The New Transparency coming to fashion: regulations as a baseline for communicating sustainability

Hundreds of sustainability labels and schemes are crippling the apparel and footwear industry. This brouhaha prevents consumers and citizens from properly understanding the impact of the piece of garment that they are buying. But those same consumers are hungry for information, and the industry is hungry to provide. The EU Commission is preparing three key legislations that will dramatically change the world of green claims, namely the Consumer Empowerment Directive, the Substantiating GreenClaims regulation, and the Eco Design of Sustainable Product Regulation. In the meantime, active EU member states, like France, are already launching mandatory transparency requirements. Let’s dive into them.

At first, the need to identify materials with lesser environmental impact emerged, and organizations such as Textile Exchange developed standards to identify such materials, as early as the mid 2000s. Then came the Sustainable Apparel Coalition, with the clear mandate to standardize performance measurement and communicate environmental performance to global consumers.

At the same time, some brands worked on capsule collections to help consumers identify their ‘green(er)’ products. However, each brand has their own definition of what ‘green(er)’ really means. This situation has led to the current chaos, as consumers struggle to properly understand the messages given to them. As the concern kept growing within the industry, policy makers, both in Brussels and in other EU Capitals, decided that it was time for public authorities to tackle the issue and to start developing a solution. Two states, France and Germany, decided to move forward, and each decided to…launch their own label (The Green Button in Germany, and the ADEME labeling in France). So, the first solution to reduce the number of labels was to create even more labels, valid only in specific geographies.

France is moving forward with a life cycle assessment (LCA) based approach, using generic data available to inform consumers. In the meantime, some other countries are pushing back on using generic data. For example, in Some Nordic countries if a company uses a French government backed label, it can be accused of misleading consumers. Thus, we are in a situation where what is considered as appropriate information for a French consumer is considered misleading for a Norwegian one. What a conundrum!

While these developments were happening at the Member State level, the EU is currently trying to solve this issue by regulating green claims to ensure comparability and trustworthiness as part of its Circular Economy Action Plan.

After their impact assessment, the EU Commission came to the conclusion that two key elements are needed to ensure comparability and trustworthiness of a green claim, that everybody uses a common and single method to calculate the impact of a product (let’s say its carbon footprint), and a common and free to use database (where one can learn about the impact of the production of one kg of organic cotton for instance ). This was formalized in a Recommendation on the use of Environmental Footprint methods issued in December of 2021.

The baseline: a common way to measure environmental impact

To regulate its use, the EU Commission is due to produce in July 2022 a new proposition for a regulation, the Substantiating Green Claim Initiative. This policy is expected to require any company that wants to communicate about the impact of its products to use the Product Environmental footprint Conception rules (PEFCR) of apparel and footwear, and the database validated by the EU Commission. After the EU Decision making process, and parliamentary debate, this regulation is currently expected to come into force around 2026.

The global textile Industry, represented by the Policy Hub - Circularity for Apparel and Footwear, clearly supports the usage of a single method, the PEF to calculate the footprint of a garment. This method is democratically governed, robust, free to use, ready for scale, and transparent. It is necessary that the method that brands and manufacturers use internally to evaluate the impact of their products is the same one as the one used to communicate about their impact. This is where the Green Claims regulation could positively support a better understanding of the impact of the apparel and footwear industry.

This regulation will also suggest the type of data that can be used to calculate a garment or footwear footprint. The EU Commission is expected to make available an EU-backed database, free for all to use, with independent experts vetting the data. This move is welcomed to ensure that all players, including SME, can properly access the information needed to evaluate the impact of their products. However, it is time for this piece of legislation to move forward quickly, not to suffer any more delays, and to be presented to the EU Parliament and all industry stakeholders.

Once implemented this regulation will ensure that all consumers can compare the impact of their clothes, whether they shop in Oslo, Paris or Berlin, from any given brand. It will also provide a clear direction to all manufacturers, brands and retailers on how to measure the environmental impact of their products. Finally, everyone: consumers, producers and retailers will speak one common language.

The second step in delivering transparency

Once you have regulated how to measure an impact, it is time to regulate how you can deliver this information to consumers. Today there is one key element to guide the industry actors - the Unfair Commercial Practice Directive Guidelines (UCDP). These guidelines were updated in December 2021. They are very informative, giving for instance information on how to evaluate if a claim is misleading or not. But each jurisdiction may follow them, or not. The UCPD guidelines advise against the usage of generic terms (for example “sustainable”) without proper substantiation. They also propose that in order to mention the impact of a product one needs to have evaluated its impacts over its entire Life Cycle. All of these are valid points, but again they are just indications.

