• Apparel Industry
  • Policy and Regulations
  • Emissions
  • Supply Chain
  • Recycling

The Balancing Effects of Circular Textile Strategies

Nasira Ahsan
Jan 12, 2024

Spiraling arcs of green triangles on a green background

Coauthored by Wiktoria Beckmann

The fashion industry has significant environmental impacts, and government policies are being implemented to address these issues. However, forecasting the long-term effects of such policies is challenging due to market dynamics and interactions with related systems. Our study of the potential impact of policies targeting textile waste generation and consumption in Sweden shows the importance of holistic and dynamic assessment to inform circularity and decarbonization strategies.

Addressing the Impacts of the Fashion Industry

By some estimates, the clothing sector contributes up to 8% of global carbon emissions. In the European Union (EU), clothing ranks as the fourth-most polluting household consumption category (after food, housing, and transport). In Sweden, for example, individuals purchase an average of 15 kg of new clothes and textiles annually and dispose of more than half that amount each year.

To mitigate these impacts and support circular business models and clothing reuse, the European Commission has published the EU Strategy for Sustainable and Circular Textiles, which includes Extended Producer Responsibility (EPR) schemes for textiles and the proposed Ecodesign for Sustainable Products Regulation (ESPR). The ESPR sets minimums for the inclusion of recycled fibers in textiles and bans the destruction of unsold products. The EPR schemes set economic incentives to make products more sustainable by charging producers for textile waste management costs.

Adding a System Dynamics Approach

The implications of these policy interventions are difficult to assess. For example, if reuse rates increase, will enough textiles still be discarded for producers to recycle into new garments?

To better understand the nonlinear behavior of textile systems changing over time, we used system dynamics—an approach where stocks, flows, and feedback loops are modeled to inform strategy and policy design. As a case study, we assessed the potential impacts of policies targeting clothing reuse on greenhouse gas (GHG) emissions from Sweden’s outerwear sector.

We analyzed different scenarios sensitive to the parameter modeling the extent to which clothing reuse can replace new production. The findings show that across all scenarios, a high rate of reuse (70%) could lead to a 15% reduction in new production by 2050. Moreover, GHG emissions allocated to outerwear consumption could decrease by almost 90% per capita between 2019 and 2050.

The figure below shows a simplified feedback loop highlighting the balancing effect of reuse versus recycling policies. Reuse policies demand more robust fabric that lasts longer and reduces the demand for new clothes, while recycling policies support fibers that are easy to recycle and can be reused to produce new clothes.

Simplified Picture of a Feedback Loop Model for Circular Textiles

Diagram of a feedback loop for textile recycling and reuse

(Source: Guidehouse)

The study also considered the impacts on other sectors, such as waste-to-energy systems, when textile waste is diverted toward reuse or recycling streams. The discovered trade-offs between sectors emphasize the need for holistic assessments for circularity and decarbonization.


Governments need to be clear on the aims of sustainable textile strategies and aware of potential balancing effects and the different resulting business models.

When promoting circular business models, simultaneously supporting the interlinked systems (e.g., waste management, municipal heating, transport) is key. Implementing EPR approaches on a subnational level is a good example of supporting the waste management sector, increasing the use of recycled materials, and simultaneously incentivizing innovation in sustainable textiles.

Since sustainable textile strategies cannot unleash their full potential when restricted to one market (e.g., the EU) due to the industry’s globalized operations and supply chains, there is a role for apparel companies to play. For instance, textile producers could advocate for and support setting up the adoption of EPR schemes in markets where they have a significant footprint.

Additionally, the holistic modeling of sustainable textile strategies shows that companies pursuing recycling-oriented strategies (recycled content, easy-to-recycle products) need to consider and support the take-back systems, while those pursuing reuse strategies are incentivized to invest in sharing, rental, and resale solutions to extend clothing lifespan and reduce new production. The balance between those two approaches will depend on the specifics of the brand and local regulatory frameworks.

By adopting these recommendations and advancing research in these areas, companies, governments, and stakeholders can work toward a more sustainable and circular fashion industry, effectively addressing its environmental impacts.