For years, companies had the laxury to look at actions for greening or ethical as nice-to-have or optional !
In that era, when happens when new requirement is introduced?
Businesses assess what needs to be done to comply. They adjust processes, report progress, and do what is neededd.
But occasionally, a regulation does something much more profound.
It changes the economics of an entire market.
The European Union’s recent ban on destroying unsold clothing and footwear is one of those moments.
If you have not heard about it – Here is what it says
Read more – Link
Facts
At first glance, it appears to be another waste reduction policy.
I don’t think it is.
I think it represents something much bigger—a shift in how value is created, retained and competed for.
The question isn’t whether companies can comply.
The question is:
“What happens to a market when its “end-of-line” option disappears?”
How does it challenge the status-quo?
For decades, the dominant business model has been remarkably consistent.
Design-Manufacture-Sell.
If products remain unsold, write them off and dispose of them.
That final step has quietly acted as the market’s safety valve. Something that you could let go, if the pressure builds up – no harm done.
It has absorbed forecasting errors. It protected brand positioning. It reduced storage costs.
But on the other hand, it enabled and made overproduction an acceptable problem to have.
Why ? Because it allowed businesses to optimise for growth while externalising the cost of excess inventory.
What happens when that option disappears?
It changes the business model and costing and hence every decision made upstream of the supply chain.
The excess inventory is no longer simply a cost that can be written off. It becomes an asset whose value must somehow be recovered.
That changes incentives, which in turn change markets.
Are we entering a new era of the circular economy?
This is why I believe we’re entering a very different phase of the circular economy.
For years we’ve spoken about resources classified as waste using a number of terms associated with “damage minimisation’ – such as recycling, waste reduction, resource efficiency.
Sounds good—but largely focused on managing waste better or minimising the damage of waste that we let produce.
Can we hope that the next decade will be defined by something different?
“What if we can design markets where products never become (not incentivised to become) waste in the first place?”
That creates a distinction –We are not talking about a system that acts reactively to waste, it acts proactively to avoid it !
The organisations that succeed won’t necessarily be those who have the most efficient processes for waste repurposing at the downstream.
They will be those that redesign their business models around value retention in the upstream.
By defining what success looks like, you let the market forces decide who wins the game – and become market dominant !
How are organisations expected to change?
If we think about the capabilities this creates demand for –
Demand forecasting becomes a strategic advantage rather than simply an operational function.
Reverse logistics becomes core infrastructure.
Repair shifts from customer service to revenue generation.
Material recovery becomes a supply chain strategy.
Digital product passports become commercial enablers rather than regulatory requirements.
Secondary markets become integral parts of corporate growth strategies.
Entire industries that today sit on the margins become essential components of future value chains.
Fashion industry will change, what about the others?
History suggests this won’t stop with fashion.
Every sector that relies on linear production should be paying attention.
Electronics. Furniture. Construction products. Automotive. Medical equipment. Consumer goods.
As regulations increasingly discourage disposal, the competitive landscape will increasingly favour businesses that can retain value (and design for it) rather than simply create it.
Circular economy becomes core part of your competitive strategy
That is where the next generation of competitive advantage will come from.
Not simply producing products more sustainably (minimising harm) using a linear-designed supply chain. But designing systems where value continues to retain and add long after the first sale.
Changes such as this has put a halt to questions such as whether circular economy policies create costs?
The tables have flipped to not to be in a defending position !
A more interesting question is:
What new markets do they make possible? What competitive edge would we lose, if we do not do it?
Because markets transform when regulations change incentives in a value chain.
Innovation, capital and infrastructure follows and that is where the growth formula lies.
Those who recognise these shifts early don’t simply adapt to the future.
They help shape it !
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