In an interview in The Guardian in early 2015, H&M’s CEO Karl-Johan Persson expressed that if we stop buying things that we do not need, it will lead to an economic and social catastrophe. Specifically, he stated that:

..if we [people] were to decrease 10% to 20% of everything we don’t need, the result on the social and economic side would be catastrophic, including a lot of lost jobs and poverty. (The Guardian, 2015)

It is a common perception among conventional economists that the world’s economies, especially in developing regions, depend on continuous material consumption and production in order to keep societies and their markets alive and growing. Thus, instead of decreasing the production and consumption of goods, CEO Karl-Johan Persson places his hope in innovation: “So the challenge is doing it in a way where you still can have economic growth and jobs creation, while finding the innovations that can limit the damage to the environment”. The greatest opportunity, he continues, lies in the circular economy, which enables companies to move away from the current linear system of produce, use and throw away. This is where H&M’s investments in global take-back schemes and textile recycling come in, which are indeed important parts of the equation.

Undoubtedly, the circular economy is bringing a surge of much-needed innovations, new modes of production and new patterns of consumption, including take-back schemes and material recycling. However, in a circular society, consumption relies primarily on the provision of services and not goods. Producing more material goods is not the main answer given by the circular economy but quite the opposite. Instead the circular economy advocates careful, resource-effective, long-lasting and repeated use of existing products and components on the market. This is articulated in the following well-known report published by the Ellen MacArthur Foundation (2013):

Such an economy is based on few simple principles. First, at its core, a circular economy aims to ‘design out’ waste. Waste does not exist—products are designed and optimised for a cycle of disassembly and reuse. These tight component and product cycles define the circular economy and set it apart from disposal and even recycling where large amounts of embedded energy and labour are lost. “ — “The tighter the circle, i.e., the less a product has to be changed in reuse, refurbishment and remanufacturing and the faster it returns to use, the higher the potential savings on the shares of material, labour, energy, and capital embedded in the product and on the associated rucksack of externalities (such as greenhouse gas (GHG) emissions, water, toxicity). (Ellen MacArthur Foundation, 2013, p. 8)

In other words, products shall be designed and manufactured for high durability, longevity and functionality as well as easy maintenance, repair and remanufacturing, in order to enable maximum use and reuse in society – with the last stage being material recycling (before composting or even incineration). The circular economy thus depends on cross-sector collaborations and business-to-business partnerships to enable effective logistics for leasing, secondhand, repair, remanufacturing and other forms of sharing and life-extension services. Service provision is a central part of the circular economy, as expressed in the following sentences:

Unlike in today’s ‘buy-and-consume’ economy, durable products are leased, rented, or shared wherever possible. If they are sold, there are incentives or agreements in place to ensure the return and thereafter the reuse of the product or its components and materials at the end of its period of primary use. (Ellen MacArthur Foundation, 2013, p. 8)

In other words, a key feature of a circular economy is the design of durable products that can be reused and “shared” by many users, as illustrated by the inner circles (See Figure 1 below). Innovations in the field of textile recycling are thus only one aspect along a spectrum of innovations and new strategies that will be needed to develop a more circular fashion industry. At another side of the spectrum lie design practices and production processes that enable more extensive use of biodegradable materials, non-toxic substances, renewable energy, as well as effective use of water and other resources, preferably in closed loops. In a circular fashion industry, fabric recycling belongs to the last stage of a garment’s lifecycle, as illustrated by the outer circle (see Figure 1).

Over the last decades, many scientists have argued, that if we continue to buy the things we do not need, it will result in a global environmental disaster. This is also a fundamental recognition on which the notion of a circular economy resides. We have already seen too much evidence of what our predominantly linear society leads to, in terms of melting ice caps, more dramatic weather patterns, heavily congested air in cities, polluted rivers, depleted lakes, plastic waste in the ocean, diminishing rain forests, extinguished species, etc. around the world. The environmental consequences of our “take, make, dispose ” system will not only have harmful consequences for people and societies that live in or near affected areas, but also for people, societies and companies that live off these resources, including consumers and fashion companies in Europe and North America. Producing more of the same and then recycling the material is not the best answer, as it will still require energy, labor, water, other material and capital to uphold such processes and surrounding logistics (even if the processes operate in closed systems). Instead, we need to carefully manage all natural and human resources that we have on Earth. Businesses based on material production and consumption will not be able to grow indefinitely without a very high cost for humanity. As Professor Johan Rockström and an international team of 28 scientists pointed out in 2009, there are planetary limits to growth:

