Thibaut Joltreau (EDHEC): ‘The luxury sector, because it is not driven by volume but by value, can lead the way in circular innovation’

Why are you interested in circularity in the textile sector?

The textile industry is one of the most polluting industries in the world. It puts considerable pressure on natural resources: in Europe, textile consumption is estimated to be the third largest cause of pressure on water and soil, and the fifth largest in terms of raw material use and greenhouse gas emissions (1).

This fundamental problem has been further exacerbated by the rise of fast fashion: a business model based on low-cost mass production and constant renewal of collections, which accelerates overconsumption and fuels a ‘disposable fashion’ mindset (2).

In response to this situation, public authorities have made this sector a priority in their circular economy policies. In France (3) and in Europe (4), new regulations have been introduced in recent years to encourage companies to reduce their volumes, extend the life of their products and improve clothing recycling. These are known as the ‘3 Rs’ of the circular economy: reduce, reuse, recycle.

In this context, I conducted research with Louise Curran (TBS Education) and Christian Gnekpe (TBS Education) on the impact of these new policies and regulations on global value chains in the textile industry, as part of the European TWIN SEEDS project (5). We were driven by one central question: Can these new rules and incentives push large companies in the sector to transform their business models and, in doing so, reorganise global clothing production networks? 

The challenge was to understand whether these new rules could ultimately lead to a tangible reduction in the sector's environmental footprint.

How have these new public policies affected the sector, including the luxury sector?

New regulations related to the circular economy – already implemented or still in preparation – have led companies to adapt strategically to this new political environment.

In France, the AGEC law of 2020 (6) marked a turning point by prohibiting the destruction of unsold goods. Brands must now find other outlets for these products, such as donation, resale, upcycling (transforming an item to give it a new function) or recycling the materials.

At European level, a major reform is also in the pipeline: all products placed on the market will have to comply with eco-design standards (7). In practical terms, this will mean designing clothing that is more durable and easier to repair and recycle from the outset. The announcement of this new regulatory framework is encouraging companies to think more broadly about how to integrate circularity into their business models and value chain organisation.

However, the changes in practices currently underway are actually very limited and vary greatly depending on the type of business and market segment.

In the mass market, which accounts for the majority of volumes and therefore waste, we have seen that changes are mostly limited to one-off adjustments: a few second-hand or in-store rental initiatives, or the integration of recycled materials in certain collections; but no real transformation of the fast fashion business model, which is still based on large volumes and very rapid collection renewal.

At the other extreme, small local businesses committed to ethical and sustainable fashion have often been pioneers, with models incorporating eco-design and short supply chains. However, they are struggling to grow in the face of globalised competition. Some have even had to cease trading in the context of the inflationary crisis of the last two years, where post-Covid sustainable consumption behaviours could not be sustained by purchasing power.

In this landscape, luxury goods companies occupy a special position. For example, they were the only ones with the financial and organisational resources necessary to systematically implement the obligations arising from the AGEC law.

And why are luxury brands ahead of others in this context?

For several reasons. Firstly, implementing circular practices involves significant costs. Sorting unsold stock and organising its reuse or recycling is much more expensive than destroying it. However, major luxury brands have the capacity to absorb these additional costs. They also benefit from better control over their value chains, which facilitates the integration of new practices.

Secondly, their dependence on image and reputation plays a key role: a scandal linked to the illegal destruction of unsold goods would immediately weaken their brand.

In this context, new practices have emerged, such as the systematic sorting of production waste and the dismantling of unsold items. To achieve this, all of the major French luxury groups and their various brands have gathered precise data on their pre-consumer waste (unsold items, production scraps) and collaborated with specialised startups that offer turnkey solutions: redirecting unsold items to the right outlets, dismantling, eco-design consulting, etc.

These efforts are a step forward, but they are not enough to transform the entire sector, especially since the volumes handled by the luxury industry remain incomparable to those of the mass market. In addition, many designers remain committed to using virgin materials, and recycled fibres still pose technical challenges: being shorter, they can be less strong, which conflicts with the quality requirements of the luxury industry.

Furthermore, these circular initiatives focus on “pre-consumer” waste (unsold items, production scraps), whereas the real challenge lies in “post-consumer” waste, i.e. end-of-life clothing. However, it is mainly fast fashion that generates these massive volumes of waste, due to the scale of sales, very low prices, and lower quality clothing.

Faced with this situation, part of the sector is advocating the development of a genuine European textile recycling industry. But for such a model to work, several issues would need to be resolved: setting up large-scale collection, sorting and dismantling logistics, producing recycled textiles that are competitive in terms of quality and price, and creating closed recycling loops (textile to textile) on a European scale. This would also require new technologies for automated waste sorting, as well as solid commercial outlets.

Today, this economic model has yet to be invented. In reality, the most effective solution remains to reduce the constant race for new collections, which is responsible for overproduction, and to focus on a ‘Made in Europe’ model geared towards mid-range clothing that is more durable and of better quality. In other words, to put an end to disposable fashion.

