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Rethinking fashion (II:III): Navigating the circular economy in textiles

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By Simon Gupta, Noa Jay

· 7 min read

This article is part of a three-part series. You can find part one here.

Nature cannot naturally break down plastic waste. Unless burned or reused, each plastic item will persist for centuries beyond our lifetime. While 60% of plastics have lifespans of less than five years, only 9% are recycled. There is a pressing need for a comprehensive strategy to establish a circular system for plastics, which must operate effectively, preserving economic value while eliminating plastic waste and pollution.

The plastic crisis  

Our approach to plastic production and consumption currently follows a linear and unsustainable trajectory. We extract oil and gas from the earth to manufacture plastic items, many intended for single-use purposes before being discarded. Arthur ten Wolde, Executive Director of, stated, 

“Plastics and packaging are present in all sectors, exerting a significant influence. Next to their symbolic value, they represent a substantial source of pollution. The impact can be made much smaller by fostering a profitable market for reuse and recycling and incentivizing sustainable design practices.” 

The production of plastic has surged from 2 million tons in 1950 to 348 million tons in 2017, transforming into a global industry with a value of USD 22.6 billion, with projections expecting it to double in capacity by 2040.

The escalating levels of plastic production and pollution have alarming effects on the triple planetary climate change crisis, nature loss, and pollution, adversely affecting various dimensions of sustainable development, including environmental, social, economic, and health aspects. Khalil Radi, Co-Founder & Global Managing Director of Buy Food with Plastic, stated that “life on land and below water gets harmed, and therefore also puts humans at risk,” continuing “circular practices must be implemented in all possible use cases to prevent plastic from contaminating the natural environment.”

 Plastic pollution can disrupt habitats and natural processes, diminishing ecosystems’ capacity to adjust to climate change, which directly affects the livelihoods, food production, and social well-being of millions of people. Around 11 million tons of plastic waste annually find their way into oceans. Without significant interventions and under a business-as-usual scenario, this figure is projected to triple by 2040.

Annually, 95% of the value of plastic packaging material, estimated at USD 80-120 billion, is lost to the economy. Transitioning to a circular economy holds the potential to mitigate these losses. By 2040, such a shift could curtail the volume of plastic entering our oceans by over 80%, reducing the reliance on virgin plastic by 55%. This could also save governments USD 70 billion, decrease GHG emissions by 25%, and generate approximately 700’000 additional jobs, primarily in the global south. For this transition to happen, it is imperative to adopt a holistic approach, considering the entire lifecycle of a material, from its sourcing and production to its utilization and post-use management.

Challenges and barriers

Plastic is one of the cheapest materials we have at hand, and the reality is that plastics will continue to be indispensable for numerous applications and sectors that are fundamental to our evolving world. Nicolas Fries, a Circular Economy and Innovation Manager at Implenia, pointed out, “External factors that impact the environment or society are often not included in prices, resulting in primary resources being cheaper than secondary resources. Nevertheless, plastics must be replaced by more sustainable alternatives in global logistics, taking into account standards for safety, transport, and durability.” Materials must comply with many standards and criteria, making finding suitable alternatives challenging. Moreover, solutions such as limiting plastic consumption and recycling processes can lead to unintended negative consequences, such as increased emissions, the use of chemicals, or water waste.

Furthermore, the current plastics economy is greatly fragmented, compounded by concerns regarding waste collection and leakages. The rising market presence of biodegradable plastics presents both opportunities and risks. The absence of clear standards, labeling, or marking for consumers, coupled with insufficient coordination across the value chain for waste collection and treatment, heightens the risk of plastic leakage and complicates mechanical recycling processes. Lukas Fuchs, a former Senior Analyst for Circular Economy at the Ellen McArthur Foundation, said:

“Adapting business models is challenging and requires time. It involves—amongst many other things—developing capabilities, restructuring incentive systems, and establishing efficient reverse logistics processes, which can be challenging to build, especially considering that many companies lack their own logistics networks.”

 Moreover,plastic waste collection systemse are fragmented and lack coordination across regions, even in advanced economies such as the US and Western Europe. This fragmentation impedes the scaling up of a circular economy for plastics, as it creates substantial gaps in both the supply and end-use of recycled materials. The situation is further exacerbated by the rapid emergence and adoption of new packaging materials and formats.

