ENSURING A JUST AND FAIR TRANSITION

In transitioning to a circular economy, it is critical that key relevant social and political issues are not neglected in favour of purely economic considerations. As noted in the Chatham House research paper entitled ‘Promoting a Just Transition to an Inclusive Circular Economy’73, ‘“Combining circular economy policies with social protection measures will be important in order to ensure that the burden of efforts to promote circularity will not fall on the poor through worsening working conditions and health impacts, reduced livelihoods, or job losses”. The COP24 Just Transition Declaration, signed by 53 countries in 201874, emphasised international concern over the potential for stranded workers and communities, and recognised the need to support these groups to build broad societal support for the transition to decarbonisation75.

A just and fair transition to a circular fashion ecosystem looks to ensure that the opportunities and benefits on offer in the target state are shared equitably across society. This means that all people have access to a viable, prosperous, and secure future76. It also recognises that the transition may represent a moment of instability and fragility for some individuals, communities, businesses, and nations, and that they will need support to avoid being left behind and to take advantage of the opportunities created. Typically, it is the most vulnerable in society who face the largest challenges in adapting to change, and the transition offers a moment in which to address not just existing inequalities, but also historic ones77.

Within the future circular fashion ecosystem, the shift towards circular business models, including clothingas-a-service, repair, take-back services, and resale, will entail significant changes to the supply chain. This will result in a different suite of jobs, and investment in skill development to fulfil these roles. As Dr Ke Wang, Knowledge Lead at PACE, stated in our stakeholder interviews:

“The circular transition will shift jobs from upstream extraction and manufacturing to downstream collection and recycling. It has been estimated that overall, the circular transition will result in a net increase in jobs globally. But each country will look different. Asia, for example, is a large base of both cotton cultivation and clothing manufacturing. On the other hand, jobs in the mid-stream (such as repair and resale) are located close to consumers. Therefore, moving to a circular economy may result in an initial net loss of jobs in the fashion industry in some Asian countries.”

This represents a likely outcome of the shift to a circular fashion ecosystem and demonstrates the value of ecosystem modelling, as cited in our recommendations, in mapping out system changes. During this period of change, the fashion industry must be mindful of its social impact, particularly where the risk of modern slavery remains. According to Simon Platts, Responsible Sourcing Director at ASOS, commenting on UK manufacturing, it will be important to educate and empower workers on their rights and “...work with the community, councils, government, retailers, stakeholders to ensure that this becomes a reality so that we can create a level playing field.”

The imbalance of socio-economically disadvantaged citizens across the entire supply chain was an insight that emerged from our CFE Industry roundtable. Many people buy less expensive clothing out of necessity. Since increasing the amount of recycled materials or improving the longevity of an item often comes at a higher financial cost, initiatives aimed at these outcomes could result in the items being less affordable. There is a perception that sustainable fashion means a higher price point, which needs to be considered in business decisions. The fashion industry must remain accessible.

Within the Phase 1 research, literature on the social and economic impacts of a circular transition was reviewed. While the importance of ensuring a just and fair transition is increasingly being recognised, current research is often highly speculative on the social and political ramifications of the changes ahead. We have endeavoured to incorporate the principles of a just and fair transition in our recommendations for stakeholders where feasible, to create a more holistic outcome and have provided certain actions that reflect the need to invest in, educate, and support workers during such a major economic transition. Such recommendations include ‘supporting manufacturing in the UK’, ‘formalising skills’, ‘directing investment towards circular performance’ and ‘mainstreaming metrics for societal prosperity’.

As outlined in ‘The Circular Fashion Ecosystem Project: Next steps’ on pages 93-94, however, specific targeted research into the complexities of balancing environmental and societal needs throughout the transition with specific reference to the fashion industry should be completed and integrated into Phase 2, to develop an appropriately phased implementation. Ahead of that research, we present below some considerations and opportunities for industry stakeholders as they engage with the transition to a circular economy. These should be considered as cross-cutting themes which are relevant across all the target outcomes, action areas and recommendations laid out in this report.

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Supporting and protecting workers’ rights

  • As labour markets transition to a circular fashion economy, governments and businesses will need to work with social enterprises and unions, and invest in upskilling or retraining workers who find themselves under-utilised or unemployed. For example, there will likely be a shift in global employment as jobs are created in sortation and recycling industries, while they disappear in virgin fibre production, manufacturing and extractive industries. As part of this, workers should be supported to relocate to enable job market matching across the economy78.
  • It will be vital that the government consults on the implementation of an EPR scheme and the potential consequences of diverting textile waste material from foreign to domestic markets. For example, halting UK exports of textile waste material could mean a loss in income and jobs for people employed in recycling industries abroad79.
  • It will be essential to focus on training and recruiting traditionally marginalised groups. The fashion industry could for example, create and support diversity and inclusion initiatives that help under-represented designers and manufacturers contribute to circular economy textile work.
  • Maximising the quality of labour-intensive jobs through establishing decent and safe working conditions and fair wages will be essential as a minimum standard for all workers throughout the fashion industry80.

Knowledge, collaboration, and consultation

  • Effective multi-stakeholder collaboration will enable the sharing of resources, knowledge, and ideas on implementing circular economy principles to ensure that no one is left behind. For example, stakeholders could look to publicise all research outputs, in publicly accessible formats, and where they are not commercially sensitive, to enhance wider industry knowledge for our collective advantage.
  • It will be key to conduct inclusive research to allow for a diverse set of stakeholders to be consulted and recognised. This needs to include all levels beyond Executive, but also those who are considered to be working “frontline” throughout the fashion supply chain. This is particularly important to ensure that traditionally marginalised groups have their voices heard and included in the transition.
  • Research funding must be provided to a more diverse set of stakeholders in the supply chain, to enable action-oriented outcomes to benefit a wider group of stakeholders. For example, research can be conducted by industry in collaboration with academia to remove the siloed approach that persists in this key area.
  • Companies operating in open-loop systems must consult with both UK and global communities living near their operational facilities. This is particularly important in cases where a company’s facilities have a harmful environmental or social impact.

