Textiles Facing Circularity Requirements: Why Exporters Must Prepare Now

The textile industry is entering a period in which production capacity and cost are no longer the only criteria determining competitiveness. In major markets, particularly Europe, businesses are increasingly required to demonstrate that products are designed, manufactured, used and handled after consumption in a more environmentally responsible manner.

This change is not taking place at a single point in time. It is emerging from multiple layers of policy related to ecodesign, waste management, extended producer responsibility, environmental disclosures and supply chain traceability. In this context, circularity in the textile industry is not simply a story about recycling clothes. It is also a matter of materials, design, data, production technology and how businesses organize their relationships with customers.

For suppliers in Vietnam, the immediate impact may come through requirements from brands and importers before being fully reflected in a direct legal obligation. Businesses that establish data systems and material-control processes early will have greater advantages when purchasing standards change.

From Low-Cost Products to Responsibility Across the Entire Life Cycle

In the traditional linear model, raw materials are extracted, used in production, sold to consumers and then become waste. The circular approach seeks to extend product use, reduce the volume of virgin materials, increase repairability and recyclability, and limit waste from the design stage onward.

For textiles, this goal is more difficult than for many other product categories. A garment is often a combination of fibers, dyes, finishing agents, accessories, labels, zippers and sewing thread. Fiber composition may vary across different parts. Blending multiple materials helps products meet requirements for durability, wearing comfort or cost, but it can also complicate sorting and recycling.

Design therefore becomes the starting point for the circularity challenge. Products that are easy to disassemble, provide clear composition information, use fewer types of materials and have appropriate durability are more suitable for repair, reuse or recycling. This is why environmental requirements are increasingly shifting from end-of-life waste treatment toward product design and development.

The European Union has incorporated this direction into its EU Strategy for Sustainable and Circular Textiles. The document aims for textiles placed on the European market to have longer lifespans and be easier to repair and recycle, while also being produced under conditions that respect social and environmental requirements. This is a policy direction, while the specific application will depend on individual regulations and product groups.

European Regulations Expand the Scope of Product Data

One important development is the EU’s adoption of the Ecodesign for Sustainable Products Regulation, commonly known as the ESPR. The regulation was published in EUR-Lex Document No. 2024/1781. The ESPR establishes a legal framework for the EU to develop sustainability requirements for many product groups, rather than focusing only on energy efficiency as previous approaches did.

A framework regulation does not mean that every requirement already applies to every type of clothing. Product groups will need to be identified through subsequent legal steps and implementing standards. However, the policy direction is already fairly clear: information on durability, repairability, material composition, environmental impacts or recyclability may become a more important part of market-access conditions.

The ESPR also provides a basis for digital product passports. In essence, this is a set of electronic data linked to a product, product or batch, enabling relevant parties to access information about the characteristics and life cycle of goods. The specific implementation will depend on the regulations for each product group, but textile businesses may need to become familiar with providing structured, consistent and verifiable data.

This is different from sending a single specification sheet to a customer. Data needs to be collected from multiple stages: fiber sources, composition ratios, processing locations, dyeing and finishing processes, energy consumption, water use, chemicals, packaging and product-handling instructions. If information is scattered across spreadsheet files or stored only by a few individuals, businesses will find it difficult to respond quickly when customers request verification.

Traceability Is Not Just a Technology Challenge

Many businesses tend to view traceability as a software project. This perspective is incomplete. Software can help store and connect data, but the quality of the system depends first and foremost on the process for determining what data must be recorded, who is responsible, when it is updated and how discrepancies are checked.

In a garment order, data may pass through multiple supplier tiers. A sewing factory may purchase fabric from another company; the textile producer may use fibers from multiple sources; and the fiber supplier may in turn depend on upstream materials and processing methods. If data exists only for the sewing stage, a business will struggle to fully substantiate the material information requested by customers.

Practical preparation can therefore begin by mapping the supply chain for key product groups. Businesses need to distinguish self-declared data from data that has been verified, while also identifying high-risk points such as changes in material sources, fiber blending, chemical use or outsourced processing. The more transparent a system is about its data limitations, the greater its ability to maintain reliability.

Materials and Design Determine Recyclability

The recyclability of textiles is directly influenced by material choices. Single-fiber materials are generally easier to sort than blended products, but they do not always meet performance or durability requirements. Conversely, blended materials may help manufacturers improve comfort, stretch or lifespan, but they often make end-of-life processing more complicated.

Therefore, a particular type of fiber should not be equated with the entire concept of sustainability. Recycled fibers may help reduce the need for virgin materials in some cases, but their environmental performance also depends on the source material, recycling technology, energy consumption and verifiability. Similarly, bio-based fibers do not automatically solve every problem if producing the raw material places pressure on land, water or biodiversity.

Material assessment needs to be placed within the product’s entire life cycle. A garment with a high proportion of recycled material but a short lifespan may produce a different result from a durable product that is used for a long time and can be repaired. Quality, longevity, care requirements, washing methods and the post-use recovery rate can all affect environmental impacts.

