Developing a Korean Extended Producer Responsibility (EPR) Framework through Comparative Analysis of Domestic and International Textile Waste Recycling Systems

Redefining growth for a thriving fashion industryCircular business models represent a significant opportunity for new and better growth in the fashion industry because they decouple revenue streams from production and resource use.Currently, booming models like resale and rental, while they hold great potential, do not always achieve this decoupling and the environmental benefits that come with it.For circular business models to reach their full potential, businesses, supported by policymakers, need to redesign performance indicators, products, and supply networks to fit themand scale a wider range of these models.Now is the time to explore a new way of doing business in fashion.In recent decades, the fashion industry has experienced ever growing levels of production, coupled with shrinking profit margins and increasing negative environmental impacts.Clothing production doubled between 2000 and 2015 while, during the same period, utilisation i decreased by 36%. 1 This trend led to the global fashion industry producing around 2.1 billion tonnes of greenhouse gas (GHG) emissions in 2018 -4% of the global total. 2 On top of this, due to ever lower prices and lost revenues -from overstock, stockouts, and returns -profit margins of the world's leading apparel retailers decreased by an average of 40% from 2016 to 2019. 3 i Utilisation is defined as the average number of times a garment is worn before it ceases to be used ii Depop, Rent the Runway, The Real Real, Vinted, Poshmark, Vestiaire Collective, and thredUP iii To meet the 1.5-degree pathway set out by the Intergovernmental Panel on Climate Change (IPCC) and ratified by signatories to the 2015 Paris agreement, the fashion industry needs to reduce emissions by around 50% -or 1.1 billion tonnes -by 2030.Source: McKinsey & Company and Global Fashion Agenda, Fashion on Climate ( 2020).If rental, resale, repair, and remaking reach a 23% market share by 2030, in aggregate, this could lead to an overall CO2e emission reduction for the fashion industry of up to 16%, providing up to a third of the abatement needed to be on a 1.5-degree pathway.See Appendix page 69 This was exacerbated in 2020 by the impacts of the Covid-19 pandemic, which saw the industry suffer a 90% decline in profits.4 Circular business models represent a significant opportunity for new and better growth because they decouple revenues from production and resource use, maximising environmental benefits.As a key part of the transition to a circular economy, circular business models present an opportunity for the fashion industry to -by design -decouple its revenue streams from production, i.e. to make more revenue from fewer new products.This means less need for raw material production and therefore lower GHG emissions, pollution, and pressure on biodiversity.Four business models (resale, rental, repair, and remaking), which all have the potential to decouple revenue streams from production and resource use, currently represent a USD 73 billion market.Since 2019, and despite the Covid-19 pandemic, seven ii rental and resale platforms have reached valuations above USD 1 billion.These business models are expected to continue growing as customers increasingly adopt new ways of accessing fashion, motivated by factors such as affordability, convenience, and environmental awareness.Resale, rental, repair, and remaking have the potential to grow from 3.5% of the global fashion market today to 23% by 2030, representing a USD 700 billion opportunity with the potential to provide a third of the emission reductions necessary to put the fashion industry on a 1.5-degree pathway.iii This would amount to a reduction of around 340 million tonnes of CO2 equivalent (CO2e) annually by 2030, more than the annual GHG emissions of Thailand or France.5 As well as reducing GHG emissions, business models that increasingly decouple revenue generation from the use of virgin resources have also been shown to reduce pressure on biodiversity by cutting the amount of land needed for raw material production and the pollution associated with virgin fibre processing.6 Currently, booming sectors like rental and resale, while they have great potential, do not always realise the environmental benefits of decoupling revenue streams from production and resource use.There are a number of barriers to achieving this decoupling and successfully developing circular business models.One is performance indicators and associated customer incentives.A business measuring its success by sales volumes might incentivise product take-back for resale, remaking, or recycling by offering vouchers for new products which, while promoting circular business models, also grows the core linear business model.