By Baptiste Carriere-Pradal, Co-founder of 2B Policy
Over the past decade, three events have been nourishing the wave of legislation that all business actors, and particularly the fashion ones, are facing. First, the Rana Plaza disaster pushed citizens to ask lawmakers to increase brand responsibility. Then, the skyrocketing rise in awareness of global warming, led by figures such as Greta Thumberg. Then, lately, revised expectations of voluntary initiative and labels, understanding their intrinsic limitation for such a broad sector, facing so many challenges simultaneously.
By combining those topics, you can understand the fuel behind the following pieces of legislation aimed at accelerating and securing the transition of the fashion industry to a circular and responsible one:
- EU – Eco-design for Sustainable Products Regulation (ESPR). Qualified by the EU Commission as the mother of all legislations, it aims at making “sustainable products” the norm in the EU common market. In practice this regulation could establish minimum criteria on product quality and robustness, inclusion of recycled material and better traceability along its lifetime to accelerate recyclability.
- EU – Sustainable Corporate Due Diligence Directive – CSDDD – This introduces mandatory due diligence (DD) for human rights and environmental impacts across the value chain. Brands will have to set a robust system to evaluate, monitor, improve, and communicate about the environmental and social performance of the actors in their value chain. Some EU member states have already started to move forward by establishing their Due Diligence legislation (e.g., France, Germany, and the Netherlands)
- EU – Transparency regulation (empowering consumer and green claims directive) This combination of laws mandates companies to substantiate their claims. Substantiation would need to follow guidance from the commission. In practice, this will require companies to reassess how they communicate about their product or brand’s environmental attributes and performance, particularly evaluating the completeness, robustness, and materiality of any claim they make. The change is expected to be radical.
- EU – Sustainable Corporate Reporting Directive – CSRD introduces requirements for large traders in Europe to disclose their performance and plan of action regarding all main impact areas (e.g., GHG emissions, water, biodiversity, social compliance, and more). This will impact tens of thousands of brands across the globe that are active in the EU Market
- FR – Loi Climat: The French government plans to introduce an environmental label on all textile products. This initiative aims to inform consumers about the environmental impact of garments, and to help them identify whether one product has a higher environmental impact than another. The methodology, database, and label will be imposed by law, and companies must develop IT systems and data collection tools to calculate the product footprint. All background data will be made public.
The level of compliance effort required by these upcoming pieces of legislation is significant. Some leaders are already well advanced on this journey, but for the majority of the industry meeting those expectations represents a significant step. As we say in French, “A l’impossible nul n’est tenu,” (Nobody is bound to the impossible). Let’s explore what’s possible.
Gather Data Specific to Your Supply Chain
While you unpack these upcoming legal expectations, you may realize that the underlying operations requirements have significant and material overlap.
The first action is to encourage actors to use smart and collaborative data gathering platforms, to understand the current level of performance, both on a social and environmental level, progressively, of all the actors in your value chain. This is the starting point to evaluate your performance as required by the Due Diligence legislation, or to report on your organization’s impact as demanded by the reporting directive.
Then, you will have to ensure that this data is robust, that it is externally verified. Gone are the days that this data was mainly used for internal monitoring purposes. True to the principle that “light is the best disinfectant,” by forcing all of this data in the open, legislators want to push all actors to accelerate the journey to better quality data.
Then, a business’s capacity for analysis must be increased. Once you understand the data, a pathway of improvement can be created. While monitoring the side effect of any action (for instance, is your plan to reduce GHG emission going to significantly impact your land use footprint or your organization’s water consumption ), actors will need to equip themselves to better understand the consequences of each of their improvement scenarios.
Finally, it is likely that the current IT infrastructure underpinning your product development is not yet fit to enable a smooth flow of information between all of your databases (do they speak the same language?). Behind the sustainability revolution, there is a data and IT infrastructure revolution hiding.
The scale of the change is significant. The EU Commission hasn’t shied away from requiring the car industry to invest trillions and to challenge millions of jobs to reduce its impact. And it won’t shy away from similarly demanding compliance from other industries like textiles, fashion, footwear and other consumer goods.
The path is clear. Time to put your gears on.