Luxury brands burn unsold clothes to protect prices. The EU just banned it.

'Why burn it when you could just give it away?'

A single T-shirt can carry an asking price of 1 million won ($674), and some coats run into the millions of won. For certain luxury brands, the price is whatever the label says.

But a high price tag does not guarantee a sale. A significant volume of luxury goods never finds a buyer and ends up sitting in inventory.

The problem is that this unsold stock is being sent not to discount stores but to incinerators. In Europe — the heartland of luxury fashion — more than 200,000 tons of new, unworn clothing is destroyed every year.

The reason is straightforward: brands destroy unsold goods to protect their image and prevent market prices from falling. For decades, the industry bore little accountability for the enormous environmental damage caused by producing and then incinerating its own products.

That decades-long practice now appears to be coming to an end. The EU has moved to ban the destruction of unsold goods outright.

Global clothing production has been climbing steadily. According to the UN Environment Programme, worldwide garment sales jumped from about 50 billion garments in 2000 to about 100 billion in 2015. If that trend has continued, annual production is now estimated at roughly 150 billion garments.

A large share of that output never reaches a consumer. According to a report by the Australian Circular Textiles Association, an estimated 30 percent of all clothing produced worldwide goes unsold — meaning roughly 40 billion or more garments are discarded or incinerated every year.

Europe is no exception. The European Environment Agency estimates that between 4 and 9 percent of textile products placed on the European market are destroyed before ever being used — equivalent to between 264,000 and 594,000 tons by weight.

Brands cite various reasons for disposing of perfectly wearable clothing. Luxury labels in particular often make this choice to preserve "scarcity." If luxury goods were sold at steep discounts, the argument goes, consumers would struggle to accept full retail prices, and the products would lose the perceived value that justifies both their exclusivity and their cost.

Mass-market clothing brands also destroy unsold inventory regularly. Storing out-of-season stock in warehouses runs up rent and management costs while eating into space needed for new arrivals. Even when discounting is an option, the cost of running a sale often exceeds the revenue it generates. Destruction, ultimately, can be the cheapest solution.

But as of Sunday, large companies operating in the EU can no longer destroy unsold clothing, accessories, footwear and other products as they once did. The EU's Ecodesign for Sustainable Products Regulation, known as ESPR, has entered into force. Enacted in 2024, the regulation aims to reduce the environmental impact of products across their entire life cycle — from production and use through to end-of-life disposal.

"Destruction" under the regulation means more than burning. The rules prohibit the full range of disposal practices applied to unsold goods — shredding them for recycling processes, incineration, landfill and similar methods. Grinding new garments into fiber or stuffing material is also banned.

The EU is encouraging donation, repair and reuse in place of destruction, and will permit disposal only in specific circumstances — such as when a product poses a health or safety risk, is counterfeit, or is damaged beyond recovery.

On the surface, the measure bans incineration and landfill to cut greenhouse gas emissions from textile disposal. But there is a deeper intent: to push the industry to forecast demand more accurately and reduce production volumes. The regulation takes aim at the fashion industry's habit of mass-producing garments it knows may never sell.

European Environment Agency analysis shows that roughly 80 percent of the climate impact from textiles comes from the production stage — raw material cultivation, spinning, weaving, dyeing and sewing. End-of-life processes such as collection, sorting, recycling, incineration and landfill account for only about 3 percent. In other words, producing clothes that will never be worn does more environmental damage than destroying the unsold ones.

Producing the clothing, footwear and household textiles consumed in the EU in 2022 required 234 million tons of raw materials, 5.3 billion cubic meters of water and 144,000 square kilometers of land. Supply chain greenhouse gas emissions that year totaled 159 million tons. Annual greenhouse gas emissions from processing and destroying unsold textiles in Europe are estimated at up to 5.6 million tons.

South Korea faces a similar problem. The domestic fashion market was valued at approximately 48.42 trillion won in 2023. Based on Statistics Korea data, the ratio of year-end inventory to production value in the apparel sector stands at around 20 percent — a significant volume of clothing that goes unsold. Some large companies have drawn public criticism after it emerged they incinerated more than 100 tons of unsold garments in a single year.

In response, the government has said it plans to develop a system for sorting, shredding and chemically recycling waste clothing, along with a Korean-style ecodesign regime, in 2026, and to establish a first circular economy master plan covering 2027 to 2036. South Korea has yet to introduce rules directly banning the destruction of unsold clothing or requiring companies to publicly disclose disposal volumes — measures the EU already has in place.

As a result, shredding and incineration remain the easiest and cheapest way for companies to handle surplus stock. The apparel industry says it has little choice but to stick with low-cost disposal methods. Smaller businesses complain that even when they want to explore recycling options for environmental reasons, there are no clear guidelines to follow.

"Not many companies can develop recycling technologies or build the necessary systems on their own," an official at one apparel company said. "If the incentives for not incinerating translate into real financial benefits, and if the government supports the recycling infrastructure, companies will naturally come on board."