Key Drivers and Barriers to Circular Economy Practices in the Global Textile and Fashion Industries: Sustainable Strategies for the Indonesian Batik Industry

The global textile and fashion industry is one of the sectors that significantly impacts the environment [1-5]. The production processes, which involve extensive use of natural resources and generate large amounts of waste, make this sector a major contributor to environmental degradation [6-9]. The fashion industries generate significant pollution, making them among the least environmentally friendly sectors globally due to the growing adoption of a linear fashion system that continues to exploit scarce natural resources and energy. This highlights the need for a shift toward a circular economy to achieve sustainable production and consumption [10, 11]. Amid growing global awareness of the importance of sustainability, the circular economy concept has been proposed as a solution to mitigate the negative impacts of this industry [12-14].

Globally, the concept of a circular economy is rapidly evolving as an alternative to the linear economy, which follows a "take-make-dispose" model [10, 14-17]. Circular economy aims to reduce waste, extend product life cycles, and optimize resource use, including repurposing waste as new resources [18-20]. Research within the global textile and fashion industry context has focused on various aspects, such as textile recycling, upcycling, and innovations in design that extend product lifespan [1, 21, 22]. However, the application of circular economy principles in the textile and fashion industry remains scarce and faces many challenges [3, 23-25], especially in developing countries like Indonesia [26, 27].

The textile, fashion, and batik industries are closely interlinked through supply chains, production, and global and local market dynamics. All three contribute to economic and cultural dynamics and hold great potential for future sustainable practices [7, 8, 11, 28]. Batik is an integral part of the textile industry but has distinct characteristics as a traditional art form that reflects Indonesia’s rich cultural heritage. The batik-making process involves special dyeing techniques, such as wax-resist dyeing applied to textile fabrics. Batik is not only a textile product but also a symbol of the cultural identity and history of Indonesian society [27, 29].

These three industries-textile, fashion, and batik-are also increasingly interconnected in efforts toward sustainability [7, 8, 28]. The textile industry is striving to develop more durable and environmentally friendly fabrics, the fashion industry seeks to create reusable or recyclable products, and the batik industry, with its traditional processes, is exploring ways to reduce environmental impacts, especially from the use of chemical dyes that can be pollutive [3, 30, 31].

Amid the global concern over environmental issues caused by the textile and fashion industries, the batik industry, as part of the textile sector, is also under scrutiny regarding its ecological impact, particularly in traditional production methods that often still use chemicals and synthetic dyes [3, 7, 8, 23]. However, research on the circular economy in the batik industry remains limited globally. Most studies have focused on the textile industry in general and how developed countries adopt circular economy models [32]. Batik, which is considered a specialized sector with cultural value, has not yet become a central focus in global discussions on the circular economy. Nevertheless, with growing interest in sustainable practices, batik-producing countries like Indonesia are beginning to be seen as part of a global strategy to reduce the environmental footprint of the textile sector [3].

At the national level, attention to circular economy practices in the batik industry is increasing, in line with efforts to preserve environmental sustainability and enhance product competitiveness in global markets. The Indonesian batik industry, a national cultural heritage symbol [33], faces similar challenges in terms of sustainability. Although batik is recognized as a premier product with high cultural value, its production process often generates chemical and solid waste that adversely affects the environment [29, 31, 34-40].

On the other hand, international market pressures to adopt sustainable practices in the textile and fashion supply chains add urgency to the need to implement circular economy concepts in the batik industry [3, 7, 8]. However, the application of these practices remains minimal due to various obstacles, such as a lack of understanding of long-term benefits, technological limitations, and resistance from industry players [34-36].

Water and soil pollution resulting from batik industry waste can harm the health of local communities living near production areas. Communities that rely on rivers for clean water and agricultural irrigation are directly affected by the pollution from batik waste. Furthermore, these environmental impacts can trigger social conflicts between batik industry players and local communities who depend on the preservation of their environment. Additionally, a lack of education and awareness about sustainability among batik workers and entrepreneurs makes it harder for them to compete in markets that demand sustainability standards [29, 31, 34-36, 40, 41].

