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Circular Fashion Is En Vogue | January 2024

The fashion industry has been long scrutinized for unsustainable business practices. Consumption patterns over the last several decades have changed to favor so-called “fast fashion.” This term refers to highly profitable, cheap, trendy clothing and is often associated with companies such as SHEIN, Forever 21, H&M, and Zara.

The availability and accessibility of fast fashion encourage consumers to buy and discard clothing at a much faster rate than they used to, contributing to pollution and waste. Another major issue adding complexity is the increasing amount of returned products. Some say circular fashion could be the answer to these sustainability problems.

What is a circular economy?

A circular economy involves keeping products in use for as long as possible by designing materials more responsibly, reducing waste and pollution, and recycling materials. This shift away from a linear, start-to-finish perspective has been embraced in support of sustainability as a way of slowing climate change. The concept of a circular economy is applicable to many industries including food, fashion, packaging, energy, and more.

Fashion’s sustainability problem

According to the United Nations Environment Programme, the fashion industry is responsible for 2 to 8 percent of carbon emissions worldwide due to both production and consumption. There are also some problematic materials in use. For example, polyester generally has a negative effect on the environment during production, wear, and disposal. It is made from fossil fuels, it sheds plastic microfibers, and it is not biodegradable.

Both consumers and businesses will play an important role in making fashion more sustainable. Not only are consumers purchasing clothing more frequently than they used to, but they also tend to buy more clothing than they need. By keeping articles of clothing in use for as long as possible and purchasing fewer new items, consumers could help reduce and prevent the emissions created during the manufacturing process.

Though textile production makes up the largest share of emissions, fashion’s sustainability problem doesn’t stop once the finished good is sold. Consumption—which includes washing and drying garments—is the second largest source of emissions in the apparel supply chain. Washing clothes less often, using cold water, and hanging clothes to dry instead of using a drying machine are just a few ways to make an impact.

Returns are also a major area of concern. Though consumers may assume the items they return go straight back to the retailer, this is often not the case, especially for major retailers like Amazon and Walmart. Generally, some returns go back to the retailer to be sold, some are sent to discount retailers, some are donated, some are incinerated, and some go to landfills.

Reverse logistics, which focuses on the upstream movement of materials and finished products, can be a lengthy and costly process for companies due to transportation, packaging, lost sales, and the time it takes to sort and process products. It is estimated to be a $1 trillion industry. Many clothing companies and other retailers hire returns liquidators to handle the returns process. For example, Inmar Inc. is the largest returns liquidator in North America with 17 facilities and half a billion in annual returns processed.

Retailers are taking action to discourage returns, including charging for returns, making the return window shorter, and improving online product listings. Some retailers, such as H&M, now use AI to enhance product descriptions and recommendations and target ads to shoppers that are likely to keep their purchases. Luxury dressmaker Dress the Population gives discounts to customers who commit to not returning their purchase.

Inside circular fashion

Adopting a circular economy mindset for the fashion industry means focusing on reuse, resale, and recycling. For example, outdoor clothing company Patagonia uses mostly recycled materials, teaches customers how to repair clothes, and has repair and recycling programs.

Additionally, there is a rise in secondhand fashion thanks to social e-commerce companies, such as Depop and ThredUp, that allow consumers to easily buy and sell clothes. According to ThredUp, the secondhand fashion market has grown by more than $24 billion in less than a decade. Even luxury brands such as Another Tomorrow offer customers the option to resell their clothes on the company’s website.

Recycling closes the loop of the circular economy. One textile facility in El Salvador called Intradeco produces recovered fibers by using virgin cotton, remnant materials, and recycled plastics. Now, the company is working to extract fibers from unsold clothing. Unsold inventory and returned products often find their way to landfills and incinerators. Recycling seems like an easy solution, but, of course, there are challenges associated with recycling garments such as removing zippers and buttons. Intradeco is working to overcome these obstacles.

With such a vast and complex industry, collaboration and communication amongst the industry’s biggest players could make a huge difference when it comes to setting goals and finding solutions. The fashion industry may be at a tipping point where embracing sustainable practices could redefine its environmental impact.

In the Classroom

This article can be used to discuss sustainability (Chapter 2: Business Ethics and Social Responsibility) and the supply chain (Chapter 8: Managing Operations and Supply Chains).

Discussion Questions

  1. What is fast fashion and why is it unsustainable?
  2. What is a circular economy and how can this concept be applied to the fashion industry?
  3. Describe the consumption stage of the apparel supply chain and how consumers can be more sustainable with their clothing.

This article was developed with the support of Kelsey Reddick for and under the direction of O.C. Ferrell, Linda Ferrell, and Geoff Hirt.


Amanda Mull, "This Is What Happens to All the Stuff You Don’t Want," The Atlantic, December 11, 2023,

Céline Semaan, "What Needs to Happen to Tackle Fashion’s Climate Impact," Time, September 30, 2023,

Joel Millman, "A Plan to Nurture a Circular Economy in Fashion With Unsold Clothes," Bloomberg, December 6, 2023,

Patrick Coffee, "Retailers Enlist AI in Fight Against Returns," The Wall Street Journal, December 18, 2023,

United States Environmental Protection Agency, "What Is a Circular Economy?"

Zahra Hirji, "How Circular Fashion Can Help Fight Climate Change," Bloomberg, July 5, 2022,

About the Author

Linda Ferrell is the Roth Family Professor of Marketing and Business Ethics in the Raymond J. Harbert College of Business, Auburn University. She was formerly Distinguished Professor of Leadership and Business Ethics at Belmont University. She completed her Ph.D. in business administration, with a concentration in management, at the University of Memphis. She has taught at the University of Tampa, Colorado State University, University of Northern Colorado, University of Memphis, University of Wyoming, and the University of New Mexico. She has also team-taught classes at Thammasat University in Bangkok, Thailand.

Profile Photo of Linda Ferrell