For Anne-Laure Descours, the question fashion observers should be asking isn’t why so many brands destroy unsold merchandise but why they produce enough overstock to make it necessary in the first place.

“If you plan better and produce the right amounts of goods, you’d be less exposed to mass destruction,” the Hong Kong-based supply chain veteran said.

The practice is among the industry’s worst-kept secrets, especially among luxury companies that employ this ruthless calculus to maintain exclusivity through scarcity, prevent their products from being devalued by clearance racks and thwart counterfeiters seeking to intercept genuine stock on the gray market. But mass-market retailers also do this because their high-volume, low-margin business models make processing ecommerce returns and storing past-season inventory more expensive than shredding the surplus.

The European Environment Agency estimates that roughly 4-9 percent of all textile products placed on the European market, amounting to between 264,000 and 594,000 metric tons of material, are destroyed each year before use.

Everyone did it, Descours said, even Puma, where she directed development and sourcing for nearly 14 years, though a spokesperson for the sportswear giant said it doesn’t destroy any products that can still be worn, instead selling them through its network of outlet stores or donating them to charity.

As of last Sunday, however, any large brand, wholesaler or manufacturer with more than 250 employees and a turnover of 50 million euros ($57 million) selling into the European Union is legally prohibited from destroying any apparel, footwear and accessories, with medium-sized companies to follow from 2030.

The move, introduced under the Ecodesign for Sustainable Products Regulation, aims to prevent valuable products and the resources used to make them from going to waste, the European Commission’s Directorate-General for Environment said in a statement on Friday.

“When new, usable goods are discarded, the raw materials, water, energy and labor invested in their production are lost, while their disposal generates avoidable greenhouse gas emissions,” said the department, which is responsible for developing and delivering the 27-member bloc’s environmental laws and sustainability policies. “By encouraging reuse, repair and more resource-efficient business practices, the new rules support the transition to a more circular and competitive European economy.”

This was a long time coming, Descours said, though it’s a big deal in that it will force brands and retailers to invest much more in better planning. Depending on whom you ask, anywhere from 20-40 percent of clothing produced is never actually sold. These items, whether liquidated, destroyed or left as deadstock, represent hundreds of billions in lost potential sales even before aggressive markdowns—a whole other problem in itself—are factored in.

But as they say in her part of the world, in crisis, Descours said, there is opportunity. Under the new law, businesses must prioritize keeping products in use by selling them, including through discounts or alternative markets; donating them to charities or social enterprises; or preparing them for reuse, repairing, refurbishing or remanufacturing. To legally dispose of unsold inventory, brands must demonstrate that reuse or recycling wasn’t possible because the items were irreparably flawed or damaged, posed a health or safety risk, were identified as counterfeit or were rejected for donation.

Any company that gets this wrong faces hefty financial penalties set and enforced by the relevant EU member state, naming and shaming through mandated public disclosures, and potential sales bans across the world’s largest single market.

What this means is that proving a product doesn’t belong to a brand is becoming just as important as proving that it does. And with requirements such as digital product passports on the way, the amount of data businesses are expected to process will grow exponentially.

Descours joined Haelixa’s board of directors last year because she believes that a physical solution—the Swiss biotech company uses synthetic DNA markers—is a better fit for compliance than paper-based or blockchain-only systems.

Observing the heavy burden compliance places on suppliers, she realized that embedding an irremovable tracer directly into the product provides a simple solution that removes any doubt about material provenance. This is particularly important, she said, within mass-balance supply chains or where companies are restricted from sharing sensitive supply chain data externally, such as in China.

“We are in a world where we are all hoping digital will take over all the problems we have, but I think going back to something very simple that really secures your supply chain and your product is going to be a necessity not just for brands but also to protect suppliers,” Descours said. “Because, if something happens, the brand will always go back to the vendors.”

While other jurisdictions are addressing textile waste through landfill restrictions, voluntary industry codes and extended producer responsibility schemes, the EU is so far the only one to enact a comprehensive, product‑category‑wide ban on destroying unsold clothing, footwear and accessories.

In Hong Kong, two former warehouse staffers are on trial for allegedly stealing more than 720 Chanel-branded handbags and small leather goods destined for destruction. The case dates to January 2017, when prosecutors say Chanel’s local operation routinely shredded 10,000 to 20,000 outdated or unsold items every six months. Following the courtroom disclosures, the French luxury house issued a statement saying that the numbers are not representative of its current global practices, which have “evolved in line with its sustainability commitments,” including through its circularity platform, L’Atelier des Matières.

If Descours had one piece of advice for Chanel, it would be this: Adopt data-driven demand planning to align production with market interest and optimize raw material use for accessories.

“The consumer on the luxury side will be more interested in something that’s more bespoke and less mass market, so that’s going to help reduce overproduction as well,” she said. “But producing on demand is such a paradigm shift from the way most brands work today.”

While mainland China enforces strict rules on electronics and automotive recycling—requiring unsold products to be safely treated, disassembled or processed to extract raw materials, or destroyed safely if recovery isn’t an option—its policies for the fashion and textile industry still rely heavily on voluntary initiatives.

Still, textile recycling is becoming mainstream in China, Descours said, adding another layer of authentication and traceability needed to “prove that what you’re claiming is recycled truly comes from a feedstock you have received.”

“Before I left Puma, Puma moved into that and now has millions of jerseys made of textile recycling, primarily from China, that will need those claims to be validated,” she said. “Any yarn supplier can tell you it’s recycled. How do you prove it’s recycled? Yes, you have a paperwork or traceability tool in place, but this also has limitations.”

One of fashion’s existential issues is that it doesn’t own its own factories—for the most part, anyway.

“If you look at the food industry, the car industry, the pharmaceutical industry, the beauty industry, they all have factories,” Descours said. “They understand the complexity of manufacturing and supply chain. If you look at all the fashion retailers in the world, none of them really produce.”

Shifting supply chain strategies from margin squeezing to long-term, collaborative partnerships with vendors creates space for innovation and risk-sharing that reduces overproduction, she added. That, by extension, removes the need to destroy stubborn leftover inventory. It’s Descours’s hope that EU legislation, including the destruction ban, will force a real change in how retailers and brands manage their vendor relationships.

“I think here it’s really an opportunity for brands to reassess how they approach demand planning and how they’re going to handle this overproduction,” she said. “That, for me, would be a simple action they have to take.”