Purpose The purpose of this paper is to study what type of organizational factors enable Finnish textile and clothing companies to achieve sustainability-oriented organization and to integrate circular business practices in order to address the environmental concerns of the industry. Moreover, the study aims to develop an understanding of the circular economy development within the clothing and textile industry in Finland.

Methodology A multiple case-study approach is adapted in order to provide an in-depth research of the organizations among the clothing and textile industry in Finland. Therefore, a purposive sampling is used for the sample selection since there are limitations for the area of study and limited amount of possible companies that meet the study criteria. This paper includes primary data acquired through semi-structured interviews and secondary data from the casestudy companies’ websites and reports.

Findings The findings indicate that the organization’s openness to new ideas and sustainability-oriented innovation together with constant business development can encourage the transition towards circular economy. Additionally, motivation to practice circular economy is largely based on the values of the organization that are aligned with the organization’s employees’ personal values. Then again, the lack of common understanding within an organization of what constitutes and includes in a circular economy can inhibit sustainability-oriented innovation and slow down the development of business processes. In addition, the findings present some of the challenges that come with implementing sustainable and circular practices in the textile and clothing industry in Finland. For example, the current consumer behaviour favours the linear business model due to cheap fast fashion purchases. Therefore, textile and clothing companies face a challenge related to poor-quality clothing, which are difficult to recycle to new material and problematic to repair or re-use. However, the results show that companies aim to tackle this problem by encouraging consumers towards responsible buying behaviour. Research limitations This research paper is limited by its focus on the Finnish textile industry and companies that produce B2C consumer products. In addition, sustainability in this paper accounts for environmental sustainability, excluding the social and economic considerations. Value of the paper This paper provides information about the enablers and inhibitors for building a sustainability-oriented organization. Moreover, this study contributes to creating theoretical and managerial knowledge for the professionals and practitioners who pursue to address the environmental challenges embedded in the textile and clothing industry through circular economy.