In a joint business statement, the groups, which also include the American Apparel & Footwear Association (AAFA), Fashion for Good, ThredUp and Global Fashion Agenda, are among the 68 organisations arguing that circular models represent a “multi-billion dollar economic opportunity” but remain constrained by market conditions that favour virgin production and linear retail structures.
The companies say current systems make it harder for circular operators to compete, pointing to structural issues including labour-intensive processes such as sorting, cleaning, listing and repair, alongside higher cumulative tax burdens created through repeated transactions.
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“Circular business models, such as resale and repair, present an unrivalled opportunity for businesses to stay competitive, desirable, and resilient,” the statement says.
However, it adds that existing policy frameworks are misaligned with that potential, noting that “current investment and policy disproportionately favour product design and end-of-life infrastructure” while circular business models face “market barriers to scaling”.
Christiane Dolva, head of innovation, research & demonstration, H&M Foundation, said: “We’ve seen real progress on circular business models, but they remain a small part of a very large industry. Without policy that actively removes economic barriers, there’s a risk that circular models will stay stuck as a niche instead of becoming the norm. This is what The Fashion ReModel policy statement sets out to change.”
The statement also highlights what it describes as an “economic trap” in which businesses reselling products are taxed at every transaction rather than only at the initial sale, reducing incentives to keep goods in circulation.
In the letter, the coalition calls for:
- Reduced VAT (across the EU) and eliminated sales tax (in Canada and the US) on resold products and repair services
- Reduced labour taxes (across the EU) and an incentive package that includes labour tax credits (in Canada and the US) for jobs involved in resale and repair operations
- Extended Producer Responsibility (EPR) policy to help create separate collection and sorting infrastructure at scale
“We need a circular economy for fashion, but it is being held back,” the group says, calling for “decisive policy leadership to reduce the existing economic barriers that prevent circular business models from scaling”.
They demand a policy mix that supports both supply and demand for circular services, arguing this would make resale and repair more commercially viable while also expanding consumer access.
The businesses say such reforms could help close the profitability gap with linear models and unlock new revenue streams, with modelling cited in the statement suggesting resale and repair could reach significantly higher market penetration under supportive policy conditions.
The coalition concludes that it will continue engaging with governments and stakeholders to support the development of policies that make circular business models commercially viable at scale.
