Walking the Talk: Fashion’s Financial Stairway to Sustainability

Prologue: Take the Stairs

For the past two weeks, I’ve been staring down the blinking cursor of writer’s block - a rare and deeply inconvenient affliction. The words I usually find so easily about sustainability and fashion felt distant, as if I’d drained my own well of insight.

Then I remembered a striking idea from Michael Easter’s The Comfort Crisis: only about 2% of people take the stairs when the elevator is an option. A simple statistic, but one that holds up a mirror to our culture’s obsession with comfort and convenience.

We live in an era where effort is outsourced and discomfort avoided: groceries arrive at our door, social media delivers endless dopamine hits, and systems are optimised to make things easier - not harder. Easter calls this an evolutionary mismatch: our minds and bodies are wired for challenge, movement, and growth through effort. Without it, we grow restless, anxious, and unfulfilled.

So, in the spirit of discomfort, I leaned into the hard stuff - including applying (yet again) for an ESG role at a bank.

And suddenly, I found myself thinking about finance, fashion, and sustainability all at once: what if sustainability - and by extension, circular fashion - is the stairs in this metaphor? Slower, more demanding, less flashy. It offers no shortcuts or quick wins. Yet, it might be the only way to build real resilience and lasting change.

If taking the stairs means embracing effort and patience, then circular fashion is that climb - and the question is whether the industry is ready to invest in the long haul rather than quick wins.

How Circularity Became Fashion’s New Muse

In a world where hemlines rise and fall with the stock market, fashion’s newest muse isn’t a model - it’s a business model. Circularity, once the quirky domain of mending circles and charity bins, is now being courted by the most seductive of suitors: private equity, ESG funds, and a whole cohort of impact investors hoping to cash in on clothing’s conscience.

But as billions pour into resale platforms and rental startups, I started to question: Is circular fashion truly scalable - or are we just tailoring an old system in a new green fabric? And, more importantly, are we ready to take the stairs when the elevator beckons with ease and speed?

Fashion’s $1.5 Trillion Problem

The global fashion industry is valued at approximately $1.5 trillion USD, employing over 300 million people across its value chain - from cotton farmers to garment workers to retail staff (McKinsey & Company, 2021). It produces more than 100 billion garments each year, yet the average item is worn just seven to ten times before being discarded (Ellen MacArthur Foundation, 2017).

In 2022, unsold inventory cost the global fashion industry an estimated $163 billion - a 36% increase from pre-pandemic levels (McKinsey, 2022). Linear fashion, it seems, is still very much in vogue - at least economically.

Enter the solution: circular fashion. By shifting from the traditional “take-make-waste” model to one of reuse, recycle, and rent, brands hope to reduce waste, emissions, and raw material dependency. Investors have taken note - the circular fashion market is projected to reach $218 billion by 2030, up from $45 billion in 2020 (GlobalData, 2022).

But here’s the catch: circularity might be great for the planet - but the margins? Still far from runway-ready.

Cash or Consciousness? The New Money Chase in Circular Fashion

Circular fashion is no longer a cottage industry - it’s a cash magnet.

Between 2020 and 2023, circular fashion startups raised over US$2.7 billion in venture capital globally, with major funding rounds going to resale platforms like Vestiaire Collective, recommerce logistics companies like Trove, and rental businesses including Rent the Runway (PitchBook, 2023). The logic is seductive: sustainability sells, and resale margins - if scaled - can, too.

Take Vestiaire Collective, which secured €178 million in a funding round led by SoftBank in 2021, later becoming the first resale platform to achieve B Corp certification. It now operates in over 80 countries. Meanwhile, Trove, which powers resale logistics for brands like Patagonia and Lululemon, raised US$77.5 million to build the infrastructure behind branded take-back programs (TechCrunch, 2021).

And then there’s Rent the Runway, which IPO’d in 2021 with a valuation of US$1.7 billion, positioning itself as the Netflix of clothing. But behind the glossy narrative was a fraying financial hemline: the company has never posted an annual profit (SEC Filings, 2023). In fact, Rent the Runway’s net loss for FY2022 was US$138.7 million, raising questions about the economic durability of the rental model when pitted against high dry-cleaning costs, reverse logistics, and customer churn.

Impact investors have flooded in - BlackRock, Generation Investment Management (co-founded by Al Gore), and even luxury conglomerate Kering have dipped their toes into resale and recycling ventures (Financial Times, 2022). But their interest often hinges on the idea that these models will eventually scale and become profitable.

That “eventually” is starting to feel like fashion’s version of waiting for Godot.

Circular Fashion’s Unit Economics - Dreams vs. Dollars

If traditional fashion thrives on volume, circular fashion survives on margins - or tries to. And the numbers tell a sobering story.

