EU Circular Economy Regulations Introduce New Requirements for Vietnamese Textile and Garment Businesses

Vietnam’s textile and garment industry is entering a phase in which production capacity and cost are no longer the only factors determining access to the European market. Alongside regulations on chemicals, sustainability and environmental responsibility, the European Union is developing a policy system aimed at extending product lifespans, increasing reusability and limiting the volume of discarded textiles and garments.

Notably, EU member states must organize separate collection of textiles from January 1, 2025, under amendments to the Waste Framework Directive. This regulation primarily places responsibility on member states, but indirectly affects the entire supply chain, including producers outside the EU. As products are increasingly required to provide clearer evidence of their composition, durability, repairability and end-of-life treatment, Vietnamese businesses will need to prepare data and processes early rather than only meeting requirements at the export stage.

From Separate Collection to Changes in Product Design

The EU’s textile policy does not focus solely on post-consumer waste. The European Commission’s strategy for sustainable and circular textiles addresses the entire product life cycle, from design, materials, production and distribution to use and recycling.

The key point is that textiles are viewed as part of a resource system rather than simply as goods sold on the market. A shirt may be produced at a low cost but still create significant environmental costs if it wears out quickly, is difficult to repair, contains multiple blended fibers or has accessories that cannot be separated. Conversely, products with longer lifespans, easily disassembled structures and clear material information will be more suitable for repair, reuse or recycling.

EU Directive 2018/851 requires member states to ensure the separate collection of textiles no later than the beginning of 2025. Separate collection does not mean that every product will subsequently be recycled into new fibers. However, it is a necessary condition for reducing the mixing of textiles with other waste streams while creating a more stable source of materials for sorting, reuse and processing activities.

For Vietnamese suppliers, this change increases the importance of information that was previously often scattered across technical documents. Fiber composition, dye types, accessories, coatings, finishing processes and the ability to separate product components may become data that must be managed throughout the supply chain.

Which Parts of the Process Will Affect Exporting Businesses?

Design and Material Selection

Design is the stage that largely determines how a product can be handled after consumers are no longer using it. Businesses may need to consider more carefully the use of multiple blended fibers, coatings that are difficult to separate or accessories that hinder sorting.

This does not mean that all products must immediately switch to a single type of fiber. Blended fibers can still provide benefits in terms of durability, comfort or performance. The issue is that businesses need to understand the purpose of each material structure and assess its end-of-life treatment options. If material choices are based solely on purchase price without considering transparency and processing requirements, risks may arise when customers request data or evaluate suppliers.

Increasing the proportion of recycled materials also requires a cautious approach. Recycled fibers do not automatically mean that a product has a lower environmental impact in every case. Businesses need to identify the source of the materials, the recycling method, the applicable standards and how the recycled content ratio is controlled in the finished product. Environmental claims that lack appropriate supporting documentation may create reputational and compliance risks.

Data and Traceability

The EU has issued Regulation 2024/1781 on ecodesign requirements for sustainable products. This regulation establishes a legal framework for requirements concerning durability, reusability, repairability, resource use and product information, while also paving the way for digital product passport mechanisms for suitable product groups.

A digital product passport should not be understood simply as a QR code attached to a label. In essence, it is a requirement to provide product data in a structure that can be accessed and used at different stages of the value chain. For textiles, the data may relate to materials, sourcing, performance characteristics, care instructions and information supporting end-of-life treatment, depending on the specific requirements applied to each product group.

Vietnamese businesses therefore need to review their existing data systems. Many factories already manage information on specifications, quality and orders, but that data may not be linked to each product code or each batch of materials. When customers request evidence of fiber origin, the percentage of recycled materials or chemical compliance, manually compiling information from multiple departments can increase processing time and the risk of inaccuracies.

Compliance Costs May Shift Within the Supply Chain

EU environmental regulations are often applied directly or through importers, brands and extended producer responsibility systems. Therefore, even when a Vietnamese business is not the final legal entity in Europe, it may still receive requests to provide data, change materials or participate in customer assessment programs.

