Producers that sell textiles in the European Union will have to cover the cost of collecting, sorting and recycling those materials, under a new directive to reduce waste in the fashion industry. The EU is adopting a new law whereby producers will have to oversee the management of waste from clothing to blankets to curtains, reports The Wall Street Journal (Sept. 11, 2025). The directive covers the full life cycle of a product and aims to motivate producers to “reduce waste and increase the circularity of textile products,” since they will be bearing the cost of managing that waste.
The EU is looking to reduce the environmental impact of the fast-fashion industry. Some 12.6 million tons of textile waste are generated in the EU each year. It estimates that just 1% of textiles are recycled worldwide.
The law will apply to all producers, including those using e-commerce tools and irrespective of whether they are established in an EU country or outside the bloc. Smaller companies will have an additional year to comply with the requirements.
“This legislation will accelerate the move towards circular business models and more sustainable consumption,” said a recycling consultant. “The requirements will bring added costs and operational pressures for producers at a time when many are already under strain.”
Elsewhere, the EU is to set new targets on food waste. From 2031, member states will be required to reduce food waste generated during processing and manufacturing by 10%, while the target for shops, restaurants and households will be 30%. Every year, almost 60 million tons of food waste, amounting to about 291 pounds per person, is created within the EU.
Classroom discussion questions:
- Supplement 5 in your Heizer/Render/Munson text introduces the term “circular economy.” What does that mean and how does it apply in this EU case?
- Discuss the OM implications of this new directive? Does it impact U.S. firms?