The traditional batik industry heavily impacts ecosystems, primarily through water pollution, harmful chemicals, and excessive energy and water use. Untreated liquid waste discharged into rivers degrades water quality, harming biodiversity [33, 39, 40, 42, 43]. The use of fossil fuels for energy in the production process also increases carbon emissions, contributing to climate change [2].

Several studies in Indonesia have examined the environmental impacts of the batik industry, particularly regarding the use of chemical dyes and toxic waste generated by batik production. This waste can pollute rivers and soil around production areas, negatively affecting local community health and ecosystem balance. Therefore, some research has begun exploring alternative environmentally friendly natural dyes and cleaner production practices [29-31, 33, 34, 36-38, 40, 44, 45]. These studies also propose the need for stricter regulations regarding waste management in batik production centers and increased awareness among entrepreneurs of the importance of sustainability. This highlights the need for a shift toward a circular economy to achieve sustainable production and consumption. However, many challenges arise in introducing circular economy principles, which hinder the system’s transition [10, 11].

While the circular economy has been widely discussed in the context of the global textile and fashion industries, there is a lack of specific studies addressing the application of this concept within the Indonesian batik industry. Most previous research has focused on developed countries or modern textile industries [26, 32], while local contexts like batik-which has different production characteristics and supply chains-have not been sufficiently explored [29, 40]. Several research findings related to the drivers, barriers, and strategies of circular economy practices in the global textile and fashion industries can be reviewed as a reference basis for identifying and analyzing the drivers, barriers, and strategies of circular economy practices in Indonesia's batik industry:

Research findings in Europe reveal that the main drivers are relevant European regulations, appropriate technologies and digitalization, increasing consumer social and environmental awareness, and managerial capabilities. The barriers include supply chain complexity, large-scale supply chain collaboration, information gaps, and readiness to take market risks [1]. Research findings in the Global South emphasize that funding is the main driving force for sustainable manufacturing practices, while the lack of education on remanufacturing and recycling is identified as the main barrier [14]. Research in India reveals five major challenges to circular economy practices in the fashion industry: expensive raw materials, lack of certification, issues in collection and sorting, weak technical knowledge, and the absence of a shared vision [12].

In Brazil, research findings highlight that internal drivers (market strategies, business principles, commitment, production processes, innovation) are more prominent than external factors (government regulations) in implementing the circular economy [46]. Research in Taiwan identifies six dominant barriers: low customer demand for recycled textile products, the lack of successful circular business models, challenges in collaborative innovation among supply chain partners, the lack of high-quality recycled materials, and high costs with low short-term economic benefits [25]. In Indonesia, research shows that a lack of customer knowledge, along with socio-cultural and regulatory factors, is a barrier to the sustainability of batik SMEs [29].

Regarding circular economy practice strategies in the global textile, fashion, and batik industries, research in Germany has shown that only a small number of companies have adopted the following circular business model strategies: upcycling and recycling, clothing rental, repair, reuse, and material innovation [21]. Research in Italy has developed a theory/concept to address challenges and barriers in circular economy adoption through a circular supply chain orchestration approach [6]. Research in Sweden reveals that motivation for eco-friendly innovation is necessary to address environmental issues in the fashion industry. Multi-stakeholder collaboration provides the knowledge, scale, and resources required, which a single actor may not possess [32]. Findings from Pakistan indicate that enhancing research and development capacity is the most important strategy for implementing green supply chain management [47].

This research aims to fill that gap by providing an in-depth analysis of the specific challenges and opportunities in the batik industry. Key research gaps to be addressed include: 1) The scarcity of studies specifically on the full application of circular economy in the batik industry, particularly in recycling and material reuse. 2) The lack of empirical data on the success of circular economy-based business models in small and medium-sized batik centers. 3) The technological limitations and awareness among traditional batik industry players, especially in adopting environmentally friendly new technologies.

This research is expected to provide a tangible contribution to supporting the transition of Indonesia’s batik industry toward circular and sustainable practices. Thus, the primary goal of this research is to: 1) Identify the key factors driving and inhibiting circular economy and sustainability practices in the global textile, fashion, and batik industries, including in Indonesia. 2) Develop sustainable strategy recommendations based on global best practices that can be applied by the Indonesian batik industry to enhance sustainability and competitiveness in global markets.

