The EU’s New Legal Framework on Textiles: Addressing Fast Fashion’s Environmental Impact

By Caroline Swain, Senior Associate at Charles Russell Speechlys

It isn’t revelatory news that our voracious consumption of clothing and footwear is having a huge impact on the environment. Textile production almost doubled globally between 2000 and 2015 and consumption of footwear and clothing is anticipated to increase by 63% by 2030. 

Production and inevitable environmental impact is increasing with the rise of online shopping, which itself is becoming more straightforward and appealing. 

Unlike products tried on in store, which are typically returned to the shelf for purchase by another consumer, a large number of online returns are sent for incineration or to landfill as the cost of checking, sorting and restocking the products outweighs the profits to be made on resale. 

New legal framework proposed in Europe

In line with its ‘Strategy for Sustainable and Circular Textiles,’ European Union governments agreed in May to introduce a law banning the destruction of unsold textiles. The intention being to least drastically reduce the 6 million tonnes of textiles that the European Commission estimates are put into landfill or incinerated annually.  

In addition to the ban on the destruction of unsold textiles, the new law is expected to include a requirement for textiles to carry a ‘digital product passport’ (DPP) and new requirements in the design of products.

A DPP will need to be made available to consumers as they make their purchasing decisions and will be used to demonstrate a product’s environmental sustainability. The intention here is to help consumers make informed, sustainable choices about their purchases. 

The rules around DPPs will apply to all textile products placed on the European market regardless of the location of the selling or manufacturing entities’ headquarters. This information requirement will undoubtedly be costly and administratively burdensome for retailers of all sizes. 

Impact on the sector

Concerns from industry leaders that these measures will stifle European economies are being largely ignored as political leaders focus on the boost that the new law will have on the bloc’s green credentials. French president, Emmanuel Macron however, has publicly urged the EU to pause imposing any new environmental laws for fear of their economic impact while highlighting that Europe has already made far more advances in this space than other comparable industrial powers.

For designer brands, the destruction of unsold products pre-dates our fast fashion over-consumption and is a long-held tradition to prevent sale at a discount or on the black market. This practice is purported to prevent compromising the value of those products and their intellectual property. Burberry was famously heavily criticized in 2018 after it was discovered and widely reported that it had destroyed more than £28 million of unwanted products in the previous year. Burberry ceased burning stock immediately following the public backlash and promised to expand its efforts to reuse, repair, donate or recycle unsold products. 

The risks of this new law to business in this respect are clear. Closer inspection on the process of buying is likely to follow as retailers attempt to reduce losses at source. More ‘limited collections’ may ensue and demand will inevitably increase as supply falls making the process of determining volumes increasingly complex. 

A rise in secondary selling websites and portals is likely to follow as retailers pass off unwanted product to third party sellers rather than retaining out of season stock. Resale in the fast-fashion market is likely also to add to the economic burden on these retailers, as their cost-conscious customers will wait for stock to become available on the secondary market instead of buying it from the original online or physical store. There is also a question here as to product liability and who will be held responsible for defects in these products.

That said, there is huge potential for innovation from retailers here – the chance to work on recycling and reforming textiles into new season, sellable items. A number of notable fashion brands are ahead of the curve on this and provide balance sheet evidence of the positive effect it can have but invention, costs money and is likely to be limited – at least in the short term- to businesses with global reach and innovation departments. 

Risk for consumers

The risk to consumers is, as ever, price increases as recycling or processing these textiles, producing DPPs and innovating to create more sustainable products will inevitably increase retailer costs. There is undoubtedly a growing number of consumers who truly care about the origin and environmental impact of their purchases but those that are able to act on this concern are typically those who are financially comfortable enough to be afforded the luxury of choice. 

Impact on UK industry

As it stands, we do not know the full extent of the proposed legal framework, nor do we know the extent to which this will impact UK businesses. If they are based in the EU, it may only apply to the EU-based outlets but UK headquartered businesses are likely to be impacted by the law in relation to any EU entities or outlets and their respective sales to EU based consumers. Regardless, we anticipate that there will soon be calls for a similar regime to follow in the UK which may be more or less punitive. 

The need to address fast fashion’s environmental impact is irrefutable, but we also must acknowledge that the EU’s new legal framework to do this presents yet another challenge to an already struggling industry.