The EU has sprung into action with separate pieces of legislation that mark a push towards greater sustainability individually but together aim to drive a circular economy for all those involved in the apparel supply chain from the products and fashion brands to manufacturers and end consumers.
The EU’s approved legislation includes its Corporate Sustainability Due Diligence Directive (CSDDD), forced labour goods ban from 2027 and the adoption of its right to repair directive that will require suppliers to fix goods long after sale. Plus, it has also confirmed its revised Ecodesign for Sustainable Product Regulation (ESPR), which aims to make sustainable products the norm.
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This mix of legislation takes on sustainability and social responsibility from every angle. It ranges from product rules with its Ecodesign and forced labour legislation to trading rules with CSDDD as well as reporting with its previously approved Corporate Sustainability Reporting Directive (CSRD) and Green Claims Act. It also uses the digital product passport of the Ecodesign Regulation and right to repair directive to empower consumers to make more sustainable choices.
The EU’s legislation push towards an ESG mandate for the apparel sector
The University of Delaware’s professor of fashion and apparel studies Dr Sheng Lu tells Just Style exclusively: “While the details of these EU legislations need to be studied further to fully understand their potential impacts, the passage of these laws send a strong signal to fashion companies that sustainability and social responsibility will increasingly become mandates.”
The executive director of non-profit multi-stakeholder initiative Fair Wear Foundation Alexander Kohnstamm agrees, adding: “Ultimately, these separate pieces of legislation all boil down to one great shift: brands and retailers need to take responsibility not only for the quality of their products, but also for the way they are made.
“Human Rights and Environmental Due Diligence (HREDD) will be the foundation for all of it. Above all, brands must assess and address the (potential) adverse impacts for people and planet in their supply chains. This explicitly includes their own role: through their purchasing practices, brands have a huge influence on what happens during the whole production process.”
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By GlobalDataHowever, he also points out the apparel industry has the best sector-specific knowledge on how to do good due diligence, stating: In our HRDD [Human Rights Due Diligence] Academy for example, 25 years of practical due diligence experience is brought together for brands to use in their daily CSR practice – something that just doesn’t exists in other sectors. We know how to assess risks and how to deal with them, the tools are there and now we have the legal and business imperatives as well.”
The importance of tackling environmental and social issues together
For Kohnstamm it’s crucial to highlight that human rights and environmental sustainability may seem separate but they are in fact intertwined in many ways: “Looking at regulation that mandates more durable and circular products, this too has more than environmental effects. Higher value materials mean that higher skills are needed from workers – making an even better case for investing in wages, social dialogue and overall working conditions.”
He’s confident that the swathe of legislation is good news for apparel brands wanting to do business in a decent way without being undercut by those that don’t. Not to mention the fact that both consumers and investors will also benefit: “They will have better information available to them to make informed decisions. For example, it should be clear if the price of a product takes into account the costs of respecting basic human rights and the environment.”
Impact of EU CSDDD legislation on the apparel sector
The International Apparel Federation’s secretary general Matthijs Crietee explains that of all the EU’s recent legislation updates, the CSDDD is the most impactful because it deals with the way the supply chain is actually mandated to collaborate in order to deal with the other topic specific environmental and social laws.
The CSDDD, which has now been approved, will require due diligence for all companies selling to consumers in the EU to prevent adverse human rights and environmental impacts in the company’s own operations and across their value chains.
Crietee shares: “From the manufacturers’ perspective, this collaboration is crucial to prevent an ever growing list of requirements and no means to deal with them.”
He continues: “It affects how brands and retailers should work together with their supply chains to implement all of the other environmental and social legislation that is part of the EU green deal.
“From a manufacturers’ point of view, a correctly implemented CSDDD is what stands between a tough but collaborative approach to industry transition and an exploding list of demands for investments, improvements, data and assurances.”
Crucially, Crietee adds that CSDDD could potentially protect manufacturers from a purely compliance-based approach that is completely unsuitable to deal with the barrage of EU legislation.
Crietee’s organisation prides itself on giving a voice to global apparel manufacturers and he notes that with CSDDD companies will be required to consider their own purchasing practices for the first time, which will prevent them from simply outsourcing their legal responsibilities associated with the new legislation upstream into their supply chain.