A deeper understanding of the factors driving and hindering the implementation of the circular economy, particularly in the batik industry, is needed. With sufficient knowledge, stakeholders can formulate policies and strategies adopted from global best practices to promote sustainable practices. This research is crucial to help Indonesia’s batik industry not only compete in global markets but also meet sustainability standards, which are becoming increasingly important in the future.

3.1 Bibliometric analysis

This research began by identifying data and documents published in the Scopus database in accordance with the scope of this research to find out updates on the number and trends of related research results at the global level. The next step is to screen the published documents obtained, to carry out an eligibility analysis to determine the number of most relevant journal articles used as the basis for the study in this research. The publications were identified on December 31, 2023 based on the search keywords: "Circular Economy" OR "Sustainable Manufacturing" AND "Strategy" OR "Intervention" OR "Implementation" OR "Practice" OR "Enablers" OR "Drivers" OR "Barriers" OR "Challenges" AND "Batik" OR "Textile" OR "Fashion".

As shown in Figure 2, there has been a significant increase in publication trends and volume from 2015 to 2023 at the global level related to this research in the Scopus database. During the selection and eligibility stages, the publication volume gradually decreased, but the trend continued to rise, resulting in a total of 38 journal articles being selected as the most relevant focus for this study. Based on publication trends and volume, it can be seen that this research is highly relevant and has attracted significant attention at the global level. Publication trends and volume related to this research topic have significantly increased, especially over the past three years. This indicates that the research topic is highly relevant and possesses clear novelty, as evidenced by the continuously rising trend each year. Therefore, this research topic represents a new frontier in the global landscape, increasingly gaining attention from researchers across various countries, including Indonesia.

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Figure 2. Publication trends and volume in a specific field of research (2015-2023)

As shown in Figure 3, the publications recorded in the Scopus database related to this research have spread widely and demonstrate an increasing trend year by year from 2015 to the end of 2023. Countries that are highly active in publishing related research are spread across five continents, with the most active in order being Europe, Asia, North America, Australia (Oceania), and South America. Meanwhile, Africa and Antarctica have not yet shown any publication activity related to this research. This publication activity is likely linked to the numerous textile, fashion, and batik industry hubs located in countries across these five continents. The progress of publications related to this research indicates an increasing awareness and policy direction in the development of the textile, fashion, and batik sectors, moving towards a sustainable circular economy transition and beginning to move away from unsustainable linear economic practices [5, 6, 10, 11, 14, 17, 21, 59]. Countries that dominate this field possess a combination of strong regulations, advanced technology, high consumer awareness, access to capital, and cross-sector collaboration. These factors enable them to lead in the adoption of circular economy and sustainability practices, as well as to dominate publications and research in this area, as reflected in the publication data shown in Figure 3.

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Figure 3. The most active countries in a specific field of research

As shown in Figure 4, the 29 recorded journals represent the top 10 leading journals in a specific field of research, although there are 2 journals that are particularly significant in publishing studies on this topic. The distribution of publications is relatively even, except for these two journals, which stand out in terms of significant contributions. Based on the data, publication trends and volume on this research topic have continued to rise year by year, especially from 2015 to 2023, and are predicted to keep growing globally in the coming years. This growth correlates with increasing awareness of the Sustainable Development Goals (SDGs), which optimally balance economic, social, and environmental interests [5, 17, 60-64]. In efforts to achieve the global SDG targets, the circular economy has emerged as the most robust strategy to date. The Indonesian government's policies through 2030 have emphasized five priority industrial sectors that are continuously encouraged to adopt circular economy practices. Furthermore, the circular economy has been incorporated into Indonesia's Vision 2024 agenda for all industrial sectors. This means that the circular economy will remain a central strategy in realizing sustainable development, particularly in Indonesia, with goals set to be achieved by 2045 [65].

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Figure 4. The leading journals in a specific field of research

3.2 Key drivers, barriers, and strategies at the global level

The next step after carrying out the SLR analysis is to identify key drivers, barriers and strategies for circular economy and sustainability practices in the global textile and fashion industries based on the findings of previous related research.

