Illustration by Fernando Cobelo

To help people visualize what a circular economy could look like and bring the challenges down to a closet-sized scale, Emily Bolon (MBA/MPA 2007) recommends the following exercise. First, make a mental tally of the number of garments you’ve cleaned out of your closets over the last year: the retired styles, outgrown sizes, anything you let go because it was no longer sparking joy. Now estimate how many clothes you’ve bought secondhand. “If you’re like most people, the first number is far greater than the second,” says Bolon, who is CEO of Looper Textile Co., which collects used garments in Europe. “And as long as that’s the case, we have a problem.”

It’s one of several, perhaps. The World Economic Forum estimates that the $1.5 trillion apparel industry is responsible for a 2 percent share of global GDP, but a disproportionate 10 percent of global greenhouse gas emissions. There’s also rampant waste and pollution involved in making the clothes we wear—two-thirds of which, after being jettisoned from our closets, get tossed into landfills or incinerated.

Shifting from that linear economic model—from production to consumption to disposal—toward a more circular system is a lofty ambition, and for all its efforts and public commitments, the industry is criticized for not doing more. But a host of emergent technologies, like cloud computing and AI, are unlocking new circular business models that are making scaled solutions more attainable and bringing the idea of a circular economy within grasp. HBS alumni can be found working in ventures up and down the value chain as part of this effort; here are just a few of the ways in which these tech-enabled business models are helping to transform the industry.

WASTE NOT

One of the gaps on the path toward circularity has been “an utter and complete lack of infrastructure,” Bolon observes. Looper Textile Co. was founded in 2023 to address that. A joint venture of the multinational fashion brand H&M Group and the European waste-management company Remondis, Looper Textile Co. collects unwanted textiles from retailers and municipalities across Europe. The company operates facilities in Germany, where garments are sorted with a combination of automation and manual tech, so that the useful life of each piece can be extended. About 60 percent of the items are distributed to a network of resellers, while 35 percent become feedstock for companies making recycled products—old wool sweaters become new ones, or last year’s fashions become tomorrow’s couch-cushion stu⁄ng. The market for recycled materials is widening, Bolon notes, as textile recycling technologies advance from year to year.

The Stockholm-based company is on track to redirect 40 million garments in its first year, with ambitious plans to scale. Bolon envisions a not-too-distant future in which textile recycling is as routine as trash collection. Garbage trucks are already visiting cities and towns the world over to collect glass, paper, and metal for recycling, as she points out; one day textiles will be just another stream. In the meantime, Looper is investing in tech to innovate its collection and near-infrared sorting processes to improve outcomes, explains Bolon, who previously worked in the alternative energy division of the multinational oil and gas company BP and as head of commercial and strategic partnerships for H&M Group.

Looper comes from a desire to decouple growth from resource consumption, an idea that Bolon notes is gaining traction among brands. “The forward-thinking retailers realize they will need to secure access to responsibly sourced materials to generate new garments to sell. They are very positive about being a part of the cycle, and I think their numbers will increase dramatically in the very near term,” she says.

RESALE AT SCALE

When James Reinhart and Christopher Homer (both MBA 2009) founded ThredUp in 2009, the sectionmates wanted to make it easier to buy and sell used clothing. Now one of the world’s largest resale platforms, ThredUp has processed more than 130 million items. Each article arrives by mail before being sorted using visual recognition tools, priced by algorithms, photographed automatically, and offered for sale on its online marketplace. ThredUp is a tech company in the thrift-store business.

Processing 100,000 unique items a day takes careful automation and creates a ton of useful data. Every time a particular cable-knit J.Crew sweater arrives, for example, the company knows how many of them they’ve sold in the past, how many views the item received before it sold, and at what price. The systems actually drive the process and get smarter with each iteration, although humans are around to “fix on an ad-hoc basis,” observes Homer, who serves as COO but also runs the company’s engineering efforts as the former CTO.

The company expects secondhand clothing to develop into a $90 billion market in the next decade and grow faster than any other channel. Part of that may also be fueled by the expansion of resale-as-a-service, which ThredUp introduced in 2018. At that time, brands weren’t terribly interested, but attitudes have shifted, Homer says. “We believe that every brand and retailer will have a resale strategy in the future.”

TAILORED SOLUTIONS

The shirt on your back might be made from a fabric that was spun in one country and assembled in another, with a zipper that came from a third. This lack of vertical integration makes visibility into the supply chain almost impossible. Add to that the fact most of the negative environmental impact occurs in what the industry refers to as tier four of the supply chain—in the fields where the raw materials are grown and where the data is most scant. “This is why it’s so challenging from an environmental perspective,” explains Maria McClay (MBA 2006). Even if they wanted to, most brands have little visibility into the impacts higher up the supply chain. Customers, meanwhile, are increasingly demanding more accountability and transparency.

McClay has filled myriad roles within the fashion sector: first on the European consumer and retail investment banking team at Lehman Brothers, then running Gucci’s northern Europe operations, and more recently as a director at Google Cloud, working with fashion and beauty companies to help drive more circular business practices using AI and machine learning. In 2021, her team at Google worked with the World Wildlife Fund and Stella McCartney’s luxury fashion brand to roll out a digital tool called the Global Fibre Impact Explorer. It taps into the power of cloud computing to assess the risks of raw materials against factors such as air pollution, biodiversity, emissions, and water use, giving the fashion and textile industries access to previously unattainable data.

“The great news is that at every step of the value chain—consumer, sourcing, design—there are steps that brands can take, and it’s become much easier through the facilitation of technology. Of course it’s never enough, but I’m actually quite proud of how the industry is coming together, and I’m quite optimistic that we’ll end up in the right place,” McClay says.

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