By Marcus Julius Zanon
Attorney-at-Law • Registered Patent & Trademark Attorney • Compliance & Innovation
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On 19 July 2026, one of the most significant regulatory changes ever introduced to the fashion industry came into force in the European Union. Large companies are now prohibited from destroying unsold new clothing, clothing accessories and footwear, ending a long-standing practice historically used by both luxury brands and fast-fashion retailers.
The measure is part of the Ecodesign for Sustainable Products Regulation (ESPR) – Regulation (EU) 2024/1781, complemented by Commission Delegated Regulation (EU) 2026/296. It marks a fundamental shift in European policy by promoting circular economy principles, reducing waste, and encouraging the more efficient use of natural resources.
Although rarely discussed outside the industry, destroying unsold inventory has long been used as a commercial strategy.
Companies cited several reasons:
For luxury brands, scarcity itself is a valuable business asset. Limiting supply reinforces desirability and supports premium pricing. In many cases, destroying excess inventory was viewed as economically preferable to allowing products to enter the market at heavily discounted prices.
One of the best-known examples involved Burberry, whose disclosure in 2018 that it had destroyed millions of pounds worth of unsold products triggered worldwide criticism. Reports have also indicated that Chanel historically adopted similar inventory management practices, although the company has since stated that it prioritizes recycling and material recovery.
According to estimates used by the European Commission:
Beyond the environmental consequences, the destruction of new products wastes raw materials, water, energy, chemicals and human labour already invested in manufacturing.
Since 19 July 2026, large companies operating in the European Union may no longer destroy unsold:
Instead, businesses are expected to prioritize more sustainable alternatives, including:
The legislation provides limited exceptions, including products that present safety risks, are irreparably damaged, fail to comply with legal requirements, or infringe intellectual property rights, such as counterfeit goods.
The regulation does not target individual brands. Instead, it applies to companies meeting the size criteria established by the ESPR.
In practice, the new rules affect many of the world’s largest fashion groups, including:
Medium-sized companies will have additional time to comply, while micro and small enterprises are currently exempt.
For luxury companies, the challenge extends well beyond inventory management.
Their greatest asset is not simply the product itself, but the perception of exclusivity.
If larger quantities of authentic products enter secondary markets through outlets, certified resale platforms or donations, brands may face:
Consequently, fashion companies are expected to rely increasingly on artificial intelligence, advanced demand forecasting and supply-chain analytics to reduce overproduction before it occurs.
From an intellectual property perspective, the regulation creates an important strategic shift.
Historically, destroying genuine products was sometimes used as an indirect mechanism for protecting brand value and market positioning.
Going forward, companies will increasingly rely on:
Importantly, the legislation continues to permit the destruction of counterfeit goods and other products infringing intellectual property rights, preserving one of the key enforcement mechanisms available to trademark owners.
The regulation is expected to accelerate growth in several sectors:
Companies capable of demonstrating complete product lifecycle traceability are also likely to gain a competitive advantage.
Although the regulation applies directly only within the European Union, its impact will likely extend worldwide.
Manufacturers, exporters and suppliers serving European brands—including companies based in Brazil, Asia and North America—may need to adjust production planning, contractual arrangements and inventory management practices.
As has occurred with GDPR and other European regulatory initiatives, the ESPR may influence future legislation in multiple jurisdictions, establishing a new global benchmark for sustainable product governance.
The European Union’s prohibition on destroying unsold clothing represents far more than an environmental initiative.
It fundamentally reshapes the relationship between sustainability, intellectual property, supply-chain management and corporate strategy.
For businesses, success will increasingly depend on producing more accurately, predicting demand more effectively, protecting brand value without relying on inventory destruction, and embracing technologies that support circular economy principles.
For intellectual property professionals, compliance officers and innovation managers, this new regulatory framework opens significant opportunities to integrate ESG, digital technologies and IP strategy into a more sustainable and resilient business model.
Read the Portuguese version of this article here: