The fashion industry is woefully unprepared for the wave of legislation coming out of the EU, according to experts. That’s because these new laws and regulations have implications for every aspect of a supply chain that fashion has only recently started to study and understand.
“The fashion industry is not even aware of the amount of regulations coming to them, because those regulations have been made a lot without the fashion industry in mind,” says Lisa Lang, policy director and EU affairs orchestrator at Climate-KIC.
Over a decade ago, the EU began setting its sights on trying to align how the economy functions with the growing urgency of climate change and other social and environmental challenges. In the coming years, the bloc and the individual countries within it published a run of initiatives to target aspects of planetary health, from carbon emissions and water pollution to chemical toxicity and waste management — many of them calling out particular industries and offering frameworks for how those sectors can comply.
Fashion, however, was not among them, at least not until recently. The industry was not on policymakers’ agendas, nor did it make an effort to put itself there — and now reality is catching up, as many of the regulations promise to impact fashion’s operations with little guidance on how fashion should meet them. There are some major bills already on many brands’ and retailers’ radars, to varying degrees: a forced labour ban, the Waste Framework Directive and the Corporate Sustainability Due Diligence Directive. But there are others, touching on everything from deforestation to the carbon footprint of individual products, that will have direct and significant impacts on the fashion industry, too.
Overall, the regulatory landscape is shifting so profoundly that fashion “can’t possibly” continue to operate as it does today. Lang says that fashion hasn’t kept close enough tabs on what’s been developing in legislation — but adds that policymakers haven’t done enough to involve it, either. She goes so far as to predict that 75 per cent of the existing industry could disappear in the next three to five years because so many businesses won’t able to comply.
That’s a bold prediction and others don’t expect the impact to be quite so dramatic. Still, there’s widespread agreement around the underlying sentiment that the shift is significant and that the stakes are likely to be unprecedented.
“I do believe it will require a lot for brands to meet the many obligations of upcoming regulations. A large portion of the fashion industry is not prepared for this, both in terms of internal knowledge and understanding of the requirements that teams must hold,” says Pauline God, policy and partnership manager at supply chain traceability platform Trustrace, on top of the technological and other needs brands will have in order to comply.
She’s clear, though, that it’s not impossible for brands to implement the kinds of changes being required of them. “I would be optimistic that many have realised what is needed to continue to operate, but in a more responsible manner,” she says.
Columbia University fashion policy professor Elizabeth Cline emphasises how new the entire situation is — no one can know how exactly things will turn out because none of it has been done before — but says that “regulations don’t simply shutter businesses. They force industries to modernise and innovate.”
We break down some of the most significant bills and what fashion needs to know about them.
Due Diligence Directive
The Corporate Sustainability Due Diligence Directive (CSDDD) is one the fashion industry has been following most closely. It aims to require companies to identify and mitigate any human rights violations and adverse environmental impacts in their value chains; and throughout last year, the regulation seemed like it was on a smooth path to passage. In a major blow last month, Germany and Italy announced they would abstain from the vote, saying the bill would burden business with excessive bureaucracy.
The bill is not dead, however. Much to the contrary, because of how it’s written, it’s impossible to kill, says Lang. “It can get prolonged, watered down and slightly re-navigated, but not stopped. That’s the beauty of those big flagship programs. They’ve been so long in the making, and especially with CSDDD — it is in between the human rights framework and the sustainability framework, so it’s a cluster. It can’t get moved out.”
That means it’s largely a wait-and-see game for now, with the biggest question coming down to whether the final regulation comes down before or after the parliamentary election in June. The specifics of two key points are likely to hang in the balance, says Lang: the size of the companies that will be eligible for the regulation, and how deep the regulation will require a company’s reporting to go, such as to which tier of the supply chain.
Lang says the former is effectively irrelevant to fashion because the industry, at least in Europe, is comprised almost entirely of major companies or small ones. Few or no businesses sit in the grey area, which is one of the key points of contention — because if small and medium enterprises (SMEs) are exempt or have a longer lead time for compliance, who draws the line for what defines an SME? The latter, meanwhile, will be informed in part by how other regulatory frameworks, such as Extended Producer Responsibility, get written because there will be overlapping aspects of the supply chain and the EU is going for consistency between them.
Deforestation-free regulation
The EU deforestation regulation, or EUDR, aims to stop products entering the EU that contributed to recent deforestation or an expansion of agricultural land in forested areas. In effect, that targets some of fashion’s most prized materials — leather in particular, because cattle ranches are a key driver of deforestation globally including in the Amazon, as well as others like rubber and wood, which manifests not only in wood pulp-based fibres such as viscose but also packaging and furniture (think retail store furnishings).
