Sunday, June 16, 2024

Can fashion waste be outlawed? – Law Society Journal

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The Seamless scheme is Australia’s National Clothing Product Stewardship Scheme (NCPSS). It was launched in June 2023 and will be operational from 1 July 2024. It is enforced under the Product Stewardship Act 2011 (Cth),  a voluntary scheme for industry to take responsibility for waste management. It can in some cases impose mandatory obligations where industry does not voluntarily comply with waste reduction measures. So far, less than 10 major Australian brands have signed up to Seamless to pay a levy on garments which goes towards their reuse and recycling. They need at least 60 per cent of the industry to sign up to reach their goal of reducing fashion landfill through diverting 120,000 tonnes of discarded garments, by 2027.

The six foundational members, Big W, David Jones, Lorna Jane, Rip Curl, R.M. Williams and The Iconic, each committed $100,000 and a 4c levy on each garment to fund a 12-month transition phase for Seamless. Both Sussan Group and Cotton On later signed on as foundation members, making the same commitment.

France has had a program in place since 2007, which scales its levies based on the quantity of goods produced by a company in the preceding year. In 2021, more than 6,000 brands paid a collective €51 million in fees for 2.8 billion items. That averages out to €0.16 per garment. This falls short of what is impactful, according to the Or Foundation, which says fees should begin at $US0.50 per garment and go up to at least $US2.50 based on the item’s cost to reuse and recycle, and the impact of its decomposition.

Australia’s current levy of $0.4c per item may attract brands to sign up, but it falls well short of what is necessary to overhaul the industry.

Amid the launch in June 2023, the Minister for Environment and Water Tanya Plibersek vowed to regulate the fashion industry if not enough movement is made towards circular fashion by mid-2024.

Seamless … and fully voluntary

The Australian Government provided $1 million in funding to the Australian Fashion Council to support the development of a national scheme for clothing textiles through the National Product Stewardship Investment Fund, but Seamless is now an independent body.

In a speech to the eBay Circular Fashion Fund in March this year, Minister for the Environment and Water Tanya Plibersek told the audience that up to 97 per cent of clothing sold in Australia is designed and manufactured overseas, and that importers and retailers must be more accountable for the environmental impact of highly disposable fashion. She explained the Federal Government had tasked the Australian Fashion Council with crafting the Clothing Stewardship Scheme, Seamless, that Plibersek launched in June 2023.

Plibersek’s claim to be “watching” the industry held little weight, however. There are no existing penalties for brands that do not voluntarily sign up to Seamless. And despite her claim that “if the garment is made from synthetic fibres, it takes around 500 years to decompose” should have been alarming, added to her claim that “the fashion industry is responsible for 10 percent of humanity’s carbon emissions”.

In a June 2023 speech, Plibersek said, “Clothing has been sitting on the priority list for regulation for the last couple of years. That means that government has said to this industry that we’re giving you a chance to get your house in order. If companies choose to pull out, or free ride on the work of others, then I have no problem stepping in and regulating directly. The alternative to this program isn’t a weaker scheme with a lower levy – it’s government regulation. If the voluntary scheme is not viable – if we don’t believe it’s sufficient, or if it’s not raising enough money to cover its costs – then I will regulate.”

That regulation would feasibly begin at the design stage, akin to the European Union approach, where clothing must be designed with a view to reuse and repair (additional buttons, thread or zippers could be provided along with items at sale point), mono materials (as opposed to a combination of organic and synthetic fibres which are harder to recycle), and use of recycled textiles. The specific measures will include environmentally safe design requirements for textiles, clearer information on the textiles and their sources, a Digital Product Passport and a mandatory EU extended producer responsibility scheme.

Consumers would also need to be well-informed of where and how they can return and recycle goods.

In the US, schemes that enforce levies for the recycling of products are proving effective at cutting waste. In Connecticut, where Extended Producer Responsibility (EPR) levies of $US11.75 per mattress are imposed, an estimated 76 per cent of discarded mattresses are recycled. In California, which charges companies $US10.50 per mattress, 1.6 million mattresses were recycled in 2021, resulting in the recovery of 90 million pounds of materials.

In 2022, Seamless – while still under the Australian Fashion Council’s banner – commissioned The Global Scan Report, which examined global best practices and a “contextual understanding of Australia’s capacity for change”, led by Alice Payne, Paige Street, Annastasia Bousgas and Caitlan Hopper of Queensland University.

The report provided a survey of the current state of the Australian clothing industry and product stewardship, an analysis of clothing waste policies and initiatives in 12 countries, and the possible use of technologies and processes to enable a circular economy for clothing.

One of its key findings was that “Voluntary initiatives tend to mean less centralised action, and the number of and aims of PS [product stewardship] schemes become overly complicated and fragmented. This leads to confusion among stewards, applies weaker incentives to improve circularity and can lead to free-riders. Depending on scheme design, mandatory schemes have the potential to be more efficient, as they have the ability to set required targets and can allow industry more autonomy to meet the obligations.”

Ensuring fairness and industry buy-in 

Fashion law attorney Betina Baumgarten told Forbes that EPR regulations empower fashion brands to contribute to the solution.

“It’s forcing businesses to consider their footprint and getting them to think top to bottom and ask themselves, ‘How much do we need to be producing and how do we make sure we don’t have to pay for it on the backend?’” she said.

Courtney Holm was on the consulting team for the Seamless initiative and its transition from the Australian Fashion Council to becoming an independent body in 2023. Holm represented small fashion businesses. She founded her circular fashion label A.BCH in 2017, followed by launching technology platform Circular Sourcing as a means of trading and recycling surplus textiles in Australia and beyond.

