Key findings:
First, the textile recycling rate remains low in the garment and footwear sector. As the OECD report noted, the market share of recycled fibers remained at approximately 7.6% in 2024 within total textile fiber production. Meanwhile, “of all recycled fibers, more than 90% was recycled polyester made from open-loop plastic bottles and less than 10% from actual post-consumer textiles.” For apparel sourcing, this means that using recycled input remains limited, fragmented, and often costly, challenging scalability for brands with large-volume sourcing models.
Second, the recycling supply chains are not immune to social responsibility and compliance risks. According to the OECD report, “Child laborin recycling processes is a key area of concern.” Meanwhile, a 2024 International Labor Organization (ILO) study cited in the report found that workers in waste management and recycling typically earn far less than in other sectors. Additionally, since “textile waste collection, aggregation and sorting are often performed manually, especially in contexts where automated systems are not common,” working conditions could be an issue. Informal workers could also be hired in the recycling supply chain. For example, the ILO estimates that about 80% of jobs in the recycling sector are informal, and in Dhaka alone, around 100,000 women and children work as informal waste pickers. Overall, for fashion brands and retailers that source clothing made with recycled textile materials, this means that due diligence must go beyond traditional Tier 1 or Tier 2 suppliers to include waste and recycling networks. Additionally, recycling activities could occur in regions different from those of garment manufacturing hubs.
Third, the large-scale export of used textiles has implications for recycling outcomes. The OECD report noted that textile waste often crosses borders for sorting or recycling. However, such textile waste trade could undermine domestic recycling capacity (e.g., in the Netherlands, half of the collected textiles are sorted abroad, and the local sorting capacity is used to sort textiles from Germany) and create environmental burdens on textile waste-importing countries. The debate over managing the used clothing trade could continue (e.g., how to avoid shifting environmental burdens from apparel-consuming countries to textile-waste-importing countries, especially those in the developing world).
Fourth, regulatory shifts are reshaping global trade related to textile recycling. The OECD report highlights the EU’s Ecodesign for Sustainable Products Regulation, the revision of the Waste Framework Directive, and the expansion of Extended Producer Responsibility (EPR) schemes. These measures, either already adopted or under development, mandate the separate collection of textiles from mixed household waste, require sorting prior to export to prevent misclassification of waste as reusable goods, and shift the financial responsibility for end-of-life management to producers. For fashion brands and retailers, these changes are likely to raise compliance costs and demand greater traceability throughout supply chains, including post-consumer waste. They also create stronger incentives to redesign products for durability, recyclability, and lower environmental impact, as regulatory fees and trade restrictions become directly tied to “product characteristics.”
Additionally, due diligence for fashion brands and retailers must be adapted to the era of circularity. The OECD report recommends that fashion companies prioritize:
- scoping new high risk actors (waste pickers, sorters, informal workers),
- identifying “choke points” in waste flows (e.g., large sorting hubs, major aggregators, or recycling facilities that process high volumes of textile waste and therefore have leverage over upstream practices)
- evaluating how their own purchasing practices may contribute to downstream impacts (e.g., low pricing pressure or rejection of unsold goods can push waste handling into informal and unsafe channels).
- meaningful engagement with workers and informal sector representatives, particularly in contexts where recycling activities occur in small workshops, open-air settings, or home-based units with limited regulatory oversight.
Summarized by Sheng Lu
For FASH455 class: When writing your blog comment, you may consider addressing the following aspects. Students are strongly encouraged to read the full report before leaving their comments.
- Does global textile trade enable circularity or export waste burdens?
- Should countries restrict used textile imports and exports?
- Should brands prioritize textile-to-textile recyclability even if it increases costs or limits design flexibility? How might this shift sourcing geography or supplier selection?
- To what extent should fashion brands and retailers be financially and legally responsible for post-production and post-consumer waste? Should waste costs be integrated into retail pricing?
FASH455 Global Apparel & Textile Trade and Sourcing 
Factor proportion theory helps explain the patterns in textile recycling described in this blog post. The theory states that countries that are more efficient in labor should do labor abundant production, while countries efficient in capital should do capital abundant production. The blog states, “textile waste collection, aggregation and sorting are often performed manually, especially in contexts where automated systems are not common.” Textile recycling should therefore, according to the theory, take place in labor abundant countries. Dhaka, Bangladesh has a labor pool of 100,000 women and children working in textile recycling, while the Netherlands, a capital abundant country, sends its textiles abroad for sorting and recycling. This demonstrates factor proportion theory operating in practice. If recycling becomes more automated and expensive due to technological advances, labor abundant countries like Bangladesh may lose their advantage in this sector, while capital abundant countries like the Netherlands may begin to perform more recycling domestically.