Embracing the value of plastic

According to Chris Whyte, Director of the ACEN Foundation, “We must critically examine the issues surrounding plastics and packaging, understanding both their requirements and opportunities. Recognizing the vital role that plastics play, we must ensure the provision of the necessary infrastructure for their processing. Despite facing challenges, it’s crucial to embrace opportunities and acknowledge the enduring presence of plastics in our society.” The revalorization of products at the end of their lifecycle is crucial. Once we grasp the opportunities and attain a comprehensive understanding of the value chain, the emergence and adoption of new technologies can take place. Innovations such as bioplastics, paper-based products, and biodegradable products have been instrumental in driving progress.

Further research and innovation are essential to fully understand plastics' potential. Adequate funds and investments must be directed toward this industry to accelerate the process, thereby enabling the development of targeted policies. 

Sebastian Kahlert, Sustainability Manager at ETH Zurich, specified, “Extended producer responsibility has proven effective across many industries by incorporating takeback costs into product pricing. Tax incentives and regulations promoting sustainable practices and transparency facilitate the affordability of circular and sustainable business models for consumers while also incentivizing producers to prioritize sustainability.”

The adoption of a historic resolution by the UN Environmental Program (UNEP) in March 2022 to develop an international legally binding instrument on plastic pollution, including the marine environment, by 2024 marked a crucial step forward. This resolution comprehensively addresses the full lifecycle of plastic, emphasizing its production, design, and disposal. The upcoming treaty, grounded in legally binding global regulations and holistic circular economy measures, presents a unique opportunity to catalyze systemic changes and combat plastic pollution. As plastic value chains increasingly transcend national borders, it’s imperative to recognize the importance of international developments, such as China’s recent decision to restrict imports of certain types of plastic waste. 

Christopher el Khoury, Circular Economy Expert at Intesa Sanpaolo, told us, “A crucial strategy involves redesigning products and business models but also assessing the entire value chain to determine how a circular approach can be integrated. This necessitates the development of adequate technologies, innovative materials, and a supportive regulatory framework that comprehensively promotes and creates a good playing field to accelerate the adoption of circular practices.” 

In addition to governmental efforts, collaborative initiatives like the New Plastics Economy Global Commitment launched by the Ellen MacArthur Foundation and the UN Environment Program in 2018 play a crucial role. This initiative unites businesses, governments, and organizations worldwide behind the common vision of a circular economy for plastic, aiming to prevent plastic from becoming waste or pollution. The participation of signatory governments and businesses accounting for 20% of global packaging production underscores a collective to transform plastic production, use, and reuse. It is also essential to incorporate recyclability guidelines and frameworks and ensure the implementation and fulfillment of recycling quotas.

While reducing and recycling plastics represent important initial measures, they alone are insufficient to address the plastic waste crisis. Instead, a paradigm shift is required in designing, using, and reusing plastics. Closing the circularity gap requires a cohesive global alignment of government policies, stakeholder values, financial support, and the implementation of transformative technologies. Urgent and substantial investments in infrastructure and technology are imperative on a large scale to effectively manage the escalating volumes of plastic waste.

Broadpeak works with industry experts, impact-driven investors, and academia on pressing global issues. Through our articles and trilogies, we want to share the key insights we gain with our network. All our articles and earlier trilogies can be found here.

illuminem Voices is a democratic space presenting the thoughts and opinions of leading Sustainability & Energy writers, their opinions do not necessarily represent those of illuminem.

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About the authors

Simon Gupta is the Founder & Managing Director of Broadpeak, a Swiss-based Advisory Company specializing in Impact Finance. He has 20 years of experience in development finance in Latin America, Africa and Asia. He is also a Partner at investment firm Investment Associate AG, where he leads social and environmental impact investing. Simon has been involved in the set-up of multiple blended finance structures on the LP side as well as the GP side. Before founding Broadpeak, he worked for financial institutions DEG, KfW, and ResponsAbility Investments AG.

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Noa Jay is Policy Analyst at Broadpeak, a Swiss-based International Advisory Company specialised in Impact Finance. Noa holds a BSc in Economics (University of Lausanne) and is pursuing her Master’s in International Economics (Geneva Graduate Institute).

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