From Policy to Practice: Why fashion's circular future depends on better decisions?
For years, the fashion industry’s sustainability conversation has been dominated by the same themes: better materials, cleaner production, renewable energy, traceability, and more responsible sourcing. These are all fundamental building blocks of a more sustainable industry, and the progress made over the last decade should not be underestimated.
Yet, over the past few weeks, I found myself reading a series of reports and reflections from very different voices across the ecosystem, including Global Fashion Agenda, Fashion for Good, Ken Pucker, Patrick Frisk, Lutz Walter, Victoria C.N. Scholz, and Circular Fashion News. Although each approached the topic from a different perspective, they all seemed to point toward the same conclusion.
Fashion is entering a new chapter.
The question is no longer whether circularity matters.
The question is whether brands have the operational capability to make circularity work.
Circularity is becoming a business requirement
The latest Global Fashion Agenda Policy Matrix 2026 illustrates just how rapidly the regulatory landscape is evolving. The report maps well over one hundred policy initiatives influencing the global textile and fashion industry, with Europe clearly leading the transformation.
From the Ecodesign for Sustainable Products Regulation (ESPR) and the upcoming Digital Product Passport (DPP), to Extended Producer Responsibility (EPR), the Corporate Sustainability Reporting Directive (CSRD), the Green Claims Directive, revisions to the Waste Framework Directive, mandatory textile collection requirements, and the future Circular Economy Act, the direction is unmistakable. Fashion is moving from voluntary sustainability commitments toward measurable operational accountability.
At the same time, the challenge facing brands continues to grow. According to the European Environment Agency, Europeans discard approximately 5.8 million tonnes of textiles every year - roughly 11 kilograms per person annually - while collection, sorting, reuse and recycling systems still struggle to keep pace. The regulatory environment is evolving precisely because the existing system is no longer capable of absorbing the scale of consumption and waste the industry generates. Circularity is no longer becoming a competitive advantage. It is gradually becoming a licence to operate.
Innovation Is Accelerating, but mostly before the customer
One of the most encouraging developments over the past year has been the number of ambitious initiatives trying to redesign the industry’s future. Fashion for Good’s Closing the Footwear Loop initiative highlights the enormous complexity of footwear circularity. Today, approximately 23–24 billion pairs of shoes are produced globally each year, while an estimated 90% still end up in landfill, incineration, or unmanaged waste streams because existing recovery infrastructure cannot adequately process their material complexity. Projects such as Project Rewear, Closing the Footwear Loop, and Future Forward Factories, together with partners including H&M Foundation, Laudes Foundation, Arvind Limited, and numerous innovators across the ecosystem, demonstrate remarkable progress in fibre-to-fibre recycling, automated sorting, manufacturing optimisation, product redesign and new circular business models. These initiatives are exactly what the industry needs. But reading across them, one observation kept returning to me.
Almost every initiative focuses on improving what happens before the product reaches the customer - or after it reaches dedicated recycling infrastructure. Very few begin with what happens the moment the product comes back.
AI doesn’t need more data. It needs better signals.
Artificial intelligence has become the defining technology conversation across almost every industry, and fashion is no exception. Most discussions focus on demand forecasting, design generation, inventory optimisation or supply chain planning. Those applications are undoubtedly valuable. However, I believe AI’s greatest opportunity lies somewhere much less visible.
Every returned product tells a story. It tells us something about product quality, customer expectations, sizing accuracy, durability, logistics performance, manufacturing consistency, and even future product design. Yet in many organisations, these signals are still captured through manual inspection, generic return categories, fragmented spreadsheets, or sometimes not captured at all.
This is particularly striking because many of the reports I have been reading - including recent work from Fashion for Good and Circular Fashion News - emphasise that AI will increasingly become the engine behind circular supply chains. I completely agree.
But AI can only optimise what it is able to understand.
Without structured, high-quality operational data, even the most sophisticated AI systems cannot make consistently intelligent circular decisions.
The missing ingredient is not the algorithm.
It is the signal.
Reverse logistics is becoming a strategic intelligence layer
For decades, returns have been treated primarily as an operational inconvenience.
A cost centre. A logistics problem. Something to process as efficiently as possible.
I increasingly believe this perspective is becoming outdated.
Every returned product represents one of the richest sources of business intelligence available to a brand. It provides direct feedback on product quality, material performance, manufacturing consistency, customer behaviour, warranty risks, resale potential, repair feasibility and future product development. The question is no longer simply how quickly a return can be processed. The question is how much knowledge a business can extract before value is lost.
This is precisely the philosophy that has shaped the way we are building CIRQUEL.
Rather than viewing returns, warranty claims and unsold inventory as isolated operational events, we see them as continuous data streams capable of improving commercial decisions across the entire product lifecycle. Through computer vision, structured product assessment, contextual customer inputs - including voice-based feedback - and intelligent routing recommendations, our goal is not simply to automate reverse logistics. It is to transform reverse logistics into an intelligence layer connecting customer behaviour, operational efficiency and circular decision-making.
The Bigger Question is…
Reading all these reports together left me with one overarching conclusion.
Almost every conversation today focuses on how products are made. Far fewer discuss how products are understood once they return.
I believe this is where the next decade of innovation will happen.
At CIRQUEL, we often say that a returned product is not simply a returned product - it is one of the richest sources of intelligence a brand will ever receive. Every image, every warranty claim, every customer explanation, every quality assessment, and every routing decision generates knowledge that can improve future design, manufacturing, sourcing, customer experience, and ultimately business performance.
If Europe is serious about building a truly circular economy, reverse logistics cannot remain an afterthought. It needs to become an intelligent infrastructure layer connecting regulation, sustainability, customer behaviour, and commercial performance.
For me, the future of circularity is no longer only about keeping products in circulation.
It is about keeping knowledge in circulation.
Because in the end, better circularity begins with better decisions.
Further reading & inspiration
This reflection was inspired by recent work and discussions from Global Fashion Agenda, Fashion for Good, Ken Pucker, Patrick Frisk, Lutz Walter, Victoria C.N. Scholz, Circular Fashion News, together with broader research from the European Environment Agency, McKinsey & Company, and ongoing conversations across Europe’s circular fashion ecosystem.
Anna Warchalowska is CEO and co-founder of CIRQUEL. If you are a brand, investor or partner interested in circular fashion, sustainable returns, or commercial partnerships, we would love to connect at cirquel.co.