Innovation That Matters

How to Close the Circularity Gap

Better Business

A look at the challenges still facing businesses and consumers who are navigating the circular economy, and the innovative solutions aiming to help.

When it comes to talking about the circular economy, it can be difficult to know where to start. 

As a consumer, getting to grips with what circularity looks like in practice can be especially difficult, not least because when we go to the shops, what we see is the product in the shop window, and not how it got there or how it came to be. 

Volans Ventures Executive Chairman and Co-Founder, (and Springwise neighbour at Somerset House) John Elkington, explains: “Part of our problem in moving towards circularity is most people neither see the importance of it nor exactly know how to do it.”

As part of this year’s International Fashion Revolution Week in April, the Liverpool Fashion Summit hosted a panel on “New” Forms of Circular Consumption, looking at the major role that consumer involvement plays in the circular economy, and how a greater awareness of circularity will help consumers adopt a more active approach to closing the loop. 

According to the non-executive director of Architecture & Design Scotland, Lynn Wilson, who took part in the panel, the fashion industry has a long way to go.

“The circular economy is built as the next thing to help us to do better, to help us to regenerate our world but there is still a design culture that designs for consumers not with consumers. We’re still very much trying to retrofit a linear system,” Wilson said.  

The Western economy has, for a long time, been linear, operating on a take-make-waste industrial model whereby raw materials are used to make a product, and after its use, any waste, packaging and so on, is thrown away.

Unlike the circular economy, which is regenerative by design, we are currently hooked into a system that bases itself on the principles of the infinite abundance of natural resources — with waste as an infinite output — to fuel our global economy. 

Producing over 92 million tonnes of waste and consuming 79 trillion litres of water per year, the fashion industry is one of the world’s worst culprits. 
Indeed, the Ellen MacArthur Foundation reports that on a global scale, customers miss out on USD 460 billion of value each year by throwing away clothes that they could continue to wear, while some garments are estimated to be discarded after just seven to ten wears.

“With its low rates of use and low levels of recycling,” states the Foundation, “the current wasteful, linear system is the root cause of this massive and ever-expanding pressure on resources.” 

So, what can be done about it?

Costs and benefits

Unsurprisingly, one of the biggest inhibitors for companies wanting to go circular, and for consumers who want to shop more consciously, is cost. 

Henning Gillberg, the founder of Repamera, an e-repair company that repairs clothes through an online service, outlines the massive challenges he, like other small startups, faced when establishing his business as a desirable alternative to fast fashion. 

“At the end of the day, the customer pays for what’s best for them. It is our responsibility to make it as convenient as the alternative to buying new,” Gillberg said. But the taxation system in Sweden, she added, is a significant impediment to achieving this. All businesses, regardless of their size or wealth, are taxed at the same rate. 

In layman’s terms, a small sartorial business that charges 10 euros an hour must, in reality, earn 20 euros an hour in order to pay their taxes. This means that they must up their commercial prices and double their efficiency just to stay afloat, thus alienating many consumers who cannot afford these services.

Consequently, these consumers will be inclined to shop from the bigger, more affordable high street brands (which, more often than not, operate within a linear economic framework) who, impervious to the same taxation barriers faced by smaller companies, have the resources to generate “stuff” at a rapid pace and at a competitively low price.

“Customers want lower prices, and there is currently no alternative to consuming new. We should be trying to make that process easier for someone who wants to make a difference,” said Henning, who believes that one incentive to encourage behavioural change should be the eradication of taxation on SMEs and startups which are trying to become circular while fast fashion companies that dominate the industry should be penalised heavily. 

Embedding circularity into a business strategy is no easy feat. Kavita Basi, CEO & Founder of sustainable activewear brands Reflexone & Ration.L, shares a similar experience about the financial implications that small businesses, like her own, must come to terms with when trying to engage in more sustainable practices.

“One of the first barriers was when we were starting up the business and wanted to buy in only very small inventory. A lot of suppliers, especially overseas, have a Minimum Order Quantity system that you have to adhere to,” Basi said. 

