H&M, Primark and Zalando back call for governments to fix 'broken economics' of resale and repair

H&M Group, Primark and Zalando are among 68 fashion and textile organisations that have signed a statement by the Ellen MacArthur Foundation urging governments in the EU, US and Canada to support policies that incentivise circular business models.

The statement builds on research by the charity that suggests the current economic system is stacked against circular business models.

In a new report called The New Bottom Line, the Foundation outlines how current infrastructure and government policies often make producing new items from virgin materials more profitable than keeping existing ones in use, as manufacturing processes are optimised for high-volume production.

Circular business models, on the other hand, involve labour-intensive processes - including sorting, cleaning, listing and repair - that bring lower margins, high taxes, and costs that hardly decrease at scale.

To fix the "broken economics of resale and repair", the Foundation, alongside retailers and resale platforms Vinted and Vestiaire Collective, is calling for three concrete policy changes:

- Reduced VAT in the EU on resold products and repair services.
- Lower labour taxes in the EU for businesses creating jobs in resale and repair.
- Extended Producer Responsibility (EPR) to fund the infrastructure needed to collect and sort clothing at scale.

These targeted changes could raise gross profit margins to up to 55% for resale and around 41% for repair, in a market projected to reach $393 billion (£291 billion) by 2030, growing at twice the pace of the wider industry.

The policy mix could also help circular business models scale, creating local jobs in repair, sorting, logistics and retail, while reducing carbon emissions and pressure on overstretched waste systems.

Endorsing the statement, Leyla Ertur, Chief Sustainability Officer at H&M Group, said: "Resale keeps products in use while meeting customer demand for more affordable and sustainable choices. But today, this business model is still economically penalised.

"If governments are serious about circularity, they need to act by removing double taxation, reducing labour costs, and removing other barriers that hold resale back. Fixing the economics of resale is one of the fastest and most concrete ways to scale circularity in fashion."

Marianne Gybels, Senior Director of Sustainability at Vinted, added: "To make circular businesses like second-hand the first choice, they have to consistently deliver on what matters most to consumers - being reliable, affordable and easy to use. We’re already seeing this shift across Europe, where buying and selling second-hand has become part of everyday life, with significant room to grow further.

"To unlock its full potential, policy should support business models that make circular choices more accessible. This helps second-hand scale further and provides consumers with high-quality, affordable alternatives that are significantly better for climate impact than buying new."