Acknowledgements
In this module Francesca Romana Rinaldi, Director of the Monitor for Circular Fashion SDA Bocconi School of Management, is talking about circular business models in fashion.
This toolkit was drafted thanks to the financial support of the European Innovation Council and Small and Medium Enterprises Executive Agency (EISMEA) COSME Programme, under the Call for proposals COSCIRCFASH-2019-3-02.
We would like to acknowledge the contribution we received from:
•The consortium of the project
•Fashion Revolution
•All other stakeholders we have engaged with in the drafting process
•In this module Francesca Romana Rinaldi, Director of the Monitor for Circular Fashion SDA Bocconi School of Management, is talking about circular business models in fashion.
Background information and inspiration
•Section 1: Background information and inspiration
•Section 2: Case studies
Case studies
•Section 3: Goals and potential shift
Goals and potential shifts
•Section 4: Reflection exercises
Reflection exercises
•Section 5: Worksheets, tools and templates
Worksheets, tools and templates
•Section 6: Resources &
Resources & references
Section 1: Background information and inspiration
Circular economy definition
Source: European Commission (2015): Closing the loop – An EU action plan for the Circular Economy
“Circularity of a production process refers to the ability of such process to retain the value of products, materials and resources in the economy for as long as possible and to minimise to the greatest possible extent the generation of waste along all the steps of the value chain”
The circular economy is based on three grounding principles:
Eliminate waste and pollution
Regenerate Nature
Circulate products and materials
Key enabling factors:
Eco-design
Multi stakeholder collaboration
Economic conditions for scaling-up
Linear business models
take make dispose
Circular Business models
take make remake
Sustainability vs circularity
Sustainability and circularity don’t always match because of the presence of some trade-offs:
Environmental & social trade-offs
Economic trade-offs
Operational trade-offs
Quality trade-offs
Section 2: Case studies
Below you can find a selection of inspiring start-ups implementing circular business models
Quid Italy
Dressyoucan
Italy
Vestiaire Collective
France
End-of-life / upcycling Life Extension / re-commerce
Sourcing the raw material from the Italian fashion and textile players, using production surpluses and deadstock fabrics
Providing jobs to vulnerable people, especially women
Combining social and environmental positive impact
Vinted
Lithuania
Product as a service / rental Sharing / P2P platform
Renting of fashion clothing and accessories for women and kids
Reducing environmental impact and fashion consumption
Leading a global online marketplace for desirable preloved fashion
Certified B Corporation
Extending the life of clothes
Peer-to-peer marketplace and community for second-hand fashion
Ecosystem where users directly get money back from other users for the items they give away
quidorg.it dressyoucan.com
vestiairecollective.com vinted.com
Section 3: Goals and potential shift
Why should we be investing in circularity? What are the reasons
Obstacles & advantages of implementing circularity in fashion
Top ranking circular fashion
Top ranking circular fashion
AVAILABILITY OF INFRASTRUCTURE
EXTERNAL CULTURAL OBSTACLES
LAW AND REGULATORY OBSTACLES
AVAILABILITY OF EXTERNAL COMPETENCIES
AVAILABILITY OF INTERNAL COMPETENCIES
INTERNAL PROCESS INERTIA
INTERNAL CULTURAL OBSTACLES
How to shift from linear to circular fashion business models?
Transparency and traceability are key enablers to accelerate sustainability and circularity (UNECE, 2022).
Knowing entirely your value chain is essential to make the shift from linear to circular fashion business models.
Here are 6 activities of the circular fashion value chain:
Traceability and transparency have a direct impact on all activities of the circular fashion value chain.
5 Circular Fashion Business Models
KEY ENABLERS: TRACEABILITY & TRANSPARENCY
SUSTAINABLE INPUTS END OF LIFE LIFE EXTENSION
SHARING
PRODUCT AS A SERVICE
•DESIGN FOR CIRCULARITY
•CIRCULAR INPUTS
•CO-CREATION
•ON-DEMAND PRODUCTION
•MODULARITY
•REPAIRING SERVICES
•RE-COMMERCE
•RECYCLING AND REGENERATION
•UPCYCLING
•DOWNCYCLING
•P2P PLATFORMS
•RENTAL, SUBSCRIPTION RENTAL AND LEASING
Recycling is among the most relevant of circular fashion activities…but it is not the only one!
WASTE MANAGEMENT AND GREEN LOGISTICS
Section 4: Reflection exercises
Which circular business model?
Exercise 2
Exercise 1
Is your current business model linear vs circular?
Please define it with a short sentence (max 20 words).
Which circular business model(s) are you adopting or planning to adopt for the future?
Please select among the 5 circular business models below and consider the related value-chain activities.
Write a short paragraph on the relevance of the selected circular business model(s) for your business.
Section 5:
Exercise 3
Which circular fashion activities should be implemented?
Considering the relevant circular business model(s) identified in the previous exercise, highlight the circular fashion activities to be implemented.
You can select from the list below.
Modularity solutions
Waste management
Worksheets, tools and templates
Needs
Exercise
Repairing services
Co-creation
Design for circularity
Which are the main needs for a SMEs (small medium enterprise) to implement circularity in fashion?
