SMEs outperform high street retailers in textile circularity

Small and medium enterprises (SMEs) in the UK fashion and textiles sector demonstrate significantly better circular design practices, according to new research from WEFT.

The research organisation’s Extended Producer Responsibility (EPR) Sandbox project analysed over 350,000 products sold by SME fashion brands, and found that smaller businesses achieved predominantly low scores on WEFT’s circularity assessment, indicating better environmental performance.

This contrasted with high street brands, where the largest proportion of products fell into the high volume, poor circularity category.

WEFT examined product composition and sales data from UK-based SME fashion brands, including Margaraet Howell, John Smedley, TBCo, Moon (Abraham Moon & Sons), and ERDEM.

The research, funded by the UK Fashion & Textiles Association and the Circular Fashion Innovation Network, examined how smaller businesses will fare under a variable textiles Extended Producer Responsibility system.

The study was able to successfully score 98 per cent of all products and sales information supplied by participating SMEs, with only two per cent of products attributed maximum scores due to missing data.

Caroline Rush CBE, former CEO of the British Fashion Council, said: "British Small and Medium Enterprises are the backbone of the British fashion and textiles industry. They are at the leading edge of creativity, innovation and adaptability and a beacon for wider British business. This project has clearly illustrated how well fashion SMEs know their supply chains, their impacts and their sourcing to a granular level."

SMEs score well on textiles circularity

The research showed a stark contrast between SME performance and that of larger retailers. SME products clustered predominantly in the low score, better circularity zones of WEFT’s assessment matrix, with no SME products appearing in the problematic high volume, high EPR score category.

The WEFT methodology, which was outlined in a White Paper released in September 2024, analyses individual product composition using a circular scoring system that considers factors such as recyclability, recycled content, and material complexity. This data, combined with sales volumes, produces indicative variable EPR fees that show producers which products score well and which require design improvements.

The SMEs participating in the research typically produced items with high natural fibre content, significant recycled content, or materials that are highly recyclable. Many could also provide additional information on chemicals used and certifications for fabrics and fibres, including organic certifications and Global Recycled Standard content verification.

WEFT notes that products from high street brands, which often had complex product compositions without recycled context, may be more durable, which the current system cannot directly assess.

Creating a textiles EPR in the UK

The research demonstrates that SME fashion businesses would benefit significantly from a variable EPR system that rewards circular product attributes. Under such a system, these businesses would receive lower EPR fees or obligations compared to a fixed per-item or weight-based system.

EPR for clothing and textiles is being implemented across multiple countries, including Australia, Spain and the Netherlands, with the UK Government currently considering similar legislation.

Rush explained: "The work has confirmed that an ecomodulated, variable fee system would benefit SMEs. A fixed price EPR system would create a system that is unfair on businesses like the ones who took part in this work and are already ahead of the curve when it comes to circularity."

WEFT recommends that the UK Government implement a textiles EPR system based on variable fees or obligations rather than fixed rates. The organisation suggests that producers should assess their current product portfolios using the EPR Sandbox to understand potential impacts and engage effectively in policy development.