Countdown to the Ecodesign Sustainable Product Regulation (ESPR): What is it and how can fashion retailers prepare?

The Ecodesign Sustainable Product Regulation (ESPR), formerly known as EU 2024/1781, came into force in July 2024 and is part of the European Green Deal – the EU’s most ambitious roadmap for transforming the economy and achieving climate neutrality by 2050. 

The ESPR sets out requirements to improve environmental sustainability of products produced in the EU. For fashion retailers, one of the most immediate and impactful changes will take effect starting on July 19th, 2026, when the destruction of unsold consumer products, including textile products, footwear and accessories, will be explicitly banned.

That gives fashion retailers just one year to rethink their current practices in order to produce and operate more efficiently, create less waste and become more “circular”, not only to comply with regulation, but to gain a competitive edge in an increasingly sustainability-conscious market.

According to the European Commission, if we continue consuming resources at the current rate, we’ll need three planets to sustain us by 2050.

A landmark regulation: What ESPR means for fashion retailers

The ESPR defines “destruction” as the act of intentionally damaging or disposing of a product with the aim of discarding it as waste, excluding cases where repair or recycling is sought. 

The rule will apply to unsold items that have not been purchased by the final consumer, such as surplus inventory, returns or products, or items with no commercial outlet. 

ESPR also requires transparency: Annually, companies will have to report how many unsold products have been discarded and why.

For years, destroying products has been a commonplace defense mechanism for many brands. In high-turnover sectors like fashion, the accumulation of unsold inventory can quickly become an economic and reputational liability for the following reasons:

• Storage costs: Holding stock in warehouses comes at a cost. Often, destroying it is cheaper.
• Brand protection: Some luxury brands prefer to eliminate excess rather than allow aggressive discounting that would affect their positioning.
• Gray  market risks: Low-priced liquidation could undercut brand control.
• Lack of redistribution systems: Without the right technology or logistics, unsold stock can be hard to repurpose.

The ESPR now forces a shift towards alternatives such as donation, resale, recycling, and more importantly, more efficient inventory management to reduce excess products and leftovers at the end of the season and even feed back into production cycles.

While ESPR introduces destruction bans for specific categories first, it will eventually broaden to include product-specific requirements around durability, repairability, recyclability, and more—further aligning with the Green Deal’s circular economy goals.

Which fashion retailers will be affected by ESPR?

Companies of all size will fall under scrutiny

The EU has defined a staggered implementation strategy for ESPR based on company size, but everyone will have to fall into line, sooner or later.

Large fashion retailers must take action today 

Large fashion retailers (>250+ employees and/or >€50M annual turnover) are already in the focus of regulators and will have to comply with the ban and the reporting obligation as soon as the law comes into force on July 19th, 2026 with no exemptions. 

Medium-sized fashion retailers have until 2030

The deadline for medium-sized fashion retailers (<250+ employees and/or <€50M annual turnover) to end product destruction will be decided in July 2030. This temporary respite gives medium-sized retailers a longer opportunity to adapt systems, processes and organizational culture.

Small and micro-enterprises are exempt for now

To date, small (<50 employees and <€10M annual turnover) and micro (<10 employees and <€2M annual turnover) will initially be exempted from this phase of the ESPR in order to not overburden businesses with limited resources. However, they are encouraged to explore more sustainable practices on a voluntary basis.

Start with better in-season inventory management ahead of ESPR

If you’re a large or medium-sized fashion retailer, the countdown to compliance has begun. And with only one year to go,  there’s no time to wait.

But there is good news: You don’t need to start from scratch. While longer-term changes will be needed across the product lifecycle, you can begin today with the inventory you already have on hand.

One of fashion retail’s longstanding challenges has been the disconnect between what’s produced and what’s actually needed in stores. Long lead times and limited visibility into demand have led to widespread overproduction, unsold goods, and costly end-of-season waste.

What’s needed now is a way to continuously adapt inventory decisions as the season unfolds, not just at the moment of buying.

That’s where solutions like Nextail’s come in. By using artificial intelligence, automation and data, these technologies help retailers continuously optimize inventory throughout the season. With the right solutions, it’s possible to:

• More accurately forecast demand at a hyperlocal level
• Adjust initial allocations to avoid stock build-ups and increase flexibility for later in the season
• Rebalance inventory between stores and channels dynamically to prolong sales and reduce excess
• Extend the life of each product by getting it where it will sell at full price
• Use in-season data as a feedback loop to inform future production decisions to refine the buy orders even at a size level

This approach not only cuts down on unsold items, but also reduces the pressure to discount or destroy goods, making operations more resilient, efficient and aligned with upcoming regulations.

Ultimately, sustainable retail begins with data. By matching inventory to actual demand as precisely as possible, fashion retailers can minimize waste before it happens, and begin to build a circular model grounded in profitability as well as responsibility, particularly before ESPR makes it mandatory.

In fact, solutions like these have already gained global recognition. In 2020, the World Economic Forum named Nextail a “Technology Pioneer” for enabling more sustainable, data-driven retail operations. 

Curious how Nextail is helping leading retailers apply these principles using advanced inventory technologies ahead of ESPR? Read more in this guide.