Amer Sports, Arc’teryx, Ecoalf, Stella McCartney and Vivobarefoot are among the fashion brands with extensive offerings that have signed a policy statement regarding the circular economy — including resale and repair — for the fashion industry.
The five are among the more than 65 entities and brands that have signed the document. Other brands that signed the statement include Decathlon, H&M Group, Inditex, Lacoste, Primark, and The Reformation. Fashion firms and retailers on the signatory list also include Carrefour, ClothingXChange, Fashion Takes Action, Global Fashion Agenda, Nobody’s Child, Policy Hub/Circularity for Apparel and Footwear, Selfridges, The RealReal, ThredUp, Vestiaire Collective, and Zalando.
The statement calls for policies that help circular business models scale and is from a report that is part of The Fashion ReModel demonstration project. The project is conducted under the auspices of The Ellen MacArthur Foundation, a nonprofit that focuses on the transition to a circular economy working with business leaders and policymakers in the U.S.
This year’s report concluded that current policy is hindering additional growth of circular business models, despite businesses that are scaling revenue from resale, repair, rental and remake at a rate that’s 4x faster than the broader revenue of the overall business.
The report also noted that by diverting products from waste, companies can start to decouple revenue from production. However, current investment and policy disproportionately favor product design and end-of-life infrastructure. That has businesses embracing circular business models facing market barriers to scaling, an environment that penalizes repair and resale.
The report also noted that by “extending product lifetimes, circular business models can deliver substantially better environmental outcomes while anchoring value creation more locally within the economy.” For example, keeping products in use longer “can reduce the demand for emissions-intensive primary production and lower consumption-based emissions.” Moreover, greater market share for resale and repair can “reduce the volume of textiles entering waste streams and the related costs of waste collection and processing.”
“Current infrastructure and government policies often make producing new items from virgin materials more profitable than keeping existing ones in use,” the report said.
In contrast, circular business models and their labor-intensive processes — sorting, cleaning, listing, and repair — bring lower margins, as well as high taxes and costs that hardly decrease at scale.
In addition, businesses reselling products are taxed at every transaction, not just at the original point of sale. The statement is also calling for a reduced VAT across the EU to 6 percent for both resale and repair, and the elimination of sales tax in the U.S. and Canada on resold products and repair services.
Another policy model calls for the reduction in labor costs for resale and repair jobs, both a reduction on the percentage on gross wage for employer social security contributions in the EU and a tax credit for similar contributions in the U.S. and Canada.
