Part 3
Measuring the State of Circularity in the UK Fashion Industry
Executive Summary
36
Introduction
Part 2
Conclusion
Part 1
Recommendations for building the business case Ensuring a stable margin by driving customer demand and limiting costs.
2 Financial incentives
Repair
• Introduce VAT cuts or discounts to improve the affordability and customer perceptions of repair. • Consider surcharges to be applied to fast fashion practices.
Financial incentives from governments and industry bodies are needed to support retailers’ top line and bottom line. Financial incentives have the potential to drive participation in circular initiatives and limit the associated costs. However, all grants will need to ensure the investment is directed towards creating sustainable operations, rather than models dependent on this funding. In 2023, UK Research and Innovation (UKRI) invested £6m 11 for three complementary teams of researchers, working in partnership with industry experts to build data and knowledge to support the sector in adopting sustainable circular business models. However, that is a fraction of the investment needed to support the transition of an industry worth £21bn to the UK economy. Investment should encourage organisations to develop new and innovative circular fashion operations that are tailored to their organisation and are focused on long-term solutions rather than short-term impact. By focusing grants on long-term solutions, governments and industry bodies can open the door to better practices, rather than quick fixes.
Rental
• Introduce incentives to reduce the impact of limited margins on rental models.
Resale
• Reduce the tax burden on second- hand clothing to ease the margin pressures on resale. • Support accelerators for high-potential resale organisations. • Design incentives by takeback volume to reduce the financial impact on retailers.
Takebacks
Circular design
• Introduce penalties for threshold breaches on emissions and waste.
Credit: Qasimi
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