PARIS — The European Union’s circular fashion sector could generate more than 104 billion euros in annual revenue and create 88,000-plus jobs by 2030, according to the “State and Prospects of Circular Fashion in Europe” study from the KPMG and Fédération de la Mode Circulaire, as policymakers and industry players increasingly turn to regulation to accelerate the transition away from linear fashion models.
Presented at the FMC’s Circular Fashion Day conference, the report comes at a time when the European apparel sector is challenged. Consumer demand remains subdued, while manufacturers continue to grapple with high operating costs, shrinking industrial capacity and growing competition from lower-cost imports.
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“Energy costs are structurally high in Europe, and it’s a competitive disadvantage with competing countries, notably Asian,” said KMPG senior manager, circular economy Mina Bishop. She also noted that there are structural concerns about the region’s industrial competitiveness.
“We are not helped either by the decline of our industrial capabilities, with average 50 percent reduction in employment in textile and apparel in Europe,” she said.
The study found that circularity is increasingly being driven by regulation rather than voluntary sustainability commitments. New European measures, including extended producer responsibility (EPR), digital product passports (DPPs), textile waste collection requirements and potential VAT incentives for repair and resale, are now shaping the economics of fashion production and consumption more than market forces.
“We need harmonized regulation to give clarity for companies, confidence for investors and fairness in competition,” said KPMG director of sustainability strategy and green transition Stephanie Taupin.
Among the policies examined, EPR is emerging as one of the most significant. By requiring brands and retailers to finance the collection, sorting and treatment of products at the end of their life, EPR effectively turns waste management into an operating cost.
“End of life becomes a cost of doing business,” Taupin said. “As payments are linked to volumes placed on the market, EPR becomes a recurring cost line by making brands pay for end of life. It creates a financial incentive to reduce those costs by reducing volumes, improve durability, certify materials, increase recyclability, etc. You look at distribution, high volumes become more costly, right, because indeed more carbon to put on the market equals more carbons to collect.”