Circular Economy in the Clothing Industry : A qualitative study of organizations managing circular economy and the perceived financial performance

Abstract: The clothing industry faces significant environmental sustainability challenges, prompting increased pressure on organizations to adopt sustainable practices. There has been an increase of pressure towards organizations to become more sustainable, which has impacted how managers make their decisions. One concept that has received a lot of attention is the idea of a circular economy. This study focuses on understanding how organizations manage the balance between investing in a circular economy and how it relates to perceived financial performance. Using an abductive approach, qualitative data was collected from six participants to understand their experiences and perceptions. The participants were three managers and three circular economy experts. The participants' experiences and perceptions are presented across four key themes: sustainability, financial performance, consumers, and policy. The empirical findings reveal that sustainability initiatives are believed to lead to better financial outcomes. The research showed that the future of the clothing industry is towards a circular economy. Uncertainty remains regarding the financial benefits associated with circular economy practices. External factors, such as regulatory interventions, emerged as viable drivers for promoting circular economy practices. Creating secondhand markets for clothes was highlighted as an effective strategy in the transition to manage CE. This study shows the complexities and challenges organizations faces in managing CE. For CE management to be efficient, new legislation is essential to eliminate greenwashing and establish a level playing field.