As regulation raises the circularity baseline, the focus shifts from compliance to operating advantage.
- The threshold for entering the top 20% rises from 5.8 to 6.0, while the bottom 80% average reaches 3.1.
- The average score this year is 3.7, up from 3.4 in 2025.
- 73–84% of brands now show moderate activation across key dimensions, but only 3–7% reach extensive activation.
- Regulatory requirements are shifting the management question from circular activity to how brands create value from the capabilities they need to build.
CHICAGO, Sept. 2, 2026 /PRNewswire/ -- Global management consulting firm Kearney today released its sixth annual Circular Fashion Index report (CFX 2026), which benchmarks how fashion brands put circularity into practice across the product life cycle. The 2026 Index assesses 241 brands across 21 countries and five product categories, evaluating performance in nine dimensions spanning materials and design through care, repair, secondhand, rental, and post-use recovery.
As regulation advances, circularity is becoming a license to operate rather than a voluntary initiative. CFX 2026 confirms this shift in adoption: the industry average score climbed to 3.7 out of 10, up from 3.4 in 2025 and around 2.0 in 2020. Yet deep execution is rare: across core primary-market dimensions, only 3 to 7 percent of brands show extensive implementation, while roughly three-quarters sit at moderate activation. The question, then, is no longer simply whether to build circular capabilities, but how to prevent them from becoming another cost layer and instead use them to improve commercial and operational decisions.
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 CFX 2026 report finds several key patterns in this year's data:
The baseline rises, but the execution gap is wide. The top tier is far ahead of the bottom 80 percent, and nine of the top 10 brands were also in last year's leading group.
The right model differs by category. Outdoor leads overall, while sports and premium/affordable luxury also show relatively stronger maturity, reflecting different product use cases and economics, along with different opportunities to create value.
Service-based models remain selective. Repair, resale, and especially rental depend more directly on consumer demand, and they require viable economics and the ability to operate them in order to scale. "Building circular capabilities and capturing value from them are two different things," said Maria Pereira, partner and co-author of the report. "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."
Kearney's analysis points to four management shifts that separate the brands that are capturing real value from circularity from those that are simply complying:
- Build a reusable product record that supports compliance as well as product development, sourcing, consumer service, and post-use decisions.
- Integrate circular decisions across core business functions, bringing commercial, sourcing, finance, and operations into relevant trade-offs and investment decisions.
- Build partner models with clear ownership and accountability across the value chain.
- Use broader product economics to shape portfolio priorities, considering inventory exposure, material-supply risk, and residual or recovery value alongside first-sale margin.
The next phase will be determined less by how many circular initiatives brands add and more by how effectively they use the capabilities they are already building to improve portfolio economics and environmental outcomes. Read the full report here.
About Kearney
For 100 years, Kearney has been a leading management consulting firm and trusted partner to three-quarters of the Fortune Global 500 and governments around the world. With a presence across more than 40 countries, our people make us who we are. We work impact first, tackling your toughest challenges with original thinking and a commitment to making change happen together. By your side, we deliver—value, results, impact. To learn more about Kearney, please visit www.kearney.com.
About Kearney's Circular Fashion Index
Now in its sixth edition, Kearney's Circular Fashion Index assesses how fashion brands put circularity into practice across the product life cycle on a 1–10 scale. In 2026, the Index covers 241 brands across 21 countries and five product categories. The framework comprises nine dimensions spanning circular materials, design, manufacturing, communication, care and repair in the primary market, and secondhand, rental and closing-the-loop models in the secondary market.
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SOURCE Kearney
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