Circular Economy  - What is it about?

Article published by Mecki Naschke

Circularity has recently become a buzzword in the textile sector, too. The general concept is not new, but since the EU started to actively promote circular economy in 2019, it has considerably gained momentum. Circular economy is very useful as a concept that may serve your business as a goal. You may use it to align, to sort and to prioritise all your efforts in the wider field of sustainability.

What is the concept of circular economy?

The core concept of circular economy is, that products are regarded as a temporary stage of a material.

In the current linear economy model, textile companies are seen as producing and marketing products. By adding the life-cycle perspective, a shift happens: Companies are defined as services, that need material for a given period of time and turn it into products. These products have a specific life-time. Following this perspective, the specific material flow that is managed by one company, becomes one part of a much bigger material-flow puzzle.

The production-stage is followed by a waste-stage or “end-of-useful-life”-stage, which is very typical for the current linear economy thinking. In a circular economy, that waste would be regarded a “raw-material”, and the circle would continue from there. Within the circular economy model, the goal is not to produce products, but to manage/operate material, and to operate the material within loops that become increasingly circular. To achieve circularity, a basic distinction is required between two kinds of loops:

  1. Organic material can be recycled through a composting circle, and can be used for materials such as cotton or wool and any organic matter such as starches, natural oils and plants etc.
  2. Technical materials require technical recycling and examples are glass, metals, or polyester.


Circularity for the textile sector a feasible concept?

When applied to the textile sector, the bigger picture includes many more options to increase material-efficiency besides those two standard circles. For example cotton and wool can be recycled which usually increases material efficiency compared to composting -  for example when natural fibres are not turned into viscose or casein fibres, but are re-used as fibre material. The circular economy concept goes as far as to include “alternative business models” in particular those that are now collected under the title of “sharing economy” and are models, where materials and products are not “owned” but leased, rented, borrowed or shared instead.

What are the benefits?

Using the circular perspective makes it possible to identify further efficiency gains within the supply chain, that would be overlooked with a linear economy perspective. It is particularly interesting for actors who operate within tight markets, and especially for those who do already maintain stable long-term partnerships with suppliers and clients. When looking at a concrete business, circular economy may seem theoretical and far away from the daily challenges at first, but it turns out to be a truly holistic approach that will help to prioritise and select measures wisely, i.e. according to their overall financial impact and according to their impact and contribution to the more general transition of the whole sector to a circular economy. It can also help to frame all the engagement nicely and help to convey the activities, priorities and steps in a comprehensible way.

What are the challenges and requirements?

You chose and design your loops, but you will definitely need to collaborate with partners who do manage the other half or further pieces of your loops. You might need to elaborate contracts that allow you and your partners to share investments, gains and risks within the partnership, and you may wish to fix the partnerships longer-term for both shared risk and security of investment.

Our Recommendations on how to start circularity

There is no easy answer as this depends very much on your business. The particular setting and history also personal preferences, experience and all need to be taken into account to identify the best fit for that business. Here we would like to share three of the most common first steps. If you wish to start on your own, then starting with one of these will not be in vain and is likely to give you an interesting first impression:

Raw Materials

In case your choice of raw-material is tied to long-term investments and can therefore not be revised shortly, but even when your business allows you to reconsider it more frequently, the choice of raw-material is one possible starting point. Questions you may ask are:

  • Is my raw-material produced / extracted sustainably? Are there more sustainable choices available?
  • Could I use another raw material and what are sustainable options for the alternative material?
  • How are the partners distributed geographically for which of the options?
  • What would closed loops look like for which option?
  • Which partners would be ideal to close your loops? How could this look like for the different material choices?
Chemicals (SVHCs)

A very common obstacle for businesses who start manage material in loops are “substances of very high concern”, SVHCs. When SVHCs are present in any given raw-material, their presence limits the options for further uses, or at least increase test-costs for material-grading. A public list of SVHCs that are detected in textiles can be found from the German Region of Baden-Wuerttemberg: (German only, textiles towards the very end):

One option is to start by reducing the use of SVHCs as much as possible, exploring possibilities to substitute these completely. You would collect chemicals inventories throughout the supply-chain, and trace any SVHCs. At gsm we are very experienced and can perfectly support you with this step.


When you consider your options to reach circularity, or even if this is your first approach, you will realise that circularity is not about your business as a stand-alone, but can only produce results when addressed in a way integrated with your supply-chains and customers building partnerships – it may even mean to engage with consumer. Your business strives mostly due to very special partnerships? When particular relations are key to your business, you may as well start your circularity-project jointly with your key-partners. Visualise your material flows and examine closely any potential changes that could make it circular – maybe even inviting further partners to help you close your loops. For this step, it is vital to keep the focus as wide as possible, and to not close off options too rapidly, even if they have failed previously in a linear thinking. Circularity is a way to help all actors within your supply chain identify priorities and move jointly. The concept helps to prioritise activities and to join forces especially when used across the supply-chains.

We can assist your company through the collection and assessment of ideas as well as guide you through the decision-making process and prioritisation and we would love to support you during the start, the actual transition and any implementation issues you may have. Depending on your company's needs and existing processes, tailored solutions can be identified and implemented. We can support you using tools such as guided brain-storming and risks assessments, particularly also when these involve a multitude of partners or further stakeholders.

gsm Global Sustainable Management GmbH
  • Von-Groote-Straße 28
    50968 Köln

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gsm is an expert for sustainable value creation. We offer strategic and technical support for brands, retailers and suppliers on social responsibility, chemical management and environmental protection.

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