Investing in the future

  • It is fundamental that internet access and other enabling technological and transportation infrastructure for a transition to a circular economy continues to gain investment and see improvement while remaining affordable. This will allow individuals to improve their digital literacy and engage with the, frequently digital, sharing economy. Ensuring such access is critical to enabling individuals and workers to thrive in a circular economy81.
  • Targeted assistance programmes will be required for many low- and middle-income countries that are negatively impacted by the transition to more circular practices, such as through a resultant loss in trade and jobs82.
  • It is clear that the transition to a circular economy offers a unique opportunity for the fashion ecosystem to reset and establish new social standards and relations to benefit all stakeholders. Individuals, communities and regions must be supported to take advantage of the opportunities on offer and must not be left behind, as has happened in previous economic transitions. The provision of investment and support will be key to enabling this, and government should look to lead from the front to champion a fairer economy.

THE CIRCULAR FASHION ECOSYSTEM PROJECT: NEXT STEPS

The IPF Circular Fashion Ecosystem Project comprises three distinct phases:

Phase 1 - Research and recommendations
Phase 2 - Developing the roadmap for change
Phase 3 - Implementation of the target state

With this report representing the culmination of Phase 1, it is important to look ahead to Phase 2 to consider how to deliver the UK circular fashion ecosystem. This is in preparation for Phase 3, where full, cross-stakeholder action will be required to implement the target state. Phase 1 sets out a bold vision for change and a strategic framework that will act as a blueprint for driving circularity within the UK fashion and textiles industry. Phase 2 will require buy-in from all stakeholders to begin the transition from a vision to reality. An optimal path must be charted for how best to implement the necessary actions within a defined timeframe. As depicted in the ‘Stakeholder actions and interconnections’ diagram on pages 54-55, all proposed recommendations require actions by multiple stakeholders, with one stakeholder group taking the lead and others playing an enabling role. Phase 2 will involve the creation of a time-bound roadmap for implementation. Our recommended approach for developing this roadmap is shown in ‘A recommended approach to phase 2 of the CFE Project’ below.

Building on input from all relevant stakeholders (item A), we recommend conducting an assessment of the 30 recommendations against multiple criteria, to develop the ‘Roadmap for change’. The assessment should note characteristics such as:

  • complexity;
  • ease of execution;
  • potential for collaboration;
  • time required for implementation;
  • impact on circularity;
  • societal impacts;
  • level and source of necessary investment; and
  • opportunity to leverage existing initiatives.

The ‘Roadmap for change’ assessment (item B), would enable identification of those activities that represent ‘quick-wins’, those that have the highest intervention potential, and those that require the most extensive change. The collaboration involved in its creation would also further pull stakeholders together to realise the vision.

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Recommendations 

Additional output from this analysis could be used to provide supporting information for project proposals and bid writing to obtain investment. It will also unearth the specific interdependencies essential for developing a critical path of activities for the time-driven roadmap (item C). Some of the recommendations from Phase 1 will be less complex to implement, easier to fund, and more readily achievable in a short timeframe. Others will require multiple conditions to be met, extensive collaboration, and very significant investment. The critical path will take these variations into account through description of short-, medium-, and long-term activities and will include the phased requirements for business cases (item E).

The challenge of balancing the environmental and societal impacts of the transition to a circular system are widely acknowledged. In developing our vision and recommendations, we have taken the views from existing literature together with those expressed by stakeholders into account, with the aim of creating a more holistic outcome. However, as outlined in ‘Ensuring a just and fair transition’, current research is often highly speculative on the social and political ramifications of the changes required and not sector-specific. As such, it is recommended that targeted research on how the transition to a circular economy for the fashion sector will affect individuals, communities, and societies is conducted (item G). This would benefit both the circular fashion ecosystem and the wider circular economy transition. This research should feed into the ‘Roadmap for change’ assessment to enable an appropriately phased implementation plan to be developed.

Whilst some high-level indicative financial modelling was performed as part of Phase 1 of the CFE, and presented in ‘Modelling financial impact of the circular fashion ecosystem’, it was not intended to be the basis for a business case or for attracting investment. The results generated from the scenario-based analysis provided useful insight into the potential value creation for the downstream ecosystem through moving to circular behaviours. Most, if not all, of the recommendations presented will require investment and as such, will require comprehensive financial data on for building a business case. It is therefore recommended that a full financial model is created (item D). The model should be based on rigorous assumptions agreed between stakeholders such that the output can be used for the development of robust business cases (item E) required to attract investment (item F).

Stakeholder engagement and collaboration is key to taking our collectively developed vision and executing the clear path that will be laid out in Phase 2; to include pilots and proof of concepts wherever possible. Phase 3 will begin realising the transition, requiring multiple stakeholders implementing the recommendations in parallel to attain the collective goal. Entirely dependent on the recommendations and associated projects to be executed, Phases 2 and 3 can overlap, with certain initiatives accelerating to Phase 3 implementation ahead of others. This overlap is expected, given the varied nature and complexities of the next step projects to be delivered by the Institute of Positive Fashion. Whether from pilot-scale execution of innovation projects, changes to policy, or full industry collaborations, what is presented here as the output of Phase 1 sets the ambition and our clear vision for change.

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