Additional costs may arise in many areas, including material testing, database development, staff training, design improvements, supplier control and investment in resource-efficient equipment. For small businesses, the greatest challenge is not only the amount of investment required but also the ability to maintain consistent records across multiple seasons and customers.

In the short term, some orders may require stricter inspection procedures, particularly for products with demanding requirements regarding material sources, chemicals or recycled content. However, it should not be assumed that all costs will be transferred entirely to factories. The allocation will depend on the contract, bargaining position, product type and policies of each brand.

Conversely, businesses that standardize their data and processes early may reduce repeated costs. A well-managed materials dossier can serve multiple customers, assessment rounds and objectives instead of having to be prepared from scratch for each order.

The Greatest Challenge Lies in Recycling Blended Fibers

The recyclability of textiles depends on many factors, including fiber type, color, dyes, finishes and product structure. Products made from a relatively uniform material are generally easier to sort than products consisting of multiple layers or components that are difficult to separate.

Blended fibers create a complex problem because separating each type of material may require expensive technology and high costs. Some processes may allow mechanical recycling, while others require chemical technology or are suitable only for certain material streams. Businesses should not make general claims that a product is “recyclable” without clearly identifying the conditions, technology and actual collection systems involved.

This is also why circular solutions cannot stop at replacing part of the virgin fiber with recycled fiber. If a product still wears out quickly or has no recovery channel, the impact of changing the input material may be limited. Designing products to extend their useful life, providing proper care instructions, enabling repair and supporting reuse may be just as important as selecting input materials.

How Should Vietnamese Businesses Prepare?

First, businesses need to map the data for each group of exported products. This map should answer basic questions: What materials does the product contain? Where do the materials come from? Who is responsible for verifying the information? When is the data updated? Can it be traced to the production batch?

Second, risks should be categorized by market and customer instead of applying the same set of criteria to every order. Some customers may require a certain percentage of recycled materials, while others may focus on chemicals, emissions, production conditions or traceability. A risk-based approach helps businesses focus resources on products most likely to face demanding requirements.

Third, factories should incorporate circularity criteria into product development from an early stage. Design, purchasing, technical, quality and production departments should participate together instead of leaving the compliance department to handle the issue at the end of the process. A small design change, such as reducing accessories that are difficult to remove or standardizing composition information, may be much easier to implement than overhauling the entire process after a product has been approved.

Fourth, businesses need to be cautious with green claims. They should retain evidence corresponding to each claim about recycled materials, resource savings, durability or recyclability. When the data is insufficient, limited and transparent wording is safer than using absolute statements.

Opportunities for Suppliers with Strong Data and Material Capabilities

Policy changes in the EU create additional pressure, but they also open opportunities for businesses capable of providing solutions beyond traditional contract manufacturing. Factories with strong material management systems, stable quality control and the ability to substantiate product information will have an advantage in long-term sourcing programs.

Opportunities may also emerge in areas such as repair, reuse, scrap recovery and the development of recycled fibers. However, these markets require investment in technology, standards and collection networks. Expanding too quickly based on expected demand without a stable material supply or identified customers may increase financial risks.

For Vietnam’s textile and garment industry, an appropriate path is to combine existing production capabilities with data management and more responsible product design. Not every business needs to build an entire recycling ecosystem independently. Many businesses can begin by standardizing data, working with reliable material suppliers, testing several product lines and evaluating results for each season.

The EU’s separate collection requirement is a policy milestone, not the sole solution to the textile waste problem. Its practical impact will depend on how member states implement it, producer responsibility systems, sorting capacity and market demand for post-use materials. Nevertheless, the overall trend is clear: exported textile products will increasingly need more information about how they are made, used and processed. Businesses that prepare reliable data and design suitable products will be better positioned to adapt as specific requirements continue to be developed.