Is a closed-loop system a meaningful way to reduce environmental impact, or is it just another buzzword in the sea of corporate greenwashing?
The concept of the closed-loop economy has been around since the beginning of civilization. Early examples include the potlatch ceremonies of Indigenous peoples in North America, in which goods and resources were shared among members of the community. The Indigenous people of the Amazonian rainforest have been living in harmony with their environment for thousands of years, too, as have most tribal cultures on the planet — using only what they need and recycling all waste. The philosophy behind these systems is common sense: everything is connected and nothing should go to waste. But all of that changed when capitalism replaced tribalism.
Now, as the climate crisis is impacting all areas of our lives, the closed-loop or circular economy is re-emerging in full force as an economic system in which businesses can operate in a way that minimizes waste and maximizes resources — much like our ancestors did. In a closed-loop system, materials are reused or recycled instead of being discarded as waste.
There are many benefits to closed-loop systems, including reducing pollution, conserving resources, and creating jobs. Closed-loop systems also have the potential to create economic value by closing the loop on resource use. The closed-loop economy has gained traction in recent years as a way to address the growing problem of waste and resource depletion as well as climate change. Businesses are beginning to adopt closed-loop practices, and governments are implementing policies to encourage closed-loop thinking.
What is the circular economy?
The circular economy is the bedrock of a closed-loop system. It plays an important role for businesses and governments to understand and implement in order to create a more sustainable future, often seen as a more viable alternative to the traditional linear economy, in which resources are used once and then discarded. “We must transform every element of our take-make-waste system: how we manage resources, how we make and use products, and what we do with the materials afterwards,” says the Ellen MacArthur Foundation. “Only then can we create a thriving circular economy that can benefit everyone within the limits of our planet.”
In recent years, there has been a renewed interest in the circular economy as businesses and governments around the world strive to become more sustainable in order to meet the Paris Accord target of keeping global temperature rise from surpassing 1.5°C. The European Union has been a leader in this effort with its Circular Economy Package released in 2015. The goals of the E.U.’s Circular Economy Package are to reduce waste, maximize resource efficiency, boost competitiveness, and create jobs.
What is a closed-loop system in manufacturing?
A closed-loop system is a manufacturing process where waste materials are reused to create new products. Closed-loop manufacturing is the process of reusing waste materials to create new products. In a closed-loop system, there is little to no waste because everything has a new purpose. This type of manufacturing is also sometimes referred to as a “zero-waste” or a “cradle-to-cradle” system.
Recent examples include Stella McCartney’s partnership with fiber recycling platform Protein Evolution. Prada’s use of ocean-bound plastic to make upcycled nylon is another example. LVMH, the world’s largest luxury group — parent to Louis Vuitton, Christian Dior, and Fendi — recently joined the Circular Bioeconomy Alliance, launched by King Charles in 2020.
How do closed-loop systems work in fashion?
The fashion industry is one of the most polluting industries in the world. It’s responsible for ten percent of global carbon emissions, and huge amounts of water and chemical waste — about 20 percent of the world’s wastewater comes from fashion production alone. It’s also one of the biggest industries moving toward a closed-loop system. The nature of the fashion industry lends itself well to closed-loop manufacturing, from deadstock materials to fully biodegradable options that return to the earth, making it poised to be one of the biggest leaders in circularity.
There are a few different ways that closed-loop systems can work in fashion. One common method is through garment take-back programs, where customers return their used clothes to the retailer. The clothing is then cleaned and repaired, if necessary, before being resold or made into new garments. Consumers often receive a discount on a new product that may also be made with returned materials.
Another way closed-loop systems can work is by using sustainable materials that can be easily recycled. For example, some brands are using Econyl, a recycled nylon made from waste such as fishing nets and carpet flooring. There are also biodegradable materials, now being used in a growing number of garments. Danish luxury label Ganni launched a fully circular t-shirt. Underwear company Kent makes garments that biodegrade in backyard compost systems within just a few months.
Eileen Fisher has been one of the earliest adopters, building its Renew program not as an afterthought but as an integral part of its business model. Through Renew, the company takes back gently worn pieces from customers, refurbishes them, and resells them as secondhand or upcycles them into one-of-a-kind designs under its Waste No More initiative. The process has diverted more than 2 million garments from landfills since its inception, giving old clothes new life in the same ecosystem that created them.
Stella McCartney, another leader in circular design, has partnered with companies like Evrnu to develop recyclable materials such as NuCycl — an engineered fiber created from old cotton garments that can be regenerated multiple times without a loss in quality. McCartney has also piloted bio-based materials that are designed to return safely to the earth, including mushroom leather and closed-loop viscose made from responsibly managed forests certified by Canopy.
Smaller labels are scaling circularity in elegant ways, too. Los Angeles–based For Days runs a take-back program where every item sold comes with a built-in recycling plan. Customers can send back used clothes — whether from For Days or other brands — and receive credit to spend on new items. The returned textiles are sorted, broken down, and spun into new yarns, eliminating the concept of waste entirely.
Meanwhile, Swedish brand Filippa K has leaned into a closed-loop strategy with its Circular Design Guidelines, crafting garments that are designed from the start for disassembly and recycling. This includes choosing mono-materials, removing hardware when possible, and avoiding blends that hinder recyclability. Each product is mapped for its future reintegration, ensuring that the end of use isn’t the end of value.
Even fast fashion giant H&M, though often criticized for greenwashing, has trialed garment-to-garment recycling machines in-store. At its Stockholm flagship, the brand introduced Looop, a machine that cleans and mechanically spins old clothes into new ones in just a few hours — a limited but symbolic gesture toward what scalable, closed-loop innovation could look like.
Closed-loop manufacturing benefits
By recycling textile fibers and other materials, closed-loop systems can contribute to a circular economy, where resources are continually reused instead of wasted. This helps to make fashion more sustainable and less damaging to the environment. Reducing waste in manufacturing and closed-loop systems can help brands achieve their carbon-neutral or net-zero goals.
While closed-loop systems are not yet perfect, they offer a more sustainable way of producing and consuming fashion. As awareness of the environmental impact of the fashion industry grows, closed-loop systems are likely to become more popular and widespread. In the meantime, closed-loop systems offer a few ways for fashion brands and consumers to reduce their impact on the environment.
Reduction in waste
One of the biggest benefits of closed-loop manufacturing is that it reduces the amount of waste produced. In traditional manufacturing processes, wastes are often dumped into landfills where they release greenhouse gases and contribute to climate change.
Improved efficiency
Another benefit of closed-loop systems is that they are more efficient than traditional manufacturing processes. This is because there is no need to transport raw materials or finished products back and forth between different locations.
Cost savings
Closed loops are financially responsible, too. Businesses can save money by using a closed-loop system because they don’t have to pay for new raw materials or for the disposal of waste. Additionally, since the process is more efficient, businesses can save on labor costs. Closed-loop systems provide businesses with significant cost savings compared to traditional manufacturing processes.
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