Introduction

The ramifications of fast fashion are well-known: excessive waste, depletion of natural resources and exploitation in global value chains. Although fashion items can be acquired at historically low prices, the environment and vulnerable communities in the Global South are bearing the brunt of the costs. In economic terms, this is a textbook case of market failure, driven by negative externalities such as sustainability impacts that are not reflected in market prices. One way the EU legislator is responding to the environmental dimension of this issue is by introducing extended producer responsibility (EPR) for textiles. The core idea behind this is very straightforward: those responsible for environmental damage – in this case, fashion brands – should bear the cost.  

However, EPR does not operate in isolation. Public policy provides the overarching framework, but private law – such as contract law – is equally essential because it governs the agreements through which responsibilities are allocated between parties (Steenmans & Ulfbeck 2023). Implementing EPR means building contractual networks between textile producers, municipalities, sorters and recyclers, yet these dependencies rarely feature in the legislative debate. In this post, I take EPR for textiles as an example to explore this overlooked link between public regulation and private governance, and hint at a bigger question: should environmental principles like the 'polluter pays' eventually shape European contract law to better align private agreements with sustainability goals?

Extended producer responsibility: a closer look  

EPR is an environmental policy instrument that operationalises the 'polluter pays principle' (PPP), which enjoys constitutional status in EU law (Article 191(2) TFEU). Mandatory EPR schemes already exist for product groups such as packaging, batteries and electronic waste (WEEE). The revised Waste Framework Directive (WFD) adds textiles to this list. 

Essentially, EPR for textiles shifts responsibility for the proper disposal of clothes and footwear from consumers to producers. Not only brands, but also retailers and online marketplaces typically qualify as producers, and they must fund and build the infrastructure for repair, reuse and recycling. 

Here is how it works: the WFD requires producers to collectively meet their EPR obligations through a Producer Responsibility Organisation (PRO) (Article 22c(1) WFD). Producers pay a fee for each product they place on the European single market. This fee goes to a PRO, which uses it to finance collection schemes and manage collected textiles, covering preparation for reuse, recycling and disposal. These fees are eco-modulated, meaning they vary based on sustainability criteria such as durability and recyclability (Article 22c(3) WFD), as developed under the Ecodesign for Sustainable Products Regulation.

The revised WFD still needs to be implemented by Member States, but some countries, like France and the Netherlands, have already taken EPR measures on their own initiative. In the Dutch set-up, the central government has set legally binding targets and outcomes, such as minimum reuse and recycling rates, while leaving considerable discretion to producers and other stakeholders in how to fulfil these obligations. In practice, this means the market has to take the lead. The regulatory flexibility allows producers to set up governance structures to their own liking. 

From EPR to contractual governance 

To illustrate how this works in practice, we can take a closer look at the Dutch approach. The largest PRO in the Netherlands in terms of membership is Stichting UPV Textiel.  They support producers in meeting their EPR obligations through a structured set of contracts and agreements with parties along the textile chain, such as municipalities, collectors, sorters, thrift stores, recyclers, and companies developing new initiatives for collection and processing.

What is interesting is the dependency of EPR on contractual structures, a reality largely overlooked by the EU legislator. Stichting UPV Textiel operates through a layered set of agreements that collectively implement the EPR scheme. At the core is the so-called ‘framework agreement’, which sets out the main arrangements for cooperation among producers, municipalities, and service providers. From this framework, specific agreements branch out, creating a structure that links all actors in the downstream textile chain, ensuring compliance, quality assurance, and monitoring under Dutch EPR legislation. Compliance with these agreements is left to private enforcement, raising questions about effectiveness and risk distribution.

Recognising that these agreements are entered into with a regulatory purpose, not just a transactional one (Cafaggi 2013), is an interesting starting point for further (empirical) research. How do parties navigate these agreements in practice? How do multiple remedial systems interact? How are risks divided? And what happens when contracts fail to deliver on policy goals?

Distributive effects 

One potential friction point in leaving it to the market to make polluters pay lies in the distributive patterns that may emerge from these governance structures. If costs shift away from producers and onto consumers, municipalities, or even third countries, the very purpose of EPR is at risk.

In practice, costs for waste management might move downstream from producers to consumers. This can happen when brands include eco-modulated fees into retail prices. Uncommercial stakeholders such as municipalities or charity organisations might have to bear unexpected costs for sorting and storage when collection volumes exceed projections. At the same time, large volumes of unsorted textile waste are still (illegally) exported to countries with weak environmental standards, externalising harm and undermining circularity goals. 

From this distributional perspective, we should ask: who ultimately bears the burden that EPR places on producers? Do private governance structures favour commercial parties over publicly funded ones? And how can we protect weaker parties, such as charity organisations or small and medium-sized enterprises, in the transition to circular textiles?  

Why this matters for European contract law

To explore those questions, we could turn back to the principle underpinning EPR and consider its potential to shape European contract law. By the latter, I mean rules governing contractual relations in Europe, including EU law (treaty provisions, directives, and the case law of the Court of Justice of the European Union) and national contract laws as they interact within a harmonised framework. While the PPP has constitutional status, its direct application between private parties is limited. Still, the principle is starting to emerge in climate liability cases against private parties, where corporations are being targeted as major polluters (Kingston 2020). 

Could the PPP influence general principles of European private law? One possibility is through concepts like Norbert Reich’s ‘framed autonomy’, where party autonomy is constrained by countervailing principles, like the PPP (Reich 2017). Another option is to treat the PPP as a benchmark for fair risk allocation. For example, recyclers often receive textiles made of blended fibres, which are costly and difficult to recycle, even when producers elsewhere in the chain promised easier-to-recycle designs. When these promises fail, recyclers bear the extra cost. The PPP could influence how contracts should allocate risks and costs in these sustainability contexts. Building on that, the principle might also inform how contract terms are interpreted within circular economy goals, recognising that these agreements serve a regulatory purpose, not merely a transactional one (cf. Borowicz 2020).

These considerations matter because EU public policy, like EPR, depends not only on statutory targets but also on the contractual structures that implement them. Recognising this practical truth should make us reconsider how European contract law governs (these) regulatory contracts. If we get it right, we might move closer to a system where the polluter actually pays.