The transition towards circularity in the garment and footwear sector is accelerating, with recycling increasingly positioned as a key solution to reduce resource use and textile waste. A report by the Organisation for Economic Co‑operation and Development (OECD) explores how recycling processes in the sector can create new environmental and social risks and why companies must apply responsible business conduct (RBC) due diligence across these circular value chains.

Key insights

1. Recycling is growing, but current systems face structural challenges

Global clothing consumption and fibre production continue to rise, while recycling rates remain limited. Only a small share of textile fibres currently come from recycled sources, partly because collecting and sorting textile waste at scale remains difficult. Mixed fibres, chemical treatments and contamination often make recycling technically challenging or economically unviable.  

  2. Circular value chains involve diverse actors and new business relationships

Recycling systems rely on multiple actors including waste collectors, aggregators, sorters and recyclers. Inputs may come from post-production textile scraps, post-consumer waste, or even non-textile sources such as plastic bottles. These value chains are often highly fragmented, with both formal companies and informal workers playing critical roles in sorting and processing textile waste. 

  3. Informality and low margins increase social risks

Many recycling activities are labour-intensive and operate with low profit margins. Informal employment is widespread, particularly in waste collection and sorting, which can expose workers to unsafe conditions, low wages, and risks such as child labour or forced labour. Migrant workers and marginalised groups are often over-represented in these activities.  

  4. Recycling processes can create occupational and environmental hazards

Workers in recycling facilities may face risks from handling contaminated textiles, exposure to chemicals, heavy machinery or textile dust. Improper waste management can also lead to environmental pollution, including chemical releases, landfill waste and emissions from burning textiles. Transporting textile waste across countries further contributes to environmental impacts.

  5. Companies need to extend due diligence to circular supply chains

Businesses do not need entirely new due diligence frameworks, but they must adapt existing practices to include recycling processes. This includes mapping waste flows, identifying high-risk actors in recycling value chains, reviewing purchasing practices that generate waste, and considering product design choices that affect recyclability and worker safety.  

As the textile sector moves towards circular models, recycling will play an increasingly important role in reducing environmental impacts. However, without effective oversight, recycling systems can replicate or even amplify existing social and environmental risks. Applying responsible due diligence across circular supply chains can help companies identify these risks early, strengthen partnerships with recyclers and waste handlers, and ensure that the transition to circular textiles supports both environmental sustainability and fair working conditions.

For further information please visit OCED website.