The social impacts of the Circular Economy in the Global South: Circularity strategies and shared value creation in fashion social enterprises
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The current fashion industry, based on linear business approaches, is known for being broken and causing environmental harm and social scandals, especially in the Global South. The Circular Economy (CE) concept is much-heralded among policy-makers, scholars and industry professionals as a promising pathway towards a more sustainable state in the apparel sector. Nevertheless, until now, research combining CE to social business approaches in the fashion industry is lacking, and thus it remains vague in which way fashion business models could create value for people, planet and profit. This research was based on a deductively and inductively created framework including the typology of three different SE business models by Alter (2007), circular practices in the fashion industry and existing literature on shared value creation including 12 social value type indicators and 7 brand value type indicators. The framework was applied on different circular fashion brands using one of the three SE business models selected for this research: embedded (being a SE in the Global South), integrated (being a brand based in the Global North and producing with a SE in the Global South) and external (being a brand based in the Global North and funding a social initiative in the Global South). The aim was first to assess which circular strategies are adopted by these different SE business models and secondly to analyze what types of value can be created for people in the Global South as well as for the brands themselves by applying these SE business approaches. Considering the circular strategies, the results show that the embedded SE business model uses mostly upcycling, the integrated SE business model recycling and upcycling, and the external SE business model only recycling. Regarding the shared value creation, all three SE Business models create significant value for the people in the Global South. In contrast, for the brand value types, only the embedded and integrated SE business model achieved substantial results. The most crucial finding reveals that circularity is linked to different meanings and motivations in the Global North than in the Global South. In fact, the embedded SE business model considers the social aspects behind circular fashion, but not the environmental ones. Nevertheless, the findings clearly show that it is possible to include environmental as well as social aspects into fashion business models without depriving financial outcome. This preliminarily suggests that if CE is adequately understood and applied to social business models, the concept can fulfil its purpose as a convincing paradigm to offer system-level change and open new opportunities for the apparel sector.