However, this is going to change with the new proposed directive on consumer empowerment. This directive on empowering consumers for the green transition, first published on 30 March 2022, proposes two key elements. First and foremost, it creates a mandatory obligation. Same obligation across the single market. Yet, the proposed directive is going even further and will significantly strengthen the content of the UCPD directive. Here are some major changes:

First, it restricts the usage of terms such as sustainable, green, eco-friendly, to products that have proven excellence using EU schemes such as the Eco Label or national equivalent, like the blue angel or Nordic Swan. Those labels represent epsilon of the current garment production. At the Policy Hub, we think that the directive shall have gone even further, and should have prohibited such generic and vague claims.

The directive also introduces new elements: it regulates a claim on future performance, for example in cases when one organization wants to communicate that it will be carbon neutral by a given date, it will be required to have a clear plan of action, monitored by a third party. This directive, in its current version, also restricts usage of labels and certificates.

The Empowering Consumers directive was published, and is pending to be discussed in the EU Parliament. Again, this process should take around 18 months. Once adopted, the EU Member States will have two years to translate the Directive in their national legislation. It is expected to come into force from 2026.

These two pieces of legislation on Substantiating Green Claims and Empowering consumers have one thing in common - they regulate how an organization can talk about its organization or its products environmental performance in cases when the organization wishes to communicate about it. The proposed policies do not force any organization to do so. But few other pieces of regulation, at EU level or national level, may very well do.

Where transparency could be mandated.

At the EU level, the Commission has proposed a regulation for Ecodesign for Sustainable Product Regulation(ESPR). As part of this regulation, the Commission has opened the door for creating mandatory classes of performance per product for the textile sector. What does this mean? It suggests that every piece of textile put on the EU market may have a performance class, like for instance an A to E ranking, to inform consumers on the environmental impact of this given piece, or in its durability, or any aspect that could inform the consumer in a way that would lead to a reduction of the impact of our sector. The conversations on this will take place in the next few years.

Meanwhile, in a small French Village…

Meanwhile, frustrated by the slow progress of the EU Commission, the French Government has decided to move ahead. In 2021, France passed a law requiring that within 5 years of the promulgation of the law, hence in 2026, every single product put on the French Market will need to disclose its environmental footprint. The candidate methods for the textile sector have already been shortlisted. They are currently being tested, and it is expected that the final method will be selected and polished in 2023. The textile sector is mentioned as a priority in this piece of legislation as it was re-stated by the president elect, M. Emmanuel Macron, as part of his environmental priorities for his new mandate. This means that technically all retailers and brands putting products on the French Market will have to know, and disclose, the environmental impact of their product. Such a process takes years, and only a few brands have so far properly evaluated what this obligation means for them, or planned for this. Many are not prepared for this legislation, misevaluating the effort required to implement it or hoping for a very long implementation timeline, and this type of hope was significantly deceived as illustrated by the Loi AGEC.

The loi AGEC is actually the first of a series of policies to come into force on EU soil, and will be applicable as soon as 2023. Even if Loi AGEC legislation was known about since 2021, many textile companies hoped for a longer implementation timeline which has not been granted.

The loi AGEC requires mandatory traceability and communication of it. Hence for each garment, brands and retailers will have to disclose the location where the fabric is made, dyed and printed, and where the final cut and sew happens. For each piece of footwear, it is required to disclose the place of assembly of the upper, the assemblage, and the finishing stage.

The new French legislation will take effect on 1 January 2023 for companies generating revenue of more than 50 million euros (and more than 25,000 items) on the French market.. The following year it will affect companies with more than 20 million euros of revenue (and more than 10,000 items) on the French market. Very few companies have the information readily available, let alone the infrastructure, to implement this policy. This means that many companies will disclose the information almost at the same time as they see this information internally. Many organizations are at risk of being in the same situation regarding the footprint of their garments.

This in turn raises the issue of one Member State being proactive and going forward with its approach, which creates market fragmentation and resource diversion. Situations like these call and urge the EU commission to ensure that there is a single approach for a single market, based on ambitious principles to guarantee that only robust and trustworthy information is communicated to consumers.