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Circular economy business models are based on the establishment of closed production systems where resources are kept on using for a longer period. Despite the strong desire and demand of the fashion industry to become circular, less is understood regarding the concepts and application of circular economy in the fashion business. This paper offers a holistic understanding about circular fashion, by synthesizing the literature to derive a comprehensive definition for circular fashion and providing a framework of strategies that facilitate the move from linear to circular fashion. Moreover, the barriers and enablers for the transition are discussed by consolidating different viewpoints. This analysis provides useful insights for the designers, researchers, businesses and innovators to support the transition towards circular economy in fashion.

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Purpose The purpose of this study is to assess sustainability across the handloom industry in Sri Lanka and identify opportunities for sustainable innovations supporting new markets, development of small-and-medium enterprises (SMEs) and growth in the Sri Lankan craft sector. Design/methodology/approach Using a multiple case studies methodology, 10 case studies and 37 semi-structured interviews were analysed along with the triple-layered business model canvas. Findings The study reveals the handloom industry to be fundamentally sustainable but with structural barriers that hinder both innovation and growth. The environmentally conscious production process and social inclusion within weaving communities are the key driving forces of sustainability in the sector; however, the structure of the industry and lack of access to markets and information act as barriers to both innovation and growth. The incorporation of design interventions, closed-loop manufacturing strategies and the encouragement of community-based entrepreneurship would support sustainability-orientated business innovation in the handloom industry. Originality/value The rapidly increasing market share for high-quality, hand-made goods indicates the potential of the creative industries to accelerate socio-economic growth. Handloom textiles is attracting growing interest in fashion markets because of increasing concern about exploitation in production, thus encouraging interest in the economic benefits of fairly traded, high quality materials and the potential contribution of handloom to sustainability in the fashion industry. The results of this study will support the handloom industry and policy-makers in developing support for sustainable innovation in the handloom industry.