For garment manufacturers, this increases the role of the product development department. Instead of choosing materials solely according to price and the technical requirements of each season’s collection, businesses need to discuss usage objectives, the possibility of removing accessories, composition requirements and post-consumer treatment options with customers at an early stage. Decisions made during the design stage are generally less costly than modifying the entire process after the product has already been manufactured.

Environmental Pressure Is Entering Purchase Orders

For exporters, the pressure to transform generally comes through three channels. The first is the regulation of the importing market. The second is the standards and assessment questionnaires of brands. The third is requirements from financial institutions, business customers or partners in the supply chain.

These requirements may relate to energy use, greenhouse gas emissions, wastewater, chemicals, labor conditions and raw material sources. Not all requirements have the same legal status, but all of them can affect purchasing decisions or the maintenance of commercial relationships.

In the area of chemicals, businesses often need to control restricted-substance lists according to customer or market requirements. In the environmental field, data on electricity, fuel, water and waste is increasingly being requested in a more systematic way. When customers move from asking whether a factory has an environmental policy to requesting periodic data, businesses need measurement and record-keeping capabilities, not just general commitments.

Extended producer responsibility regulations are also an issue that needs to be monitored. According to the European Commission’s information on textiles and waste, the EU is promoting solutions to reduce textile waste and increase product circularity. The specific allocation of obligations among brands, importers, manufacturers and consumers may differ under each legal mechanism, but the general trend is that end-of-life costs and responsibilities will receive greater attention.

Vietnamese Businesses Need to Prepare in Order of Priority

Not every business can immediately invest in a complex traceability system or change its entire materials portfolio. A practical roadmap should begin with the product groups and customers that face the highest requirements.

Standardize Input Data

First, businesses need to establish a minimum data list for each product: fiber composition, blend ratios, suppliers, material codes, key processing steps, accessories and shipment information. Data must be reconciled across purchasing records, test reports and production records. Unverified information fields should be clearly marked rather than automatically treated as complete.

This may appear to be administrative work, but it creates the foundation for subsequent steps. When material codes are inconsistent among the purchasing, warehouse and production departments, calculation or source tracing will take much more time. Standardizing codes and update responsibilities can deliver benefits even before a business deploys new software.

Invest in Bottlenecks

Next, businesses should identify the processes that create the greatest risks. For some factories, the bottleneck may be energy and water data. For others, the issue may involve managing fabric suppliers, controlling chemicals or tracing outsourced orders. Investing in bottlenecks helps avoid buying technology without resolving actual data gaps.

Businesses also need to distinguish between data used for internal management and data that must be provided to customers. Not all internal information needs to be disclosed, but information used to substantiate an environmental claim must have a measurement method and supporting records. This is important for avoiding the risk of greenwashing, meaning the use of environmental messages that go beyond what can be demonstrated.

Bring Design into Cost Discussions

Circular design can create costs at the initial stage because of requirements for material testing, changes to product structures or the search for new suppliers. However, looking only at the purchase price of materials overlooks other life-cycle costs, such as defective-product rates, data-processing time, the risk of shipment rejection or the cost of meeting new requirements under time pressure.

Early discussions with customers help businesses clarify which objectives are mandatory, which are priorities and which can still be tested. This approach is more practical than pursuing every certification at once or replacing all materials without a plan to assess effectiveness.

Competitive Opportunities Lie in the Ability to Provide Evidence

Circularity is often viewed as a compliance burden. This perspective reflects only part of the issue. As brands seek to shorten supplier-verification times and reduce supply chain risks, businesses with reliable data may become more attractive partners.

The ability to provide evidence also helps businesses avoid relying on general claims. Instead of simply saying that a product is “green” or “environmentally friendly,” manufacturers can explain specifically what materials the product uses, which processes are controlled, which data has been verified and where the limits of the information lie. This form of communication may be more persuasive because it allows customers to evaluate products based on evidence.

However, the circular transition cannot be addressed solely at the garment-factory level. It requires coordination among fiber suppliers, textile producers, dyeing and finishing facilities, collection companies, recyclers, brands and regulators. If there is insufficient demand for recycled materials or a lack of common data standards, businesses will face high costs and uneven results.

Accordingly, issues to monitor in the coming period include the roadmap for specifying EU requirements for textiles, how brands translate environmental goals into purchasing conditions, the development of fiber-recycling technologies and post-consumer collection mechanisms. Another issue is the potential formation of data standards that can be used throughout the supply chain.

For Vietnamese businesses, preparing for circularity does not necessarily have to begin with a major investment. The more important first step is to know what materials are being used, where the data is located, which points in the supply chain cannot yet be verified and how long the product is designed to last. When these questions are answered through clear processes and appropriate evidence, environmental requirements will not only be a barrier to market access but also become part of long-term competitiveness.