The data presented in Table 2 relates to the identification of key drivers of circular economy practices and sustainability in the global textile and fashion industries. Based on the data, it is clear that the government is the primary key stakeholder in driving circular economy practices and sustainability in the global textile and fashion industries, particularly in countries across Europe, Asia, Australia, South America, and Africa. The key drivers are government policies, subsidies and regulations relevant to circular economy practices, legal issues, and pressures. These key drivers fall under the social and environmental sustainability dimensions [1, 14, 29, 46, 66-76].

Producers are the second key stakeholder driving circular economy practices and sustainability in the global textile and fashion industries, particularly in countries across Europe, Asia, Australia, and South America. Their key drivers include increased knowledge, awareness, commitment, productivity and efficiency, profit or benefits from waste reduction, and meeting circular and green product export requirements. These key drivers fall within the economic, social, and environmental sustainability dimensions [14, 46, 66-70, 73-77].

Table 2. Key drivers of circular economy practices and sustainability in the global textile and fashion industries

The third key stakeholder is consumers, whose key drivers include increased environmental and social awareness, trends, concern, ethics, economic growth, and environmental impact. These key drivers fall within the economic, social, and environmental sustainability dimensions and are primarily found in several countries across Europe, Asia, Australia, and Africa [1, 14, 66, 67, 70, 73-79]. Papamichael et al. [22] conducted a study on consumer behavior toward circular fashion products, finding that the higher the level of consumer education, the greater their awareness of circular and sustainable fashion products. Therefore, it is crucial to provide education to consumers with lower education levels to increase their awareness, particularly regarding environmentally friendly fashion products.

Based on the Pareto analysis of the key drivers, as shown in Figure 5, it was found sequentially that the government, producers, and consumers are prioritized as key stakeholders. These prioritized key drivers (KD-G-SE, KD-P-SEE, and KD-C-SEE) contribute 80% to the achievement of circular economy practices and sustainability in the global textile and fashion industries. Therefore, based on the recommendations from the Pareto analysis results, there are three prioritized key drivers. These can serve as a strong motivation for circular economy practices and sustainability in the textile, fashion, and batik industries. The Pareto analysis results can also be used as a reference in designing key strategies according to the key drivers, particularly in the Indonesian batik industries.

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Figure 5. Pareto diagram: prioritization of key drivers

Table 3. Key barriers of circular economy practices and sustainability in the global textile and fashion industries

The data presented in Table 3 relates to the identification of key barriers to circular economy practices and sustainability in the global textile and fashion industries. Based on the data, it is evident that producers are the first and second key stakeholders in hindering circular economy practices and sustainability in the global textile and fashion industries, particularly in countries across Europe, Asia, South America, and Africa. The first key barrier falls under the social and environmental dimensions, which include a lack of knowledge, skills, managerial capability, motivation, and awareness for circular economy and sustainable product development [6, 12, 14, 23, 25, 28, 47, 70, 75, 77, 81-103]. The second key barrier falls under the economic and environmental dimensions, such as high financial investment, difficulty in accessing financial capital, costly raw materials, infrastructure and hazardous waste management, and unpredictable market demand [1, 6, 12, 14, 23, 25, 28, 47, 69, 70, 75-77, 81, 84, 86-88, 93, 102, 104-109].

Consumers are the third key stakeholder in hindering circular economy practices and sustainability in the global textile and fashion industries, particularly in countries across Europe, Asia, Australia, South America, and Africa. The key barrier in this case falls under the social, economic, and environmental dimensions, including a lack of knowledge, motivation, and awareness in circular initiatives, unwillingness to pay for eco-friendly products, poor customer demand, and difficulty in changing behaviors and attitudes toward circular products and strategies [3, 6, 8, 14, 25, 28,29, 66, 76, 81, 83, 93,98, 102-104, 107, 109-115].

Papamichael et al. [22] conducted a study on consumer behavior toward circular fashion products, it was found that barriers such as a lack of education and awareness hinder the widespread adoption of sustainable fashion practices. Therefore, educating consumers is essential to raise their awareness of circular and sustainable fashion.

