Chapter 5
Policy action to incentivise circularity in the textile value chain
The SHC sector provides a robust infrastructure for textile reuse. Over the past 40 years, it has developed an efficient system to collect, sort, process, and sell SHC for reuse, significantly reducing carbon emissions and energy consumption. The potential to expand the SHC and reuse sector is vast. However, an overemphasis on fiber-to-fiber recycling and imposing unnecessary restrictions on the export of used clothing to non-OECD markets—such as treating all textile products as waste—could reduce reuse rates. Diverting materials into recycling conflicts with the goal of greater circularity and waste prevention. Experts agree that reuse, the primary goal of the circular economy, offers the highest standard of environmental protection.
The used clothing sector must engage in a public debate about how best to develop regulations and guidelines that ensure sorting of textile items is carried out in an environmentally and socially responsible manner, focused on the provision of effective waste management infrastructure. The aim is to build on recent legislative initiatives at state and federal level in the US, including proposals to implement Extended Producer Schemes (EPR).
Proposed textiles EPR schemes in the US
In 2023, Senator Josh Newman of California introduced the Responsible Textile Recovery Act to improve textile collection and recycling across the state. The legislation has been delayed for more stakeholder consultation. Senator Newman acknowledges the growing problem of textile waste in California, driven by fast fashion, where consumers purchase low-cost, low-quality items that quickly go out of fashion. As a result, textiles account for 3% of total landfill waste in the state, despite 95% of these materials being suitable for recycling or reuse.60 Our survey also found that Californians have more unworn clothing in their closets than any other state, with on average 7.19 items they’ve never worn.
Senator Newman identifies the key public policy issue: the burden of managing discarded textiles falls on collectors and used clothing businesses, not fast fashion producers. The decline in the quality and design of garments in recent years means their longevity is extremely limited. The legislation aims to create an "end-to-end system" to optimize the repair, reuse, and recycling of textiles by placing new responsibilities on producers. These producers would be responsible for designing and implementing a program to collect, sort, and recycle textiles.61
The draft legislation categorizes textiles as ‘any item customarily used in households or businesses that are made entirely or primarily from a natural, artificial, or synthetic fiber, yarn, or fabric.’ This includes blankets, curtains, towels, bedding, and fabric sold by the bolt at retail. The goal is to promote circularity and create new production and consumption opportunities.
Nonetheless, there have been concerns that the proposed legislation is too burdensome for small producers and will be bureaucratic to implement. Moreover, under the EPR law the Producer Responsibility Organization (PRO) will award contracts to collection organizations.
There are fears among industry stakeholders interviewed for this study that some collection businesses will miss out, even though EPR should build on the current collection infrastructure. 68% of Californians believe the government and political leaders should support the secondhand clothes sector. It is important for this legislation to work with, rather than compromise the efficiency, of the existing sector.
Political forces within California's ‘progressive’ wing of the Democratic Party are pushing for an outright export ban on used clothing, arguing that exporting unwanted items reinforces colonialism and negative aspects of globalization. Such a ban would award collection and reuse contracts to companies agreeing not to move used garments out of the state, compromising circularity due to insufficient domestic demand, thus undermining environmental sustainability goals.
As highlighted in Chapter 1, recent research from African importing countries such as Kenya and Ghana has shown that the environmental and socio-economic impact of the trade is significantly positive. Independent research from Ghana shows that less than 5% of imported clothing could be considered waste, and in actual fact, the imported goods are an important source of clothing for most of the population and a job creator.62
According to respondents surveyed for this report, 58% of Californians believe wearable but unwanted clothing should be exported abroad for reuse, 79% agree this is an important way to support developing countries and the environment, and 62% believe political leaders should make it easy to trade second-hand clothes around the world, as a critical part of the circular economy.
In New York, there is similar proposed legislation to establish EPR for textiles, although it is less advanced than in California. The regulations drafted by State Senator Brian Kavanagh require a producer, either individually or cooperatively in a group or with a representative organization, ‘to submit to the department of environmental conservation a plan for the establishment of a collection program for textile covered products no later than December 31, 2024’.63 In levying fees on producers, the EPR scheme is intended to make purchasing fast fashion items more expensive for the consumer, thus reducing consumption. Industry stakeholders interviewed for this study welcomed the development of EPR schemes, not least because they believe EPR helps to raise awareness of the importance of reuse and environmental responsibility.
New Yorkers are also likely to support the proposals, with 61% of New York respondents to our survey agreeing that the government needs to invest in better clothing collections to make donating clothes easier.
However, the emphasis of the proposed EPR programs both in California and New York is on ‘scaling’ recycling as the solution to the problem of textile waste, which contradicts the circular economy hierarchy that prioritizes reuse.64 It is striking that the fashion brand H&M has explicitly endorsed the California legislation, ‘saying it wants to use 100% recycled or sustainably sourced materials by 2030, but many such materials are not yet commercially available or even invented’. The emphasis on recycling violates the fundamental primacy of reuse in the circular economy hierarchy.
Effective technological solutions do not exist to undertake mass recycling of artificial fibers, and there is robust scientific evidence that textile recycling is itself polluting and environmentally damaging (see Chapter 3). Some industry stakeholders worry that EPR mandates will lead niche brands to destroy clothes to keep them off the used clothing market.
