Introduction
The fashion industry, once synonymous with glamour and aesthetic innovation, is now at the center of crucial debates on sustainability and ethics. Responsible for nearly 10% of global carbon emissions and 20% of wastewater, the fashion industry faces unprecedented pressure to reform its practices. Consumers are demanding greater transparency, investors are incorporating ESG criteria into their portfolios, and governments are enacting strict regulations. Navigating this complex landscape of ESG regulations has become essential for any company wishing to thrive in the industry. This comprehensive guide aims to educate fashion professionals on the key regulations and best practices for effectively addressing them.
Why is ESG reporting important for companies in the fashion industry?
Consumers are becoming increasingly aware of the environmental and social impacts of their purchases. According to a recent study, 73% of millennials are willing to pay more for sustainable products.
Some brands are now facing demands from their investors to incorporate ESG criteria into their development strategies.
Compliance with most regulations requires companies to manage and disclose their ESG criteria, with penalties for noncompliance.
Key ESG Regulations Affecting the Fashion Industry
Corporate Sustainability Reporting Directive (CSRD)
- Objective: The Corporate Sustainability Reporting Directive (CSRD) requires large companies to disclose detailed information about their ESG performance in order to improve the transparency and comparability of sustainability data.
- Affected companies: Large companies with more than 250 employees, companies listed on the EU market, and certain non-European companies with a presence in the EU market.
- Effective Date: In effect since 2023, with reporting requirements to be phased in through 2026.
- Requirements: Companies must provide detailed reports on their environmental, social, and governance impacts, including information on their supply chains.
Explore all our resources on the CSRD to learn more and prepare for compliance:
Dual materiality analysis: understanding the basis of CSRD reporting
Everything you need to know about the CSRD (Corporate Sustainability Reporting Directive)
Why is the CSRD's ESRS E1 standard crucial for fashion brands?
EU Taxonomy
- Objective: To establish a classification system to determine which economic activities can be considered sustainable.
- Impact on the fashion industry: Companies must assess and disclose the sustainability of their operations based on specific criteria, such as energy efficiency and the use of recycled materials.
Duty of Care Directive (CSDDD)
- Objective: The Corporate Sustainability Due Diligence Directive (CSDDD) requires companies to assess and reduce environmental and social impacts throughout their value chain in order to promote responsible business practices.
- Affected companies :
- 2027: Companies with more than 5,000 employees and revenue > €1.5 billion
- 2028: A company with more than 3,000 employees and revenue of more than 900 million euros
- 2029: Companies with more than 1,000 employees and revenue > €450 million
- Effective Date: Adopted in May 2024, with phased implementation between 2027 and 2029 based on company size.
Regulation on the Ecodesign of Sustainable Products (ESPR):
Originating in Europe, the ESPR is part of the EU's commitment to a circular and sustainable economy.
- Objective:
- Encouraging the design and manufacture of sustainable products: The ESPR aims to promote design practices that extend the lifespan of products, facilitate their repair and recycling, and reduce their environmental impact throughout their life cycle.
- Raising consumer awareness of the environmental impact of products: By providing clear and transparent information on the environmental performance of products, the ESPR helps consumers make more informed and sustainable choices. (Digital Product Passport)
- Contributing to the transition to a more environmentally friendly economy: By establishing standards for product sustainability, the ESPR supports the broader goals of reducing waste, conserving resources, and combating climate change.
Explore all of our resources on the ESPR to learn more and prepare for compliance:
ESPR: Everything you need to know about the European Ecodesign Regulation
Destruction of unsold products: what brands need to do to comply with ESPR
Waste Framework Directive
- Objective: To promote a circular economy by mandating the separate collection of textile waste and holding producers accountable through extended producer responsibility (EPR) systems.
- Affected companies: All companies in the textile sector operating in the EU market.
- Effective Date: Phased implementation, with mandatory separate collection of textile waste beginning in January 2025.
AGEC Act
- Objective: The Anti-Waste Law for a Circular Economy (AGEC) aims to reduce waste, eliminate the destruction of unsold goods, and promote eco-design in products.
- Affected companies: All companies selling products on the French market, particularly those in the textile sector.
- Effective Date: The law has been phased in since 2020, with specific requirements for large companies in 2023, 2024, and 2025.
Climate and Resilience Act (Environmental Labeling)
- Objective: To implement an environmental labeling system that provides consumers with clear information about the environmental impact of products, in order to promote responsible consumer choices.
- Companies affected: Large fashion companies with annual revenue exceeding 50 million euros and selling more than 25,000 units per year in France.
- Effective Date: Mandatory as of January 2023, with a phased expansion to medium-sized businesses by 2025.
Get ready for the arrival of French Environmental Display with Waro.
Directive on Green Claims
- Objective: The Ecoclaims Directive aims to prevent greenwashing by requiring scientific evidence and third-party verification for all environmental claims.
- Companies affected: All companies that make environmental claims about their products or services, including fashion brands.
- Effective Date: The directive is currently being adopted and is scheduled to take effect in 2026.
Our tips for effectively preparing to comply with these regulations:
Understand your company's specific requirements and assess your current position
- In-Depth Regulatory Analysis: Assemble a dedicated team to identify the regulations that apply to your business and
- Internal ESG Audit: Analyze your supply chain to identify risks and opportunities related to ESG reporting.
Set up a system for reporting and tracking metrics
The complexity of the supply chain in the fashion industry poses a major challenge for brands, which must build strong relationships with their suppliers and use traceability solutions to facilitate data collection and track product traceability.
To manage your ESG data more effectively, it is essentialto establish a system for reporting and tracking these indicators.
You can start by collecting the data needed for mandatory ESG reporting and impact calculations.
Measure your company's emissions:
In the fashion industry, Scope 3 emissions account for a significant portion of your environmental impact (approximately 90%). It is therefore important for brands to measure the impact of their products in order to accurately determine their Scope 3 emissions. These impacts can be accurately assessed using Life Cycle Assessment (LCA) software such as Waro. Understanding the impact of your products will also help you develop a quantified strategy for reducing that impact and effectively manage that strategy.
Practice transparent communication
- Regular Public Reports: Publish detailed annual ESG reports that are accessible and understandable to all your stakeholders.
- Use of Labels and Certifications: Obtain recognized certifications such as Fair Trade, OEKO-TEX, or Bluesign to enhance the credibility of your efforts.
.png){kind=icon}
.png)