Prior, she’d lectured and taught within the Sustainable Innovation and Fashion Design Bachelor programs at the Fashion School of Melbourne’s RMIT University.

“Seamless is really the only thing we have right now, and it’s not regulated yet,” she tells LSJ. “It’s fully voluntary at the moment, which is problematic in getting brands to sign on because they feel that there’s ‘freeloaders’ not opting in. The sooner it can be regulated, the better.”

Still, Holm says we can’t assess its efficacy since it is still in its infancy.

“It hasn’t rolled out yet, so we can’t say if it’s working or not,” she said.

“Eight of the 30 intended brands have signed on, which are the biggest Australian-based businesses. We need to let the Seamless initiative live its life because if it’s regulated right away, we might miss the opportunity for business to shape and be a part of the scheme and to allow them to participate in that stewardship mentality.”

At this early stage, Holm is hesitant to put a time frame around assessing whether to legislate participation or not, but she suggests that four years might be a reasonable time to enable brands to voluntarily sign up.

“Eventually it will need to be co-regulated at least, or fully regulated, which may take four or so years to happen,” she says.

The influx of cheap fast fashion from brands like Shein also needs to be accounted for in any approach to fashion waste.

Holm says, “In my mind, regarding the product coming into the country, information and tax has to be collected at the point where it enters the country because how else could you monitor and regulate imported brands? Anything coming into Australia should have to require a levy.”

The $0.4c levy proposed by Seamless, Holm says, is “not based on how many units are sold, but how many products are made, so you don’t pay at the till but when the product is made. That’s an overarching incentive for brands not to over-produce. If you’re planning to sell 60 percent of your production inventory, then it’s an incentive to be more efficient.”

“Seamless want to keep reporting as simple as possible to avoid being a burden on small business, especially. We don’t know what those reporting requirements are yet, but we will know in July. In terms of small business, there’s a big difference between businesses creating 1000 garments a year, with less than $1 million in revenue, versus major corporations. To me, it’s only fair that everyone pays the $0.4c per garment for as many as you make. For small business, that wouldn’t be a $5 million bill annually, because they’re creating less. It keeps it simple.”

In California, New York, Sweden, the Netherlands, and Italy, regulators are introducing mandatory rules under the “extended producer responsibility” (EPR) schemes that hold fashion companies accountable for the lifecycle of their products. The UK and EU have also proposed legislation that would be enacted by 2028. Under regulation, fashion companies would have to pay levies towards textile recycling programs through paying for the volume of clothing they produce.

EPR schemes already exist for products including batteries, mattresses and medical sharps, requiring brands to pay fees based on their product output, or to set up their own recycling programs.

A major problem is the lack of international cooperation, with many countries regulating stewardship programs to varying degrees of strictness, while the US, EU and Australia continue to ship unwanted clothing for “recycling” to Ghana, which receives as many as 15 million discarded garments every week, according to the advocacy body Or Foundation.

EU introduces landmark legislation

The new legislation is an extension of the EU Corporate Sustainability Due Diligence Directive (CSDDD) that mandates due diligence on environmental and human rights impacts. Any business operating in the EU or part of the supply chains to that company must conduct due diligence on their operations and supply chains to comply with social and environmental responsibility mandates.

Additionally, in January 2023, the Corporate Sustainability Reporting Directive (CSRD) was introduced, with companies required to apply the rules from 2025 for financial reporting in 2026. The CSRD bolsters the rules applying to social and environmental information that companies have to report. Companies will also be required to report if they generate over EUR 150 million on the EU market.

The EU has newly introduced additional legislation to penalise companies for making unsubstantiated claims of sustainability or environmental friendliness. It is also proposing new laws that would make fashion companies responsible for the life cycle of their fashion and textiles beyond the original sale, penalising companies overrepresented in landfill.

The new EU rules also provide minimum requirements for the use of recycled materials and quality standards to ensure textiles and garments are long-lasting and repairable. Legislation largely falls within the Waste Framework Directive, which is where new Extended Producer Responsibility (EPR) regulation will be clarified. This includes a digital passport for garments to ensure traceability.

The EPR is being introduced in all EU member states by January 2025, and retailers will be liable for the cost of collecting their garments for reuse and recycling. The fees are not popular, of course, and the expected cost of setting up specialised textile recycling plants is into the billions, but it is a powerful initiative.

Europe bans destroyed surplus

Up to 30 per cent of apparel across the global industry is never sold according to the Australian Circular Textile Association. What happens to the hundreds of billions of dollars’ worth of unsold clothing? It’s often sent to landfill or burned. Indeed, Burberry burned £28.6 million (AUD $55.3 million) worth of inventory in 2018 and – in an effort to avoid their brand being sold at bargain prices and diluting its worth – the parent company of Cartier, Richemont, burned up to £400 million ($773.2 million AUD) worth of unsold watches.

Considering the microfibres, plastics and gasses that are released during burning, this is an enormously damaging practice that negatively contributes to carbon emissions and the destruction of habitat.

According to ShareCloth, 1.2 billion tonnes of greenhouse gas emissions are produced through textile production annually, outpacing the emissions of both maritime shipping and international flights.

Will Australia’s Seamless address our nation’s contributions to both emissions and global waste? It is too early to tell, but within an international move towards sustainable, circular fashion, it is a clarion call to the Australian fashion industry that efficiency is no longer an option if they want to remain self-regulated.

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