Closing the loop: Increasing fashion circularity in California

Updates were made after the original publication to reflect latest data as of August 2022. While magnitudes have changed, overall directional implications and conclusions remain the same since the original March 2022 publication.

The fashion value chain is predominantly linear and global. It has put the apparel industry on an unsustainable path.

In 2021, Californians bought and wore 780,000 tons of apparel.¹Sum of all imported finished apparel and apparel manufactured in state, less the quantities exported or lost throughout the production and retail process (see Chapter 2, Exhibit 5 in the main report for a further breakdown and assumptions). Sources: “Crop production annual summary,” US Department of Agriculture, Economics, Statistics, and Market Information System, January 12, 2022; interviews with fashion/circularity experts (October–December 2021); Preferred fiber and materials market report 2021, Textile Exchange, August 17, 2021; “The life cycle of secondhand clothing,” Simple Recycling, October 2014; “Textiles: Material-specific data,” US Environmental Protection Agency, last updated July 2, 2021; “Textiles and apparel,” US International Trade Commission, 2018, accessed 2021; 2020 guide to the business of chemistry, American Chemistry Council, December 2020, accessed 2022; Cotton and Wool Yearbook Database, US cotton supply and demand, US Department of Agriculture, Economic Research Service, November 22, 2021; David Roberts, “2021 state of the U.S. textile industry,” Textile World, April 15, 2021; Raw Fiber Equivalents of US Textile Trade Data Documentation Database, US Department of Agriculture, Economic Research Service, April 22, 2022; “US export markets by group: Total textile mill products,” US Department of Commerce, International Trade Administration, Office of Textiles and Apparel, May 2022; “US export markets by group: Total apparel,” International Trade Administration, Office of Textiles and Apparel, US Department of Commerce, May 2022. As a result, 740,000 tons of materials used to produce this apparel will eventually enter landfills—covering an area more than five times the size of the City of Los Angeles.²Assumes that about 85–90 percent, or about 685,000 tons, of apparel sold to and worn by Californians ends up in landfills through curbside municipal solid waste (MSW) collection. An estimated 50,000 tons of production losses also end up in landfills through curbside MSW collection. Of the remaining tons of apparel used by Californians and collected through other channels (that is, donation centers, consignment stores, drop-off containers, mailed-collection programs, curbside textile collection programs, and in-store take-back programs), about 5 percent, or 5,000 tons, is ultimately landfilled. See Chapter 2, Exhibit 5 in the main report for a further breakdown and assumptions. Estimate of landfilled apparel waste in California based on approximate breakdown of assumed 2021 volumes of completed apparel imported into California and apparel manufactured in California for sale to or use by Californians; additional reasons for a higher/lower actual landfilled amount could include (but are not limited to) throwaway of apparel purchased out of state, import of apparel waste into California, and life span of different apparel types. Average weight of, and average square meter of fabric required to manufacture, a T-shirt and pair of jeans used to convert estimate of weight of apparel eventually landfilled to surface area. Sources: interviews with fashion/circularity experts (October–December 2021); “The life cycle of secondhand clothing,” October 2014; “Textiles: Material-specific data,” July 2, 2021; What Things Weigh, “How much does a pair of jeans weigh?,” blog entry, accessed 2021; “How much does a T-shirt weigh (with examples),” Silver Bobbin, accessed 2022; “How many yards to make a pair of pants?,” Venus Zine, January 27, 2022; Leonard M. Pitt, “Los Angeles, California, United States,” Encyclopedia Britannica, March 10, 2022. More than 97 percent of the textiles used in this clothing are virgin materials. Less than 1 percent of the materials worn today will resurface in clothing manufactured tomorrow (Exhibit 1).³“A new textiles economy: Redesigning fashion’s future,” Ellen MacArthur Foundation, January 12, 2017.

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Such waste requires transformative change. The key lies in circularity—specifically, in building a closed loop for recycling materials back into the manufacturing process, reducing both waste and reliance on natural resources.

To date, California has seen relatively little investment in (or research into the benefits of) closed-loop recycling of apparel, so progress on building collection, sorting, and recycling capacity to execute this process has remained limited. We launched this research to understand what effort building a closed-loop system in California will require, what stakeholders need to participate, and what initial impact the effort may have.

Our research shows that the effort promises to be very worthwhile.

