The EU is turning circular fashion from a voluntary practice into mandatory regulation, driving a full-chain transformation of the textile industry. A new report from market research firm Spherical Insights shows that the EU circular fashion market was valued at approximately USD 2.8 billion in 2025 and is projected to reach USD 6 billion by 2035, with a compound annual growth rate of 7.9%.

The report notes that starting July 19, 2026, large EU companies have been banned from destroying unsold clothing, accessories, and footwear, with medium-sized enterprises subject to the same ban from 2030. The measure is part of the EU's Ecodesign for Sustainable Products Regulation (ESPR). Meanwhile, the revised Waste Framework Directive took effect in October 2025, introducing an EU-wide extended producer responsibility (EPR) scheme for textiles, requiring producers to cover the costs of collecting and managing textile waste, and granting exemptions and support to socio-economic organizations involved in collecting second-hand textiles.

These policies are forcing fashion brands to comprehensively adjust across design, inventory management, reuse, repair, collection, and recycling. The supply chains of global brands in the EU market will be profoundly affected. According to the report, the EU generated 6.94 million tonnes of textile waste in 2022, about 16 kg per capita, of which 85% of household textile waste was not separately collected and was mixed into general waste. About 4% to 9% of textiles on the EU market are destroyed before ever being used, amounting to 264,000 to 594,000 tonnes per year.

In response, brands are taking action. H&M plans to achieve 100% use of recycled or sustainable materials by 2030 (with recycled materials accounting for 50%), and in 2025, 32% of its materials were recycled; adidas has maintained a 99% recycled polyester usage rate since 2023 and plans for 10% of its recycled polyester to come from discarded textiles by 2030; Arc'teryx has launched a circular design program focused on repairability and ease of disassembly; H&M and REMONDIS established the joint venture Looper Textile to develop industrial-scale textile sorting, and partnered with Syre to develop textile-to-textile recycled polyester, with H&M collecting over 17,000 tonnes of textiles from consumers in 2025.

The report predicts that building a mature circular textile system will require additional capital expenditure of EUR 8 billion to 11 billion and annual operating expenditure of EUR 5 billion to 6.5 billion, with the goal of achieving a 15% textile-to-textile recycling rate by 2035. Germany, France, the Netherlands, Italy, and Sweden are the most promising EU markets, with the Netherlands having an annual fabric sorting capacity of 200,000 tonnes and a circular material utilization rate of 32.7%, the highest in the EU.

Currently, companies in recycling, sorting, repair, resale, reverse logistics, and digital traceability are embracing the biggest industrial opportunity since the 1980s, and first movers are expected to gain an edge amid regulation and competition.

Source: Europe’s 2030 Circular Fashion Mandate: Why Global Brands Are Racing to Close the Loop- Expert View by Spherical Insights · Originally published on 2026-09-01