The EU Green Deal and its impact on the European textiles industry

On December 11, 2019 – merely 6 months after the new European Commission took office – the EU Green Deal was presented to the world. President Ursula von der Leyen presented the initiative as “our new growth strategy – for a growth that gives back more than it takes away; that will help our economy to be a global leader by moving first and moving fast”.

The Green Deal itself is not a law, but provides a roadmap with actions to boost the efficient use of resources by moving to a clean, circular economy and stop climate change, reverts biodiversity loss and cut pollution. The European Green Deal covers all sectors of the economy, notably transport, energy, agriculture, buildings, and industries such as steel, cement, ICT, chemicals… and textiles.

Since that day, the European Commission has been active to translate this political ambition into (draft) legislation. For instance, in March 2020 the Commission presented its new Circular Economy Action Plan. It targets how products are designed, promotes circular economy processes, encourages sustainable consumption, and aims to ensure that waste is prevented and the resources used are kept in the EU economy for as long as possible. This action plan targets specifically the textile sector.

Under the “zero pollution Europe” target of the Green Deal, a new strategy on sustainable use of chemicals is being developed. The strategy plans to amend REACH and will also consider restrictions for PFAS and skin sensitizers. Therefore, the textile sector is likely to be impacted by the future legislation developed in this strategy.

More recently, the Commission launched its "Fit for 55" package, a very ambitious program which aims to align EU rules with the newly agreed 55 % emissions reduction target for 2030. This package will look at revising the ETS system, prepares for the introduction of a Carbon Border Adjustment system (CBAM), revises the Effort Sharing Directive and more. Again, all this has an impact on the competitiveness of our companies, as in some segments of our sector, energy is a critical cost factor.

In essence, the Commission’s mantra is to promote a green and digital transition, and that concept is applied throughout any European policy initiative but also impacts on the EU and national budgets, e.g. 50 % of the € 750 billion EU recovery funds are allocated to “green and digital transition”.

Euratex is actively engaged in shaping each of those components of the EU Green Deal, as far as they will impact the European textiles industry. We have developed our own Circular Textiles strategy, we are involved in negotiations on the Product Environmental Footprint, which should create more transparency, we contribute to this new Sustainable Chemical Strategy, we offer solutions for textiles waste recycling, etc.

As industry representative, our goal is not to shy away from these challenges but develop constructive proposals that are workable for our SMEs, and guarantee their long term prosperity. Sustainability can – and should – become a source of competitiveness for the European textiles industry. This requires intense dialogue with the legislator, who needs to understand the (complex) value chain in textiles, and avoid unintended consequences – and costs – of some proposals. And of course, this entire policy package needs to be assessed in a global context. Textiles being one the most globalized sectors of the economy, we simply cannot afford to be subject to stringent environmental or chemical standards, while competitors from abroad operate in a different framework and may place their products in the EU single market without proper market surveillance. Euratex reaches out to its sister organizations around the world to establish a level playing field, where our companies can compete in a free and fair regulatory environment.

The EU Green Deal was launched a few months before the Covid-19 pandemic erupted. Since then, European textiles and apparel companies have gone through difficult times, resulting in turnover drops of 25-35 % (in 2020). Euratex has insisted with the EU authorities to be extremely careful in pushing this Green Deal through, while companies were struggling to survive. Moreover, rising energy costs and price of raw materials have put a hamper on the textiles recovery.

Looking forward, this double challenge of the EU Green Deal and the Covid-19 pandemic are putting the industry at a crossroads. We need to decide on a new business model – embracing sustainability and circularity, creating transparency in our supply chain, establishing common rules and standards across the globe, invest in new materials and technologies, attract young workers and develop new green and digital skills. The new EU Textiles Strategy, to be announced by the Commission by the end of 2021, as well as the new EU Industrial Strategy – which includes the textiles ecosystem – offer great opportunities to shape that new framework. Euratex and its members are contributing to that process, to ensure our companies can prosper, invest and grow.