A stitch in time or a seamless transition to clothing product stewardship in Australia

What is product stewardship?

Product stewardship means managing the broader impacts of products and materials.

The legal basis for product stewardship in Australia is the Product Stewardship Act 2011 (Act), which provides an adaptable approach: there can be no one-size-fits all approach to regulating different products and materials across different industries.  The Act provides a basis for different products to be regulated as needs arise, whilst ensuring that Australia continues to meet its international obligations.  The Act allows industries to voluntarily regulate but also provides a basis for co-regulation and mandatory regulation by the government.

What is extended producer responsibility?

Extended producer responsibility (EPR) schemes are where product stewardship responsibilities primarily lie with the producer, importer or seller of a product.  This concept has increasing significance as industries and businesses have shifted gears on sustainability and circularity.  In Europe, the EU Commission set a series of requirements to improve re-use and recycling of waste in the European Union (reported here).  Businesses that do business in Europe will have various obligations in Europe, which effectively sets a benchmark for the rest of the world, including Australia. 

The National Clothing Product Stewardship scheme which was launched in Australia last month is an example of an EPR scheme. 

We have developed a tracker for EPR schemes in the textile sector around the world here.

What is the National Product Stewardship Scheme about?

On 7 June 2023, a consortium led by the Australian Fashion Council (AFC) launched the country’s first National Clothing Product Stewardship Scheme and roadmap to clothing circularity by 2030 called Seamless.  Seamless is designed to cover all new clothing imported into or manufactured in Australia including outer and underwear. It excludes single use protective wear, footwear, and accessories.

Seamless has four priority areas to achieve circularity by 2030:

1. circular design: to incentivise clothing design to be more durable, repairable, sustainable and recyclable;
2. fostering new circular business models based on reuse, repair, re-manufacturing and rental;
3. expanding clothing collection and sorting for effective re-use and ensuring non-wearable clothes (including underwear and hosiery) are recycled into new high-value products and materials; and
4. encouraging changes in consumer behaviour regarding clothing acquisition, use, care and disposal.

How will Seamless be funded?

The Australian federal government has provided AUD 1M to set up the scheme and the NSW Environment Protection Authority is contributing a further AUD 100,000 to the transition phase as a supporting partner. 

The Seamless design report (full report here) recommended that the scheme impose a 4 cent per garment levy, paid by clothing brands and retailers who become members of the scheme.  The AFC has noted that if 60% of the market by volume sign up to the scheme, a funding pool of $36 million will be raised per year. 

While the scheme is currently being set up, it has built in some modulation so that brand owners will be rewarded for “good behaviour” e.g. the levy potentially being reduced to 3 cents per item, provided that the objectives of the scheme are being met. 

What happens if the industry does not self-regulate?

While signing up to Seamless is voluntary, the Minister for Environment and Water Tanya Plibersek has vowed to take action including by imposing mandatory levies if little is done by the fashion industry over the next 12 months.  So far, six Australian brands have signed up to Seamless: Big W, David Jones, Lorna Jane, Rip Curl, R.M. Williams and THE ICONIC. 

If the uptake by brands to the scheme is low, the Minister will regulate.  Based on other regulated schemes in Australia, it is believed that the mandatory levy imposed by the government will not be as low as the recommended 4 cents under Seamless.

Although the scheme is not designed to be punitive, it is noteworthy that the product stewardship body will have compliance and audit powers (towards which some of the funding will go). 

While the mechanics of the Seamless scheme are being developed and only time will reveal the extent of its success, one thing is clear: brand owners should be proactive in this space so as to not get left behind. 

What should brand owners do next?

• If you haven’t done so, contact the Australian Fashion Council who is collating a register of brands that have expressed an interest in the scheme during the transition phase.Brand owners that have signed up to this register will receive updates about the scheme during the transition phase.
• Note that Seamless is open to brand owners and in some cases, retailers, who bring items of clothing into Australia or manufacture in Australia.
• Consider what technologies and innovations that assist your business to achieve circularity such that once an item is on the market, can it be re-used, recycled or re-manufactured?
• Consider your brand’s approach to transparency and educating consumers.
• Consider whether product labels and promotional materials for clothing/textiles make accurate and evidence-based claims.See our article here around new guidance in this space.

If you need advice about your legal and regulatory obligations in the retail and consumer sector, the team at Bird & Bird are well placed to assist you. Please reach out to the authors for assistance.