The fashion sector is taking a lead on disruptive "circular economy" business models.
"The new business models we're seeing emerge hold the key to unlocking value and creating supply/demand-side competitive advantage through the circular economy."
That is the view of Peter Lacy, managing director of Accenture Strategy for the Asia Pacific region. Talking from Tokyo as part of Accenture's Sustainability 24, Lacy said at least five business models are coming to the fore:
- Circular inputs: new ways of thinking about the inputs and the raw materials.
- Output recovery: recovering useful resources from products that are discarded.
- Product life extension: elongating the useful life of products and services.
- Sharing platform: opening up new ways of sharing and harnessing technology to use assets more effectively.
- Product as a service: a shift from products to services and from consumer-based models to user-based models.
Lacy said the circular economy is no longer just about the supply side, but is becoming much more of a customer proposition: "Companies that think circular are redesigning their products and services with a much greater — and much more acute — understanding, not just of the wants and needs of their customers, but the way in which they use and then dispose of products and services. That gives you an edge in terms of your customer proposition."
Eva Karlsson, CEO and creative director of Houdini Sportswear, highlighted how her company has tapped into the circular economy to grow its business. "When we design products and develop products, we look at them as wearable 'multitudes.'" They have to be long-lasting, and they have to be versatile. And they are performance-driven in the way we develop them, not style-driven. So there's a big difference in how we look at products compared to, say, the fashion industry."
She added that the business is also looking at reuse, repair and rental business models for its products: "Rental is the best example of how we are pushing boundaries. If you go skiing for one week, why would you want to own a shell? It just hangs in your wardrobe. So, rent one." Karlsson said that 65 percent of Houdini's products are produced under a circular versus linear model.
Another innovative approach is being taken by textile company Dutch aWEARness. Rien Otto, founder and creative director, said when developing new products the focus is to look first at the performance required of the end product or the user and then design around that. The user then pays to use the garment for a fixed period, after which it is returned to the company, shredded and melted down into new yarn.
Similarly, H&M introduced a garment collection program last year to prolong the useful life of its clothing. Henrik Lampa, environmental sustainability manager, said they were looking to increase the percentage of fibers that go back into commercial use. It is now looking to the paper and pulp industry for inspiration to transform the industry.
"We see potential when it comes to chemical recycling. But we need more innovation and more capacity in chemical recycling to provide for the possibility of cellulose and different synthetic fibres being reused," he said.