EU Adopts New Directive: Textile Companies Must Pay Waste Management Fees.

The EU’s EPR Directive is a powerful “push” that forces the global textile industry to transform and become more sustainable. While facing many challenges, this is also an opportunity for Vietnamese businesses to enhance their competitiveness and affirm their position in the global supply chain.

The European Parliament has just passed a groundbreaking directive that requires textile manufacturers to bear the full cost of collecting, sorting, and recycling their products at the end of their life cycle. This Extended Producer Responsibility (EPR) policy will apply to all businesses selling products in the EU, including foreign companies and e-commerce platforms.

The directive was introduced to address the massive textile waste problem, especially from the fast fashion and ultra-fast fashion industries. According to the European Commission (EC), the EU generates about 12.6 million tons of textile waste each year, of which only 22% is collected for reuse or recycling. What’s alarming is that 4–9% of textiles produced are destroyed before ever being used, generating 5.6 million tons of equivalent CO2 annually.

The EPR policy requires EU member states to set waste management fees based on a product’s durability. This aims to encourage manufacturers to switch to more circular and sustainable business models.

International Expert Opinions

International experts and organizations view the new EU directive as a significant step forward, but one that also presents many challenges.

James Beard, Head of Compliance at Valpak, a company that helps businesses comply with recycling regulations, believes the directive will encourage textile manufacturers to transition to circular business and sustainable consumption models. However, he also emphasizes that EPR will increase costs and operational pressures for businesses, forcing them to find a balance between new financial obligations and market competitiveness.

The non-governmental organization Changing Markets Foundation states that EPR is an effective tool to control the negative impacts of the fast fashion industry. However, they warn that without a strong monitoring mechanism, companies could find ways to circumvent the law, and the final costs might be passed on to consumers.

Giusy Bettoni, founder of C.L.A.S.S., a consulting firm specializing in sustainable fashion, believes this is a strong incentive for brands to design products with a longer lifespan that are easier to recycle and use more environmentally friendly materials. She asserts that companies must begin to view product life cycle management as a core part of their business strategy.

Assessment of Positive Environmental Impacts

The EU’s EPR Directive offers several clear benefits for the environment:

• Waste Reduction: By making manufacturers financially responsible, the directive will significantly reduce the amount of textile waste that is landfilled or incinerated. This will directly limit soil, water, and air pollution.
• Promotion of the Circular Economy: This policy encourages brands to invest in designing products that are durable, repairable, and recyclable. This will shift the production model from “take-make-dispose” to a more closed-loop system, helping to conserve natural resources.
• Limiting Fast Fashion: The mechanism for adjusting fees based on product durability will impact fast and ultra-fast fashion brands, which rely on producing large quantities of low-quality products. This will help reduce the environmental impact of uncontrolled production and consumption.
• Reduced Carbon Emissions: Recycling and reusing textile products will reduce the need to produce raw materials, thereby significantly lowering the carbon emissions associated with the industry.

Impact on Major Garment-Exporting Countries

The new EU policy will have a significant impact on major textile-exporting countries worldwide, including China, Bangladesh, India, and Vietnam.

• Financial Pressure: Manufacturers in these countries will face increased costs due to EPR fees. This could reduce profits or force them to raise product prices, affecting their competitiveness in the EU market.
• Quality and Design Requirements: To reduce EPR costs, manufacturers will have to change their production processes, focusing on more durable products that use environmentally friendly materials and have high recyclability. This requires factories to invest in new technology and workforce training.
• Competitive Opportunities: For companies that have already invested in sustainable production, this directive can be a competitive advantage. European importers will be inclined to partner with those who comply well with environmental and sustainable development standards.

Specific Impact on Vietnam

As one of the world’s leading textile and garment exporters, Vietnam will certainly be affected by the new EU policy.

• Major Challenges in Cost and Technology: Vietnamese textile companies, which are primarily engaged in outsourcing, will face pressure from major European brands. They will need to meet stricter requirements regarding materials, production processes, and product life cycles. This will require significant investment in technology and process upgrades.
• Opportunity for Transformation and Value Enhancement: This is also an opportunity for Vietnam’s textile industry to shift from the traditional outsourcing model to a higher-value industry focused on sustainable production. Businesses that pioneer the adoption of green technologies and processes will gain a significant advantage in the market.
• Driving the Development of the Recycling Industry: The EU directive could stimulate the development of the textile recycling industry in Vietnam. Collecting and recycling domestic textile waste will become a potential business sector, creating jobs and reducing pressure on the local environment.