Closing the loop to create competitive advantage in textiles & fashion

How can your business gain a competitive advantage by collaborating with suppliers to advance the circular economy in the textiles & fashion industry? 

State of Play
Today, most businesses and governments follow a linear model of production and consumption, where they take finite resources from natural ecosystems to make products they eventually discard as waste. In 2021 alone, this model consumed over 100 billion tonnes of materials and wasted over 90% of all materials extracted and used, widening social inequalities, and exacerbating other global challenges such as biodiversity loss, pollution and waste, climate change, and resource scarcity (Circle Economy, 2022). 

Currently, only 8.6% of materials are returned to the economy. Yet, the circular economy could yield up to $4.5 trillion in economic benefits to 2030 (World Economic Forum). Companies that adopt circular economy business models stand to maintain or gain a competitive advantage, through creating new products and services, lowering costs and meeting stakeholder expectations. 

With 70% of global GHG emissions released into the atmosphere directly linked to material processing and use (from extraction, transportation, and manufacturing to use of products such as clothing, food, and phones), implementing “closed loop” practices will also be critical in enabling businesses and governments to meet their net-zero targets and aligning with a 1.5°C pathway. 

What is the Circular Economy and why is it good for your business?

With 70% of global GHG emissions released into the atmosphere directly linked to material processing and use (from extraction, transportation, and manufacturing to use of products such as clothing, food, and phones), implementing “closed loop” practices will also be critical in enabling businesses and governments to meet their net-zero targets and aligning with a 1.5°C pathway. 
- Elimination of pollution and waste
- Circulation of materials and products at their highest value
- Nature regeneration (Ellen MacArthur Foundation, 2022)

It provides solutions for businesses and governments of all sizes to tackle the root causes of global challenges and achieve sustainability targets across all three dimensions of sustainable development:

Economic: The economic benefits of a circular model include lower production costs, economic growth, reduced investment in resource extraction, lower cost of recycled raw materials compared to virgin raw materials, growth in technological development investment, and creation of high-quality jobs in the new sectors of industry focused on converting the linear model to a circular model. With consumers and other stakeholders increasingly focusing on the impact of their purchases, incorporating the circular economy into your business model can lead to a competitive advantage. 

Social: With new job opportunities, higher economic stability, and a cleaner and better community to live in, the circular economy increases the standard of living, encourages community development, and creates a pathway towards a sharing social economy.

Circular Economy and the Fashion Industry

Every year, millions of tonnes of clothes are produced using a wide range of resources, and every second, the equivalent of a rubbish truck filled with these clothes is incinerated or sent to landfills (Ellen MacArthur Foundation, 2022b). This linear model of production and consumption is responsible for most of the plastic microfibers entering our oceans, and at least 4% of global GHG emissions (Ellen MacArthur Foundation, 2022b; McKinsey, 2020).

A circular economy for the fashion industry allows companies to generate revenue without creating new products through the implementation of circular business models such as rental, remake, resale, and repair, while considerably reducing GHG emissions (Ellen MacArthur Foundation, 2022b). 

Fashion products in a circular economy are:

Used more. Products are kept at their highest value longer through the implementation of rental and other recommerce business models.

Made to be made again. All materials used and products created are designed to be disassembled so that they can be reused, remade and recycled at end of life.

Made from safe and recycled or renewable inputs. While textiles like rayon or viscose, often made from pine or eucalyptus wood pulp, are considered eco-friendly, almost half of the rayon produced annually comes from endangered or ancient forests (Tonti, 2022). Furthermore, transforming tree pulp into fabric is highly toxic for workers and the environment. Maximising recycled materials inputs and eliminating the use of hazardous substances contribute to the regeneration of nature and the reduction of pollution and waste.

How to get started ...
Adopting a circular economy business model will take time but following these steps can help you get started:

Step 1 – Consider the lifecycle of your products and undertake a waste audit (PwC, 2021) – look at your own operations as well as waste generated throughout your value chain (e.g., in supply chains and by the consumer). 

