We Can’t Build a Circular Future With a Linear Playbook

Is it time for brand managers, licensing agencies, and solution providers to work together to drive a circular revolution in the apparel industry?

The apparel industry has a long-standing waste problem, and solving it will require collaboration and new ways of thinking about what happens to unsold licensed merchandise.

THE CRISIS

An estimated 15 to 45 billion garments produced by brands and retailers every year are never sold. This contributes to 92 million tons of textile waste annually and results in a massive volume of brand-new, deadstock inventory going straight from retail backrooms and warehouses to landfills and incinerators.

THE OPPORTUNITY

Upcycling is a circular solution, transforming existing products and materials into desirable, higher-value items while using minimal energy, zero water, and no harmful dyes. It reduces waste, manufacturing-related emissions, and potential misuse of labor in offshore factories, while aligning with the values of today’s eco-conscious consumers.

Instead of discarding unsold licensed apparel, brands can now transform it into new, desirable merchandise creating additional revenue opportunities. This keeps valuable materials and brand assets in circulation while eliminating the negative environmental impacts from waste disposal. Upcycling can also protect and preserve brand equity. Proprietary logos, graphics, colors, and other brand assets remain under the brand's control while their useful life is extended. At the same time, upcycling unsold and surplus inventory becomes a tangible sustainability story that demonstrates environmental responsibility through mission-based programs.

THE INDUSTRY BARRIER

While many brands are eager to meet their sustainability goals, legacy licensing frameworks are not equipped to support a circular approach to the lifecycle of licensed apparel. Currently, licensing agreements, designed to maintain traditional brand standards, are applying "linear" models to sustainable "circular" solutions. This creates an unsustainable environment for upcycling initiatives due to:

  • Administrative Rigidity: Standard legacy licensing contracts do not recognize "upcycled" goods as being separate and distinct from new merchandise and, therefore, not subject to traditional licensing requirements.

  • Economic Misalignment: Requiring a second round of royalty fees on upcycled goods — which have cleared their licensing obligations and already earned a royalty — makes mission-driven sustainability programs economically difficult to sustain.

  • The "Responsiveness Gap": While brands are eager to lean into sustainability initiatives, they are inadvertently hindering these efforts by applying fee structures and compliance criteria that do not apply to upcycling programs which operate in a post-licensing environment. 

It’s time to come together to align sustainability goals with licensing practices to drive a large-scale circular revolution in the apparel industry. One that ensures that everyone will benefit from a shared triple bottom line: people, planet, and profit.

If you're working in this space, we'd love to hear your perspective.