By Debbie Shakespeare, senior director of sustainability, Avery Dennison
Trend-setting is fashion’s forte. Now, the industry is poised to lead the charge in sustainability, as one of the first sectors to fall under the European Union’s Ecodesign for Sustainable Products Regulation¹ (ESPR).
The ESPR is part of a package of measures central to achieving the objectives of the 2020 Circular Economy Action Plan. It is designed to help the EU reach ambitious environmental and climate goals, doubling its circularity rate of material use, and achieving its energy efficiency targets by 2030.
Under ESPR, fashion is set to pioneer mandatory Digital Product Passports², (DPPs) scheduled to come into play no later than 2030. These will improve the availability of information on product provenance, sustainability and recyclability. Alongside DPPs, the EU is introducing a ban on the destruction of unsold goods.
The ban on the destruction of certain unsold textiles and footwear will take effect by mid-2026, except for medium-sized enterprises, which will be subject to a ban from July 2030. Smaller businesses will be exempt from the ban.
This initiative represents a significant step towards reducing waste and fostering sustainable production and consumption practices. For retailers, it will prompt significant strategic shifts across the supply chain. For many, the adoption of Digital ID technology will be central to transitioning into this new era of accountability and transparency.
New reporting obligations
Understanding the size of the problem is essential to solving it. Therefore, the ESPR includes reporting obligations regarding the destruction of unsold goods, which are defined as any consumer product that has not been sold or that has been returned by a consumer.
According to the text, all economic operators that directly discard unsold consumer products or have them discarded on their behalf, must disclose:
The number, weight, or percentage of unsold consumer products discarded per year, differentiated by type or category of products;
The reasons for the discarding of products and, where applicable, the relevant exemption;
The proportion of the delivery of discarded products to preparing for re-use, remanufacturing, recycling, energy recovery, and disposal operations;
Measures taken and measures aimed at preventing the destruction of unsold goods.
These will be annual reports, reporting on unsold consumer products discarded in the prior financial year, and must be public and easily accessible. Again, medium-sized enterprises will be subject to these requirements from July 2030, while micro and small enterprises are exempt.
For brands with Digital IDs assigned to their clothing and footwear items, using scannable or RFID tags that track product movements both upstream and downstream in the supply chain, this level of reporting will be relatively easy to enact.
Tracking and managing obsolete inventory will become increasingly crucial. Digital solutions, like Avery Dennison’s atma.io³ connected product cloud, can simplify this process by monitoring stock levels, identifying areas for improvement, and alerting on anomalies, outliers or discrepancies.
Reducing overproduction
The EU recognizes that fashion needs to produce less in the first place. And brands know only too well that overstock is a costly pain point. The hope is that excess stock becoming a legal weight around their necks will push fashion labels to action.
Technologies such as RFID tracking, AI, and just-in-time (JIT) manufacturing practices will also play their part in improving demand accuracy and reducing overproduction.
The challenge lies in dealing with overstocks, obsolete products, or items returned or recalled due to quality issues. These problems often stem from inaccurate demand forecasting or shifting market dynamics, leading to overproduction—a significant issue the industry must address.
To comply with the ESPR and avoid waste, fashion brands must refine their inventory management and demand forecasting. This will involve tighter collaboration with suppliers and investment in advanced analytics and tracking technologies. Incorporating factors like weather predictions and economic trends into forecasting models can help brands align production with real-time demand, minimizing excess stock and its associated carbon footprint.
Embracing circular economy practices
Moving toward a circular economy is essential for fashion brands. Large-scale take-back programs can help retrieve unsold or returned items for refurbishment, upcycling or recycling, while resale and re-use channels will likely expand as brands seek to move inventory rather than destroy it.
Educating consumers about the benefits of shopping through resale markets is also vital, as it helps extend the lifecycle of products and reduces waste.
ESPR presents a significant challenge yet also an opportunity for fashion brands to lead in sustainability. By adopting Digital ID technology, retailers can prepare for new regulations and gain a competitive edge, as well as appeal to the growing consumer demand for responsible fashion.
To learn how Avery Dennison’s solutions can help you prepare for the incoming EU’s ban on the destruction of unsold goods, contact our experts today.
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¹ https://commission.europa.eu/energy-climate-change-environment/standards-tools-and-labels/products-labelling-rules-and-requirements/sustainable-products/ecodesign-sustainable-products-regulation_en
² https://www.atma.io/digital-product-passport
³ https://www.atma.io/