Who gets looked at, and what happens next: verification and penalties under the ESPR

Two questions come up whenever a board reaches the end of a briefing on the unsold stock rules. Who is going to check, and what happens to a brand that gets this wrong.

The selection method is written down in Annex III to the implementing regulation, and it is peer-relative, which changes what a brand is exposed to. The penalty position is that no EU-level figure exists, that Germany has published national fines, and that we have not found a published national figure in the Netherlands or Spain.

Where the disclosure duty stands today

The disclosure duty at Article 24 of Regulation (EU) 2024/1781 is live. The Regulation entered into force on 18 July 2024 under Article 80, and the first disclosure covers the first full financial year during which the Regulation was in force, which for a brand on a calendar financial year is 2025.

Article 24 sets no publication deadline. Implementing Regulation (EU) 2026/2 sets a twelve-month deadline, and that deadline belongs to the implementing regulation, which under its Article 7 applies from 2 March 2027 and first bites on the financial year after that. For a calendar-year filer the formatted regime reaches FY2028, disclosed during 2029.

The gap between those two facts is where a number of large brands are currently sitting. The duty is live and undated. A large company that has not published is relying on the absence of a stated deadline. The obligation is not in doubt, so the position is uncomfortable when an authority asks. It is also, as the next section sets out, a position that shows up in the selection criteria.

How ESPR enforcement chooses who to verify

Annex III to Implementing Regulation (EU) 2026/2 sets out the principles competent national authorities apply when verifying disclosures. The approach is risk-based, and the listed criteria are these:

No disclosure or unusually low numbers disclosed in comparison to economic operators that operate in the same market or product segment or compared to disclosures during previous financial years,

The economic operator’s past record of non-compliance,

A high percentage of unknown waste treatment operations of discarded unsold consumer products,

The size and nature of activities and operations under the control of the economic operator,

Information from other sources, such as tax declarations or evidence of discarded unsold consumer products, leading to suspicion that the number or weight of discarded unsold consumer products is higher than the disclosed number or weight.

Above those criteria sits an evidence power drawn as widely as it could be. Competent national authorities “may use any information, document, finding, statement, or any intelligence as evidence for the purpose of their investigations”, and they organise verification “following a risk-based approach, considering the following criteria”.

So the list describes how authorities are expected to think, and it is not a closed set of triggers. Three of the criteria are worth taking separately.

Publishing nothing comes first

It sits in the same clause as publishing an unusually low number, which indicates how the drafters were thinking about it.

The comparison runs against peers and against a brand’s own history

“Unusually low numbers disclosed in comparison to economic operators that operate in the same market or product segment” makes verification relative. A brand’s exposure is therefore partly determined by what comparable brands publish, which is not something it controls. The second limb, comparison against previous financial years, means a sharp fall in a brand’s own reported figures invites the same attention.

Tax declarations are named as a cross-check

Authorities are expected to use information from other sources where it suggests the disclosed figure understates reality. Stock write-offs leave a trail in the accounts, and the annex contemplates that trail being read against the disclosure.

The unknown column, which is a consequence of how stock is handled

Annex I to the same implementing regulation sets the template. The waste treatment field splits across preparing for reuse, destruction, and unknown.

That third option exists because it is realistic. A brand that hands a consignment to a contractor and receives a weight ticket back frequently does not know what happened to the garments afterwards. Reporting that honestly means reporting a percentage as unknown.

Annex III then makes a high proportion of unknown a criterion for selection. So the honest answer to a data gap is also the answer that raises a brand’s risk profile, which puts the pressure back on the point where the stock leaves the building. The way to report a low unknown figure is to know where the stock went, which means contracts that require the treatment route to be reported back, and records that connect a consignment leaving a warehouse to a statement from the operator that received it.

Implementing Regulation (EU) 2026/2 supports that at Article 4, which requires the information and the documentation demonstrating delivery and reception, including statements from waste treatment operators, to be kept for five years after the disclosure. The statement from the receiving operator is named in the regulation. A brand that is not currently collecting one has a contractual change to make before it has a reporting change.

Article 5 adds a further point. Competent authorities must inform other member states where non-compliance is relevant to them, so a verification opened in one market does not stay in that market for a brand trading across several.

What the Commission itself publishes from 2027

A peer-relative test is only workable if the peer figures can be seen. Article 24 already puts each operator’s disclosure on its own website, one operator at a time. Article 26 aggregates them:

By 19 July 2027 and every 36 months thereafter, the Commission shall publish on its website consolidated information on the destruction of unsold consumer products, including the following elements: (a) the prevalence of the destruction of specific groups of unsold consumer products per year, on the basis of the information disclosed by economic operators pursuant to Article 24(1); (b) the comparative environmental impacts resulting from destruction of unsold consumer products per product group.

