A Deep Dive into Circular Textile Business Models
Concerns over textile waste continue to grow as they account for a significant portion of environmental damage. To address the issue, CISUTAC published in Autumn 2024, a report developed by project partner RREUSE, providing an essential overview of the current state of repair, reuse, and recycling systems across the European Union. This report, titled “Unlocking Opportunities for Circular Business Models in Textiles: Phasing out Linearity” (Deliverable 3.2) deep dives into the operational and financial challenges these systems face while presenting a roadmap for scaling circular models.
Examples of data from the CISUTAC report.
In this document, RREUSE emphasizes the importance of reuse as a leading business model in the circular economy. However, they point out that the increasing quantity of textiles produced, and their declining quality, signals a growing challenge in the years to come. Strengthening reuse, but also giving a significant boost to repair and recycling efforts is therefore needed: all three models must be fostered to ensure their viability in the future.
The Circular model paradox
Circular business models (CBMs) face a paradox. While they aim to resolve the shortcomings of traditional, linear business models, such as overproduction and waste, they must also compete within the same marketplace. This dual challenge is compounded by high initial costs and the uncertainty of financial returns. For instance, in some Extended Producer Responsibility (EPR) schemes, the cost of collecting and processing textiles can exceed the fees paid by producers, making it difficult for circular businesses to remain competitive.
The underdevelopment of the downstream chain is another major barrier to scaling these models. Europe still faces inadequate sorting capacities, hindering the expansion of local reuse and recycling efforts. Despite an increasing volume of textiles entering the market, only a limited portion can be reused or recycled. This threatens the core aim of circular models: waste prevention. In some cases, charities are burdened with paying for the incineration of up to 70% of donated goods, as it happened to be the case in the Netherlands, illustrating how unsustainable the current system is for circular businesses.
Opportunities for scaling circular business models
Despite these challenges, the CISUTAC report identifies several opportunities to scale circular textile business models effectively.
The stakeholder survey
The primary objective of the survey was to deepen CISUTAC’s understanding of the challenges and opportunities associated with repair, reuse and recycling business models. To achieve this, RREUSE focused on identifying key factors for integrating these models into a circular textile value chain, emphasizing on stakeholder collaboration.
The survey questions have been designed with an overarching question in mind: How can circular business models be scaled?
To ensure a representative sample, at least one response was collected from each type of organization identified as key in the textiles value chain (private sorter, social enterprise, municipality, PRO, brand, research centre, recycler, and repair platform). Conducted in September 2023, the survey received 17 responses.
The stakeholder survey and interviews, organised as part of the report, highlight the critical role of policy support and collaboration across the textile value chain. For circular models to thrive, stakeholders must work together to create a supportive ecosystem, and policymakers must take decisive action to address the barriers.
The survey participants identified the following points among the top priorities for scaling CBM:
Policy and financial Support: Strong policy frameworks and financial incentives are crucial to ensure the financial viability of circular models. EPR schemes need to be designed so that they cover the entire cost of waste management activities, from collection to reuse and recycling. This includes directing a portion of EPR fees to support social enterprises active in textile reuse and improving sorting capacities in Europe.
Collaboration across the value chain: Effective partnerships between designers, manufacturers, waste handlers, and recyclers are essential. These collaborations can foster innovation, stabilise supply chains, and ensure continuous demand for recycled textiles. Long-term purchasing agreements between suppliers and recyclers, for example, can create a stable environment for investment in circular processes
Skills development: Scaling circular models requires building a skilled workforce capable of handling new technologies and repair techniques. Training schemes and vocational education should be prioritised to prepare workers for the circular transition.
Consumer engagement: Fostering consumer engagement is critical to increasing demand for circular services, from repair cafes to online resale platforms. Raising awareness of the environmental and social benefits of circular textiles can drive more consumers toward sustainable fashion choices.
Policy Recommendations to accelerate circularity
The CISUTAC report also outlines several key policy recommendations to help accelerate the adoption of circular textile business models, including:
Address overproduction: Fast fashion remains one of the biggest threats to circularity. Policymakers must tackle overproduction by incentivising reductions in textile consumption and ensuring that EPR schemes are eco-modulated based on the waste hierarchy.
Invest in innovation and infrastructure: EU funding should be directed toward research and innovation in circular models, particularly focusing on developing scalable solutions. Enhancing Europe’s sorting capacities and building a robust recycling value chain is also essential for reducing textile waste.
Boost green public procurement: National and local authorities should lead by example, embedding circular criteria in public procurement practices. By prioritising textiles made from recycled materials or reused products, public institutions can help drive demand for circular solutions.
Tax incentives for circular services: Reducing or eliminating VAT on repair services and reused products can make circular options more affordable for consumers, incentivising broader adoption of these models.
Repair work at CiLab, Belgium – one of the report's case studies. Photo credit: CiLab.
A thriving circular textile economy will depend on creating a holistic and collaborative textile ecosystem where all stakeholders across the value chain are engaged in shared goals. From design to disposal, all actors must work toward waste prevention, product longevity, and material recovery. Ensuring resilience through adaptable services, such as a balance between manual and automated sorting or scalable repair solutions, will help the sector respond to changing market demands.
Transparency will also be vital. Consumers need clear information about how and where to donate textiles, as well as the limitations of repair services, to build trust in circular business models. Local solutions, such as community repair initiatives and swapping events, can enhance the effectiveness of circular services by tailoring them to local consumer needs.
The report offers further insight into these challenges and solutions. Read the full report to explore concrete policy recommendations, and find out how your organisation can play a role.
