A new report from global management consulting firm Kearney suggests that while circular fashion has become a mainstream ambition, the industry is struggling to move from small-scale initiatives to widespread, systemic change. The fifth annual Kearney's Circular Fashion Index (CFX 2025), which evaluated 246 brands across 18 countries, shows that progress is slowing, with a gap emerging between a few leading brands and the vast majority of the market.

Sustained momentum, but at a slower pace

The CFX 2025, which analyzes brand performance across seven dimensions reflecting a product's full life cycle, found that average and median scores continue to rise, but at a decelerated rate compared to the previous year. The average score increased by 0.20 points to 3.40, and the median score rose by 0.20 points to 3.20. While this indicates sustained, positive movement, it is a slower rate of improvement than in 2024.

Over the past five years, average scores have increased by 1.4 points, and median scores by 1.6 points. "The industry has picked the low-hanging fruit," says Nora Kleinewillinghoefer, co-author of the report and partner at Kearney. "Most brands have implemented basic circularity initiatives like awareness campaigns or localized take-back programs. The real challenge now is translating these pilots into full-scale, integrated business models."

A growing divide

The report highlights a widening chasm between the leaders and the rest of the pack. More than 70 per cent of brands now fall into the ‘moderate’ zone, signaling that circularity is a priority for most companies. However, a small elite group of just 3 to 5 per cent of brands reached the ‘extensive’ implementation level, scoring above 7.0.

The top 10 list, which includes brands like Patagonia, Gucci, and Levi's, has remained largely unchanged for the third consecutive year. The bottom 80 per cent of brands, meanwhile, showed no improvement in their scores in 2025, a stark indicator of the struggles faced by the mid-tier.

Regional and category highlights

The report also reveals variations in circularity progress by region and product category.

Europe leads the way: European brands lead with an average score of 3.6, a jump of +0.4 points since 2024. This progress is largely attributed to the region's increasingly stringent regulatory environment, including the EU's Ecodesign for Sustainable Products Regulation (ESPR) and the forthcoming Digital Product Passports.

North America and Asia-Pacific: North America follows with an average score of 3.4 (+0.1 improvement), while the Asia-Pacific region recorded a score of 2.7 (+0.3 improvement). Japan showed a notable increase of +0.6 points, likely due to its culture of repair and reuse.

Top-performing categories: Underwear and lingerie saw the strongest increase in circularity scores, followed by luxury fashion, which demonstrated momentum in design, communication, and the use of raw materials.

Table: Highlights from CFX 2025

The report emphasizes that the primary barrier to scaled circularity is not a lack of awareness, but an execution gap stemming from systemic challenges. These include a lack of scalable infrastructure, poor system integration, and a missing clear business case for circularity. Circularity initiatives are often siloed in sustainability departments rather than being integrated into core business operations, such as product development and supply chain management.

Leaders in action

The CFX 2025 report points to several frontrunners who are successfully embedding circularity into their business models.

Patagonia and The North Face: These outdoor apparel leaders have long championed durability and repair. Their business models are built on the premise that products should last for a long time. They have extensive repair programs and actively encourage consumers to drop off old clothes for recycling, often incentivizing them with discounts on new purchases.

Gucci and Levi's: These brands, while operating in different segments, are making significant strides in "closing the loop. Gucci's luxury position allows it to offer high-quality repair services, which are supported by its high prices and margins. Levi's, known for its denim, has invested in take-back programs and is exploring new technologies to repurpose pre-consumer and post-consumer textile waste into new products.

On: The athleticwear brand is an example of a company integrating circularity from the very start. The report highlights On's use of life cycle assessment data in product development to inform its circular design principles and minimize environmental impact.

The Kearney CFX 2025 report serves as both a benchmark and a compass for the fashion industry. While the market for circular fashion is projected to grow significantly in the coming years, the report's findings are a clear call to action. As regulation moves from policy to enforcement, the industry must shift from declaring ambition to delivering evidence systematically, and at scale. The future of fashion, the report suggests, depends on a fundamental re-framing of circularity from a compliance exercise to a strategic lever for growth and innovation.