He continues: “In Germany, where a supply chain law similar to the CSDDD already exists, it is becoming clear that the authorities don’t accept brands and retailers delegating environmental and social legal requirements to their suppliers through contractual agreements.
“For IAF, CSDDD not only means that manufacturers get a better deal, the entire industry should be better off moving from a compliance based to a due diligence based approach because it is simply better equipped to achieve results.”
It should be noted the approved version of CSDDD has a narrower scope to the one initially put forward in December 2023.
As Robert P. Antoshak, partner at Gherzi Textile Organization, explains: “After tweaking CSDDD coverage to begin with larger companies while excluding many smaller companies, the implications for the fashion industry have become clearer. Indeed, large-scale companies (with over 1,000 employees) will be under greater scrutiny for maintaining stepped-up environmental and worker practices as called for under CSDDD.”
But, as Lu points out, it still means fashion companies meeting certain sales thresholds are mandated to establish due diligence policies, systematically evaluate and report on human rights and environmental risks, and engage with various stakeholders to address supply chain risks.
“As a result, we might witness fashion companies allocating additional financial and human resources to enhance their due diligence assessment capabilities. Similarly, new technologies empowering companies to monitor and identify human rights and environmental risks effectively could gain even greater popularity. Additionally, fashion companies may give more weight to the factor of environmental and human rights risks in their sourcing decisions, potentially shifting their sourcing bases,” shares Lu.
Antoshak predicts CSDDD will raise some companies’ production and sourcing costs.
He shares: “Some will say that additional costs are justified when measured against gains in ESG coverage; others will complain that the legislation will make their operations less competitive in an already hyper-competitive industry.
Antoshak warns that by exempting smaller companies from the same regulations imposed on larger firms there is a risk the legislation as crafted could create an unintended loophole for companies less committed to ESG standards.
He continues: “Time will tell.”
Impact of the EU’s forced labour ban on the apparel sector
IAF’s Crietee highlights the EU’s forced labour act addresses a very serious issue and everyone agrees that forced labour should not exist in the industry’s supply chains.
However, he is quick to add that this law does not work well in combination with CSDDD.
Crietee says: “CSDDD should normally cover the prevention of forced labour through its risk-based approach. Because of the severity of the issue, it will automatically appear as a priority issue if the risk analysis shows there to be a high risk of forced labour in the supply chain. CSDDD will then call for appropriate action.”
In other words Crietee believes a separate forced labour act could push brands and retailers in the direction of transferring risk towards their suppliers.
Impact of Ecodesign and right to repair directives for apparel sector
The right to repair directive is initially focused on electronic goods and their software so for now it is not expected to have an impact on the apparel sector, however it could be expanded to include the textile goods after its evaluation.
The Ecodesign directive on the other hand is a broad and complex law, combining a required Digital Product Passport, with certain minimum values for durability and recyclability and much more.
Crietee says it’s clear that it will require lots of work collecting and communicating data and doing lots of testing, but it is not clear yet what will be the underlying standards.
“These will determine the exact impact, but in any case, the law will require a lot of work from apparel manufacturers and this is also where the correct implementation of the CSDDD comes in. Brands and retailers need to enable their suppliers to implement the Ecodesign directive through their purchasing practices, adopting fair contractual terms and where necessary offering (financial) support so that adherence to the Ecodesign directive is a collaborative effort,” he explains.
Also, he points out that as a big part of the work required by the Ecodesign Directive will be carried out by apparel and textile manufacturers, they should also be able to participate in the underlying standard building process.
Overall impact of the EU’s ESG legislation on the apparel sector
Sheng asserts the overall passage and upcoming implementation of these new laws calls for more dialogue on several critical issues that are yet to be fully solved.
For example, he says a key question remains on how to balance the relationship between economic competitiveness and sustainability, especially for small and medium-sized enterprises without many resources.
Sheng states: “As many fashion companies operate on a global scale, how can we further facilitate regular coherence in sustainability and corporate social responsibility areas across regions and nations? Additionally, as the fashion industry transitions towards sustainability and circularity, whether sustainability-related legislation aligns with the shifting nature of textile and apparel production remains a question mark, such as the supply chain traceability requirements for clothing made from recycled textile materials.
“Thus, to ensure future sustainability and social responsibility legislation is effective and relevant to industry needs, direct dialogue between policymakers, industry practitioners, consumers, and civil society is essential.”
