Only a small sliver of the apparel businesses is reducing emissions and eliminating waste through circular product design, resale or reuse, according to Kearney’s 2024 Circular Fashion Index.
Just 25 of 235 brands won a score of at least five on Kearney’s 10-point scale. Among the few earning better than seven points were Levi’s, Patagonia and The North Face.
Researchers rated companies on seven best practices. A score of 10 implies extensive progress, while a one would reflect limited or nonexistent efforts and a five would show moderate circularity work. For example, to rate a company on recycled fabrics, a company with none would earn a score of one. A brand with 100 percent recycled fabrics would get a 10.
Industry analysts said the report aligns with their industry observations. “Sadly, I don’t think these findings are a surprise,” said Richard Wiechelowski, senior investment analyst at Planet Tracker. “At the moment the industry talks a good game but remains light on delivery.”
However, regulators in the European Union and the U.S. are starting to force the hands of brands, according to Brian Ehrig, a report author and partner in Kearney’s consumer practice. Europe has extended producer responsibility legislation, which makes companies responsible for the cost of dealing with the waste their packaging causes. Similar rules are advancing in some U.S. states, such as the New York Fashion Act, in addition to the federal Americas Act, currently before Congress.
“It should be an urgent call to action for them to get ahead of this before someone else tells them that they have to,” Ehrig said.
The EU Corporate Sustainability Reporting Directive and the U.S. SEC Climate Disclosure rule both force businesses to disclose information about their climate-related activities. Despite that, many companies are “greenhushing” — opting not to share their circularity progress with the public, Ehrig added.
That’s most apparent among privately owned and luxury brands. “When we have direct conversations with the brands about this, and they’ll ask where they fit in the rankings, sometimes they’ll get upset and they’ll say, ‘Well, actually, we’re doing these things.’ We’ll say, ‘Then why aren’t you talking about them?” Ehrig said.
Naming names
The Kearney report cited 10 corporations that have adopted all seven of its recommended best practices: circular design; consumer communication; garment care instructions; repair and maintenance services; pre-owned options; rental and leasing models; and drop-off for reuse or charity.
- The top 10 brands included The North Face, Patagonia, Lululemon, Levi’s, Madewell, Gant, OVS and Lindex. They were joined by Gucci and Coach — the only luxury houses on the list.
- The analysis included 32 footwear brands. It complemented the circular practices of Allbirds, Timberland, Brooks Running, Golden Goose and Ugg. Those companies all operate reuse marketplaces or shoe repair and restoration services.
The Circular Fashion Index offered a snapshot of what’s holding apparel businesses back in materials selection, manufacturing, design and resale activities.
Material innovation tends to be slower
“From an innovation perspective, we see both investment and patent activity increase in both material innovations and end-of-life technologies within the fashion industry; however, commercialization of these innovations tends to be slower,” said Tiffany Hua, an analyst at Lux Research.
And few fashion brands, with the exception of a few including Patagonia, do their own research and development, forcing them to rely on third parties for next-generation materials, Ehrig said. That can leave brands competing for recycled PET plastic with beverage companies, for example.
Manufacturing details complicate recycling
Manufacturing choices often thwart the ease of reusing or recycling a shirt or a shoe, according to the report. A cotton shirt on its own may be biodegradable. But decals, embroidery or labels added later complicate its disassembly.
The challenge for footwear is daunting because shoes are complicated: Metal button holes, polyester uppers and rubber soles are hard to tear apart and reuse.
Few companies design for second use
Few companies keep a second use in mind when creating apparel, according to the report.
“Without homogenous and easy-to-separate textile waste, there is much more burden and costs associated with sorting and recycling textiles — which is what the industry is focused on,” Hua said.
“Aside from investing, many fashion brands and textile companies have struggled with how to appropriately engage with textile sorting and recycling.”
Resale and reuse hurts profits
The branded resale platforms that have mushroomed in years have limited reach and effectiveness, Ehrig said. “It’s very expensive and usually not money-making, unless you have very premium products with really well-known name brands.”
The resale section at the back of REI stores is a good example of what works well, according to Ehrig. However, shipping pre-worn items among regions, say, to a warehouse and back to consumers, can thin profit margins, he added.
Brands are attracted to resale because it’s easier than developing new manufacturing tech from scratch, according to Hua. Maturing automation, e-commerce and computer vision technologies enable brands to implement resale more immediately than other innovations, she said.
What should companies do?
The report made the following recommendations:
- Monomaterials: Move away from blends that are hard to separate and recycle. Monomaterials — natural silk, cotton, polyester or nylon — are preferable. Although 80 percent of clothing is made of either polyester or cotton, each material is equally impactful in terms of land and water usage, according to Kearney’s lifecycle analysis. “Polyester is rightfully vilified for its connection back to petroleum … but there’s no free lunch,” Ehrig said. “Just because you’re using cotton doesn’t make it better, especially if you’re going to end up blending those things together.”
- Modular manufacturing: Make products that can be easily reused or recycled, via “conscious modularity.” Reduce the use of extra coatings, linings and labels. The brand Anything Can Be Changed (ACBC), for instance, crafts sneakers with a biodegradable body and recyclable sole that are easy to break apart.
- Care, repair and recovery: Design products that can be recycled, downcycled or upcycled — or just used more than once. Build “care, repair and recovery” into the design. Makers could consider Patagonia’s Worn Wear program, which encourages people to extend the longevity of their garments, according to the report. And Coach’s Coachtopia sells products made from leather scraps and offcuts from the production of its flagship lines.