Designing a circular fashion system that works for all

This article was originally published on BSR Insight.

The fashion industry is transforming from linear business models to more circular ones, including repair, recycling, resale and rental, while simultaneously being shaped by macro forces, such as automation and climate change.

This transition offers both the opportunity to proactively address the industry’s long-standing employment concerns by designing new business models, and the responsibility of ensuring that the new jobs created are good jobs.

The significant momentum behind circularity begs the question for both industry and policymakers: How can we leverage this transformation to reimagine and rebuild the global fashion system so that it works for everyone?

Through Keeping Workers in the Loop (KWIL), we have convened over 45 major players in the fashion industry – established brands, emerging circular companies, worker representatives, sustainable fashion experts and international institutions – to explore this very question.

Our research uncovered three key findings:

1. As business models change, circularity offers an important opportunity for entrepreneurship and skills improvement

Growth and investments in circular fashion signal the significant commercial potential in the transformation of the fashion industry. For example, just four luxury resale platforms attracted over $ 134 million in total investments in the 16 months to August. Companies offering recycling, repair, rental or resale platforms are emerging rapidly and growing rapidly.

As mainstream companies seek to adapt, circularity can also provide economic and entrepreneurial opportunities for workers. Our research, in which we interviewed nearly 200 workers, suggests a substantial appetite for getting engaged and starting new circular businesses. In India, 66% of the workers surveyed, and especially women, want to start their own business, but feel limited by a lack of investment and entrepreneurial skills. Workers already have much of the knowledge needed to successfully transition. For example, informal waste workers understand how textile and clothing waste is separated, processed and returned to the market.

Jobs in the circular economy require transversal skills such as agility, language and business skills, and technical skills (deconstruction of clothing). Our research found that there is a lack of both skills (in a broad sense) and training at all levels of the industry. Equipping diverse groups of workers with the necessary entrepreneurial skills and opportunities can accelerate the creation of a circular and resilient fashion value chain.

2. Marginalized and non-voting groups are over-represented in segments of the value chain that could expand into a more circular system and there is a strong risk of perpetuating existing employment issues in circular roles

The transition to a more circular industry means that the opaque and complex global fashion value chain will expand to encompass new segments and activities such as recycled plastics, agricultural waste and textile recovery, sorting and recycling. Our research found that parts of the industry that are already circular today, such as collecting waste for recycling or sorting for resale, have some of the worst working conditions, high levels of informality, and negative social impacts on communities. Informality in the textile and clothing industry represents a major challenge for a just, equitable and inclusive transition to circularity, as many businesses in support of a circular fashion system rely on informal workers. Additionally, harassment, long working hours, and low levels of employee representation are also key concerns among today’s circular workers.

3. The transition will take place in a context of growing precariousness and economic inequality throughout the global fashion system

KWIL’s business model suggests that circularity, automation and other macro factors could significantly disrupt employment growth in the fashion industry by 2030. The variation between the number of jobs today and what we see in the scenarios is a range of 6.72 million jobs, or more than 11% of the fashion value chain jobs included in the model. The regional variation in job losses and / or gains in our economic scenarios is significant, with China and India experiencing the greatest changes. KWIL’s business model also notes that wages in the textile and clothing industry are likely to be highly volatile relative to the rest of the economy. It is worrying that most scenarios see wages decline for low-skilled jobs across all geographies, while high-skilled wages tend to rise.

The social impact potential of circularity can only be realized through intentional action

Our findings suggest that the circular fashion transition brings a number of potentially important benefits to workers, including:

  • The potential for strong job creation;
  • More multifunctional, stimulating roles, with better health and safety for workers;
  • Business opportunities, especially for women, and;
  • Increased potential to integrate informal workers into the value chain, offering them social protection, etc.

Conversely, without the intentional integration of aspects of work and social justice and the adaptation of operating rules in the sector, there is a real risk of perpetuating the same challenging results for workers due to the lack of representation, consideration in decisions, protection. regulation and an imbalance of power along the supply chain.

The KWIL report highlights how changing industry dynamics and potential work stoppages increase the need to address these legacy industry challenges in the circular transition. To help prioritize a path to circularity that supports workers, it presents 10 recommendations to enable a just, equitable and inclusive transition.

You can find the full report here, which offers an initial mapping of the necessary skills, an exploration of how circularity will affect different roles, how the impacts on work will play out in different circular patterns, and detailed recommendations for both fashion companies and those for textiles and for policy makers.

If you are interested in exploring how your company could work collaboratively with peers and BSR to help develop new strategic approaches that improve the global fashion system so that it works for everyone, contact our team.

This research project was developed and supported by a grant from the Laudes Foundation. The partnership and financial contribution from the foundation were invaluable to the success of the project. We are also very grateful for the contributions of the Swedish Agency for International Development Cooperation, H&M Group and Target to the results of the project and to the different organizations that contributed their ideas and ideas to this work.

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