New Circular Alliance Forces Textile and Fashion Industry to Switch to EPR

What’s Changing

From the next fiscal year, Germany will apply an extended producer responsibility (EPR) regime to all market participants of textiles and footwear – i.e., manufacturers, importers and retailers. This means that, in addition to traditional product responsibility, the cost of later disposal must also be borne financially. The newly established “Alliance for Textile Circularity” by HDE and the Textile+Fashion Association aims to guide the practical design of this EPR system and transpose EU requirements into German law. Companies will therefore receive a framework that obliges them to pay fees for the collection, sorting and recycling of used clothing and shoes. At the same time, they are expected to take an active role in shaping the system to ensure transparent cost allocation and fair competition.

The rollout of the EPR system will not only alter the financial burden but also reshape the entire value‑chain processes. Suppliers will have to provide product data for downstream traceability, logistics providers will receive new contracts for collection and recycling, and retailers will need to set up take‑back schemes in their stores. In addition, a central registry is expected to record every product placed on the market. This registry will serve as the basis for calculating disposal fees, which may depend on volume, material type and possibly regional recycling quotas. The Alliance stresses that the system should be non‑bureaucratic and efficient, yet its practical implementation will demand extensive adjustments in IT, reporting and operational workflows.

What It Costs

The draft law stipulates that disposal fees for textiles and footwear will be borne by the respective market participants. The associations have not yet published concrete fee figures. Instead, they explain that costs will be calculated on a consumption‑ and material‑based model that reflects actual recycling and recovery expenses. Companies can therefore expect variable costs that may fluctuate significantly depending on product mix, volume and recyclability. The associations emphasize that the fees should be transparent and cost‑causal, allowing firms to adjust pricing and margin planning accordingly. Without published numbers, it remains unclear whether the charges will be calculated per kilogram, per item or by other criteria – an aspect companies should already factor into their financial planning.

Because no concrete fees have been published, companies must factor in a degree of uncertainty. The cost mechanism is expected to run through a central billing system operated by an entity coordinated by the Alliance. Firms should therefore anticipate additional administrative burdens, such as regular reporting of sales figures, calculating their disposal shares and paying the due contributions. These tasks can generate extra workload in controlling and logistics and may trigger external consulting costs if specialised service providers are engaged for system integration or reporting.

What Could Break

The introduction of an EPR system poses significant challenges to existing IT and logistics infrastructures. Many companies currently use ERP systems that lack interfaces for capturing disposal data or communicating with a central registry. Migrating to an expanded data set therefore often requires system modifications that can cause temporary downtime, especially when data migrations occur in production environments. Moreover, existing supply‑chain and returns processes must be restructured to enable the take‑back of used clothing and shoes. This can create bottlenecks in warehouses if take‑back systems are not implemented in time.

Another critical issue is staff training. Logistics personnel, sales and procurement teams as well as finance must understand and correctly execute the new reporting obligations. Insufficient training can lead to erroneous filings, incorrect fee invoicing and ultimately fines. External partners such as logistics providers and recycling companies also need to be integrated into the new processes, adding further coordination and communication effort. Interfaces to existing systems, for example inventory and order management, must be newly developed or adapted, which again raises the risk of data inconsistencies.

What a Transition Requires

A successful transition to the new EPR system requires a coordinated project that involves multiple functions. First, a steering committee comprising senior management, procurement, logistics, IT and legal must be established to make strategic decisions and allocate resources. The analysis of existing processes and systems should be completed within three to four months to scope the required adjustments. This is followed by the selection and implementation of an appropriate software solution – either by extending the current ERP system or by integrating a specialised EPR platform. Depending on complexity, the technical rollout can take six to twelve months, with test phases and pilot projects built in to minimise outage risks.

In parallel with the technical rollout, training programmes for the affected employees must be developed and delivered. This includes workshops on reporting, training for logistics staff on handling take‑back systems and briefings for controlling to understand the new cost structures. Communication with external partners – especially recycling firms and logistics providers – should start early to align interfaces and Service Level Agreements. Finally, a monitoring mechanism is needed to verify compliance with reporting obligations and to make cost developments transparent. Companies that execute these steps consistently can implement the EPR system without major operational disruptions while safeguarding their competitiveness in the European market.