Transitioning to a circular global textiles industry

The global textile industry is one of the largest polluters in the world but transitioning to a circular economy could be a solution.

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The COVID-19 pandemic has exposed decades-old risks, while creating new ones, in the global textile industry relating not only to the disastrous environmental impacts of garments but also geopolitical tensions impacting resource supply. However, the circular economy can potentially provide solutions to mitigate these risks but the transition will need to involve new governance mechanisms and incorporate just transition principles in order to be successful.

Going circular

The global textile industry is one of the largest polluters in the world taking a disastrous toll on the environment in terms of chemical loads to water resources, pesticide use in cotton farming, waste generation at the end-of-life stage and more. The sector is behind around 8-10 per cent of global carbon emissions – more than all flights and maritime shipping combined. It also generates 92 million tonnes of waste per year and consumes 79 trillion litres of water.

However, circular economy solutions, aiming to keep fibre and material inputs in productive loops, are now a key approach to improving environmental performance of textile supply chains. By designing clothes that last, recycling old garments, introducing bio-based materials and scaling business models for repair and rental, the industry can radically reduce its resource input and waste output simultaneously in contrast with the current ‘linear’ model in which 87 per cent of textile fibre input gets burnt or landfilled, representing a lost economic opportunity of $100 billion globally every year.   

But recent turmoil in global textile value chains – caused by the ‘demand destruction’ and massive cancellation of orders – has opened a window of opportunity to redesign textile value chains for the better.

From pandemic to geopolitics

The COVID-19 pandemic has caused significant disruption around the world, the impacts of which, have been felt both downstream and upstream by retailers in consumer economies, manufacturers and vulnerable workers in low- and middle-income countries as well as by cotton producers.

To avoid paying a high price when the next shock comes it is crucial to rethink how risks can be managed in a post-pandemic world.

In addition, the global textile sector is facing many risks stemming from geopolitical tensions between major producer countries and consumer markets. Multinational brands are facing exposure to unstable political situations in producer countries such as Myanmar and geopolitical trade tensions between the US, EU and China. For example, in March, Chinese-owned factories were burned and looted during the protests in Myanmar, while brands Nike and H&M, are facing a backlash by Chinese consumers after expressing concern about the alleged use of Uighur-forced labour in cotton production in Xinjiang.

In the case of materials such as cotton, such risks for disruption are multiplied several times because of very long supply chains where cotton farmers, merchants, warehouses, yarn spinners, fabric mills, product manufacturers and retailers can span numerous countries thereby complicating supply chain management.

Of course the pandemic has brought all of these inherent supply chain risks to the fore for retailers, brands, suppliers and governments alike too. But, to avoid paying a high price when the next shock comes, it is crucial to rethink how risks can be managed in a post-pandemic world.

Governing a circular recovery

Circular economy solutions present an opportunity to address the environmental and social problems in global textile and garment supply chains but this transition will require new governance mechanisms. Indeed, new policy and legislative developments are an indication of the change that is underway.

The EU’s latest Circular Economy Action Plan, for example, is expected to introduce mechanisms, such as sustainable product policy and legislation on ecodesign, that leverage the internal market to strengthen circular principles in production abroad.

Similar mechanisms for social protection must also follow suit such as the European Parliament’s request for legislation on human rights due diligence in supply chains which is a welcome step.

In the context of the COVID-19 economic recovery, well-governed and transparent global supply chains will be key to delivering both environmental gains as well as a just transition for workers in the textiles and garments sector. However, in light of pandemic disruptions and trade tensions, some Western textile brands are looking to bring production closer to end markets instead of improving the resilience of existing supply chains.

If environmental and labour market policies do not walk hand in hand, millions of textile and garment workers stand to lose, with little alternative employment.

But key stakeholders including global fashion brands, multilateral bodies such as the ILO, WTO, UNIDO and UNCTAD, as well as financial institutions, need to counteract the rise in inequality caused by these shocks. Local civil society organizations working along supply chains must also continue holding governments and companies accountable to eradicating forced labour and modern slavery from their supply chains.

But this is a complex challenge and requires new systems for collecting, sorting, recovering and re-purposing textiles and fibres, demanding new infrastructure, skills, as well as social protection and a professionalization of informal workers. If environmental and labour market policies do not walk hand in hand, or re-shoring becomes à la mode, millions of textile and garment workers stand to lose with little alternative employment. Co-ordinated action is necessary and most parties involved have gains to make, not only in terms of reducing the environmental footprint of the industry, but also creating better products and jobs.

Circular value chains that deal with intermediate goods, for example, can de-risk supply chains for Western multinationals while creating a new industry of reprocessing and re-manufacturing in textile hubs. In light of this, a crucial enabler for both social and environmental improvements will be the digital technologies that increase transparency through supply chains on material availability, working conditions, supporting enforcement and textile giants’ management of supply chain risks.

While not a silver bullet to tackling all social problems, employing frontier technologies, such as semi-private blockchains, can give textile companies better data on which materials circulate in the value chain while facilitating remediation of social and environmental violations.

Switching to circular textiles

When Europe, for example, puts the circular economy at the heart of its industrial strategy, there is a risk that producer countries in global value chains are left behind. International development programmes can be instrumental, therefore, in mapping out pathways to achieving a just transition to a circular textiles economy. Indeed, many new cooperation initiatives are underway, such as the Global Alliance on Circular Economy and Resource Efficiency, which was launched in March 2020 by EU, UNEP and UNIDO and joined by 12 other countries.

For value chains, supporting the multiple suppliers in developing countries to pilot circular approaches that improve environmental performance while providing decent work needs to be a priority. Technical capacity-building, skills training and making investments in new technologies will be key ingredients to bringing circular solutions to scale.

The work to ‘build back better’ across circular textile value chains needs to start with substantial investments in upstream capacities to navigate the circular transition. Indeed, in April 2021, over 30 international fashion brands, manufacturers and recyclers started collaborating in a new initiative to capture and reuse textile waste in Bangladesh.

Solutions developed in these programmes are expected to uncover new challenges around making the circular transition happen in developing countries. If successful, they could create the blueprints that can be scaled up to transform global textile value chains to become sustainable and socially just.

The example of the global textile industry shows that switching to a circular economy is evolving from theory to inevitability. Global manufacturing simply will not be able to continue as business-as-usual without a transition to circular models. But if the world has learnt anything from the pandemic, it’s that solving a global problem by focusing on only implementing solutions in the global North will only serve to deepen global inequality while weakening the global economy.