In this context, the luxury sector can lead by example. It alone currently has the necessary leeway to pave the way for circular innovation. Because it is not driven by volume but by value, it can demonstrate that circularity and quality can go hand in hand. This could involve, for example, strengthening integrated in-store repair services – which are inherent to luxury but could be extended to the mass market – or incorporating a growing proportion of closed-loop recycled textiles into products, without compromising on quality requirements.

Are the new regulations developed at European Union level the solution for the more widespread adoption of circular practices in the textile sector, beyond the luxury sector?

The new European regulations could indeed contribute to a wider adoption of circular practices in the textile industry. But everything will depend on the specific criteria that are chosen and how they are applied (8). These decisions are subject to complex political negotiations within the EU. And it should be borne in mind that Chinese ultra-fast fashion giants such as SHEIN and Temu could be quicker than European manufacturers to adapt to the new eco-design standards.

If these rules are to make a real difference, they will need to be accompanied by strong industrial policies capable of supporting players who are already implementing more virtuous models – eco-design, short supply chains, local production. This would involve relocating part of the value chain to Europe. Because to tackle the problem at its root, it is not enough to rely on ever-increasing recycling capacities. The only credible approach is to produce fewer garments, but of higher quality.

Two additional levers are essential to support this transition. The first is to guide demand: providing consumers with clear and comparable information on the environmental impact of products, for example via environmental labelling in France (9) or the future product passport at European level (10). The second is to secure stable outlets for sustainable players, for example by incorporating more eco-designed textiles into public procurement, such as workwear in hospitals.

However, today, this does not seem to be the direction favoured by decision-makers.

In France, despite recurring talk of ‘reindustrialisation’, the financial resources allocated to sustainable fashion players remain limited. This suggests that textiles are not considered a priority sector to support at a time when international competition is focused primarily on high technology.

At the European level, the situation is similar: in a tense geopolitical context, the environmental agenda appears to have been relegated to the background. The recent Omnibus package even marks a step backwards on some of the ambitions of the Green Deal (11), which was presented as central to the previous term of office.

In this context, one question remains: in its power struggle with China, will the EU have the courage and audacity to see its approach through to the end, by making its future eco-design standards truly binding and establishing solid environmental barriers to entry into its textile market?

References

(1) "Textiles and the environment: the role of design in Europe’s circular economy", European Environment Agency, 10 February 2025, https://www.eea.europa.eu/en/analysis/publications/textiles-and-the-environment-the-role-of-design-in-europes-circular-economy-1

(2) “Ultra-fast fashion is a disturbing trend undermining efforts to make the whole industry more sustainable”, avril 2024, Taylor Bridges - https://theconversation.com/ultra-fast-fashion-is-a-disturbing-trend-undermining-efforts-to-make-the-whole-industry-more-sustainable-224253

(3) « Bilan de la loi AGEC : l’élan est donné, mais la révolution circulaire reste à construire pour la filière REP TLC », février 2025, Maud Hardy - https://www.lagrandeconversation.com/ecologie/bilan-de-la-loi-agec-lelan-est-donne-mais-la-revolution-circulaire-reste-a-construire-pour-la-filiere-rep-tlc/

(4) “How is the EU making fashion sustainable?” - https://environment.ec.europa.eu/topics/circular-economy/reset-trend/how-eu-making-fashion-sustainable_en

(5) Towards a World Integrated and Socio-economically Balanced European Economic Development Scenario - https://twinseeds.eu/

(6) La loi anti-gaspillage pour une économie circulaire (AGEC) - https://www.ecologie.gouv.fr/loi-anti-gaspillage-economie-circulaire

(7) Ecodesign for Sustainable Products Regulation - https://commission.europa.eu/energy-climate-change-environment/standards-tools-and-labels/products-labelling-rules-and-requirements/ecodesign-sustainable-products-regulation_en

(8) Louise Curran et Thibaut Joltreau, « Déchets textiles : "Seules des normes d’écoconception ambitieuses et des écocontributions élevées changeront la donne" », Le Monde, 2 décembre 2024, https://www.lemonde.fr/idees/article/2024/12/02/dechets-textiles-seules-des-normes-d-ecoconception-ambitieuses-et-des-ecocontributions-elevees-changeront-la-donne_6424791_3232.html

(9) Affichage environnemental sur les vêtements (2024) - https://www.ecologie.gouv.fr/politiques-publiques/affichage-environnemental-vetements

(10) EU's Digital Product Passport: Advancing transparency and sustainability (Sept. 2024) - https://data.europa.eu/en/news-events/news/eus-digital-product-passport-advancing-transparency-and-sustainability

(11) “Global trade is fracturing: here’s why the EU needs the GreenDeal more than ever” (Feb. 2025) - https://theconversation.com/global-trade-is-fracturing-heres-why-the-eu-needs-the-green-deal-more-than-ever-247500