Summary: The report Systemic Bankability of Textile-to-Textile Recycling, with calculations contributed by ReHubs and Boston Consulting Group (BCG), points out that if Europe wants to raise its textile-to-textile recycling rate to 15% by 2035, it will require an additional €8 billion to €11 billion in capital expenditure. Of the 13 recycling and sorting technology variants assessed in the report, only 3 can obtain commercial financing. The financing gap, not technology, is the bottleneck.

Key points

  • Europe's 2035 textile-to-textile recycling rate target is 15%, with an estimated need for an additional €8 billion to €11 billion (about $9.2 billion to $12.7 billion) in capital expenditure.
  • The report breaks recycling and sorting technologies into 13 variants and 12 risk factors. Only 3 variants do not touch any "red" risk factor and can obtain commercial financing.
  • The report advocates that public funds underwrite risks the market is unwilling to bear, and that binding recycled content requirements and producer recycling targets turn uncertain demand into predictable long-term orders.

The problem is not the process, it is the money
The conclusion of the (Systemic Bankability of Textile - to - Textile Recycling) report is straightforward: even though the technology pathways have largely been proven, projects still fall into a "financing gap" when they enter the deployment stage. Early-stage venture capital has limited coverage, while mainstream commercial credit struggles to take over. The project risk structure is so complex that commercial banks cannot price it.

This judgment is not new. In 2020, the Royal Swedish Academy of Engineering Sciences already pointed out that financing and investment are key success factors in the transition to a circular model; what is scarce in the textile circular chain is not technology, but the capital to truly close the loop.

Why banks dare not lend
Based on the report's breakdown of 13 technology and sorting variants and 12 risk factors, the elimination rate is extremely high. Lenders are not only concerned about whether "the process can run"; they also need a stable source of qualified feedstock, predictable offtake prices, and someone to backstop the project if technical performance falls short. The reality is that operational data are scarce, and insurers are also unwilling to underwrite technical performance risk, creating a cycle: without financing, plants cannot be built; if plants are not built, operational data cannot be generated.

Transferring risk is the solution
The report therefore recommends that public funds underwrite risks the market is unwilling to bear. Along with measures such as binding recycled content requirements and producer-oriented recycling targets, originally uncertain demand can be transformed into predictable long-term orders, giving banks a basis for lending. Offtake agreements held by brands and retailers can aggregate fragmented demand and provide projects with stable cash flow; but many current brand commitments remain at the level of "interest" and lack legal binding force.

For Chinese recycled textile and used clothing supply-side companies that rely on exports and face the EU's recycled content policy, the signal sent by the report is worth noting: whether Europe's funding and demand gap can be filled by government policy tools requires more mature commercial cases to attract investors. In the past, recycling facilities were constrained by waste textiles, and export destinations were previously highly concentrated. In the future, there may be multi-point development in production equipment, plant supporting facilities, and brand cooperation, with a more significant pull-through effect on upstream players. When demand arrives, capital may follow—investors should seize this window.

Source: Sustainable fashion stuck in financing: textile recycling scale-up lacks technology, why banks dare not lend? · Originally published on 2026-10-14