The exponential growth of human activities is raising concern that further pressure on the Earth System could destabilize critical biophysical systems and trigger abrupt or irreversible environmental changes that would be deleterious or even catastrophic for human well-being. This is a profound dilemma because the predominant paradigm of social and economic development remains largely oblivious to the risk of human-induced environmental disasters at continental to planetary scales…” — “Planetary boundaries define, as it were, the boundaries of the “planetary playing field” for humanity if we want to be sure of avoiding major human-induced environmental change on a global scale.“ (Rockström et al, 2009)

In conclusion, an ambition to limit our environmental damage will unfortunately not be enough to avoid catastrophic environmental events. Our industries need to drastically change the predominant business model of “take, make, dispose”. We need to shift from manufacturing good-enough products in large volumes with fast turnover that are sold and hopefully recycled, to instead creating long-lasting products in on-demand volumes that will be cared for, used actively over long periods of time, shared by many users, with components recycled for new uses, and with material recycling being the last option before composting or incineration. This could summarize the basic logic on which future investments should ideally rest.

As some final words, this article is by no means a critique of H&M’s or any other company’s work and ambitions in the field of sustainability and circularity. Instead, it is an attempt to take a critical view on conventional economics’ approach to growth in light of the circular economy and planetary boundary paradigms.

(Photo at the top by Hannah Morgan via Unsplash.com)

Make it last: Fashion companies are beginning to explore new business models and customer services, such as rent and repair. How do you think such services can benefit the company apart from increasing its sustainability performance?

Anna Brismar: As you mention, the obvious advantage of launching new services, such as second hand, rent or repair, is an increased sustainability performance and brand value of the company. In addition, these services will also contribute to a more sustainable fashion industry a large, by making clothes and other products circulate longer in society before being incinerated, sent to landfill, or downcycled through industrial recycling. For example, selling clothes secondhand in-store helps to extend their lifetime by letting new customers make use of them. Likewise, letting customers rent a fashion piece as opposed to buying it may bring higher usage to the item than if it stayed with the same owner for lifetime. According to Uniforms of the Dedicated, leasing also makes economic sense, bringing increased revenues to certain pieces as opposed to selling them. Repair is yet another service that has found its way into the fashion world, not only among jeans brands (Nudie Jeans and Levi Strauss) but also among other forward-thinking companies (such as Houdini and Filippa K). Repair services not only help to increase product longevity but can also strengthen the emotional bond to a product, making its owner hold on to it even when it goes out of fashion or looks worn down.

In other words, apart from being good for the planet and adding “sustainability creds” to the company, the general idea behind additional services such as rent and repair is to maximize the number of occasions that each item is used over its lifetime. Simply put, an item can be either maximally used by the same owner during its lifetime (through repair) or it can be used by a maximum number of different users (through rent or second hand).

Yet, there are also additional positive side-effects of these services, on which a company could (and should!) benefit intentionally and strategically. Some of the most interesting questions and valuable input generated by these services are:

• For Second hand: What special products are often returned as secondhand from the own brand? What do customers have to say about these items? What did they like and not like about them? Anything with the design, fabric, pattern, or fit that was particularly appreciated or not desirable? What clothes seem to last longer in terms of style or material durability? What clothes are returned only after a short time or few uses? What products are reluctantly handed in after many dear uses? Are there any popular secondhand items often asked for by secondhand shoppers? All these questions bring valuable feedback to the company in terms of how to create new collections – considering style, design, fabric, pattern and fit – in order to increase customer satisfaction and minimize unsold stocks.
• For Rent: What products are most often asked for within the leasing range? What do customers have to say about their user experiences? Anything that customers would like to alter in terms of design, fabric or fit for specific pieces being leased? Such questions could generate useful information as to what types of products are more popular and suitable for leasing, for example outerwear as opposed to innerwear. Also, for certain pieces such as evening dresses, what styles are more popular than others? Leasing can also provide good opportunities for salespersons to engage in dialogues with the customers about washing and caring practices. This in turn could generate ideas on how to improve care labels (washing instructions) and tags.
• For Repair: What items are most often handed in for repair? Why specifically do they need repair? For example did they break because of frequent wear, poor seams, sensitive fabric, or too tight fit? Does the zipper break easily? Do buttons easily fall off? For trousers and jeans, can the original seams around the knees be modified to facilitate repair? All such questions bring information that could help improve product durability by adjusting the original design, sourcing or tailoring practices.

In conclusion, providing new services such as secondhand, rent and repair will not only strengthen the sustainability performance of the company and help to improve overall sustainability of the fashion industry, but also provide valuable information for the company. If customers’ ideas, suggestions, and experiences are carefully tapped, systematically analyzed and effectively forwarded to the right teams within the company, this information could both reduce unnecessary costs and increase revenues in the short and long term.

This article was originally written and published for Make it last on April 10 (2015). Republished here with permission.