So from 19 July 2027, refreshed every three years, prevalence of destruction by product group becomes a published Commission document built from the Article 24 disclosures.

It is consolidated and by product group, so it supplies a denominator for a category and not the peer set an authority would use, and the Annex III test is framed on operators in the same market or product segment. The first edition will also be built on disclosures made before any format was prescribed, and on our reading of the position set out above, from a population in which some large brands will not have published. That is a thin basis for a benchmark. What it does establish is a direction of travel towards published aggregate data on destruction, on a fixed three-yearly cycle, with the first edition dated.

What a penalty can consist of

Article 74 of the Regulation leaves penalties to member states:

Member States shall lay down the rules on penalties applicable to infringements of this Regulation and shall take all measures necessary to ensure that they are implemented. The penalties provided for shall be effective, proportionate and dissuasive. Member States shall, without delay, notify the Commission of those rules and of those measures and shall notify it of any subsequent amendment affecting them.

No amount appears anywhere in the Regulation. What Article 74(3) does set is a floor on the tools each member state must have available:

Member States shall at least be able to impose the following penalties in the event of infringements of this Regulation:

(a) fines;

(b) time-limited exclusion from public procurement procedures.

The second of those is the one to take to a board, and not because of its size, which nobody can state. Temporary exclusion from public procurement does not resolve into a line in a provision account, and it lands on a part of the business usually nowhere near the unsold stock decision. For a fashion business with a workwear division or public-sector supply contracts, that is a different kind of exposure from a financial penalty rather than a larger one.

Article 74(2) lists what penalties must have regard to: the nature, gravity and duration of the infringement; whether it was intentional or negligent; the financial situation of the operator; the economic benefits derived from the infringement; environmental damage; steps taken to mitigate; repetition; and other aggravating or mitigating factors.

“Economic benefits derived from the infringement” is the phrase that matters commercially. The money saved by destroying stock rather than recovering it is an explicit factor in setting the penalty, which means the arithmetic that made destruction the cheap option is part of what a penalty is designed to recover.

The penalty figures in circulation, and where they come from

We are asked for a number in almost every conversation on this subject, and we will not give one.

Figures are circulating in trade commentary. A figure of EUR 50,000 attached to Germany and a percentage of turnover attached to the Netherlands are the two we see most often. When we followed them back, they appear to attach to greenwashing and misleading-communication regimes rather than to the ESPR. Germany has since published national ESPR penalties with different figures: section 19 of its Ökodesign-Gesetz (BGBl. 2026 I Nr. 191, issued 26 June 2026, in force 1 November 2026) sets fines of up to €100,000 for destroying unsold products in breach of Article 25 and up to €10,000 for Article 24 disclosure and information failures. We have not found a published ESPR penalty instrument in the Netherlands or Spain.

That is the honest state of it. Member states are required to lay down rules and to notify the Commission of them. Each must be able to impose fines and time-limited exclusion from public procurement. Beyond Germany, what any individual member state has actually legislated, and at what level, is not something we can currently evidence.

Anyone quoting a specific ESPR penalty figure should be asked which national instrument it comes from.

What this changes about preparing

The verification design has a practical consequence that is easy to miss. Because selection is risk-based and peer-relative, the work that reduces exposure is not primarily the work of writing a good disclosure. It is the work of having a defensible number to disclose and a record of where the stock actually went. Those are operational, and they sit upstream of anything that gets written.

The two triggers pull against each other for a brand with no historic data. Publishing nothing appears in Annex III in the same clause as publishing an unusually low number. A high proportion of unknown treatment appears as a separate criterion.

So a disclosure that reports what is known and marks the remainder unknown answers the first criterion and engages the third, while publishing nothing answers neither and engages the first. Which position to take is a decision for a brand and its advisers on its own facts. The criteria are set out above so that it can be taken with the text to hand.

Three things follow from the criteria in order. Publishing at all removes the first and most direct trigger. There is no prescribed format before 2 March 2027, so a compliant disclosure today is the four points in Article 24 published on an easily accessible page of the website, covering the preceding financial year. What a large fashion house actually publishes sets that out. Nothing prevents a brand from adopting the 2027 template early, and a disclosure built on that template is difficult to fault for completeness.

Knowing the treatment route removes the unknown percentage. That is a contracting and record-keeping change at the point stock leaves the building, made long before anything is reported at year end.

Having the derogation evidence assembled at the time of the decision is what answers the 30-day request when it arrives, under Article 24(2) of the Regulation and Article 3 of Commission Delegated Regulation (EU) 2026/296. Part 3 of this series covers what that file has to contain.

