Transforming fashion: The social impact of circular strategies in the apparel value chain

The global fashion industry, valued at trillions of dollars, employs millions of workers around the world—from cotton farms to factory floors and, eventually, recycling centres. While developing countries handle much of the labour-intensive production, developed nations play an integral role in distribution and waste management. Despite its economic power, fashion is under increasing scrutiny for its environmental and social issues, including resource depletion, hazardous chemicals, and widespread waste, as well as the exploitation of workers in unsafe conditions.

The rise of fast fashion, characterised by overproduction and the rapid turnover of cheap clothing, worsens these issues by encouraging exploitative practices for quick profits. As consumer awareness around sustainability grows, the industry faces a crucial question: Can it embrace environmentally friendly practices without exacerbating social inequalities?

One promising path is the adoption of Circular Economy (CE) strategies. By focusing on minimising waste and extending the life of products through resale, repair, and recycling, circularity offers a model that could decouple economic growth from resource extraction. Yet, as Utrecht University researcher Lis Suarez-Visbal's four-year study, supported by the Laudes Foundation, reveals, the social impact of these new business models is still poorly understood.

Apparel value chain and its challenges

The apparel value chain is vast and complex, spanning continents from raw material extraction to manufacturing, retail, and disposal. It plays a significant role in the economies of developing nations, where garment production provides employment for millions. However, workers in this sector, particularly at the bottom of the chain, face severe economic and social vulnerabilities, with limited opportunities for upward mobility.

For many workers, the reality is grim. Human rights violations, including forced labour and unsafe working conditions, are widespread. Women, who form the majority of the garment workforce, frequently suffer from wage discrimination, gender-based violence, and lack of access to leadership roles. Many workers are paid less than a living wage, are forced to work long hours, and lack basic labour protections. As brands seek lower prices, the most vulnerable people at the bottom of the chain bear the brunt of these demands.

Can circularity solve fashion's problems?

The Circular Economy aims to eliminate waste by keeping materials in use for as long as possible through strategies like reducing production, reusing materials, repairing goods, and recycling products. CE principles seek to decouple economic growth from resource consumption, prioritising sustainability while also creating jobs. In the textile and apparel value chain, circular strategies are gaining momentum. Companies are beginning to adopt business models that promote garment rental, resale, and repair services. Brands such as Patagonia and The Renewal Workshop have made repair and resale central to their strategies, while fast fashion giants like H&M and Zara have launched take-back programmes and recycling initiatives. Yet, these circular strategies, while promising, remain limited in scope and often serve wealthier markets.

New research on the social impact of circular fashion

While circular strategies offer environmental benefits, their social impacts are less clear. The research led by Lis Suarez-Visbal found that many CE jobs—such as those in repair, resale, remanufacturing, and recycling—are characterised by low wages, gender-pay gaps and job insecurity. This trend was observed across multiple countries, including both developing economies like India and developed ones such as the Netherlands and Spain. These circular jobs often replicate the same precarious conditions found in traditional linear production models, with marginalised groups, such as migrant and informal workers, disproportionately affected.

The research underscores the need for circular strategies to address both environmental and social challenges. Without deliberate efforts to improve working conditions, the shift to circularity risks replicating the same inequalities the industry is already grappling with.

Essential changes for a just circular economy

To achieve a fair and inclusive transition to a circular apparel economy, businesses must fundamentally rethink their strategies. The research highlights several key recommendations: implementing long-term employment contracts, ensuring fair compensation through living wage policies, addressing gender disparities in the workforce and enabling social dialogue. Circular strategies should go beyond waste reduction to create high-quality jobs that offer economic stability for workers. Integrating social justice into sustainability goals is essential, with companies prioritising worker well-being alongside their environmental impact.

Governments also have a pivotal role to play. By enforcing international labour standards and mandating human rights due diligence, they can help protect vulnerable workers. Policies such as Extended Producer Responsibility (EPR), which hold brands accountable for their products’ entire lifecycle, could ensure that circularity benefits both the environment and the people involved in production and recycling across borders. A future where the fashion industry fully embraces circularity while ensuring social equity is not only possible but necessary. By integrating principles of fairness into their circular strategies, businesses, governments, and workers can collaborate to transform fashion from a source of exploitation into a force for sustainable development. In doing so, the industry could lead the way towards a future where no one is left behind.

For more information on her research “Assessing and improving the social impacts of circular strategies in the Apparel Value Chain”, Lis Suarez-Visbal can be contacted at l.j.suarezvisbal@uu.nl.