A broad coalition of nearly 70 fashion and textile businesses—from mega-brands like H&M Group, Primark and Inditex to secondhand marketplaces such as ThredUp, Vestiaire Collective and Vinted to think tanks including Fashion for Good, Global Fashion Agenda and Policy Hub—has banded together with a single purpose: to urge the United States, Canada and the European Union to implement policy changes that would help circular business models such as repair and resale reach their full potential.
In a statement organized by the Ellen MacArthur Foundation, the signatories call for what they describe as “decisive policy leadership” to remove economic barriers that prevent a circular fashion economy from scaling. Beyond a moral appeal, they argue that resale and repair present an “unrivalled opportunity” for businesses to remain “competitive, desirable and resilient” by driving growth that uses fewer resources, generates fewer emissions and creates jobs in repair, sorting, logistics and retail.
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With the global secondhand market poised to hit $393 billion by 2030—more than twice the pace of the overall apparel sector—the right policy mix could raise gross profit margins to 55 percent for resale and roughly 41 percent for repair, the Ellen MacArthur Foundation estimated. While insufficient to close the profitability gap between circular and linear models, those gains could still unlock billions in revenue, helping make circular fashion commercially viable for broader adoption.
The companies have three overarching requests: reduce the value‑added tax in the EU and eliminate sales tax in North America on resold products and repair services; lower labor taxes in the EU and introduce tax credits in North America for businesses creating jobs in resale and repair; and expand cost coverage under extended producer responsibility schemes—such as California’s SB707 and the EU’s Waste Framework Directive—to fund the critical infrastructure needed for collection, sorting, recycling and disposal.
“To make circular businesses like secondhand the first choice, they have to consistently deliver on what matters most to consumers: being reliable, affordable and easy to use,” said Marianne Gybels, senior director of sustainability at Vinted. “We’re already seeing this shift across Europe, where buying and selling secondhand has become part of everyday life, with significant room to grow further.”
The role of policy, she added, is to support business models that make circular choices more accessible.
“This helps secondhand to scale further and provides consumers with high-quality, affordable alternatives that are significantly better for climate impact than buying new,” Gybels said.
Much of the problem, as it usually does, boils down to money. Chief among the issues, according to Miranda Beckett, fashion project manager at the Ellen MacArthur Foundation, is that current infrastructure and government policies favor linear business models, making it more lucrative to produce new items from virgin materials than to keep existing ones in circulation. She pointed to what she described as an “economic trap” that taxes businesses reselling goods at every transaction, inflating costs unnecessarily.
Despite the growing use of automation and AI, circular business models still require people to sort, clean, repair and list products, making them labor-intensive by necessity and more expensive to run than high-volume mass manufacturing. In a breakdown informed by stakeholder interviews and desktop research, the Ellen MacArthur Foundation found that labor accounted for 50 percent of costs per unit of repair. Meanwhile, repair’s “bespoke” approach means costs don’t fall as scale expands.
“Businesses are increasingly seeing circular business models as not just a sustainability strategy, but a resilience strategy,” Beckett said. “We’re seeing increasing supply chain shocks, and organizations are seeing that customers actually want these services, so resale is booming globally. There’s a clear business need and a business want, but organizations aren’t currently seeing a way to invest at scale.”
Leyla Ertur, chief sustainability officer at H&M Group, recently spoke at the Global Fashion Summit in Copenhagen about the gaps that stymie circularity. There, she advocated for an EU benchmark that defined circularity.
“When you talk about circularity, how do you say a company is 60 percent circular? How do you say a company is 100 percent circular? There’s no way that we can understand this,” she said. “That’s why the European Union needs harmonized legislation, defining what needs to be done—what are the pillars, what are the steps toward that agenda, what are the incentives for the brands—because there’s no way for us to compare apples to apples right now.”
Now, Ertur is extending that line of thinking, saying that if governments are “serious about circularity,” they need to remove double taxation, reduce labor costs and eliminate other barriers holding resale back.
“Fixing the economics of resale is one of the fastest and most concrete ways to scale circularity in fashion,” she added.
While the Ellen MacArthur Foundation is headquartered in the United Kingdom and brings an understandably Eurocentric vantage point, many of its arguments resonate with Rachel Kibbe, founder and CEO of American Circular Textiles, or AMRCIRC, in the United States. (Reformation and ThredUp, both signatories to the foundation’s letter, are also members of AMRCIRC.) For one thing, Kibbe has long sought to reform the U.S. tax system’s application of sales tax to used items, calling it a form of “double taxation” and an “unfair double dip.”
“AMCIRC has long advocated for removing structural barriers that disadvantage circular business models through policy and market development alike—particularly thoughtful EPR fee structures and incentives like sales tax exemptions for secondhand goods,” she said. “We’re supportive of the spirit of this analysis and look forward to seeing more circular economy policy gain traction in the U.S.”
Like the letter’s signatories, Kibbe is clear‑eyed that markets will not change through voluntary action alone. “Both ‘carrots’ and ‘sticks’ will be required,” she said, “along with real commitments from industry to evolve.”
One early proving ground for this is the Ellen MacArthur Foundation’s Fashion ReModel initiative, which launched in 2024 to examine what it would take to decouple revenue from production through repair, resale and even rental. The project counts several of the letter’s signatories—including Decathlon, H&M Group, Primark, Reformation and Zalando—among its cohort.
That many of its participants are purveyors of so‑called “fast fashion,” a model that hinges on high output and low margins, often at the expense of the physical product durability that circularity needs, isn’t lost on Beckett. At the heart of these discussions is a familiar tension in fashion: how to reconcile the industry’s reliance on overproduction with the circular economy’s central requirement of keeping fewer, better‑made garments in use for longer.
“We acknowledge they sell a lot of clothes,” she said. “But in order to shift the system toward the circular economy, you’ve got to work with the organizations that are putting clothes out onto the market. And there is real willingness to change.”
Part of this has to do with EPR legislation; another is that supply chain gyrations as a result of geopolitical turmoil and tariff uncertainty require more hedging of bets. Still, skeptics will be tempted to ask whether brands built on selling millions of cheap, disposable garments can truly be trusted to scale circularity.
Beckett remains a believer. If the first year of Fashion ReModel was about figuring out what metrics to use to measure circular business models and create a compelling business case for finance teams, the second year—and beyond—will focus on the systemic roadblocks holding them back from going mainstream. The letter is part of that.
“Some of the other common barriers that we’re hearing about are that access to high-quality supply is really difficult at the moment, and ensuring that there is guaranteed access to that,” Beckett said. “We know there’s enough clothing out there, but it’s just not ending up in the right places. So we’re looking at how organizations across the value chain can work together, whether it’s charity shops, whether it’s brands, whether it’s providers, and how you can create a bit more of a joined-up ecosystem to ensure that clothes are kept in use for longer.”
