Circular Economy

The circular economy is a systems-level framework that aims to decouple economic growth from resource consumption by keeping materials in circulation at their highest value indefinitely. The Ellen MacArthur Foundation (EMF) — the primary source on the framework — defines it as "a system where materials never become waste and nature is regenerated," built on three principles driven by design: eliminate waste and pollution, circulate products and materials at their highest value, and regenerate nature. (Ellen MacArthur Foundation, 2026)

The framework contrasts with the dominant linear economy (take–make–waste) and is visualised by EMF's "butterfly diagram," which shows continuous flows of materials through both biological cycles (compost, regeneration) and technical cycles (reuse, refurbishment, remanufacture, recycling). It is the conceptual backbone of the EU's European Green Deal and shapes a growing body of ecommerce regulation — including ESPR (Ecodesign for Sustainable Products Regulation), Digital Product Passport, and Extended Producer Responsibility (EPR) for textiles.

EU policy context

The EU's second Circular Economy Action Plan (March 2020) is described by the European Commission as "one of the main building blocks of the European Green Deal." (European Commission, environment.ec.europa.eu, live July 2026)

Europe's current circularity rate is approximately 11.8% (as-of 2026-07); the Circular Economy Act — due for adoption in 2026, following a public consultation launched August 2025 — targets doubling that to 24% by 2030. The Act is explicitly framed as an industrial competitiveness strategy, not merely environmental policy: a 2026 EMF podcast (Ep 208) characterised it as situating "circularity as a pillar of industrial competitiveness for the EU, less dependent on volatile raw material imports." (Ellen MacArthur Foundation, Ep 208, 2026-02-17)

As of 23 July 2026, the EU regulatory landscape includes:

Regulation	Status	Key ecommerce implication
ESPR — unsold textiles destruction ban	Live 19 July 2026 (large cos); 2030 (medium cos)	Fashion retailers may not destroy unsold/returned clothes, shoes, accessories; must sell, donate, or prepare for reuse first
ESPR — disclosure obligations	Applies from Feb 2027 (large cos)	Annual reporting of volumes/weight discarded by category, reason for discarding, end-of-life outcomes
Digital Product Passport registry	Live 20 July 2026; first mandatory DPPs Feb 2027	Each serialised product needs a scannable DPP data carrier; textiles/apparel among first product groups
Extended Producer Responsibility (EPR) — textiles	EU WFD adopted 16 Oct 2025; national schemes by April 2028	Brands pay per-unit fees funding collection, sorting, reuse & recycling; eco-modulated in France; Netherlands operational since 2023
Packaging Waste Regulation (PPWR)	In force February 2025	Harmonised secondary raw materials standards
Right to Repair Directive	In force July 2024	Consumers can demand repair of certain product categories
Circular Economy Act	Due 2026 (public consultation closed Nov 2025)	Single Market for secondary raw materials; digitalised EPR; public procurement criteria

The ESPR destruction ban is underpinned by European Environment Agency data: an estimated 4–9% of all textile products put on the EU market are destroyed before use — between 264,000 and 594,000 tonnes annually — generating approximately 5.6 million tonnes of CO2, roughly equal to Sweden's total net emissions in 2021 (as-of 2026-07-17). (European Commission, 2026-07-17)

The Commission's foundational design principle: "Up to 80% of products' environmental impacts are determined at the design phase." (European Commission, environment.ec.europa.eu)

Fashion and ecommerce implementation

EMF CEO Jonquil Hackenberg (who succeeded Andrew Morlet in March 2025) identifies three systemic levers for fashion circular transition: (1) drive adoption of circular design and material choices; (2) create conditions for resale, rental, repair and remaking to scale; (3) unlock collection, sorting, and recycling infrastructure at scale. (EMF, Ep 206, 2026-01-12)

EMF frames "every second, the equivalent of a rubbish truckload of clothes is burnt or buried in landfill" as a symptom of both environmental unsustainability and economic fragility. (EMF, fashion overview, 2026)

Bleckmann (a fashion logistics provider) identifies three primary circular business models for fashion ESPR/EPR compliance: (1) repair and lifetime extension, (2) take-back and resale, and (3) subscription/closed-loop system/rental. (Bleckmann, 2026-05-20)

Brand examples cited by Bleckmann (2026-05-20, citing 2024–2025 programme data):

• Nudie Jeans: 33 repair shops across 20 cities; ~500,000 total repairs to date; 68,342 repaired in 2024; 3,513 refurbished jeans sold under "Re-use collection" label in 2024; free home repair kits available; no purchase required for repairs.
• Patagonia Worn Wear: >212,000 used items kept in circulation; 174,799 repaired globally (as-of 2025); attracts customers avg 10 years younger than typical brand profile.
• Nuuly (URBN rental arm — Urban Outfitters/Anthropologie): $98/month, 6 garments; turned first profit in 2026 — US fashion rental viability signal. (as-of 2026-05-20)

