Megatrend: Circularity

By 2030, environmental and social impact will be the core factors dictating consumer behaviours for purchasing decisions and personal actions. Sustainability and responsibility will be non-negotiable for retail propositions. Businesses will need to fundamentally change existing linear business models by adopting resale, rental, repair and recycling initiatives where appropriate.

Megatrend: Circularity

Aarthi Thangavel / Insight / 3 Jun 2024

DRIVING FACTORS 

Consumer demand for brands to be sustainable and have a positive environmental and social impact continues to grow rapidly. 72% of consumers want to adopt circular practices, but they feel constrained by the lack of convenience, access and cost. The evolution of Extended Producer Responsibility (EPR) policies, (e.g. the Plastic Packaging Tax in the UK, or France's expansion of EPR into categories such as textiles), has progressively shifted the responsibility for the entire life cycle of products onto brands and retailers. This compels them to adopt more sustainable practices and mitigate their environmental impacts throughout the product's journey. The combination of these forces is fostering a transition towards a circular economy where resources are kept in use for as long as possible. 

CONSUMER-FACING PROPOSITIONS 

For example, circular business models such as rental and resale have the potential of taking 23% of the global fashion market by 2030, representing a $700bn opportunity. Platforms such as Vinted have grown exponentially, from 30m users in 2019 to over 80m in 2024, showing that consumers seek more sustainable and affordable options. Working with the likes of River Island, Tala and Hush, Reskinned are pioneering end-to-end solutions for taking back used items, resale/reuse and textile recycling. The environmental impact of reusing textiles is 70x lower, with 3kg of CO2 saved for each high- or medium-quality piece of clothing reused. 

Repair services are also in higher demand, with 58% of UK consumers saying they are likely to use a repair service to extend the life of their purchases (WRAP). France has emerged as a leader by offering repair subsidies since October 2023, incentivising customers further. In the UK, Sojo provides digitised clothing alterations and repairs, through both a D2C proposition as well as with brands. Backed by the British Fashion Council, Sojo launched the Pledge to Repair campaign to tackle the lack of legislation in the UK. With the likes of Ganni, Nanushka and Vestiaire Collective, the pledge is a coalition between fashion brands, circularity champions and citizens to drive collective action around repair in driving circularity for the fashion industry. 

WASTE AS A RESOURCE 

It's a common misconception that circularity only applies to industries like fashion. In reality, circularity presents massive opportunities across sectors by treating waste as a valuable resource input. For example, the fertiliser industry is a major contributor to global greenhouse gas emissions. The production and use of nitrogen fertilisers for food account for around 5% of global GHG emissions alone. Innovators such as CCm Technologies are partnering with food brands like PepsiCo to tackle this. Combined with CO2 through its carbon capture process, it transforms the waste potato peelings used to produce Walkers crisps into a low-carbon fertiliser which is returned to the farms for growing the next potato crop.  

Food waste is an enormous environmental issue, with over a third of all food produced globally being discarded yearly. In the US, 120 billion pounds of food waste is discarded every year. Shameless Pets is one player disrupting this by working with North American suppliers to upcycle surplus and misfit food produced into sustainable pet food products while ensuring health benefits and taste. To date, it has saved over two million pounds of food, with an aim to upcycle five million pounds of food by 2025. 

FINAL THOUGHTS 

The transition from a linear to a circular economy is no simple feat, but it requires fundamental shifts in how companies source materials, manufacture products, and enable customers to participate in reuse and recycling after use. Identifying opportunities to sustainably source ingredients and materials, then selling products through channels that make circularity convenient for consumers, will be critical for driving meaningful change. Despite its challenges, getting circularity right can unlock new opportunities for companies that can meet intensifying demands for sustainable solutions. 

If you’d like to explore how to navigate the circular transition and identify opportunities for your business, get in touch at hello@true.global. 

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