The fashion industry is known to be one of the biggest polluters in the world. According to McKinsey & Company, the industry was responsible for some 2.1 billion metric tons of greenhouse-gas (GHG) emissions in 2018, about 4 percent of the global total. That’s about the same quantity of GHGs per year as the entire economies of France, Germany, and the United Kingdom combined.
With mounting pressure from conscious consumers and environmental activists, the industry is seeking to become more sustainable in its operations. An approach that’s increasingly gaining steam (and media coverage) is to redesign operations around Circular Economy principles.
The Ellen McArthur Foundation describes the Circular Economy as “gradually decoupling economic activity from the consumption of finite resources, and designing waste out of the system.” In the Circular Economy, economic activity continually builds and rebuilds overall system health. It’s not just about making changes adjustments aimed at reducing the negative impacts of the linear economy. Instead, it’s a broader systemic shift that “builds long-term resilience, generates business and economic opportunities and provides environmental and societal benefits.”
While the Circular Economy is undoubtedly a great way to rethink and redefine how we produce goods, what’s the right business model to power it? I believe the answer is a subscription or membership-based business model. Let me explain why.