Step 2 - Set time-based, measurable targets that will support your transition to a circular economy business model (e.g., waste minimisation, GHG emissions reductions, recycled content and packaging etc.) and identify and implement initiatives to deliver on these (PwC, 2021).

Step 3 - Engage your supply chain. This could include:

a) Working with suppliers to redesign products or services

b) Embedding circular economy requirements into your procurement strategy and processes (Bland, 2022)

c) Mapping preferred or mandatory supplier credentials to your targets

d) Educating and incentivising your supply chain to adopt circular practices and improve sustainability performance.

Step 4 – Implement end-of-life services, for example, repair services, which keep garments in use longer, take-back and resale services (Ellen MacArthur Foundation, 2021). An increasing number of companies, such as Patagonia and Lululemon, are collecting their used products to be sold again through their websites at reduced prices. This creates an extra source of income for businesses, keeps garments in use longer, encourages customers to recycle and buy used products, and reduces emissions. 

Finding suppliers with credentials that advance the circular economy in fashion and textiles is essential, not only for moving away from the take-make-waste model, but also for ensuring that inputs, such as eucalyptus wood pulp for rayon production, come from responsibly managed forests. Additionally, it is important to also consider social and governance credentials that promote ethical labour practices and help mitigate human rights risks across your supply chain. The increasing number of sustainability credentials means that it is now possible to set preferred or mandatory requirements and maintain an acceptable level of supply. However, each credential has a different focus and set of metrics, which can create confusion for procurement managers and requires explanation.

givvable is an AI-driven technology platform helping businesses to identify preferred or mandatory sustainability credentials aligned to their targets and discover and track the credentials of their suppliers and trading partners. The platform covers over 1 million credentials across 1,000+ local, regional, and global sources, such as certifications, accreditations, ratings, commitments, and initiatives, automatically mapped to sustainability targets and widely used global frameworks (such as the UN Sustainable Development Goals). By capturing data in an easy to access platform, givvable helps companies screen existing suppliers for preferred or mandatory credentials, and continuously grows pools of credentialed suppliers. 

Credentials that advance or support the circular economy
There are many credentials that are applicable to the textiles supply chain, including those that identify material and fibre sources, chemical inputs, labour practices or track chains of custody. The list below provides examples of credentials captured on the givvable platform, that suppliers may register and users can track, that indicate supplier practices or initiatives advancing the circular economy and sustainable textile production.

Name: Cradle to Cradle certified & Cradle to Cradle Material Health certified

Issuing Organisation: Cradle to Cradle Products Innovation Institute.

Coverage: Global

Category: Products

Description: Cradle to Cradle Certified® is a globally recognised measure of safer, more sustainable products made for the circular economy. To be certified, products are assessed for environmental and social performance across five critical sustainability categories: material health, material reuse, renewable energy and carbon management, water stewardship, and social fairness.

Name: Ecological and Recycled Textile Standard (ERTS) certified

Issuing Organisation: Ecocert

Coverage: Global

Category: Product

Description: Ecological and Recycled Textile Standard (ERTS) certified enables ecological and recycled textiles to be commercialized worldwide. The standard aims to promote production practices and conditions in the clothing and textile industry that respect the environment and people. It stipulates the minimum environmental and social requirements, covering the product's design stages, raw material production, manufacturing up to completion, distribution, use and end of life of the finished product.

Name: Fairtrade Textile Standard

Issuing Organisation: Fairtrade International

Coverage: Global

Category: Organisation

Description: The Fairtrade Textile Standard applies to operators employing hired workers in the textile supply chain processing Fairtrade certified cotton and/or other responsible fibres, to ensure fair employment conditions and implementation of environmental management systems including water, energy, waste, and recycling. This includes, but is not restricted to, ginners, spinning, weaving, knitting, and cut-make-trim stages of textile production, and also applies to brand owners purchasing finished textiles.

Name: Certified B Corporation

Issuing Organisation: B Lab

Coverage: Global

Category: Organisation

Description: Certified B Corporation is a designation that a business is meeting high standards of verified performance, accountability and transparency on factors from employee benefits and charitable giving to supply chain practices and input materials. 