The fourth key stakeholder is the government, with the key barrier falling under the social and environmental dimensions, such as a lack of government regulations, support, certifications, and incentives for eco-friendly policies and obligations to circular economy practices. This fourth key barrier is mainly found in several countries across Europe, Asia, and Africa [6, 12, 23, 25, 28, 29, 47, 75-77, 81, 83-85, 87-89, 93, 102, 104, 116, 117].

Puglia et al. [121] reviewed government policies in Europe and highlighted their key role in enabling and accelerating the transition to a circular economy, particularly in the textile and fashion industries. The study identifies several gaps, including insufficient focus on replacing the linear economy, an overemphasis on the beginning and end of the resource life cycle with neglect in the core stages, the dominance of external over internal policy measures, and inadequate policy coverage that addresses key actors, infrastructure, and resources.

Abdelmeguid et al. [10] conducted a study examining the significance levels of challenges identified in the literature to assist top management in shaping strategies. Decisions will be made and prioritized based on the key challenges to ensure the successful and effective implementation of circular economy practices in the fashion industry. The findings indicate that regulatory pressures, along with poor management and leadership, are the most significant challenges. Therefore, achieving a successful and effective circular economy implementation requires adjustments in managerial strategies.

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Figure 6. Pareto diagram: prioritization of key barriers

Based on the Pareto analysis of the key barriers, as shown in Figure 6, it was found sequentially that the producers, consumers, and government are prioritized as key stakeholders. These prioritized key drivers (KB-P-SE1, KB-P-EE, KB-C-SEE, and KB-G-SE) contribute 80% to the inhibition of circular economy practices and sustainability in the global textile and fashion industries. Therefore, based on the recommendations from the Pareto analysis results, there are four prioritized key drivers. These can serve as a strong blockage for circular economy practices and sustainability in the textile, fashion, and batik industries. The Pareto analysis results can also be used as a reference in designing key strategies according to the key barriers, particularly in the Indonesian batik industries.

Although regulations can serve as a key driver, poor implementation can turn them into barriers. Therefore, the focus should be on addressing weaknesses in regulations to maximize their benefits. In developed countries, strong environmental regulations have been a major driver for the adoption of circular economy practices. Conversely, in developing countries, inconsistent regulations often act as barriers. Environmentally friendly technology can serve as a driver if it is widely available and affordable. However, if the costs are too high or it is difficult to access, it becomes a barrier for many industry players, especially SMEs.

Table 4. Key strategies for circular economy practices and sustainability in the global textile and fashion industries

The data presented in Table 4 shows the key strategies for circular economy practices and sustainability in the global textile and fashion industries, which should be prioritized sequentially according to the number of mentions. The first strategy specifically relates to producers, involving practicing green design, sustainable innovation, selection and consumption of resources (raw materials, energy, and water), recycling or upcycling, extra marketing, and internal research and development [3, 21, 24, 26, 41, 47, 102, 122-125]. The second strategy relates to both producers and consumers, particularly in training programs to increase motivation on eco-innovations, awareness, and knowledge about technology, trends, ethics, process design, and green products, as well as their social, economic, and environmental benefits [3, 32, 41, 47, 87, 124-127].

Klemm and Kaufman [132] conducted a study on consumer acceptance of new circular products. The overall findings reveal that consumers value circular attributes, particularly durability, when purchasing fashion and textile products. However, the study also highlights challenges in designing products that are easier to recycle and price competitively. Recommendations to address these challenges include involving consumers in product design and development, as well as creating policies that internalize the social and environmental impacts of fast fashion.

The strategic priorities involve producers as the key stakeholders in the effort to implement circular economy practices and sustainability in the global textile and fashion industries, followed by consumers and then the government. Based on the Pareto analysis results, as shown in Figure 7, it is evident that the key recommended strategies from global research are closely related to producers and consumers, while strategies involving the government appear to be of lower priority. This means that the key determinants or main contributors to the success of circular economy practices and sustainability in the global textile and fashion industries are producers and consumers.

