A consortium of globally leading circular economy organisations is working to co-design an EU circular textiles policy framework that is informed by data and includes the perspectives of key stakeholders. The project seeks to identify critical areas to strengthen the design of the policy packages and supportive measures to aim for a win–win situation for all as well as required areas for scaled-up support to trading partners.
RECOMMENDED ACTIONS FOR EU POLICYMAKERS to maximise EU textiles strategy success while ensuring a just and equitable textiles transition for all:
- Recognise the extent of EU circular policy success dependence on third-party trade partners. Engaging proactively with textile trade partners, both upstream and downstream, offers the EU significant opportunities to harness the benefits of global circular value chains and reduce the cost of transition. By collaborating with textile trade partners, the EU can tap into its expertise in upcycling, reselling and recycling textiles, helping to close the loop on textile production and consumption. This approach not only supports the EU’s sustainability goals, strengthens economic ties, and promotes innovation in circular practices. In lieu of the imminent risk of increased tariffs being imposed by President-elect Trump and the growing risk of inflation in the EU, greater consideration should also be given to how the circular textile transition can be achieved in the most cost-effective manner. This involves exploring the synergistic benefits of closer cooperation with key trade partners, drawing on their competitive advantages related to textile repair, upcycling and recycling.
- Improve the EU policy impact assessment process. Impact analysis and consultation processes are currently insufficient to identify and quantify: (i) the level of EU dependence upon non-EU value chain actors to achieve EU circular economy (and broader environmental) policy goals; (ii) the willingness and ability of these value chain actors, with the support of the European Union, to adapt to new requirements; and (iii) the socio-economic policy impacts on the most marginalised value chain actors. It is, therefore, important that the EU improves the ex- and post-ante policy impact assessment process by including evaluations of likely impacts on trade partners (similar to that conducted by this project).
- Facilitate investments and access to finance to upgrade textile production facilities to enable circular solutions. The EU can facilitate investments by leveraging the European Investment Bank (EIB) and other European development finance institutions (e.g. KfW) to collaborate closely with local development banks, creating credit lines specifically tailored to circular economy initiatives in the textile sector. To support the smaller players that form a large part of the textile ecosystem, the EU should consider making microloans available through local banks, targeting very small businesses and cottage industries that use textile waste as resources but are excluded from traditional financing.
- Improve working conditions and strengthen workers’ rights. The EU may consider providing ongoing support to improve working conditions and workers’ rights at all stages of the textile value chain. For an inclusive circular textile value chain, enabling decent working conditions for workers engaged in the collection, sorting, processing and recycling of secondary textile materials and waste is crucial. The Corporate Sustainability Due Diligence Directive includes ambitious measures for access to remediation and decent pay, but without adequate representation and the right tools to access these rights, the impacts will not be felt.
- Build technical capacity to implement digital product passports (DPP) for textiles upstream and downstream. This requires a phased approach, engaging key stakeholders such as manufacturers, suppliers, local governments, traders and recycling entities. In the first phase, which focuses on production, capacity-building should prioritise digital skills and data management for manufacturers and suppliers to track and document essential product information like material composition, carbon footprint, production processes and sourcing data. Training programmes and technical support in digital literacy, data entry and systems integration will be essential to ensure the accuracy and interoperability of DPPs across textile value chains.
- Establish EPR transboundary fee transfer. Used textiles will continue to be exported to non-OECD countries thereby transferring the cost burden of waste management. The expense of preparing items for reuse is a significant factor in material being discarded as waste as retailers and upcyclers cannot bear the cost of preparing increasingly poor-quality clothing for reuse (and these costs are not currently accounted for within EU EPR costing evaluation). Without funds to prepare unbaled garments for reuse, second-hand retailers report that the items are being sold at a loss or given up as waste. To address the ongoing risk of offshoring used textile and textile waste handling costs to secondary markets, the EU should consider embedding transboundary transfer payments within its guidelines for EU textiles EPR. This would ensure that the polluter pays principle – the goal of the EPR – is more likely to be fulfilled by ensuring sufficient funding is available to manage exported textile items at their end-of-life.
- Facilitate technology transfer for textile renewal. The EU should strengthen commitments to facilitating technology transfer for key textile trade partners, along with improved access to recycling services. Enhancing local capacity for textile renewal and recycling will enable these countries to fully participate in circular value chains, driving global sustainability goals forward.
- Pursue international collaboration to identify pragmatic trade facilitation and regulation solutions for unsold, used and upcycled textile products. Recognising that a global effort is required to transition to a sustainable and equitable textiles sector, the EU should take a proactive stance to support and coordinate at the global scale ongoing initiatives to identify pragmatic trade facilitation and regulation solutions for unsold, used, upcycled and waste textile products. This coordinated effort will help address systemic challenges and promote a just transition across the textile industry worldwide. The lack of separate classifications for unsold and upcycled textiles hinders the development of circular textile value chains. Solutions could include revising HS codes or introducing new classifications in the HS2028 revisions, similar to the successful e-waste addition in HS2022. Alternatively, establishing production and traceability standards could prevent misclassification. A coalition involving the EU, key trading nations and institutions such as the World Customs Organization could drive these changes.
- Improving provisions within trade and economic agreements. The EU has an opportunity to strengthen existing economic and trade partnership agreements with key textile trade partners to include commitments supporting collaborative actions. This could involve enhanced commitments to facilitating technology transfer, necessary financial transfers, cooperation on innovative trade facilitation, and harmonisation of policy and standards. Support for capacity-building, particularly for third-party auditing of recycling facilities in line with waste shipment regulations, would be valuable. Additionally, the EU could establish partnerships with countries importing used textiles, enabling renewal and upcycling for reimport to meet shifting market demands.
Recommended actions to non-EU textile trade partners include:
- Seek early support from the EU to comply with the evolving circular textile policy landscape, especially when it comes to new product standards, recycled content requirements and traceability requirements (in particular, the digital product passport for textiles).
- Seek further clarity from the European Commission on the predicted used and waste textile trade flow alterations likely to occur over the short, medium and long term.
- Secure commitment from brands to support their suppliers through the transition, avoiding quick replacements with others who may already meet compliance standards.
- Request support in implementation and the legislative implementation transition period to ensure that mechanisms are in place to guarantee all actors have a clear understanding of the opportunities and requirements that small and medium-sized enterprises aren’t left behind
- Seek active, inclusive involvement in consultations prior to future drafting of European legislation that impacts partner trading countries, including the perspectives of worker representative groups.
THE FUNDERS: Funded by Laudes Foundation and the German Federal Ministry for Economic Cooperation and Development (BMZ), with the support of Deutsche Gesellschaft für Internationale Zusammenarbeit (GIZ); and led by a consortium of globally leading circular economy organisations (Chatham House, Circle Economy Foundation, European Environment Bureau).