California consumers want closed-loop recycling. Our survey results revealed the following:

• Among surveyed consumers, 54 percent anticipate buying more clothes made with recycled materials.⁴McKinsey 2021 California Fashion Circularity Survey (conducted in October 2021).
• Younger Californians (18 to 24 years old) report a willingness-to-pay premium of almost 15 percent for clothes made with recycled materials.⁵McKinsey 2021 California Fashion Circularity Survey (conducted in October 2021).
• Ninety-two percent of surveyed consumers would participate in a brand-sponsored apparel recycling program, if offered the opportunity.⁶McKinsey 2021 California Fashion Circularity Survey (conducted in October 2021).

A fully closed-loop apparel recycling system in California could potentially achieve a total holistic impact (economic, environmental, and social benefits) of $11 billion to $13 billion a year, based on our estimate of total holistic impact of approximately $5.5 billion to $6.5 billion from closed-loop recycling of polyester, which represents nearly 50 percent of apparel textile fibers thrown away by Californians (Exhibit 2).⁷Holistic impact includes environmental, social, and economic benefits: CO2e emissions abatement, water-use reduction, land-use reduction, chemical-use reduction, job creation, GDP growth from job creation, revenue growth, and cost savings. The $75 billion to $105 billion potential holistic impact for the US is based on sizing for the polyester use case in California. Since pure and blended polyester apparel accounts for an estimated 49 percent of all apparel, an estimated multiplier of two can be used to roughly size the total holistic impact for California of switching from virgin to recycled apparel for all fiber types (for example, polyester, cotton, man-made cellulosic fibers), which would be an estimated $11 billion to $13 billion. Additional detail on an initiative-by-initiative level is available in the main report. Sources: “How much does garment industry actually waste?,” Reverse Resources, February 1, 2021; Interviews with fashion/circularity experts (October–December 2021); Preferred fiber and materials market report 2021, Textile Exchange, August 2021. That translates into holistic impact of $3 for every $1 spent.⁸Capital expenditure (capex) and operating expenditure (opex) estimates were calculated at a high level for each individual initiative and were based on public data inputs and cost estimates from experts in the apparel and textile waste management industries. Additional detail on an initiative-by-initiative level is available in the main report. Scaled up across the US, closed-loop apparel recycling could achieve a total holistic impact of $75 billion to 105 billion.⁹Since California’s retail industry accounts for approximately 13 percent of US GDP, an estimated multiplier of seven to eight can be used to roughly size the holistic impact for the US from switching to recycled apparel from virgin for all fiber types: Source: “Gross domestic product (GDP) by state,” US Bureau of Economic Analysis, June 30, 2022.

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We identified eight core initiatives that could significantly advance fashion circularity for apparel made with polyester (100 percent or blended) in California and help unlock this holistic impact. Future efforts could build on these initiatives to address other textile materials:

• Purchase recycled polyester to replace virgin polyester in apparel, probably at a premium, but with few other switching costs involved.
• Promote and sell recycled apparel to shoppers, touting clothing “made with recycled polyester.”
• Partner with apparel manufacturers to collect pre-consumer polyester waste, such as scraps and rejected apparel that manufacturers discard.
• Partner with retail stores to collect pre-consumer polyester waste, such as unsold garments that are typically thrown away if not diverted for low-cost resale or donation to employees.
• Partner with existing collectors, such as donation or consignment stores, to divert post-consumer polyester waste that would otherwise be downcycled or sent abroad.
• Introduce and scale curbside textile collection in Los Angeles, San Francisco, and select Bay Area counties because the high cost of curbside collection makes it most viable in densely populated metropolitan areas.
• Build a highly automated facility to sort and deconstruct polyester textiles because the inability of recycling processes to handle more than one type of textile waste and the potential for unsorted waste to introduce contamination make sorting necessary.
• Build a chemical recycling facility to process polyester textiles because chemical recycling is critical to sustaining the quality of textile fiber over many iterations.

But any effort to build closed-loop recycling capacity faces a catch-22—the disconnect between the supply of and the demand for recycled materials. While benefits outweigh costs system-wide, both benefits and costs are distributed unevenly among stakeholders across the value chain. Unlocking the total holistic impact will require actions to level the playing field, such as forging public–private partnerships, enacting recycling-friendly policies, and encouraging vertical integration in the apparel industry.

The California apparel industry can start building closed-loop recycling capacity today to reduce waste and reliance on limited natural resources. We hope that this report will establish the opportunity at stake for textile circularity in California as well as the actions stakeholders across the fashion industry can take to capture it. Furthermore, we hope this report can serve as the foundation for further research and action across other materials and geographies, catalyzing even more positive economic, environmental, and social benefits.