Endogenous feedback loops stall fashion circularity at scale

By Priya Raman

Endogenous feedback loops, not gaps in recycling capacity or consumer demand, stall fashion circularity pilots the moment they attempt to scale, a University of São Paulo study published in Business Strategy and the Environment concludes.

The paper, Co-Creating Circular Pathways in the Fashion Industry: A Participatory System Dynamics Perspective, narrows its lens to Brazil's apparel sector. Authors Alyson da Luz Pereira Rodrigues and Marly Monteiro de Carvalho argue the industry has catalogued what is absent — recycling plants, stricter regulation, willing shoppers — while under-examining what is already present but misfiring inside the system itself.

What did the researchers map?

The authors used participatory causal loop diagrams and group model building, a system-dynamics method that traces how a feedback entity sets into motion another entity's variable strength over time. The approach breaks from linear cause-and-effect analysis, the researchers noted, because linear thinking has not explained why circular initiatives routinely stall just as they begin to scale.

Stakeholders from Brazil's fashion value chain worked with the team to draw relationships between production volumes, material flows, reverse logistics, pricing, and regulatory pressure. The exercise produced a view of the recurring cause-and-effect chains operating inside the sector and showed how those chains react to operational pressure once a pilot moves beyond a single factory or local cluster.

Why does this matter for sourcing teams?

Brazil's apparel base supplies domestic and regional buyers across volume tiers that range from small-batch specialist work to mass-market programmes. Many circular claims tied to that volume rest on the presence of a recycler or take-back scheme somewhere downstream. The São Paulo analysis suggests this framing is incomplete.

When a circular pilot crosses from a single firm or local cluster to wider adoption, internal cost, volume, and coordination variables react to growth. The study frames these as endogenous forces — pressures inside the system that erode the economics of circular expansion rather than supporting it. A sourcing team that audits only downstream infrastructure will not see those pressures until the order book has already shifted.

What compliance angle does the study expose?

Sustainability claims rest on standards and laws that increasingly demand traceable circular outcomes. If the São Paulo findings hold, a circular sourcing decision backed by external recycling infrastructure alone has not closed its own loop. The internal dynamics of the supplier — pricing discipline, production scheduling, and reverse-logistics integration — determine whether a circular programme holds at the order volumes that compliance regimes implicitly require.

What sourcing decision does the study force?

Buyers evaluating Brazilian circular apparel programmes should request evidence of the supplier's internal scaling model, not just its downstream partner list. A circular claim backed only by external infrastructure is exposed to the same scaling failure the São Paulo researchers documented.

The takeaway: circular sourcing depends on a supplier's internal systems as much as the recycling network around it.