europe and elsewhere.
Euratex’s Mauro Scalia also pointed out that the issue of waste management will be part of policy making at national level in the EU. He underlined the importance of EPR schemes, an environmental approach that extends the producer’s responsibility for a product to the post-consumption phase of that product.
New opportunities and changed leverage
While entering the circular market undoubtedly presents challenges, it also offers exciting new opportunities.
“In the circular economy, there is potential to do things better from a social perspective,” said Martinez Diez of Global Fashion Agenda, “like improving traceability and ensuring better value distribution through circular business models.”
And since circular economy is more complex than linear value chains, additional technical knowledge is required. This means a shift in influence between big fashion brands and their suppliers, according to Euratex’s Scalia.
For example, there is a growing number of smaller companies in the industry that can innovate new materials or recycle fibers. The big fashion brands have noticed this and some have started investing in these companies. One such example is Spanish textile company Inditex’s investment in Circ – a technology company operating patented textile recycling processes.
“We’re seeing fashion brands collaborating with fiber manufacturers in a different way,” Scalia said. “It inspires a new way of working, because it’s not like I’m buying a product that I can find anywhere in the world. I need to work with my suppliers; I need to discuss what is technically feasible and how I can help them.”
“We’ve seen it many times before: established brands help their delivery companies to expand their capacities and even raise funds for them.”
Scalia summarized the circular economy as an area where “profitability and sustainability come together” that “wasn’t even on the agenda five or six years ago” but will require increasing regulation.
“We see this in Europe, a big laboratory for many experiments, but we also see many other regions of the world from Japan to Bangladesh, India, South Africa and other regions doing the same thing,” he concluded. “I think this is a very exciting opportunity.”
This article was published on FashionUnited.uk. Translation and editing: Barbara Russ