EPR implementation: country differences

Country	EPR status (textiles)	Notable feature
France	Operational (Pro Refashion)	Eco-modulated fees; leads European resale market
Netherlands	In force since 2023 (full fees from 2025)	50% recycling/reuse by 2025 → 75% by 2030; 10% Dutch reuse by 2025 → 15% by 2030 (as-of 2026-05-20)
Spain	Implementing 2025	National scheme underway
Italy	In consultation (April 2025)	Draft decree; slower timeline
UK	10-point industry blueprint for mandatory scheme published early 2026	Cross-sector coalition of brands, trade associations, recycling firms

Bleckmann warns that brands not building their own circular infrastructure risk ceding brand loyalty to PRO (Producer Responsibility Organisation)s like Refashion, which become "indirect competitors" in the circular value chain. (Bleckmann, 2026-05-20)

EMF policy brief warns that many EPR schemes "risk putting too much emphasis on recycling and not enough on keeping products in use for longer," limiting true environmental benefits. (EMF briefing via Bleckmann, 2026-05-20)

Resale market signals

Recommerce has moved from circular experiment toward retail infrastructure in the EU/UK:

• Vinted is now the third-largest fashion retailer in the UK by customer numbers (behind Primark and Next); reported €813.4M revenue in 2024 (+36% YoY, as-of 2026-02-16); net profit €76.7M; >17.4M UK users; on track for >€1bn revenue in 2026. In France (Q1 2025), Vinted was the top clothing retailer by volume, surpassing Amazon and Kiabi. (Internet Retailing, 2026-02-16)
• eBay/Depop: eBay has agreed to acquire Depop from Etsy for ~$1.2bn, signalling that scale players believe resale has further headroom. (Internet Retailing, 2026-03-03)
• UK market: 35% of Brits have bought or sold second-hand apparel online; UK online second-hand fashion expected to reach ~€7bn by 2029; 28% value CAGR from 2019–2025 (as-of 2026-03-03). (OC&C via Internet Retailing, 2026-03-03)
• Global secondhand: ThredUp 2026 Resale Report projects global secondhand apparel market → $393bn by 2030 (10% of total apparel spend, as-of 2026). (Shopify citing ThredUp, 2026)

OC&C Strategy Consultants identifies four conditions for profitable brand-level resale: (1) strong brand equity and product durability, (2) healthy margin structure, (3) product benefit from certification/refurbishment, (4) a reason to keep customers in the brand ecosystem (trade-in credit, membership, access to drops). (OC&C via Internet Retailing, 2026-03-03)

Consumer behaviour and adoption drivers

Accenture research (previewed February 2026, EMF Ep 209) found five "hidden drivers" consistently present when circular behaviour thrives across diverse cultural contexts: financial reinvestment, social infrastructure, narrative/emotional attachment, engagement with process, and local resilience. (Accenture/EMF, Ep 209, 2026-02-24)

The research found that consumers already practise circularity without calling it that: "People are not only capable of being circular, but are already doing it innately and purposefully themselves, but they're not going to call it circular." This challenges the dominant "say-do gap" narrative. (Accenture/EMF, Ep 209, 2026-02-24)

Accenture also found brands often over-build proprietary circular infrastructure when robust local social systems — donation networks, repair communities, deposit-return schemes — already exist: "As brands and companies, we assume that we need to build our own infrastructure, and our own logistics, and own those channels, which is an ego problem as much as anything else." (Accenture/EMF, Ep 209, 2026-02-24)

Beni (a browser extension collating secondhand options across platforms) frames the consumer proposition as: "I'm selling you style, I'm selling you affordability. Sustainability is the gift with the purchase." — positioning price and convenience, not ethics, as the primary purchase driver for circular products. (Kate Sanner, Beni CEO, Futerra/Mastercard panel, 2025-10)

Global policy scale

A Chatham House/UNIDO stocktake found 99 adopted national circular economy policy frameworks encompassing over 4,000 policy actions across 16 sectors, with 26 additional frameworks published since May 2024 — 16 of those 26 from developing countries (as-of 2026-02-17). (EMF, Ep 208, 2026-02-17)

EMF's three priority themes for 2026: plastics and packaging, critical minerals, and fashion and textiles. (EMF, Ep 206, 2026-01-12)

Key terms

Term	Meaning
Butterfly diagram	EMF's canonical visualisation of the CE; shows biological and technical material cycles running in parallel
Circularity rate	% of materials entering the economy that are secondary (recycled/reused); EU: ~11.8% (as-of 2026-07)
Eco-modulation	Adjusting EPR fees based on product sustainability criteria (durability, recyclability, material composition)
End-of-waste	Regulatory status at which a secondary material is no longer legally classified as waste
PRO (Producer Responsibility Organisation)	Body (e.g., France's Pro Refashion) that collectively manages EPR obligations on behalf of brands
Technical cycle	Circular Economy pathway for manufactured goods: reuse → repair → refurbish → remanufacture → recycle
Biological cycle	Circular Economy pathway for biological materials: compost → regenerate