One important concept that connects to this blog post is the Smiling Curve. The Smiling Curve explains that not all stages of production create the same amount of value. Activities like R&D, design, and branding tend to generate higher value, while stages such as manufacturing, sorting, and recycling usually create lower value. This helps explain why some parts of the supply chain are more profitable than others.
In the blog post, it mentioned that recycled fibers made up only about 7.6% of total textile fiber production in 2024. The Smiling Curve helps explain this because recycling and sorting are considered lower value-added activities compared to areas like design and branding. Even though sustainability is becoming more important in the fashion industry, recycling does not always provide strong financial incentives for companies.
This creates challenges for firms trying to expand circular practices. Lower margins and higher costs can limit investment in recycling systems. Because of this, companies may need to explore other strategies or rely on regulations to support wider adoption of recycled materials. I am curious to see how companies approach this in the future and whether it leads to meaningful changes across the industry.
After reading the New OECD Report, a key concept that relates to these textile recycling findings is the New International Division of Labor concept. The New International Division of Labor theory is defined by an integrated system of worldwide production. In other words, it explains why countries with advanced economies handle high-value tasks, such as the design process and marketing, and why developing countries handle lower-value tasks, such as labor-intensive manufacturing.
This theory connects to the new OECD Report because textile waste is following the same path as garment manufacturing. Recently, textile waste has been outsourced to developing countries where labor is cheaper, and regulations are weaker. This is important to pay attention to because it means the same working conditions that developing countries are subject to are now spreading to recycling facilities.
Outsourcing textile waste has many negative consequences, but for fashion brands, it poses a significant threat to those claiming to be sustainable. The OECD report warns that recycling supply chains very often involve child labor and informal workers who are paid unfairly. The report states, “A study in India (2020[41]) recorded children and young workers in bleaching facilities, often working seven days a week, while an assessment in Pakistan (2023[43]) confirmed that a substantial number of children and young workers were involved in waste-picking.” When brands label themselves as sustainable, consumers are led to believe that the product is made with care and responsibility. If brands do not hold recycling suppliers to the same standards that garment manufacturers are now held to, they are at risk of facing social consequences. It is of the utmost importance that brands pay attention to labor violations in every sector of the garment process and make sure they are creating fair and livable working conditions.
Great application of our course concept. I am working on a research project this semester about the business side of textile-to-textile recycling. This is a brand-new supply chain, very different from a cloth supply chain using virgin fiber. However, as you mentioned, the distribution of value added still seems to follow the “smiling curve,” raising both ethical and economic concerns.
One key concept from our class that relates to this blog post is the New international Division of Labour concept. A concept that Piggy backs off of another theory the Comparative Advantage theory. Comparative advantage is when a country does not have absolute advantage in any one export, but it produces the product that it has the least dissadvantage in. The New International Division of Labour concept goes off of this and is a better explanation as to why a country with higher capital produces more captial intense prodcuts, and a country withhigher labour produces more labour intense products.
We can see this in the report because just how garment manufacturing is exported to other countries with higher labour, garment recycling is being sent here as well, despite the lack of restrictions and regulations.
Going further we can explore how this exporting of garment recycling is affecting the garment sector of these countries. Countries like the US, which has a lot of capital, sending garments to be recycled to another country that has significantly less capital but more labour may sound like a good idea. But when really looking into it can be seen that with technical enhancements and automation of the process that the process is becoming less and less labour intensive. These countries for the most part do not have strict worker rights laws or regulations we also have to keep in mind the well being of the garment workers
A concept I learned from our class that connects to this blog post is comparative advantage theory. In class, we discussed how countries specialize in producing goods where they have a relatively lower opportunity cost, even if they are not the most efficient overall. This specialization explains why international trade occurs and why countries do not produce everything domestically.
The OECD report shows that textile waste and recycling often move across borders for sorting and processing. This suggests that some countries may have a comparative advantage in labor-intensive recycling, especially where manual sorting is common and labor costs are lower. The report also highlights concerns such as informal employment, child labor and environmental burdens in waste-importing countries. This challenges the assumption that trade based on comparative advantage always leads to balanced and mutually beneficial outcomes.
In the future governments and brands should reconsider whether cost-based specialization alone should drive recycling trade. If circularity shifts social and environmental risks to lower-income countries, then stricter oversight and shared responsibility could be necessary to ensure sustainability goals are genuinely achieved.
In class, we talked about how fashion brands are the ones responsible for checking not only their factories but also the deeper parts of their supply chains for labor and environmental risks. This means companies cannot just focus on the final production stage, but they must also look at where materials come from and what happens after consumers get rid of their clothes. The OECD report connects directly to this concept by showing that even recycled textiles bring about risks. Only 7.6% of textile fibers in 2025 were recycled, and most of that was recycled polyester from plastic bottles, not old clothes. The report also explains that many recycling jobs are informal and low-paying, and how in places like Dhaka, there are around 100,000 women and children working as waste pickers. This shows that even recycling can bring about ethical challenges. A key takeaway is that brands need to take more responsibility for what happens to clothing after it is discarded and to make sure that recycling systems are set up to be safe and ethical, even if that means raising costs to do so.