This proved a challenge for Kavita who, determined to avoid over-producing garments that would be wasted and end up in landfill, was forced to pay double the price for certain items.

In spite of this, Kavita insisted: “I wanted to show people that you can change the way that you produce, design and manufacture things by trying to bring in some forms of dealing with the situations that were happening worldwide.”

Better policies

But there is only so much one can do without exerted efforts being made at higher levels. Dr Helen Goworek, author and professor at the University of Durham, highlighted the pivotal role that management can play in inciting positive change, especially given the “frankly appalling” emphasis that the UK places on fast fashion. 

“There are many incentives in the way that people work that persuade them to behave in an unsustainable way. What if you were to incentivize them in different ways?”, Goworek asked. She also highlighted the impact of hidden practices such as buyers’ share options as part of financial packages to incentivise employees to ensure a company’s profitability. 

Wilson believes that government-level enforcement will be necessary to bring about long-lasting change. 

“The change will not come from the fashion industry,” she argued, making the point that without government-to-government policies to ensure that best practice is being implemented, hundreds of suppliers, for example, will continue to adhere to unrecognised and unsustainable ways of doing things. We, as consumers, need more information to make responsible decisions, but “we don’t understand how bad it is because there is not enough dialogue between points in the supply chain.” 

In light of this and the ongoing pandemic, one question we should perhaps be asking is how informed are our policymakers on the public procurement of PPE, which undoubtedly creates a critical mass that ends up in the landfill?

Innovative solutions

The good news is that thanks to the innovation in technology and social media, the consumer exerts more power than ever before. According to Henning, the opening up of media channels means that conversations between the buyer and the seller have become much more two-directional. Goworek agrees, insisting that retailers are often more likely to listen to their customers than they would their employees, just as universities tend to respond to complaints made by a vociferous student body over those of their staff members. 

What’s more, organizations like the Sustainable Apparel Coalition and the Textile Exchange are important alliances that provide support to retailers, brands, and suppliers who are committed to creating a positive impact, thereby strengthening the collective voice. 

Springwise continues to spot new and practical solutions that allow the everyday consumer to engage with the complex issue of circularity in simple ways. 

A French browser extension, Fairify, collects data and conducts extensive research to rank brands based on sustainability metrics. The extension will also provide more sustainable alternatives to low-ranked brands, allowing users to more easily choose fairer options for themselves.

As the company told Springwise, the idea came about because: “We wanted to buy more sustainable ourselves, but found that existing options were either unreliable or very time-consuming. After doing some research, we found that 85 per cent of consumers face the same problem. There is currently a huge amount of impact not being made, that’s why we decided to solve this problem.” 

In a similar fashion, Brandless, a popular retail platform, now categorizes its products by value. Customers can filter their search to products that are cruelty-free, tree-tree or biodegradable. 

Elsewhere, the outdoor clothing company Patagonia opened a pop-up café in central London, offering visitors the opportunity to “learn how to make a positive difference”. The pop-up, called Action Works Café, curated climate activist training courses, workshops on topics such as carbon literacy, habitat conservation and non-violent protest. 

Other initiatives worthy of note include WRAP’s Retailer Clothing take-back guide, as part of a movement to encourage re-use or resale opportunities at the places where most new sales take place, thus making it easy for customers to extend the life of their own unwanted garments. This, according to the organisation, will represent a key part of the strategy for their Textiles 2030 Circularity Roadmap

Springwise’s partner, Re_Set, the next generation strategy consultancy, also recognises the importance of embracing circularity as part of one’s business model. As such, the company has established an intervention, Path to Circularity, as part of a new series of initiatives to help businesses become more resilient, responsible and sustainable in the coming decade.

Written by: Tabitha Bardsley

Our Better Business series aims to provide actionable takeaways for companies and entrepreneurs looking to bring more purpose to their work and create positive change within and beyond their sectors.