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Circular Fashion Index gives clothing brands failing grades

Circular Fashion Index gives clothing brands failing grades

According to Kearney’s 2024 Circular Fashion Index, only a small fraction of apparel companies are reducing emissions and eliminating waste by designing, reselling or reusing products in a circular economy.

Only 25 of the 235 brands scored at least five on Kearney’s 10-point scale. Levi’s, Patagonia and The North Face were among the few that scored better than seven.

The researchers rated the companies based on seven best practices. A score of 10 indicates significant progress, while one would reflect limited or nonexistent efforts and five would indicate moderate work on circularity. For example, to rate a company for recycled fabrics, a company that has none would receive a score of one. A brand with 100% recycled fabrics would receive a 10.

Industry analysts said the report was consistent with their industry observations. “Unfortunately, I don’t think these findings are surprising,” said Richard Wiechelowski, senior investment analyst at Planet Tracker. “Right now, the industry is talking good talk but still not delivering a lot.”

But regulators in the European Union and the U.S. are starting to put pressure on brands, according to Brian Ehrig, author of the report and a partner in Kearney’s consumer practice. Europe has expanded producer responsibility laws that hold companies responsible for the costs of dealing with waste caused by their packaging. Similar laws are being introduced in some U.S. states, such as the New York Fashion Act, in addition to the federal Americas Act currently before Congress.

“This should be an urgent call to action for them to get on it before someone else tells them they need to do it,” Ehrig said.

The EU’s Corporate Sustainability Reporting Directive and the U.S. SEC’s Climate Disclosure Rule force companies to disclose their climate-related activities. Yet many companies are “greenhushing”—choosing not to share their circular economy progress with the public, Ehrig added.

This is most evident among private labels and luxury brands. “When we talk to brands directly about this and they ask where they rank, sometimes they get upset and say, ‘Well, we do that,’ and we say, ‘Why aren’t you talking about it?’” Ehrig said.

Naming

The Kearney report identified 10 corporations that implemented all seven recommended best practices: circular design, consumer communication, garment care instructions, repair and maintenance services, pre-owned options, rental and leasing models, and clothing donations for reuse or charity.

  • The North Face, Patagonia, Lululemon, Levi’s, Madewell, Gant, OVS and Lindex rounded out the top 10 brands. They were joined by Gucci and Coach, the only luxury houses on the list.
  • The analysis covered 32 footwear brands. It complemented the circular practices of Allbirds, Timberland, Brooks Running, Golden Goose, and Ugg. All of these companies operate reuse markets or shoe repair and refurbishment services.

The Circular Fashion Index provided an overview of the factors that hinder the development of fashion companies in terms of material selection, production, design and resale.

Material innovations tend to develop more slowly

“From an innovation perspective, we are seeing an increase in investment and patents for both material innovations and end-of-life technologies in the fashion industry. However, commercialization of these innovations has been slower,” said Tiffany Hua, an analyst at Lux Research.

And few fashion brands, with the exception of a handful, including Patagonia, do their own R&D, forcing them to rely on third parties for next-generation materials, Ehrig said. That could leave brands competing for recycled PET plastic with beverage companies, for example.

Manufacturing details complicate recycling

According to the report, manufacturing choices often make it difficult to easily reuse or recycle a shirt or shoe. A cotton shirt itself may be biodegradable. However, stickers, embroidery or labels added later complicate disassembly.

The footwear challenge is enormous because shoes are complex: metal buttonholes, polyester uppers and rubber soles are difficult to tear apart and reuse.

Few companies design for reuse

According to the report, few companies are considering the possibility of second-hand clothing uses.

“Without homogeneous and easy-to-separate textile waste, sorting and recycling textiles is a much greater burden and expense — and this is where the industry is focused,” Hua said.

“In addition to investing, many clothing brands and textile companies have struggled with how to properly engage in textile sorting and recycling.”

Reselling and reusing hurt profits

Branded resale platforms, which have proliferated in recent years, have limited reach and effectiveness, Ehrig said. “They’re very expensive and usually don’t make a profit unless you have very high-quality products with really well-known brands.”

According to Ehrig, the resale section in the back of REI stores is a good example of something that works well. However, shipping used items between regions, such as to a warehouse and back to consumers, can reduce profit margins, he added.

Hua said brands are interested in resale because it is easier than developing new manufacturing technology from scratch. Maturing technologies in automation, e-commerce and computer vision are enabling brands to implement resale faster than other innovations, she said.

What should companies do?

The report recommended:

  • Monomaterials: Move away from blends that are hard to separate and recycle. Monomaterials—natural silk, cotton, polyester or nylon—are better. Although 80 percent of clothing is made from polyester or cotton, each material has the same impact on land and water use, according to Kearney’s life-cycle analysis. “Polyester is rightly criticized for its link to petroleum… but nothing is free,” Ehrig said. “Just because you use cotton doesn’t make it better, especially if you’re going to mix these things together.”
  • Modular production: Create products that can be easily reused or recycled through “conscious modularity.” Reduce the use of additional coatings, linings, and labels. For example, Anything Can Be Changed (ACBC) creates sneakers with a biodegradable shell and recyclable sole that easily disintegrate.
  • Care, repair and regeneration: Design products that can be recycled, downcycled or upcycled — or simply used more than once. Build “care, repair and recovery” into the design. Manufacturers could consider Patagonia’s Worn Wear program, which encourages people to extend the life of their clothes, according to the report. And Coach’s Coachtopia sells products made from leather scraps and offcuts from the production of its flagship lines.