Take some time to write down a full list of the needs of your business.
Downcycling
Now condense them down to the top 3 and see how they relate to circularity and circular business model(s).
Re-commerce
Upcycling
Green logistics
Circular inputs
Recycling and regeneration
Sharing through peer-to-peer platforms
On-demand production
Rental, subscription
rental and leasing
Obstacles
Key stakeholders
Exercise Exercise
What are the main obstacles to overcome?
Take some time to write down a list of the main obstacles you can foresee in the implementation of circularity in fashion.
Which are the three main stakeholders to involve in your business? How are you planning to engage them?
Take some time to map the key stakeholders for your business.
You may choose from the stakeholders below:
Other companies present in the fashion industry
Other companies present in other industries
Suppliers
Final users
Investors
Government
Non-governmental Organizations (NGOs)
International Organizations (IOs)
Other stakeholders
Now condense them down to the main 3 and reflect on strategic approaches and tools to engage them.
Section 6: Reading list, further resources & references
Quotes
and inspirations
Buy less, choose well, make it last
Vivienne WestwoodIf we could build an economy that would use things rather than use them up, we could build a future.
Ellen MacArthurEverything we make pollutes. The most responsible thing we can do is to make each product as well as we know how so it lasts as long as possible.
Yvon ChouinardConsider this: all the ants on the planet, taken together, have a biomass greater than that of humans. Ants have been incredibly industrious for millions of years. Yet their productiveness nourishes plants, animals, and soil. Human industry has been in full swing for a little over a century, yet it has brought about a decline in almost every ecosystem on the planet. Nature doesn’t have a design problem. People do.
Michael Braungart & William McDonoughTerminology
Business Model
A business model is the way a company is organized, its basic architecture, made up of: the value proposition, the profit formula, the key resources, and the key processes.
The value proposition
“an offer system that allows customers to solve a problem more effectively, reliably, practically and conveniently, at a specific price”1
The profit formula
“the economic model that defines how the company creates value. It specifies the assets and structure of fixed costs, as well as the margins and the speed necessary to cover them”1
The key resources
“the unique nature of the people, technology, products, structures, equipment, financing and trademark, necessary for the value proposition to the customer”1
The key processes
“the means through which a company maintains the value proposition for the customer in a sustainable, repeatable, modular and manageable way”1
Sustainability
The term Triple Bottom Line (TBL) –People, Planet and Profit – was introduced by John Elkington in 1997.
This model set up the key of longterm strategies for companies making the transition to sustainability, based on three important dimensions of sustainable development: environmental quality, social equity, and economic benefits.2
In the simplest terms, the TBL agenda focuses corporations not just on the economic value that they add, but also on the environmental and social value that they add –or destroy.3
Co-creation
Product or service design process in which one or more players of the supply chain, or the final users, are involved directly.4
www.sdabocconi.it/ circularfashion
Circularity
The circular economy is based on three principles, driven by design:
• Eliminate waste and pollution
• Circulate products and materials (at their highest value)
• Regenerate nature
It is underpinned by a transition to renewable energy and materials. A circular economy
decouples economic activity from the consumption of finite resources. It is a resilient system that is good for business, people and the environment.5
ellenmacarthurfoundation. org/topics/circular-economyintroduction/overview
Regeneration
The third principle of the circular economy is to regenerate nature. By moving from a take-makewaste linear economy to a circular economy, we support natural processes and leave more room for nature to thrive.
By shifting our economy from linear to circular, we shift the focus from extraction to regeneration. Instead of continuously degrading nature, we build natural capital. We employ farming practises that allow nature to rebuild soils and increase biodiversity, and return biological materials to the earth. Currently, most of these materials are lost after use and the land used to grow them is depleted of nutrients. If we move to a regenerative model, we begin to emulate natural systems. There is no waste in nature.5
ellenmacarthurfoundation.org/ regenerate-nature
5
1 Johnson, 2010
2 Elkington, 1997
3 Elkington, 2004
4
Further reading
Books
Rinaldi, F. R. & Testa, S. (2014)
“The Responsible Fashion Company” Greenleaf Publishing – Routledge
Rinaldi, F. R. (2019)
“Fashion Industry 2030”
Egea – Bocconi University Press
Rinaldi, F. R. & Testa, S. (2022)
“L’Impresa Moda Responsabile”
Egea
Reports
Ellen MacArthur Foundation (2017)
“A New Textiles Economy: Redesigning fashion’s future”
www.ellenmacarthurfoundation. org/publications/a-new-textileseconomy-redesigning-fashionsfuture
“Monitor for Circular Fashion Report 2021” &
“Monitor for Circular Fashion Report 2022”
sdabocconi.it/circularfashion
Circular Fashion Manifesto 2022
www.sdabocconi.it/upl/entities/ attachment/circular_fashion_ manifesto_2022.pdf
Policy papers
United Nations Economic Commission for Europe (2022)
“Enabling Sustainability and Circularity in Garment and Footwear: Policy Developments and Industry Perspectives on Traceability and Transparency” Geneva: UNECE
www.thesustainabilitypledge. org/toolbox.html