What is the circular fashion and how can traceability help it?

A fundamental aspect for understanding sustainability-driven innovation is looking at how social and environmental issues are addressed across the entire product life cycle, including manufacturing, operations and disposal.

This is where circular fashion and the concept of circular economy come into play.

A definition of circular economy

What is the circular economy? How can we achieve that?

A sustainable business model, also called circular business model, is developing in opposition to the traditional linear business model.

“In a linear business model, the conceptual logic for value creation is based on a material flow where (only) virgin material enters the value chain upstream and all product value, except raw material value, is added through manufacturing and user behaviour[1]”.

On the contrary, “We define a circular business model as a business model in which the conceptual logic for value creation is based on utilizing economic value retained in products after use in the production of new offerings[2]”.

In the circular economy, a business aims to minimize resource consumption and reduce waste, while maximizing the value that can be created by operating within as many “loops” as possible.

Take back, second-hand sales, subscription and rental models are all examples of circular models with the aim of prolonging the life of existing clothing.

Examples of circular fashion models

The North Face has organized a “Take back program” initiative. The brand is helping to ensure that worn clothes don’t end up in landfills. Its “Clothes the Loop” program encourages people to drop off unwanted clothing and footwear (any condition, any brand) at the North Face retail and outlets stores. 

Resale is also becoming a new market category in the fashion world being pioneered by companies like Thred Up, The RealReal, Poshmark, followed by major e-commerce sites like eBay and Etsy that are also in the mix.

Yoox Net-A-Porter Group launched Infinity with the ambition to power a circular luxury fashion platform, while Farfetch has its own Second Life platform for second-hand goods. 

Traceability is the pillar

Thus, it is expected from a circular business model “to contain offerings where the ownership over the product is retained, because the retained ownership facilitates the return flow of used products to the producer[3]”.

It enables to create value from recycled and reused materials, instead of overexploiting natural resources through the use of virgin materials.

According to the Ellen McArthur Foundation, achieving the vision will require transparency and traceability across the value chain, for example on product specifications, chemical inputs, materials used, and production practices.

The ability to trace products, components, and materials, as well as the social and environmental conditions in which they were made, along the whole supply chain, including after use, is essential to prove that the product is really circular.

The digitalization of the supply chain is the most effective enabler of retained ownership, because the information about the product lifecycle will be crucial to inform after-use practices such as sorting, remaking, and recycling.

Click here to discover more about the “digitalization of your supply chain”.