“As a major economy and consumer of these commodities linked to deforestation and forest degradation, the EU is partly responsible for this problem and it wants to lead the way to solving it,” the EU says in its overview of the framework, which entered into force in June 2023 and enforcement for which will begin at the beginning of 2025.
Compliance will hinge directly on knowing the full extent of a product’s supply chain, because the raw material is almost always what implicates a product in driving deforestation, and for fashion will be no easy task. Take leather as an example. “You literally need to have traceability all the way down to the plot of land where the cattle was born. That’s very, very granular data. You need GPS coordinates for that plot of land, and on top of that, proof that no deforestation has happened after December 2020,” says God. She explains the time-stamped data is necessary to prove that the product didn’t drive deforestation that occurred two or three years ago. “It’s a very unique and very granular piece of legislation and the industry has not met something like this before.”
Brands theoretically have the option to rely on their suppliers to comply with the regulation, because the brand typically doesn’t import goods at the point in the supply chain that would hold them responsible for a violation. Doing so, however, leaves brands entirely vulnerable to how a supplier behaves and then documents that behaviour, she says. “What happens if they don’t comply? It’s your goods in the end that will get stuck. It’s your brand that will be affected.”
Forced labour
The EU drew accolades for reaching a provisional agreement earlier this month to ban goods made using forced labour. The proposal was written amid — although it does not explicitly name — widespread allegations of forced labour in the Chinese region of Xinjiang. However, unlike the Uyghur Forced Labor Protection Act (UFLPA) in the US, which targets goods made in or with materials sourced from Xinjiang, the EU rule would apply to products from all over the world.
It’s similar in scope and focus to the UFLPA, but its approach is quite different: it doesn’t place the burden of proof on a company or brand, as the US law does, but on regulatory authorities in the EU and its individual countries.
God emphasises that even so, brands once again have incentive to ensure their supply chain is up to snuff because they are ultimately on the hook if their products get flagged.
“The investigation process is expected to take 10 to 11 months. That’s a really long time for fashion goods, because if you get detained and you have 11 months of investigation of that shipment, then the good is probably not fit for the market when it’s done with that investigation,” she says.
Preparation, however, could help to mitigate that risk. Brands that already have product and sourcing data and have traceability or supply chain mapping mechanisms established, she explains, are more likely to be equipped with evidence that could satisfy the investigating authority. (Many details remain to be seen, as it’s still unclear how exactly enforcement will work.)
Waste, greenwashing claims, chemical management and more
On Tuesday this week, Parliament adopted its “first reading position” of a Green Claims Directive that would require companies to submit evidence before they can make marketing claims — such as “biodegradable”, “less polluting”, “water saving” or having “bio-based content” — about their products. The proposal will now need to be followed up by the new Parliament, following the elections in June.
There’s also the Waste Framework Directive, which outlines basic definitions related to waste management and includes a proposal to “bring about a more circular and sustainable management of textile waste” — yet it is still being hashed out, and has faced some major criticisms, including being too European-centric and neglecting to address the impacts of fashion’s waste problem on the Global South.
And the Ecodesign for Sustainable Products Regulation (ESPR), which proposes a framework to establish “ecodesign requirements” — such as product durability, reusability, resource efficiency, upgradability and reparability — for certain product groups. A cornerstone of the bill is the Digital Product Passport, which will provide information around a product’s environmental sustainability, made available to consumers by scanning a data carrier.
But the full scope of what’s coming for fashion is sweeping. Policymakers also have their eyes on microplastic pollution, packaging and packaging waste, chemical usage and more aggressively targeting the carbon footprint associated with imported products and beyond. The Carbon Border Adjustment Mechanism (CBAM), for instance, is so technical it hasn’t even shown up on fashion’s radar, says Lang, but it’s major — and a red flag that it’s gone unnoticed. “That is something for the CFOs. They’re talking about taxes. The CSDDD is simply about reporting; the CBAM is technically turning your carbon emissions into a cost factor,” she says.
Still, the stakes are clear and the industry needs a wakeup call more than the policymakers do.
“We engaged with members of the European Parliament and the Commission and said, ‘do you realise that all of these regulations will kill the fashion industry in Europe? Do you realise that?’ And the answer was — ‘Oh, wow.’ But also, ‘yes, because we have to’,” says Lang.
Read more – Vogue Business