One key concept from our class that relates to this blog post is how the OECD recycling report connects to trade theory was clearly represented in this article. According to comparative advantage, countries specialize in activities they can perform at lower opportunity cost. The blog shows that these activities rely heavily on manual labour, with limited automation and low capital intensity. Labour intensive recycling activities such as sorting, cleaning, shredding textiles are concentrated in lower income countries. In this blog post, the data showing that earnings in recycling are 36–75% below average wages in many countries helps explain why certain countries specialize in these activities. From a trade theory perspective, this reflects global specialization and is driven by minimizing cost. Exporting textile waste will lower the disposal and processing costs for higher income countries. Going forward, we can further explore how changes in labour costs and regulation requirements may alter a countries’ comparative advantages in textile recycling.
A concept we learned in class that relates to this blog is the “Smiling Curve”. The “Smiling Curve” helps explain why so much “value” can remain in retail countries even when production happens elsewhere. Processes like design, R&D, retail, and marketing tend to be categorized as higher value when activities like manufacturing get valued lower, leading to smaller margins.
In the article, the OECD finds that recycled fibers were only 7.6% of total production in 2024, and that over 90% of recycled fibers are bottle-to-fiber polyester rather than textile-to-textile. This shows circularity is still constrained. Though the reports’ labor risk signals tell us that the circular supply chain can add new tiers of hidden risk, not remove risk. The “Smiling Curve” explains that sustainability isn’t considered a higher value, even though it is becoming bigger in the industry. We learn that businesses do not invest in recycling.
Focusing on a managerial implication for fashion companies, brands should treat recycling like an extension of their supply chain, not just someone else’s problem. Meaning, adding who collects, sorts, and recycles their products. With EU rules like EPR, brands should also expect higher end-of-life costs ad plan to manage them through smarter design choices.
Two concepts from class that connect to the New OECD Report blog post are the New International Division of Labor theory and comparative advantage. The idea of these concepts are to divide and conquer in the categories the country does best at. Advanced economies are getting more complex jobs, like designing, and developing countries get jobs like manufacturing and textile recycling. In the report we see that both manufacturing and recycling are being sent to the same developing countries. We also saw that the recycling path followed the same manufacturing path. I believe that with our technological advancements we could be more beneficial to the recycling process and be able to take out the harsh labor for these developing countries. I think this would help the people who are working without the strict labor laws.
One key concept from our class that relates to this blog post is the comparative advantage theory. In class, we’ve discussed that comparative advantage is important because it explains why countries specialize in producing goods they can make at a lower opportunity cost. This then leads to overall increases in efficiency in global trade. Based on the blog post above we can see that comparative advantage is partially supported by the data. Textile waste frequently crosses borders for sorting and recycling which suggests that some countries specialize in these processes due to lower labor costs, while the theory is challenged because the specialization described often depends on informal labor and weak protections like in Dhaka. This suggests that what appears to be comparative advantage may actually be driven by weaker regulations and lower standards instead of genuine productive efficiency. However, the article seems to assume that simply expanding recycling systems will automatically lead to better sustainability outcomes while ignoring how ongoing overproduction in the fashion industry could cancel out the environmental benefits.
One concrete idea from class that connects to this blog post is the theory of Comparative Advantage. This is the theory of using specialization to manufacture goods based on a country’s relatively bigger absolute advantage or its relatively smaller absolute disadvantage. In class we discussed how this supports free trade and allows people to create a final good at a lower opportunity cost.
In the blog post it is clear that comparative advantage allows different countries to specialize in different areas of the process, especially sorting and recycling. The blog provides an example of comparative advantage in recycling. This is because they are able to sort and process at a lower opportunity cost than high income countries.
Unfortunately this is the reason poor countries deal with more pollution and far worse working conditions. While Comparative Advantage shows how recycling shifts to lower-cost countries, it should not lead to unsafe work conditions. Governments can enforce labor laws and invest in technology that can lead to safer recycling and manufacturing.
One concept from class that connects to this blog post is Extended Producer Responsibility. EPR shifts the responsibility for managing post consumer waste from governments to producers, meaning brands are financially and operationally responsible for collecting and recycling their products at the end-of-life. The goal is to encourage companies to think beyond production and take accountability for the full lifecycle of their products.
In the OECD report, we see how new regulations in the EU and Chile are putting EPR into action within the textile sector. The report explains that EPR can improve separate collection systems and increase recycling capacity, it can also lead to higher volumes of low-quality garments entering sorting facilities. This creates added pressure on recyclers who already operate with low margins as well as limited infrastructure.
