The circular economy is about to have some sour grapes, Kearney’s 2025 Circular Fashion Index, or CFX, suggests.
While the industry has shown growth in circularity initiatives — the circular market itself is expected to grow at a 9.2 percent CAGR through 2034 and reaching $17.21 billion, per Insight Ace Analytic — the industry is largely failing to implement these practices at scale, revealed the group’s fifth annual report, aptly titled “Circular Fashion Growing but Still Not at Scale.”
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“While our top-ranking companies continued to pull ahead, the majority of brands find themselves stuck between ambition and execution,” said Nora Kleinewillinghoefer, partner, Americas fashion and luxury lead and coauthor of the report. “Making progress in some facets — but not transforming themselves across all dimensions in an integrated way.”
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For most of the studied companies, circularity efforts are siloed in sustainability departments, she continued; they really should be embedded into product development, sourcing, supply chain and commercial operations.
Upon analyzing Kearny’s most comprehensive data set yet — 246 apparel brands across 18 industries within five core product categories — the 2025 CFX found most companies stuck between ambition and execution, with only a handful reaching “extensive” implementation levels. More than 70 percent of brands found themselves in the “moderate” zone, the index found, indicating that circularity has entered the mainstream, with many now strategically committed and implementing relevant programs.
“Even in the strongest-growing areas, progress in the adoption of circular design principles and raw material reuse was mostly limited to shifts from ‘limited’ to ‘moderate’ maturity,” said Namrata Shah, partner and Americas lead for Kearney’s industrial redesign practice, the Product Excellence and Renewal Lab. “What’s needed now is a strategic reframing and circularity must be treated as a lever for growth, not just a compliance exercise. This means embedding it into how brands design, source, sell and service their products.”
That’s because the leap from “moderate engagement” to “scaled circularity” remains rare, Kearney said, noting the significant conversion gap between intent and consistent, scaled execution. Against the index’s ranking scale of 1 to 10 (with the latter numbers on the upper end of the “moderate” implementation level for circularity initiatives), only five brands score above 7. However, scores continue to rise, with average and median scores increasing by 0.2 points to 3.4 and 3.2, respectively. However, the improvement rate was slightly lower than last year, potentially suggesting progress is leveling off.
While the reason is complex, as evidenced by the index, one thing is clear: the bare minimum is getting bigger.
“Most of the low-hanging fruit has been picked — basics such as circularity initiatives, awareness campaigns, capsule collections or localized take-back programs,” said Kearney partner Dario Minutella. “But these are rarely embedded into full product lines or deployed across geographies.”
The products were evaluated on performance across seven metrics, intended to “reflect a products full life cycle,” Kearney said. These dimensions spanned circular design principles, care instructions, repair or maintenance service, brand communications on circularity, secondhand offerings, rental models and closing the loop initiatives (including recycling programs).
“Our analysis shows execution gaps are not due to a lack of awareness but to missing enablers such as scalable infrastructure, system integration, cross-functional ownership and commercially viable business models. The message in this research is clear: while directionally correct, the industry’s pace must now shift gears,” Minutella said. “As regulation moves from policy to enforcement, incremental gains are no longer sufficient. Brands need to move from declaring ambition to delivering evidence — systematically — and at scale.”