As global sustainability regulations take effect, circularity is becoming a fundamental part of the fashion industry. Amid these changes, global management consulting firm Kearney released their sixth annual Circular Fashion Index report (CFX). The next task awaiting fashion businesses is turning circularity into a source of commercial value, they suggest.
“For fashion executives, the equation is changing. Regulation is increasingly requiring brands to build capabilities such as better product data, sourcing evidence, and post-use systems, but that investment does not create a return by itself,” said Nora Kleinewillinghoefer, Kearney partner, global fashion and luxury lead, and co-author of the report.
“Those capabilities can remain a cost of compliance, or they can become part of how the business makes better decisions on what to design, what to buy, where to invest, and how to retain value beyond the first sale. Compliance is now the price of entry. Advantage still has to be earned.”
The 2026 Index includes 241 brands across 21 countries and five categories: fashion, underwear/lingerie, sports, outdoor, and footwear. It also sorts brands into four segments, including luxury, premium/affordable luxury, mass market, and fast fashion. The report evaluates performance in nine dimensions, spanning materials and design through care, repair, and post-use recovery.
The CFX 2026 reflects how regulations are affecting the industry, with the baseline for brands’ circularity rising. The average score among the brands surveyed was 3.7 out of 10. This is up from 3.4 in 2025 and about 2.0 in 2020. There is still heavy concentration at the top, with only 3 to 7 percent of brands at “extensive activation” across core dimensions. About three-quarters of the brands remain at “moderate activity.”
Nine of the top 10 brands are the same as last year—Uniqlo is the only addition. The other brands include Patagonia, Levi’s, The North Face, Coach, Gucci, Arc’teryx, Uniqlo, OVS, Lululemon, and Decathlon. Outdoor brands overall exhibited greater circular maturity with a score of 5.9 out of 10, followed by sports at 4.2, and premium and luxury at 3.8.
Another key takeaway is that service-based models for circularity have not had wide uptake. The majority of brands score below 3 in repair, resale, and particularly in rental. Expanding these models will depend on demand from consumers and the ability to scale these services and make them economically viable.
Maria Pereira, partner and co-author of the report, said, “The next leaders will be those who make better choices about where circularity can genuinely improve economics, from reducing excess and securing material supply to extending product life and improving recovery. The right answer will differ by product, category, and customer proposition. These decisions need to be brought to the functions where business trade-offs are made and considered as part of normal planning, investment, and performance management.”
The findings of the report demonstrate the shifts made by the brands that are capturing value from circularity rather than just complying. These brands have integrated circularity into the entirety of their business, from range and buying choices to materials and after-sales models. These decisions are not siloed within a sustainability team but are made the responsibility of commercial, sourcing, finance, and operations leaders.
It is also important to build a reusable product record that can be used beyond disclosure to support product development, sourcing, consumer service, and post-use decisions. It should contain reliable product data, supplier documentation, and methods to keep this information usable over time.
Companies leading in circularity have built partnerships to aid in their sustainable models. The report gives as an example Calvin Klein’s Re-Calvin program, for which the brand partnered with Trove and Debrand on item intake, routing, transparency, sortation and circular logistics capabilities. The report states that as brands work together on these types of solutions, they will need clear plans around ownership and accountability.
Finally, brands should use whole-life economics to shape portfolio choices. Circular capabilities allow brands to consider products on more than first-sale margin. The report suggests considering inventory exposure, material-supply risk, and residual value, then developing responses with both economic and ecological validity.