Massachusetts has become the first state in the US to ban the disposal of textile products. Textiles for the purposes of the legislation include clothing, footwear, towels, bedding and mattresses. The State Department of Environmental Protection introduced a ban on the disposal of household textile waste on 1 November 2022. According to the EPA, the state of Massachusetts is currently estimated to produce over 250,000 tons of textile waste a year.
Instead of disposing of textiles so they end up in landfill (or more often environmentally harmful incineration), the ban aims to ensure that textiles are collected and diverted into the reuse and recycling process. However, Massachusetts still needs to put in place an effective collection infrastructure: there are concerns that until now, the legislation has been ‘a ban without a plan’.
Another important piece of proposed legislation is the Americas Trade and Investment Act that makes provision for $14 billion to incentivize circularity across the clothing and footwear sectors. The Act is explicitly intended to re-shore manufacturing production from China, while encouraging textile reuse and recycling for greater circularity. The legislation encompasses a broad coalition of interests, and as such stands some chance of becoming law.
Our survey suggests strong public support for this type of legislation
of Americans want the government to invest more in educating the public about the importance of buying second-hand clothing,
believe there needs to be more government investment to support the growth of the second-hand clothing sector, and
feel political leaders should make it easy to trade second-hand clothes around the world, as a critical part of the circular economy.
Recent EPR efforts in the US are commendable, but legislators must avoid unintended consequences, such as prioritizing recycling over reuse. We propose the following solutions to make EPR schemes more workable and effective:
The reuse sector must operate globally, sorting clothes both in domestic and international facilities. Banning exports of used clothing would harm circularity and sustainability. Surplus resources must be dealt with safely and sensitively to prevent mismanagement. Export regulations should be clear and transparent. Unsorted collected clothing should not be categorized as ‘waste’ as this could inadvertently restrict exports and undermine reuse goals. The social and environmental benefits of reusing clothing globally far outweigh the risks from handling and disposal.
There are significant economic benefits if third countries can establish themselves as sorting hubs, extracting more economic and social value from the clothing. As such, trade barriers should be reduced or removed wherever possible. The US Government should seek to negotiate trade agreements that open up SHC markets in countries such as Brazil and Argentina. There is popular support for the global trade of SHC. 44% of consumers in our survey say that sending second-hand clothing to developing countries is a critically important way for the US to support emerging economies and protect the environment, which should be encouraged.
The reuse sector should receive public investment in infrastructure to handle greater quantities of collected clothes and to promote public awareness, given the mandatory disposal requirements now in place in states such as Massachusetts. Local governments should be incentivized to support collection infrastructure, not remove or ban it. Collected clothes must be brought to specialist reuse facilities for effective sorting by trained staff. This requires joint investment by the public and private sector.
As such, we argue the reuse industry should receive investment from EPR funds (the so-called ‘eco-fee’). The EPR subsidy should be paid to reuse businesses that operate throughout the value chain from collection to sorting to retail. EPR funding should not be directed exclusively to fiber-to-fiber recycling businesses. Public authorities and policymakers should be clear that fiber-to-fiber recycling is only preferable where textile garments have demonstrably reached the end of life. Public research and development (R&D) and innovation funding should be directed to the whole of the reuse sector particularly for automation and ICT: the Americas Trade and Investment Act proposes to make $1 billion in funding and $3 billion in grants available for innovation and R&D to promote textile reuse and recycling.
All proposed EPR schemes should prioritize reuse in the environmental sustainability hierarchy emphasizing waste prevention and reuse of textile garments and footwear over recycling. It is vital that used clothing businesses that collect SHC are not classified as ‘producers’ under EPR regulations. Those who collect waste are not necessarily the owner, they are acting as a logistics partner within the textiles value chain. In our survey, 57% of consumers agree that clothing brands and fast fashion companies should pay to support facilities that enable more items of clothing to be reused or recycled.
States should set ambitious mandatory targets for textile collection and reuse by 2035 to ensure substantial progress in diverting textiles from the waste stream. Achieving these targets requires robust sorting facilities and infrastructure, supported by public investment, as collection rates increase. Evidence from other countries highlights the potential for reuse: a study in Denmark found that 34% of household textile waste was reusable, and a similar study in Finland reported a 62.5% reusability rate.65 For these reusable items to enter the retail market, an effective system of processing, grading, and distribution is crucial. Skilled sorters are essential to identify wearable items that may not be suited for domestic markets but can be exported to third countries. Our consumer survey found that 55% of respondents believe the government should invest in better clothing collections to make donating clothes easier.
Consumption taxes on second-hand clothing (SHC) and footwear should be eliminated or reduced wherever possible. We welcome the proposal in the Americas Trade and Investment Act to grant circular textile businesses a 15% net income tax exclusion. Additionally, there should be greater efforts to promote transparency and educate consumers through public education programmes and accurate labeling of new clothing products. Our survey shows that 62% of Americans believe there should be more education about the harms of fast fashion, a sentiment that rises to nearly 70% among Millennials. Regulations should incentivize high-quality design and production to ensure more clothing is reusable. Governments need to promote eco-design policies that ensure clothes last longer. Product design plays a crucial role in ensuring durability, and consumers should be encouraged to prioritize quality.
Our survey suggests there is strong support for these proposed measures among consumers in the US
of respondents say they agree that the second-hand clothing market is crucial to the US economy and
concur that investing in the second-hand clothing market is key to a sustainable future.
believe that the government and political leaders should support the second-hand clothes industry.