From a managerial perspective, brands cannot treat EPR as a simple compliance requirement. If companies continue overproducing low quality, mixed fiber garments, recycling systems will stay overwhelmed. EPR only drives meaningful change when it is paired with smarter product design and more responsible purchasing decisions that reduce waste at the source.
Extended Producer Responsibility (EPR) is a policy approach where a producer’s responsibility for a product is extended to the post-consumer stage of its life cycle. This concept aims to shift waste management costs from the public to producers, incentivizing “design for the environment” and higher recovery rates. The source applies this by noting that while EPR schemes in Chile and the EU are accelerating interest in circularity, they may inadvertently pressure textile sorters. Sorters fear that mandatory collection will flood the market with low-quality, damaged garments previously discarded in mixed household waste. Because sorters currently derive most revenue from the top 30% of high-quality textiles, this influx of low-value waste could further destabilize their already low profit margins. A key managerial implication is that fashion brands must integrate circular design principles to ensure the waste they produce is actually recyclable. Using mono-materials and avoiding hazardous coatings or mixed-fibre blends makes recycling more viable and reduces worker exposure to chemical risks. This proactive approach helps prevent “textile waste” from being illegally dumped or burned in importing countries.
A relevant course concept is globalization and cross-border trade flows, which involves the movement of goods, services, and waste across countries. While globalization increases efficiency and access to materials, it can also shift environmental and social burdens to lower-cost regions. This highlights how trade is not always equally beneficial across all participants in the supply chain. The blog post illustrates how global textile trade enables the movement of used clothing and waste across borders, often to developing countries for sorting or recycling. While this supports circularity in theory, it can also create environmental and labor issues in importing countries, such as informal work and unsafe conditions. The fact that a large portion of textile waste is exported shows how globalization can externalize costs rather than fully solve sustainability challenges. Additionally, limited domestic recycling infrastructure in developed countries reinforces reliance on global waste trade networks. A key implication is that fashion brands must take greater responsibility for the full lifecycle of their products, not just production. Policies like Extended Producer Responsibility (EPR) could push companies to internalize waste costs and invest in more sustainable design and sourcing decisions. However, this may increase costs and require brands to rethink pricing and supply chain strategies. This raises an important question: can the fashion industry achieve true circularity without reducing overproduction and consumption in the first place?
One concept from class that really connects to this post is the new international division of labor. We learned that products today aren’t made in just one country. Instead, different stages of production are spread across countries based on cost, labor, and resources. The apparel industry is one of the clearest examples of this global system.
The OECD report shows that recycling is becoming part of that same structure. Sorting and recycling textile waste are highly labor intensive processes, which aligns with factor proportions theory that labor abundant countries tend to specialize in labor intensive activities. Meanwhile, developed countries continue to capture higher value through branding, innovation, and retail, which connects to the smiling curve we discussed. So even in circular fashion, the lower-value, higher-risk work is usually pushed downstream.
This makes me wonder whether circularity automatically equals fairness. If brands truly want sustainable systems, they can’t just focus on the profitable ends of the smiling curve. They need to take responsibility for what happens in recycling too. otherwise we’re just shifting problems instead of solving them.
One concept from our class that really connects to this post is the Smiling Curve and the New International Division of Labor. In class, we talked about how the value in the fashion supply chain is usually at the beginning (like design and R&D) and the end (such as marketing), while the actual manufacturing in the middle has the lowest added value. In this blog post, we can see that textile recycling seems to be stuck at the bottom of that curve. The data shows that around 80% of recycling jobs are informal and manual, which means the more “strenuous “unwanted” work of sorting waste is being pushed to low-wage workers in developing countries. Even though brands want to be “circular,” the report shows that the actual labor of recycling isn’t seeing much of the profit or investment yet. Personally, I think a big implication here is that brands need to stop treating waste like someone else’s problem. Although we are seeing more sustainable initiatives today, others will eventually have to invest in the technology themselves rather than just relying on waste pickers. One thing I’m curious about is if the new EU regulations will actually force companies to pay for this, or if it will just make clothing way more expensive for the average student.
One course concept related to this blog post is globalization and the movement of goods across borders. Global trade allows countries to specialize in production, but it also creates ethical and environmental challenges when supply chains cross regions with different labor standards and regulations. The blog shows that textile recycling is limited and often relies on exported waste, shifting social and environmental burdens to other countries. Most recycled fibers come from plastics, and workers in recycling networks face poor conditions. Global sourcing complicates sustainable apparel production and requires brands to go beyond traditional suppliers to ensure compliance and safety. A managerial implication is that fashion companies should integrate circularity into their supply chains, evaluating recycling partners and waste flows even if it increases costs. A key question is how brands can balance recycling with sourcing flexibility and competitive pricing, which affects both sustainability and long-term profitability.