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Figure 7. Pareto diagram: prioritization of key strategies

Abdelmeguid et al. [11] conducted a study addressing the need for a transition toward sustainable and circular practices by exploring the connection between management strategies and behavior across the fashion value chain. The study offers recommendations to stakeholders, including producers, consumers, and governments, to promote more sustainable and circular behaviors in the fashion industry. For instance, the approach highlights the importance of strategic partnerships with suppliers, waste management companies, and consumers to minimize waste and enhance circularity throughout the value chain. It urges the use of sustainable materials and eco-friendly designs for environmentally conscious consumers, while promoting visual storytelling for greater transparency. Moreover, the study underscores the need for circular business models, recommending on-demand and custom-fit manufacturing to align production with demand and reduce overproduction. It also suggests end-of-life strategies, such as take-back programs, recycling initiatives, and repair services, to extend product life cycles and create sustainable value.

Dace et al. [63] identified barriers across four key sectors-construction, chemicals, plastics, and textiles-that face significant challenges in the current linear economy and are in critical need of sustainable transitions. Across these sectors, cultural and structural obstacles were found to be the most prominent. The lack of incentives for changing consumer behavior and insufficient stakeholder collaboration were the most frequently cited barriers in the literature. From a value chain perspective, most obstacles were linked to material processing and product manufacturing stages. Lastly, potential solutions drawn from gray literature were suggested to bridge gaps and address these identified barriers. Many of the challenges were common across the four sectors, indicating that broader, cross-sectoral solutions could effectively support the transition towards sustainability.

3.3 Key strategies for Indonesian batik industries

The identification and analysis of key drivers, barriers, and strategies for circular economy and sustainability practices in the global textile and fashion industries then serve as a reference for designing strategies to be recommended for the batik industries in Indonesia. Tables 5 and 6 and Figure 8 display the results of the analysis and strategy design recommended for the batik industries in Indonesia. These recommended strategies are designed based on research conducted in many countries around the world, reflecting similarities in economic, social, and environmental dimensions. These findings come from various studies conducted globally, especially from countries across Europe, Asia, North America, South America, Australia, and even Africa. The recommended key strategies have been validated through in-depth interviews with relevant stakeholders, including the Chairman of the Batik Industry Association in Sleman, D.I. Yogyakarta, Indonesia, who oversees 42 batik industry groups, each comprising 15-20 batik industries. These findings were further confirmed by the Indonesian public and batik consumers through a survey assessing their perceptions, knowledge, behavior and awareness, involving 152 respondents. Additionally, alignment was ensured with the Regulation of the Minister of Industry of the Republic of Indonesia Number 10 of 2023 concerning Green Industry Standards for the Batik Industry.

Table 5. Recommended strategies based on key drivers according to the Pareto Principle for circular economy practices and sustainability in the Indonesian batik industry (the author's elaboration)

Table 6. Recommended strategies based on key barriers according to the Pareto Principle for circular economy practices and sustainability in the Indonesian batik industry (the author's elaboration)

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Figure 8. Recommended strategies based on SWOT analysis for circular economy practices and sustainability in the Indonesian batik industry (the author's elaboration)

The data displayed in Tables 5 and 6 represent the recommended strategies specifically for circular economy practices and sustainability in the Indonesian batik industry. These recommended strategies were generated through a process of extraction and synthesis of key drivers, barriers, and prioritized strategies based on the results of the Pareto analysis. The extraction and synthesis process were conducted using content analysis methods. The stages of the process included identification, screening, eligibility, determining the most relevant references, Pareto analysis, and the determination of internal and external factors according to the Strengths, Weaknesses, Opportunities, Threats (SWOT) framework. Based on internal factors such as strengths and weaknesses, and external factors such as opportunities and threats—which include each of the prioritized key drivers, key barriers, and key strategies aligned with relevant stakeholders—the key strategies for the Indonesian batik industry were then recommended. These key strategy recommendations have been tailored to the environmental, social, and economic characteristics of Indonesia.

Several studies in Indonesia have highlighted the drivers and barriers to circular economy practices and sustainability in the batik industry. Gunawan et al. [29] conducted an exploratory study on institutional obstacles and drivers of sustainability in Indonesia’s batik industry, which is renowned for its cultural heritage and plays a crucial role in the country's identity. They found that a lack of customer knowledge, along with socio-cultural factors and regulations, posed significant barriers to sustainability in the batik industry. Meanwhile, ecological, technological, socio-cultural, and political factors were identified as key drivers of sustainability goals.