Turning an unknown route into a known one

Stock sent for preparing for reuse is not being destroyed, because Article 2(34) carves discarding for the sole purpose of delivering a product for that treatment out of the definition. It is one route among several. Destruction stays lawful on the ten documented grounds, and no deadline requires a warehouse to be cleared at all.

What the route also produces is a named counterparty able to state what it received and what it did with it, which is what Article 4 of the implementing regulation asks a brand to retain. Whether stock routed for recovery as inventory is a disclosable discard at all is a separate and open question, and part 5 of this series sets out why.

Opera Garment Solutions is a single point of access to a network of professional garment care experts. Cleaning and conditioning does the bulk of the work and repair handles the remainder. What comes back with the stock is an outcome per consignment, from a named operator, saying what was received and what was done to it. That is a document rather than a weight ticket, and it is the difference between a treatment route a brand can evidence and one it has to report as unknown.

Questions brands ask about enforcement

What is the penalty for breaching the EU destruction ban?

Regulation (EU) 2024/1781 sets no amount. Article 74 requires each member state to lay down penalties that are effective, proportionate and dissuasive, and to notify the Commission of them. Article 74(3) requires every member state to be able to impose at least fines and time-limited exclusion from public procurement procedures. Germany has published national ESPR penalties: section 19 of its Ökodesign-Gesetz (BGBl. 2026 I Nr. 191, issued 26 June 2026, in force 1 November 2026) sets fines of up to €100,000 for destroying unsold products in breach of Article 25 and up to €10,000 for Article 24 disclosure and information failures. We have not found any in the Netherlands or Spain.

Are the figures quoted for Germany and the Netherlands correct?

Not as ESPR penalties. A figure of EUR 50,000 for Germany and a turnover percentage for the Netherlands circulate in trade commentary. Germany’s enacted ESPR fines are up to €100,000 for destruction in breach of Article 25 and up to €10,000 for Article 24 failures, under section 19 of its Ökodesign-Gesetz (BGBl. 2026 I Nr. 191), in force from 1 November 2026. The Dutch figure appears to attach to greenwashing and misleading-communication regimes rather than to the ESPR. Anyone quoting a figure should be able to name the national instrument it comes from.

How will authorities decide which brands to check?

On a risk basis, using the criteria in Annex III to Implementing Regulation (EU) 2026/2. The listed criteria are no disclosure or unusually low numbers compared with operators in the same market or product segment or with the brand’s own previous years, a past record of non-compliance, a high percentage of unknown waste treatment operations, the size and nature of the operator’s activities, and information from other sources such as tax declarations.

Does not publishing anything keep a brand out of view?

No. Publishing no disclosure is the first criterion named in Annex III to Implementing Regulation (EU) 2026/2, in the same clause as publishing an unusually low number.

Will brands be able to see what their peers disclose?

Yes, in aggregate. Article 26 of Regulation (EU) 2024/1781 requires the Commission to publish consolidated information on its website by 19 July 2027 and every 36 months thereafter, including the prevalence of destruction of specific groups of unsold consumer products per year, drawn from the Article 24(1) disclosures.

What is the unknown category in the disclosure template?

Annex I to Implementing Regulation (EU) 2026/2 splits waste treatment across preparing for reuse, destruction and unknown. Unknown covers stock whose treatment route the brand cannot evidence. Annex III makes a high percentage of unknown a criterion for selecting an operator for verification, so the way to reduce it is to obtain and keep statements from the operators that received the stock, which Article 4 requires to be retained for five years after the disclosure.

How long does a brand have to respond to a request from an authority?

Thirty days from receipt of the request. Article 24(2) of Regulation (EU) 2024/1781 covers the information and documentation demonstrating delivery and reception of discarded products and the applicability of any derogation relied on, in paper or electronic form. Article 3 of Commission Delegated Regulation (EU) 2026/296 sets the same window for derogation documentation, in electronic form, for five years after the destruction.

References

• European Union. Regulation (EU) 2024/1781 establishing a framework for the setting of ecodesign requirements for sustainable products. Official Journal L series 2024/1781, 28 June 2024. Articles 2(34), 24, 25, 26, 74 and 80.
• European Commission. Commission Implementing Regulation (EU) 2026/2 establishing the details and format for the disclosure of information on discarded unsold consumer products. Articles 1, 4, 5 and 7, and Annexes I and III.
• European Commission. Commission Delegated Regulation (EU) 2026/296 on derogations from the prohibition of destruction of unsold consumer products. Article 3.
• European Commission, Directorate-General for Environment. “Ban on destruction of unsold clothes and shoes enters into application”, 17 July 2026.

This article describes the law as we understand it at 8 September 2026. It is not legal advice.