This report maps the emerging circular textile business ecosystem in Europe to inform the co-design of TexMat’s automated collection and sorting business model. It combines a systematic literature review with TexMat consortium input to provide an updated picture of stakeholders and circular business models, as well as the regulatory, market and socio-environmental logics shaping post-consumer textiles in Europe. The ecosystem is structured around nine interdependent stakeholder groups: consumers and users, brand owners, producer responsibility organisations, collection and sorting operators, reuse and second-hand operators, recycling operators, technology providers, public authorities and policymakers, and civil society and non-governmental organisations. Their interactions are illustrated through national ecosystem case boxes from Finland, the Netherlands, and Spain, highlighting their corresponding material, financial and information flows, as well as critical dependencies. The sector currently faces a paradox: whilst textiles are amongst the most environmentally intensive consumption areas in the EU, with rising per capita consumption, separate collection and fibre-to-fibre recycling rates remain low. At the same time, the compliance ecosystem is rapidly consolidating around the EU Strategy for Sustainable and Circular Textiles, the Ecodesign for Sustainable Products Regulation, including the Digital Product Passport, and the Waste Framework Directives. These institutional logics push the system towards ecodesign, traceability and producer responsibility, but are hindered by fragmented end-of-waste criteria, delays and uncertainties in national Extended Producer Responsibility scheme implementation and obstacles to trade in secondary raw materials. Within this context, this report recognises and adapts to the textile industry’s four key circular business model categories in line with the circular business model framework of the European Environment Information and Observation Network: longevity and durability; access-based models; collection and resale; and recycling and material reuse. Across models, the current business case for circular textiles is described as weak: with labour-intensive manual sorting, competitive costs for virgin materials, under-scaled recycling capacity and fragmented reverse logistics networks undermining profitability. This report therefore stresses the need for hybrid revenue architectures that combine Extended Producer Responsibility funding, service fees, long-term offtake agreements for recycled materials, public support and efficiency gains from automation and digitalisation, rather than relying solely on commodity sales.Enabling factors include digitalisation – such as AI-enabled and Near-Infrared-based automated sorting, Digital Product Passports, the Internet of Things, and blockchain – which serve as the data backbone for traceability and coordination across business-to-business networks; efficient multi-actor reverse logistics that provide sufficient, predictable feedstock flows; targeted financial instruments and fiscal incentives for circular practices; and green skills development across the value chain. Social and environmental mission logics from non-governmental organisations, social economy organisations and critical research serve as counterweights to pure market logics, warning that some reuse, recycling and export practices can displace rather than reduce impacts, whilst also calling for more European-based reuse practices, better control of exports and the formalisation of the informal sector. This report concludes that business model co-design must frame TexMat as a networked service helping brands, producer responsibility organisations, and authorities comply with emerging regulations; embed consumers as active co-producers through digital engagement tools and incentives; leverage automated presorting to address the cost bottleneck of manual sorting; and design multi-stakeholder governance, revenue-sharing, and risk-sharing arrangements that align incentives across the ecosystem.
Bouzada-Novoa et al. (Mon,) studied this question.