Additionally, Nugroho et al. [40] assessed the sustainability of a batik industry in Pekalongan, Indonesia, which uses natural dyes. Their analysis employed five environmental, four economic, and six social indicators, resulting in a sustainability score of 77.50, classifying the industry as sustainable. The use of natural dyes emerged as a key strategy for enhancing sustainability in batik production. In terms of circular economy practices, batik industries using natural dyes have adopted the highest circular strategy, "refuse," which entails rejecting environmentally harmful raw materials.

Previously, Budi et al. [31] examined the drivers and barriers to sustainability in the batik industry of Laweyan, Surakarta. The study revealed that the primary driver was the enforcement of environmental regulations and strict oversight, while the main barrier was the lack of subsidies to support sustainable practices in the batik industry. However, research on circular economy practices and sustainability in Indonesia’s batik industry remains scarce and fragmented, with no comprehensive studies addressing drivers, barriers, and recommended intervention strategies. Therefore, this research aims to contribute to a deeper understanding of key drivers, barriers, and strategic interventions in circular economy and sustainability practices, specifically in Indonesia’s batik industry and, more broadly, in batik industries in other developing countries.

These barriers result in a slow transition of the batik industry toward sustainability, both in terms of environmental impact and economic competitiveness. These implications also create pressure on industry players to urgently seek solutions, such as training, government incentives, raising consumer awareness, and investing in environmentally friendly technologies. Without addressing these barriers, the batik industry risks losing its competitiveness in the global market, which increasingly demands high sustainability standards. In detail, the recommended strategies designed as shown in Tables 5 and 6 are further characterized based on SWOT principles as displayed in Figure 8.

Figure 8 presents the design of key priority strategies for circular economy practices and sustainability in the Indonesian batik industry. Characterizing the strategies based on their sources, the involved stakeholders, and sustainability dimensions is crucial for determining the necessary follow-up actions. Based on the SWOT analysis, the key and priority strategies that need to be pursued become clear. The SWOT analysis yields four recommended strategy models: S-O Strategy, W-O Strategy, S-T Strategy, and W-T Strategy. Each strategy model includes two key and priority strategies based on the Pareto analysis results, as shown in Tables 5 and 6.

S-O Strategy (Leveraging internal strengths to capitalize on external opportunities):

1) Optimize knowledge and awareness to leverage government policies: Utilize existing knowledge and commitment to ensure that companies meet requirements and gain subsidies or support from the government for circular economy practices.

2) Increase productivity and efficiency to meet consumer trends: Leverage operational efficiency to develop products that align with growing consumer trends in environmental and social awareness.

S-T Strategy (Using internal strengths to counter external threats):

1) Leverage knowledge to address customer awareness gaps: Use existing knowledge and awareness to educate the market on the benefits of eco-friendly products, reducing the threat of low demand.

2) Utilize efficiency to overcome a lack of government regulations: Apply efficiency and waste reduction to proactively comply with eco-friendly practices, even in the absence of stringent regulations.

W-O Strategy (Addressing internal weaknesses by exploiting external opportunities):

1) Improve managerial and financial capabilities through government policies: Leverage subsidies and regulatory support to address gaps in managerial skills and access to financial capital.

2) Boost motivation and awareness through consumer trends: Capitalize on increasing consumer awareness to drive internal motivation and the development of sustainable products.

W-T Strategy (Minimizing weaknesses and avoiding threats):

1) Develop internal training programs to overcome skill and knowledge gaps: Address weaknesses in skills and knowledge through internal training, which can also help mitigate the threat of low awareness in circular initiatives.

2) Enhance access to capital through collaboration with the government and financial institutions: Seek partnerships with the government and financial institutions to overcome challenges in accessing capital and high financial investment.

Referring to the SWOT analysis results outlined in Figure 8, each strategy has specific strengths and weaknesses depending on the industry context and challenges faced.

