According to Kearney’s 2024 Circular Fashion Index, only a small percentage of apparel companies are reducing emissions and eliminating waste through circular product design, resale and reuse.
Of the 235 brands, only 25 received a score of 5 or higher on Kearney’s 10-point scale. Among the few brands that received a score of 7 or higher were Levi’s, Patagonia, and The North Face.
Researchers assessed companies based on seven best practices, with a score of 10 signifying significant progress, a score of 1 indicating limited or no effort, and a score of 5 indicating moderate commitment to circularity. For example, when assessing companies on recycled fabrics, a company that does not use any recycled fabrics would receive a score of 1. A brand that uses 100% recycled fabrics would receive a score of 10.
Industry analysts said the report is consistent with what they’ve observed from industry analysts. “Unfortunately, I don’t think these findings are surprising,” said Richard Wieczerowski, senior investment analyst at Planet Tracker. “At this point, the industry is talking good things but executing poorly.”
But regulators in the European Union and the US are starting to put pressure on brands, according to report author Brian Ehrig, a partner in Kearney’s consumer practice. Europe has extended producer responsibility laws that require companies to cover the costs of dealing with waste from their packaging. Similar rules are in the works in several US states, including New York’s Fashion Law, in addition to federal and US state legislation currently pending in Congress.
“We need to call on them to act quickly before anyone tells them they have to,” Ehrig said.
Despite both the EU Corporate Sustainability Reporting Directive and the US Securities and Exchange Commission’s Climate Disclosure Rule requiring companies to disclose information about their climate-related activities, many companies choose to “green hash” – or not disclose their progress on circular economy efforts, Ehrig added.
This is most evident among independently owned luxury brands. “When we talk to brands directly about this and ask where they rank, they sometimes get angry and say, ‘Actually, we do this stuff,’ and we say, ‘Well, why don’t you talk about it?'” Ehrig said.
Give a name
Kearney’s report named 10 companies that adopt all seven of its recommended best practices: circular design, consumer communication, garment care instructions, repair and maintenance services, second-hand options, rental and leasing models, and reuse or charitable take-back.
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 brands to appear on the list. Thirty-two footwear brands were included in the analysis. This complements the circular practices of Allbirds, Timberland, Brooks Running, Golden Goose and Ugg, all of which operate reuse marketplaces and shoe repair and restoration services.
The Circular Fashion Index outlines what is hindering apparel companies’ material selection, manufacturing, design and resale activities.
Materials innovation tends to be slow
“From an innovation perspective, we are seeing increased investment and patenting activity in both material innovation and waste processing technologies in the fashion industry. However, the commercialization of these innovations tends to be slower,” said Tiffany Hua, analyst at Lux Research.
And with a few exceptions, such as Patagonia, fashion brands don’t do their own research and development and must rely on third parties for next-generation materials, Ehrig said, which could result in brands competing with beverage companies for recycled PET plastic, for example.
Manufacturing details complicate recycling
The report found that manufacturing choices often prevent shirts and shoes from being easily reused or recycled: A cotton shirt may be biodegradable on its own, but decals, embroidery or labels added later complicate breakdown.
The challenge for footwear is daunting because shoes are complex: metal buttonholes, polyester uppers and rubber soles are hard to disassemble and reuse.
Very few companies design with secondary uses in mind
According to the report, very few companies consider secondary uses when making apparel products.
“If textile waste is homogenous and cannot be easily separated, the burden and cost of sorting and recycling textiles becomes much greater, which is what the textile industry is focusing on,” Hua said.
“Apart from investment, many fashion brands and textile companies are struggling with how to properly tackle textile sorting and recycling.”
Resale and reuse hurt profits
Mr. Ehrig said the luxury resale platforms that have mushroomed in recent years are limited in their reach and effectiveness. “Unless you’re selling very high-end products from very well-known brands, they’re very expensive and usually not profitable.”
The resale sections at the back of REI stores are a good example of how this is working, Ehrig said, but he added that shipping worn items between regions, to a warehouse for example, and then returning them to consumers can eat into profit margins.
Hua said brands are attracted to resale because it’s easier than developing new manufacturing techniques from scratch. The maturation of automation, e-commerce and computer vision technologies has allowed brands to implement resale more quickly than other innovations, he said.
What should companies do?
The report made the following recommendations:
Monomaterial: Avoid blends that are difficult to separate and recycle. Monomaterial (natural silk, cotton, polyester, nylon) is preferable. 80% of clothing is made from polyester or cotton, but according to Kearney’s life cycle analysis, both materials have equal impacts when it comes to land and water use. “Polyester gets a bad rap because of its connection to oil, but nothing comes for free,” says Ehrig. “Just because you’re using cotton doesn’t mean it’s better, especially if you end up blending cotton with polyester.” Modular manufacturing: Create products that can be easily reused or recycled through “conscious modularity.” Reduce the use of excess coatings, linings, and labels. For example, the brand Anything Can Be Changed (ACBC) makes sneakers with biodegradable bodies and recyclable soles that break down easily. Care, repair, and restore: Design products that can be recycled, downcycled, or upcycled, or simply used more than once. Incorporate “care, repair, and restore” into your design. According to the report, manufacturers could look to Patagonia’s Worn Wear program, which encourages people to extend the life of their clothes, and Coach’s Coachtopia, which sells products made from leather offcuts and scraps left over from the production of its flagship products.
[Learn how companies are navigating the fast changing sustainability agenda and driving more impact with Trellis Network.]
