Circular Washing: The Illusion of Sustainability within Circular Business Models

This study critically examines circular business models (CBMs) in the clothing industry and the emergence of “circular washing”, understood as sustainability legitimacy gained through visible circular practices whose effects on primary resource use, new production, or material throughput remain uncertain. Drawing on a longitudinal qualitative dataset from the Finnish clothing sector, this study identifies a set of dilemmas, defined as recurring tensions between circularity ambitions, business viability, and resource-reduction goals, that challenge the effectiveness of CBMs. The study reveals that while practices such as resale, rental, and recycling are widely promoted, they often coexist with sustained or increased production and consumption levels. By integrating legitimacy and decoupling theory, this study conceptualizes circular washing as a legitimacy-oriented form of institutional decoupling. Rather than treating circular washing as a purely communicative issue, the study shows how this institutional decoupling is systemically embedded in CBM dilemmas and calls for more robust indicators and system-level change.