• The S-O strategy is the strongest, leveraging the synergy between available and measurable internal strengths and external opportunities, supported by market trends and government policies. The S-O strategy stands out by utilizing existing internal strengths, such as knowledge, commitment, and productivity, to capitalize on external opportunities backed by government policies and growing consumer awareness. The synergy between government, market, and technology makes this strategy easier to implement and yields positive long-term impacts.
• The W-T strategy is the weakest due to complex and layered barriers in skills, capital access, and behavioral changes, which take significant time to overcome effectively. Structural and cultural barriers are challenging to address in the short term. Limited capital access, low skills, and slow behavioral shifts make this strategy less effective than others, particularly without substantial support from financial institutions or the government.
• The S-T strategy is fairly strong as it focuses on using internal strengths, such as knowledge and efficiency, to address external threats, like low consumer awareness and regulations. However, results may be slow and depend on consumer behavior changes and regulatory environments.
• The W-O strategy has great potential, leveraging government policies and consumer trends to improve internal weaknesses in management and motivation. However, it is also vulnerable to policy uncertainty, with long-term results that take time to achieve.

Compared to S-O and W-T, the S-T and W-O strategies are moderate in strength and weakness. While impactful, they require more time and depend on many external factors to achieve optimal results. Thus, implementing strategies focused on optimizing knowledge, innovation, and leveraging existing policies is more realistic and brings significant outcomes for the Indonesian batik industry.

Implementation of S-O and S-T Strategies in the Indonesian Batik Industry

1) Optimize Knowledge and Awareness to Leverage Government Policies

In the Indonesian batik industry, strengths such as knowledge and awareness of circular economy and eco-friendly products must be maximized to take advantage of government policies. The Indonesian government has initiated various green economy regulations, such as Government Regulation No. 46 of 2021 concerning the Management of Hazardous Waste (B3) and the promotion of circular economy efforts. Batik producers need to further study these policies to ensure they meet the requirements, such as by obtaining eco-friendly certifications and utilizing government subsidies for environmentally friendly technologies.

Related Stakeholders:

• Producers: Responsible for complying with policies and adopting eco-friendly technologies.
• Government: Provides regulations and subsidies related to circular economy and waste management.

2) Increase Productivity and Efficiency to Meet Consumer Trends

With increasing consumer awareness of eco-friendly products, the batik industry must enhance production efficiency. This includes reducing chemical dye waste and reusing unused materials in the production process.

Related Stakeholders:

• Producers: Implement more efficient technology and innovation.
• Consumers: Appreciate and choose eco-friendly batik products.
• Government: Provides regulations and incentives for eco-friendly products.

Implementation of W-O and W-T Strategies in the Indonesian Batik Industry

3) Improve Managerial and Financial Capabilities through Government Policies

Weaknesses in management and access to capital can be overcome by leveraging government policies that support the development of small and medium-sized enterprises (SMEs). Programs like KUR (People's Business Credit) or environmental grants can be utilized to promote managerial development in the batik industry.

Related Stakeholders:

• Producers: Utilize training and financial assistance.
• Government: Provides training programs and capital access for better management development.

4) Increase Motivation and Awareness through Consumer Trends

Capitalizing on environmentally-conscious consumer trends can drive internal motivation for producers. With high demand for eco-friendly products, batik producers need to foster an internal culture that emphasizes sustainability.

Related Stakeholders:

• Producers: Play an active role in increasing internal awareness.
• Consumers: Support through purchasing eco-friendly products.
• Education: Educate future workforce about circular economy.

5) Develop Training Programs to Address Skill Gaps

The batik industry faces challenges in the lack of skills related to the circular economy. Therefore, training programs focused on using environmentally friendly technology and waste management are essential.

Related Stakeholders:

• Producers: Actively implement training programs.
• Government: Provide training and certification for workers.
• Workers: Acquire new skills to increase efficiency and sustainability in the production process.

6) Improve Access to Capital through Collaboration with the Government

To address challenges in accessing capital, the batik industry needs to collaborate with the government and financial institutions. This includes leveraging green financing programs and incentive schemes for SMEs transitioning to a circular economy.

Related Stakeholders:

• Producers: Play a role in applying for capital access.
• Government and financial institutions: Provide affordable financial support.