Navigating the EU's new mandate: Comprehensive insights for the fashion industry

The European Union’s upcoming legislative changes, following the 2024 elections, are expected to have a major impact on the fashion industry. This topic was recently explored in depth at a Global Fashion Agenda session, where a distinguished panel, including members of the European Parliament, experts in sustainability policies, and European Commission spokespeople, shared their insights. They offered a comprehensive analysis of the forthcoming EU regulations and practical advice for fashion professionals on how to navigate these significant changes.

If your fashion business operates in the European market, here’s an in-depth analysis of the essential points to focus on and the actionable steps your company should follow:

Intensify your focus on ecodesign

The EU’s commitment to sustainability is evident in its upcoming legislative priorities. The Ecodesign for Sustainable Products Regulation (ESPR) is set to become a cornerstone of this effort. The European Commission had already made significant noise about the ESPR before the recent elections, emphasizing its importance in shaping the future of the fashion industry. This regulation will mandate that products meet strict criteria for durability, recyclability, and the restriction of hazardous substances. The goal is to shift the fashion industry towards a more circular economy, where products are designed with their entire life cycle in mind.

“If you hear about the ESPR, it’s not something to worry about, but it’s definitely something you should pay close attention to. We are currently in discussions with the European Commission about the technical product requirements, such as definitions of recycled content and key standards for durability and recyclability. This is a long-term process that will continue through this year and next. It will establish the minimum requirements for your product to be accepted in the EU”, commented Pascale Moreau, Founder of Ohana Public Affairs.

Having metrics that highlight the circularity of the products will be crucial for optimizing their ecodesign. Understanding their circularity score, the amount of recycled content, and their usage potential are valuable insights. We’re already seeing platforms like BCome providing these kinds of metrics to the fashion industry.

Be aware of the upcoming changes to Extended Producer Responsibility (EPR)

The EU plans to improve the Waste Framework Directive in order to strengthen Extended Producer Responsibility (EPR). This includes setting clear objectives for waste management and recycling, and introducing eco-modulation incentives. We’ll have more information on this aspect in the coming months, but this measure would require companies to manage and report on unsold goods, as the legislation will impose restrictions on the destruction of unsold products.

The EPR would bring significant changes to the fashion industry, creating challenges that would require developing systems to accurately track and report unsold goods. Fashion brands need to familiarize themselves with the new waste management and recycling requirements, as well as explore innovative solutions to engage with their supply chain to ensure compliance with EPR.

Keep Corporate Sustainability Due Diligence on your radar

The Due Diligence Directive, which came into effect last July and will be implemented gradually depending on the size of the business, will hold companies accountable for their environmental and social impacts within their supply chains. The comprehensive vision of this directive has the potential to extend beyond Europe, as it could inspire legislative updates in other regions, affecting similar laws in places like the New York Fashion Act in the US.

“There is a significant opportunity right now, as we see international companies building their public affairs teams both in the EU and the US. The industry is eager to learn from the EU's experiences and apply those key insights to various states in the US, aiming to influence local regulations,” noted Pascale Moreau, who also highlighted traceability as a priority for gathering the data required by regulations. “Large companies are focusing on traceability strategies, which is crucial. This means you need to engage with your supply chain as true business partners, not just suppliers. They are essential for compliance and for getting your products to market. Collaborate to find a traceability tool that captures data on both social and environmental aspects”.

The collection of data to assess the social risk of supply chains is one of the new features introduced by the SLCA methodology developed by BCome. Some fashion brands are already implementing this methodology as a pilot case.

Watchout for international trades and imports

In the next few years, the EU is addressing the challenges posed by non-sustainable imports, particularly from large international e-commerce platforms. Regulations may be introduced to ensure that all products sold within the EU adhere to rigorous sustainability standards.

“I think we need to pay specific attention to the growing imports from e-commerce, particularly from major Chinese brands like Shein and Temu, which are selling a large amount of non-sustainable clothing to Europeans. This is an area where action is needed, and where the industry could play a positive role. It’s not just about buying European-made products in Europe; it’s about setting high standards for our businesses and ensuring that everyone adheres to these standards. Some of the new tools introduced in the last term could be very effective for starting and implementing these changes in the textile sector”. Mentioned Rasmus Nordqvist, Danish Member of the European Parliament.

Now more than ever, regardless of where your business is located, it’s essential to monitor regulations and stay updated on changes related to international trade and imports. Ensuring that fashion supply chain practices align with EU standards is crucial.

It’s time to engage in policy dialogue

Considering that many legislative texts are still in the approval process, one of the most promising aspects of this discussion was the potential for interaction between the industry and policymakers. The creation of legislative texts is not a one-way process; the EU encourages dialogue between businesses, civil society, and government representatives. This engagement helps to shape legislation that is both effective and practical.

Any fashion stakeholder concerned about the future of their business should participate in public consultations and provide feedback on proposed regulations. It’s time to make use of platforms like the European Commission’s “Have Your Say” page and to regularly engage with elected representatives and industry associations in order to stay informed and influence policy development.

Get ready for bureaucracy and compliance costs

Of course, implementing legislative updates will not go unnoticed in fashion companies' budgets. New regulations often bring increased bureaucracy and potential compliance costs. However, there are also opportunities to benefit from incentives for sustainable practices and innovations.

“I think traceability is crucial. You have to prove your compliance. I often say, and I apologize to those who dislike bureaucracy, that without data, you cannot demonstrate compliance and therefore cannot access the EU market or sell your products. It’s as simple as that,” stated Pascale Moreau.

Allocating resources for compliance will be essential to prepare for the potential financial impact of adopting sustainable practices. It’s crucial to act swiftly to explore available financial support and incentives for sustainability initiatives, with a focus on improving transparency and traceability to meet regulatory demands.

Look at the future legislation and policy development

The European Union made significant progress on sustainability during its last term. The Green Deal was one of the major advancements, and it is expected that many of the initiatives outlined in it will continue to be defined over the coming years. The future legislative landscape will likely maintain a strong focus on circularity and sustainability. The EU is anticipated to integrate these priorities into broader frameworks, such as the Circular Economy Act and policies addressing microplastics and water usage.

The EU’s new legislative mandate presents both challenges and opportunities for the fashion industry. By understanding and preparing for these changes, fashion companies can not only ensure compliance but also resilience. Proactive engagement with policymakers, strategic adaptation to new regulations, and a focus on transparency will be key to navigating this evolving landscape.

“There’s no playbook for the next five years”, as Tim McPhie, spokesperson for Climate Action at the European Commission, noted. However, there is a clear sense of direction and priorities. We’ll need to stay tuned over the next 6 to 12 months to gain a clearer understanding of where the focus will be.