Why EPR reform is set to fire the circular fashion starting gun

According to the European Commission, the average consumer throws away more than 11kg of clothes every single year. Around the world, a truckload of textiles is landfilled or incinerated every second.

As a result, insight from the United Nations Economic Commission for Europe suggests that fashion is responsible for 10% of humanity's carbon emissions – more than international flights and shipping combined. It also accounts for a fifth of the 300 million tons of plastic produced globally every year.

In efforts to tackle the issue, the European Union has proposed introducing mandatory and harmonised EPR schemes for textiles across all its Member States, with producers bearing the brunt of end-of-life costs. This would not only require businesses to take immediate steps to ensure compliance, but also penalise those who rely heavily on take-make-dispose methods of production and consumption. 

Under a single unified scheme, short-term thinking will no longer be enough. Rather than relying on traditional processes, businesses will instead need to embrace innovative new solutions to tackle the growing challenge of fast fashion. Making and measuring improvements will quickly become an operational priority.

A reinvigorated approach

The industry of tomorrow must embrace the circular economy to challenge global textile waste volumes and unlock widespread commercial opportunity. The vision is not a few small changes, but a paradigm shift. For many, this will cause widespread disruption. Yet for others, who are already investing in circular solutions, this provides a growth opportunity.

One company leading the charge when it comes to tackling textile waste and the fast fashion industry is Circularity portfolio company ACS. Acting as a key enabler in the shift to circular fashion, ACS works with top fashion brands and major retailers to deliver a comprehensive rental, subscription and resale fulfilment service, enabling the industry’s shift towards access over ownership.

Operating from its 19,000 sqm automated facility in the UK, ACS manages the entire logistics process – from environmentally-friendly cleaning and brand authentication, to garment repair, ironing, photography, packaging and delivery. Customers include renowned high street brands such as Moss Bros, Slaters Menswear, Monsoon and LK Bennett, as well as technology partners Hirestreet, Hardly Ever Worn It, Reflaunt and CaaStle.

ACS provides the capabilities and processes to enable retailers to scale their rental, subscription and resale ambitions with ease, transforming the industry from a traditional take-make-dispose model to one of reuse and resale.

But why is this example so relevant? Well, it demonstrates that the future of business can be both circular and successful. Indeed, circular models that are restorative and regenerative by design can achieve both profit and purpose, while alleviating many of the challenges experienced by some of the sector’s more traditional companies.

When it comes to the fashion industry, circular thinking can help to tackle the negative impacts of what has become a painfully linear sector. It can help to create a more resilient industry, tackle textile waste head-on and drive widespread economic benefit.

Growth-stage capital funding

When we founded Circularity Capital in 2015, we did so with the firm conviction that the entrepreneurs of businesses like ACS, who are developing the circular innovations to make this transition a reality, deserve a specialist investor with the right knowledge and network to unlock their full potential.

We have worked hard to develop a firm with the right capabilities to make this a reality and are currently deploying our second dedicated circular economy private growth-equity fund – at €215m, it is the largest of its kind globally.

Our current portfolio includes a number of leading circular businesses across Europe, but our ambition is to further grow this investment base by supporting leading, innovative, circular businesses where we can add value as a domain expert investor.

It’s clear to see that the circular economy provides a strong framework for decoupling business growth from resource constraints, enhancing resource productivity and driving competitive advantage. It also highlights a subset of business models which are enabling this transition and can generate premium returns for investors. Indeed, circular economy thinking will drive industry for years to come.

The supply chain is set to experience rapid change over the coming years. At Circularity Capital, we’re looking forward to playing a leading role in the transition towards a more resource-efficient future.