As the EU’s July 19 ban on destroying unsold clothing takes effect, a Chanel theft trial in Hong Kong reveals the scale of luxury’s disposal habit — and the recycling infrastructure brands are racing to build.
During the Tuesday trial of two former warehouse staffers accused of trying to steal 724 items earmarked for destruction, prosecutors in Hong Kong told the court that Chanel’s local operation destroys between 10,000 and 20,000 products every six months. The figure came up as evidence in a property case, but it also put a specific number on something luxury houses have been doing for decades, which is to systematically destroy the goods they have decided not to sell.
“The figure mentioned during the trial does not reflect Chanel’s current global practices, which have evolved in line with its sustainability commitments,” the company said in a statement after the proceedings. “Today, all Chanel products worldwide that cannot be commercialized, including deadstock, unsold, or defective products, are managed through L’Atelier des Matières,” the brand added, referring to the recycling operation it created in 2019 to return unsold and defective goods to circular supply chains rather than an incinerator.
The statement arrived three days before the practice becomes illegal across much of the brand’s home market. From Sunday, July 19, the European Union begins enforcing the destruction ban within its Ecodesign for Sustainable Products Regulation, which prohibits large companies from destroying unsold clothing, footwear and accessories and, from early 2027, will require them to disclose how much stock they write off and how it is handled.
Why luxury brands destroy unsold merchandise
The reasons a house destroys sellable stock are commercial ones. A brand that releases last season’s leftovers into the discount market teaches its customers to wait for the markdown, and it hands gray-market resellers and counterfeiters a supply of authentic goods to move margins through. Destroying the surplus protects price, scarcity and a brand’s control over where its products end up, and for years the practice drew little attention because the figures stayed inside the company.
Burberry disclosed its own numbers in its 2017–18 annual report, which showed that the company had incinerated £28.6 million of finished goods that year, up from £26.9 million a year earlier and £18.8 million in 2016, as Forbes reported when the figures drew scrutiny. Burberry attributed the destruction to clearing old inventory, though the rising total year over year, and the public reaction that followed, led the company to abandon the practice within months.
Richemont, the group behind Cartier and Piaget, reached a far larger sum by the same reasoning, buying back and dismantling roughly £400 million — about $514 million — of its own unsold watches across 2016 and 2017 to keep them out of the discount channels that erode a marque’s value, as Monochrome documented. The gold was melted down and some movements reused, an early version of the recycling argument brands now lean on, that a product broken down for its materials has not simply been thrown away.
How the EU’s ban on destroying unsold clothing works
The Ecodesign for Sustainable Products Regulation phases the prohibition in by company size. The ban on destroying unsold apparel, footwear and accessories applies to large companies starting on July 19 and extends to medium-sized companies in 2030; smaller firms are exempt. Beginning next February, large companies must also publish standardized figures on the volume of goods they discard and the conditions under which any destruction takes place, moving a practice that once sat in annual-report footnotes into disclosures that regulators and reporters can follow.
The regulation still permits destruction in narrow cases, such as safety risks or damaged products, and leaves enforcement of those exemptions to national authorities. It directs companies toward resale, donation, remanufacturing and reuse, and the Commission has framed the rule as a way to level the field between businesses already paying for circular systems and those still writing off inventory. The scale it addresses is measurable: between 4 and 9 percent of all textile products placed on the European market are destroyed before they are ever used, and textile consumption in the EU rose to 19 kilograms per person in 2022 from 17 kilograms in 2019, with roughly 12 kilograms of clothing per person discarded each year.
Those figures carry an upstream cost that helped move unsold stock from a private inventory matter to a regulatory one. Meeting EU textile demand in 2022 required an average of 323 square metres of land, 12 cubic metres of water and 523 kilograms of raw materials per person, by the European Parliament’s accounting.
How France’s anti-waste law became fashion’s test case
France reached this point first; the country’s Anti-Waste and Circular Economy law, known by the French acronym AGEC, banned the destruction of unsold non-food goods in 2022, requiring companies to donate, reuse or recycle instead. Brands operating in France, Chanel among them, reorganized the back end of their inventory systems well before the wider EU deadline, and the years of lead time gave them something latecomers no longer have, which is room to build donation partnerships and recycling contracts before noncompliance carried a cost.
“The lesson is not a specific policy mechanism to copy, but that this transition is manageable,” Raffaella Loncao, founder of On This Planet Advisory and a former luxury executive, told WWD, adding that companies which use the moment to rethink design and planning will be better placed than those treating it as a compliance exercise. She situated the Chanel episode within a broader shift across fashion, from managing waste toward designing it out, and attributed the change to tighter regulation, AI-assisted demand forecasting, investment in new materials, and traceability tools that began in anti-counterfeiting and now support repair, resale and the digital product passports still to come.
Can recycling absorb fashion’s unsold inventory?
Chanel has responded to its surplus by building machinery to absorb it. L’Atelier des Matières now operates under Nevold, a business-to-business hub for circular materials that the house formally launched in 2025 with €50 million to €80 million in backing, combining the recycling operation with a legacy wool-spinning mill and an upcycled-leather specialist. Bruno Pavlovsky, president of fashion at Chanel, told WWD at the time that the aim is to turn waste into a resource at industrial scale, and that only that scale can make recycled materials cheap enough for brands to adopt widely.
Nevold has already produced a thread blending virgin and end-of-life fibers, now used by Chanel and other brands, and a recycled leather that reinforces the interiors of handbags and shoes; around 30 percent of Chanel handbags and 50 percent of its shoes now contain those recycled components, according to the same report, and the company intends to sell the materials to sportswear, automotive and aviation buyers as well.
The recycling infrastructure those plans depend on remains thin. Less than half of used garments in Europe are collected for reuse or recycling, most used textiles are incinerated or landfilled, and under 1 percent of used clothing is recycled into new clothing. A ban that steers unsold stock away from the incinerator relocates the material rather than eliminating it, and it works only where there is somewhere for that material to go, which is the assumption underlying Nevold and the small number of ventures like it. Whether enough capacity exists to take in what an entire industry can no longer legally destroy is the question this week’s deadline leaves open.
“The discussion has evolved beyond the destruction of unsold products,” Loncao told WWD. “The future of luxury will not be defined by finding better ways to dispose of excess inventory, but by becoming precise enough not to create that excess in the first place.”
Related on Ethos:
