Saturday, April 1, 2023

Challenges and opportunities of using circular business models

As sustainability brands face increasing pressure from consumers, legislators and investors must improve their sustainability credentials, increasingly moving to new circular business models.

This transition brings exciting opportunities, as well as new challenges in terms of due diligence, as companies build additional relationships throughout their supply chains with recyclers, sorters, collectors, and other business partners.

This was one of the topics discussed at the OECD Forum on Due Diligence in the Clothing and Footwear Sector, which was held in Paris on February 16-17.

Mauro Scalia, director of sustainable business at Euratex, the body that represents European clothing and textile manufacturers, some 16 pieces of legislation are currently being worked on to improve the textile sector, which he “stimulates” and “stimulates” in tuc.’.

According to Scalia, only 1 percent of the 7.5 million tons of textile waste generated each year in Europe is recycled. The goal is to recycle 2.5 million tons of fiber by 2030. “We have a clear target,” he says, but “a new infrastructure and value chain” is estimated to require 150-250 additional facilities for recycling collection, classification. and other processes.

This way the sector is moving into “uncharted territory,” Scalia said, as the value chain expands and companies begin to form to compete with business partners they don’t usually work with, like those in the industrial and chemical industries.

There is an urgent need for education and training

The transition from linear to circular models will bring new challenges, agrees María Luisa Martínez Díez, director of public affairs at Fashion Agenda Global. Therefore, he said, “there is a need for training and skill” to ensure due diligence and reduce the risk of unemployment and exclusion.

This includes the technical skills to operate and maintain the new equipment, but it also includes digital literacy: the training of workers to use modern drive systems, which are increasingly used in the circular attitude of the industry, for example through recycled fibers.

The Global Fashion Agenda has introduced the Circular Society in Bangladesh in 2020 to do just that, supporting the development of recycled textiles in the country, Diez noted. The company currently works with 80 manufacturers, nearly 20 recyclers and global brands. The project will continue until 2025, and has since been expanded to Vietnam and Cambodia.

Tobias Fischer, head of sustainable development at Swedish fashion giant H&M, also noted that the industry faces additional challenges from increased laws and a change in consumer behavior towards circular models. “We see opportunities in a lot of business, but where there are opportunities, there are also risks,” he said, as companies move from one level of due diligence to the next.

“The most important thing is recycling,” he says, as companies begin to work with new partners in the less formal sectors, noting the importance of addressing human rights in those countries where it is currently less regulated.

“We have done with our foundation in some projects in India, where we look at this matter and get recyclers into a more formal industry,” he said, adding that the process is important because “it will take some time.” “.

The topic of recyclers came up a lot in the market, as it is an area that can be dangerous not only because of the physical nature of the work, but also because the industry can often be infected by criminal gangs both in Europe and beyond. .

Mauro, from Euratex, pointed out that the issue of waste management will be part of the policy making at the national level in the EU, and mentioned the importance of EPR systems, which is an environmental policy approach in which the responsibility of the producer extends to the product. to the post-benefit customer life cycle of the product.

New opportunities

While there are certainly some challenges in new, often less formalized business partners in the circular market, it also offers exciting new opportunities.

“We can do better in the circular economy from the social side,” says Diez of the Global Fashion Agenda, in order to increase traceability and provide better value distribution with circular business models.

And as linear value chains evolve into more complex areas where additional technical knowledge is needed, we also see a shift in influence between brands and suppliers in large ways, Euratex’s Scalia said.

For example, the sector sees an increase in the number of smaller companies capable of creating new materials or recycled fibers, something that big brands have noticed and have also begun to invest in. In July 2022, Spanish fashion giant and Zara owner Inditex invested in Circ, a technology company with the potential of a proprietary textile recycling process.

“You can see us collaborating with fabric manufacturers in a different way,” adds Scalia. “It creates a new kind of collaboration, which is not like buying a product that I can find anywhere in the world. I work with my suppliers; I know what can be done technically and how I can help them.”

And he continues: “We have seen many times: professional brands support providers to expand their capacity, including to obtain financing.”

The scale of the circular economy is included as an area where “professionalism and sustainability” meet, “it was nowhere in the agenda five or six years ago”, but it will require more and more regulation.

“We see it in Europe, a large laboratory through many experiments, but we see many other countries of the world, from Japan to Bangladesh, through India, South Africa and other countries doing the same,” he concluded. “So I think it’s a very exciting opportunity.”

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This article was first published on FashionUnited.UK, and was later translated from English to Spanish and edited by Alicia Reyes Sarmiento.

Nation World News Desk
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