Let’s start with rental. On paper, it’s the holy grail of fashion sustainability: fewer clothes, more wears, lower environmental impact. But beneath that promise lies a web of operational costs that would make even a fast-fashion CFO clutch their clipboard.

According to internal data from Rent the Runway’s IPO filing, the company spends an estimated US$15–$25 per item just on reverse logistics - including shipping, quality control, cleaning, and repackaging (SEC Filing, 2021). And that’s not counting the dry-cleaning bill: garments are cleaned up to 30 times during their rental life, which not only adds cost but also wears down fabric quality - shortening lifespan and resale value (Forbes, 2022).

Meanwhile, return rates in fashion rental hover around 20–30% higher than in traditional retail, due to sizing issues and shorter-term customer engagement (CB Insights, 2022). The result? A business model that scales in complexity faster than it scales in profit.

Then there’s resale. Recommerce platforms like thredUP and Vestiaire Collective have made secondhand fashion aspirational - but at what cost?

thredUP’s consignment model requires the company to process, photograph, and list over 100,000 new SKUs per day (thredUP Resale Report, 2023). That volume comes with staggering labour and warehousing costs. Even with AI-enabled automation, gross margins hover around 50–70%, notably lower than fast fashion’s 80–90% (Morningstar, 2022).

Shipping alone eats away at profitability: reverse logistics in recommerce is estimated to be two to three times more expensive than forward logistics (McKinsey, 2023). Add to that the carbon emissions of moving millions of garments back and forth, and suddenly “sustainable” starts to sound... resource-intensive.

And what about recycling? It’s the most technically ambitious of the circular strategies, but also the most capital-intensive. Chemical textile recycling - touted as a solution for blended fabrics - currently costs between US$1,500–$2,000 per tonne of material, compared to US$200–$400 for virgin polyester (Textile Exchange, 2022). Ergo, at present, recycling is only financially viable with hefty subsidies, strategic partnerships, or deep-pocketed R&D investment.

The Scalability Myth - Grow, or Go Home

For venture capital, scale isn’t optional - it’s a demand etched in stone. The faster a startup can grow, the faster investors can exit. But circular fashion, with its low margins and high operational intensity, doesn’t fit neatly into Silicon Valley’s hockey-stick fantasy.

To scale, many circular startups have been forced to act more like tech companies than fashion disruptors - chasing user acquisition, automating everything, and outsourcing the “unscalable” human parts of their operations. In chasing scale, many drift from the very values that initially won their customers’ hearts.

Take Rent the Runway, again. In its race to scale, the company moved toward subscription models and broadened its inventory with fast fashion-adjacent brands - blurring the line between sustainability and convenience. By 2023, it had accumulated over US$1.1 billion in total losses since its founding (SEC Filings, 2023), all while trying to maintain the narrative of a cleaner, greener wardrobe.

Or look at thredUP, which went public in 2021 with a promise to “disrupt the $500 billion fast fashion industry” (thredUP IPO Prospectus, 2021). By 2023, however, it had partnered with Walmart, Gap, and Adidas - not exactly poster children for sustainable retail. Their resale-as-a-service (RaaS) platform now quietly powers the secondhand shops of brands still deeply embedded in linear production models.

This raises a difficult question:

Can a circular business stay true to its mission while operating at scale - or does growth inevitably dilute impact?

It’s a question with no easy answer, but here’s the kicker: most circular startups don’t even get the chance to find out. A 2022 analysis by Fashion For Good found that over 70% of circular fashion innovations stall at pilot phase, largely due to a lack of long-term, patient capital willing to weather the slower returns (Fashion For Good, 2022).

Because impact takes time. But in the world of finance, time is money - and money has other plans.

Money Talks, But Does Circular Fashion Listen?

There’s no denying it: impact investing has brought vital attention - and capital - to fashion’s long-ignored sustainability crisis. Circular startups are challenging consumption norms, introducing new behaviours, and questioning what it means to own, value, and wear clothes.

But here’s the uncomfortable truth: money moves faster than mission. When capital demands scale, speed, and liquidity, sustainability - with its slower timelines and systemic nuance - starts to look less like a competitive edge and more like a risk.

So, what now?

Perhaps the next phase of circular fashion doesn’t need more VC-backed unicorns, but more creative hybrids - co-ops, slow-growth models, grant-funded experiments, or community-owned platforms. Maybe the businesses best equipped to reshape the industry aren’t racing toward IPOs but rethinking value from the ground up.

Or maybe we need a new kind of investor - one who doesn’t just ask, What’s the return? but also, What’s the repair?

Because at the end of the day, circularity is about more than profit margins and platform scalability. It’s about reimagining relationships - between people, products, and the planet. And if finance wants a real role in fashion’s future, it might have to take the stairs, too.

The views, information, and opinions expressed in this article are solely my own and do not reflect the official policy or position of my employer, its parent companies, subsidiaries, affiliates, or any other organisation or entity with which I am associated.

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