How Policy-Making Can Support Second-Hand Fashion

When we talk about circular, slow and second-hand fashion, the conversation often revolves around consumers and producers, how individuals can shop more sustainably, and how brands can strengthen their environmental and social performance. And of course, A Sustainable Closet (ASC) is part of this. We exist to support people in building their own sustainable wardrobes, to make thoughtful, informed choices that reflect both care for the planet and personal style.

However, while people play an essential role, it’s not enough to rely on individual action alone. Businesses must lead the way, and both businesses and consumers need a market that is fair and sustainable in the first place. It should not be more expensive to do the right thing. Yet today, it often is. Those who take greater responsibility face higher costs, while those who don’t can still profit from environmentally harmful practices. This is where policy must step in.

In October, the Scandinavian Textile Initiative for Climate Action (STICA), together with a wide range of companies and organisations across Sweden and the Nordic region, issued a strong call to the Swedish government: lower the VAT on second-hand sales to 6% in the 2026 national budget.

Why this matters

A growing second-hand market is one of the most concrete ways to move away from the throwaway culture that dominates the fashion industry. According to Svensk Handel’s Pre Loved Indicator, Sweden’s second-hand market reached SEK 16.9 billion in 2024, with fashion being the single largest category at SEK 4.7 billion.

This growth is promising, but the big shift has yet to come. Despite more people buying second-hand, new production and linear business models still dominate. Circular models such as repair services, clothing rentals, subscriptions and resale are vital steps towards a more sustainable industry, especially when they replace new consumption. Studies show that when circular models are used as true substitutes, they can dramatically reduce greenhouse gas emissions, water use and chemical pollution.

The structural barriers

Within STICA, 54 clothing and textile companies have already committed to reducing their greenhouse gas emissions and regularly reporting progress. Yet, most identify profitability as the biggest obstacle to scaling circular business models.

A recent STICA survey found that:

• 72% view circular models as central to their climate transition plans.

• 65% have already launched a circular business model.

• Yet most expect only 1–5% of their total turnover to come from these models by 2030.

The fashion industry is responsible for an estimated 2–4% of global greenhouse gas emissions, with the largest footprint coming from the production of new garments. Scaling circularity is therefore essential. But today, administrative burdens and double taxation make it harder, not easier, for circular businesses to grow.

Every time a garment is resold, it is taxed again at the full VAT rate, meaning that the same product can be taxed two, three or even more times throughout its life cycle. Combined with high handling and logistics costs, this reduces margins and creates unnecessary bureaucracy for resale companies operating in Sweden.

A simple policy shift with big impact

Reducing VAT on second-hand clothing to 6% would be a simple and effective way to accelerate the circular transition. It would make reuse more affordable for consumers, increase profitability for resale businesses, and strengthen Sweden’s position as a leader in sustainable fashion.

It would also send a powerful signal: that reuse, repair and responsible consumption are priorities, not afterthoughts.

Broad support from across the industry

This proposal is not a niche demand. It is backed by a wide coalition of fashion leaders, from major brands such as H&M, Acne Studios, Peak Performance, Lindex, House of Dagmar, and Nudie Jeans, to outdoor companies like Haglöfs, Fjällräven and Klättermusen, and resale pioneers such as Arkivet Second Hand.
It also carries the endorsement of key organisations, including Svensk Handel, Cradlenet, the Swedish Society for Nature Conservation (Naturskyddsföreningen), TEKO, and the national sustainability initiative Textile & Fashion 2030.

Together, they represent a unified message: if Sweden is serious about creating a circular economy, tax policy must align with environmental goals.

At A Sustainable Closet, we couldn’t agree more. For the circular transition to succeed, we need not just conscious consumers and innovative businesses, but also supportive systems. Fair taxation is one of the simplest, most effective ways to make sustainable fashion the norm rather than the exception.