To achieve certification, a company must: 

• Demonstrate high social and environmental performance by achieving a B Impact Assessment score of 80 or above and passing B Lab’s risk review. Multinational corporations must also meet baseline requirement standards. 
• Make a legal commitment by changing their corporate governance structure to be accountable to all stakeholders, not just shareholders, and achieve benefit corporation status if available in their jurisdiction. 

Exhibit transparency by allowing information about their performance to be measured against B Lab’s standards and made publicly available on their B Corp profile on B Lab’s website.

Name: Fashion Forever Green Pact signatory

Issuing Organisation: Forest Stewardship Council (FSC)

Coverage: Global

Category: Organisation

Description: The Fashion Forever Green Pact brings brands, retailers and manufacturers together to protect the world’s forests through a commitment to responsible procurement, certified sourcing and labelling to prevent deforestation and illegal logging. The FSC Chain of Custody (CoC) certification maintains supply chain integrity end-to-end, ensuring that man made cellulosic fibres, including viscose, cellulose acetate, modal, and lyocell, derived primarily from wood and other natural plant materials come from managed, sustainable and renewable resources. The FSC Recycled Label is also being increasingly applied to textiles, as well as paper and cardboard products, to keep textiles in the circular economy and out of landfill.

Name: Australian Fashion Council (AFC) National Clothing Product Stewardship Scheme

Issuing Organisation: Australian Fashion Council

Coverage: Australia

Category: N/a

Description: The National Clothing Product Stewardship Scheme will identify, educate, empower and activate all stakeholders to better manage and improve environmental and human impacts of clothing products and materials. The initiative aims to improve the design, recovery, reuse and recycling of textiles, providing a roadmap to 2030 for clothing circularity in Australia in line with National Waste Policy Action Plan targets. A Roadmap to 2030 is expected to be released in January 2023.

Name: Australian Packaging Covenant Organisation member

Issuing Organisation: Australian Packaging Covenant Organisation (APCO)

Category: Product

Coverage: Australia

Description: APCO's vision is a packaging value chain that collaborates to keep packaging materials out of landfill and retains the maximum value of the materials, energy and labour within the local economy. The Australian Packaging Covenant (the Covenant) is a national regulatory framework that sets out how governments and businesses across Australia share the responsibility for managing the environmental impacts of packaging. The Covenant aims to reduce the environmental impacts of Consumer Packaging by supporting two goals: 

• adopting approaches that make changes in the way we design, use and buy packaging and packaged products so that packaging uses less resources and is more easily recycled, and;
• enabling packaging materials to be returned to the economy thereby minimising waste associated with the generation and consumption of Consumer Packaging across the supply chain.

1 - Optimising resource recovery of Consumer Packaging through the supply chain by:

2 - Preventing the impacts of fugitive packaging on the environment by adopting approaches that support new innovations and find solutions to capture packaging materials or waste before it enters the environment, or support the adoption of new or alternative types of packaging.

Name: Global Fashion Agenda Circular Fashion Partnership (CFP) and Global Circular Fashion Forum (GCFF)

Issuing Organisation: Global Fashion Agenda

Coverage: Global

Category: Organisation

Description: The Circular Fashion Partnership is a cross-sectorial project to support the development of the textile recycling industry in Bangladesh by capturing and directing post-production fashion waste back into the production of new fashion products. The GCFF builds on the Circular Fashion Partnerships (CFP) in Bangladesh that demonstrated the potential for domestically accelerating & scaling recycling of post-industrial textile waste to create new textiles. The GCFF intends to establish the necessary ecosystem for scaling post-industrial textile waste recycling programs in manufacturing countries, locally owned and led national Circular Fashion Partnerships (NCFPs).

For questions or enquiries on how your organization can use givvable to quickly assess and screen the sustainability & ESG attributes of suppliers to advance your targets & KPIs, contact us.

You can also request a free sample supplier sustainability screening for up to 20 suppliers.

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