Navigating the new era of fashion regulation will require increased digitisation and greater brand/vendor collaboration

New regulations on visibility, transparency and data management relating to fashion industry will ensure that best practice processes can be standardised for the benefit of people, planet, profits and performance.

If there is one thing the fashion industry has learnt over the last three years – then it is that the only constant is change. For fashion brands and manufacturers that successfully navigated the Covid pandemic, a huge rise in costs, increased geo-political uncertainty and the cost of living squeeze, a slew of sustainable fashion regulations are about to raise the bar.

Given the fashion industry’s notorious reputation as one of the world’s greatest polluters, the much-maligned industry is now bracing itself for a number of new global regulations, demands and requirements that will undoubtedly shake up the whole industry once again in a bid to clean it up once and for all.

The winds of change

There is no doubt that the fashion industry has to go through some sort of deep cleanse following the disastrous attempts of a few big-name players that hoped to greenwash themselves to safety.  New legislation is certainly coming for fashion this year, ending a long history of voluntary initiatives and self-reporting – especially with regard to its impact on the environment and fair working practices.

Although the industry has indeed been tainted as a result of a few bad apples, the fact remains that it really has given rise to the need to be pushed – kicking and screaming, or not – into the next century, given its reluctance to modernise in the same way that other manufacturing sectors have done. Fashion has long been synonymous with dynamism and rapid change, yet the industry’s supply chain has, in many respects, remained static.

This is why new regulatory demands on visibility, transparency and data management relating to fashion industry’s emission reduction, garment worker rights, supply chain responsibility and product circularity – although painful to begin with – will ultimately help pull the industry up by its bootstraps and ensure that best practice processes can be standardised across the industry for the benefit of people, planet, profits and performance.

Poised to profoundly reshape the fashion industry’s supply chain, these new regulations will undoubtedly necessitate increased digital transformation and much greater collaboration between brands and manufacturers, like never before, as the industry tries to align the best technologies and processes to hit all new global compliance requirements as seamlessly as possible.

Brace yourself – Here’s what’s coming!

There are over 60 new different legislative initiatives across the globe, however, according to a recent guide published by The Remedy Project, there are ten in particular that will reverberate most meaningfully throughout the global fashion value chain. We will address a few below.

Passed in 2023 and included in the EU’s Strategy for Sustainable Textiles, anchored in the Circular Economy Action Plan (CEAP) and The European Green Deal, the new EU Corporate Sustainability Reporting Directive (CSRD), will require qualifying large organisations and SMEs in various sectors, including fashion, to report on ESG (environmental, social and governance) metrics following defined standards that can be verified with external audits. In effect, the EU is hoping that this directive will become a huge facilitator for change across global apparel value chains, as players wanting to continue selling in the Single Market will have to set up their operations accordingly and adopt best practices backed up by robust data evidence, wherever their factories might be based.

The EU Corporate and Sustainability Due Diligence Directive will additionally create an obligation on companies globally (that meet the stated thresholds) to conduct human rights and environmental due diligence, as well as offer a robust complaints procedure.

Even tougher than France’s comprehensive Fashion Act, the proposed New York Fashion Act will require fashion retailers with more than US $ 100 million in global revenue to produce detailed maps of their supply chains to identify, prevent, mitigate and account for – as well as take remedial action – to address actual and potential adverse impacts on human rights and the environment within their own operations and across their supply chain. That’s certainly going to need plenty of thought, significant investment and a whole overhaul of the ways global brands and manufacturers currently do business.

On top of that, EU Forced Labour Regulation; the US Uyghur Forced Labour Prevention Act (UFLPA); EU Ecodesign for Sustainable Products Regulation, which will include new EU Digital Product Passports (DPP); EU Packaging and Packaging Waste Directive; EU Microplastics Regulation; UK Plastic Packaging Tax; EU Product Environment Footprint Guide; EU Textiles Regulation; and the EU Taxonomy Act make fashion stakeholders not only overwhelmed with the raft of new rules being hurtled towards them like a runaway low-carbon, electric train, but many are also at a loss as to where they need to start to maintain compliancy.   Standardisation of directives such as the DPP is key to governing compliance. This will be one of the most difficult elements to implement given the fundamental lack of standardisation within the fashion industry.

Taking into account the complexity of supply chain management as fashion supply chains are often vast and intricate, involving numerous suppliers and intermediaries across the globe, ensuring compliance to the most stringent regulations across this complex network can be a logistical nightmare without the right tools and systems in place.

A more collaborative approach to finding a digital solution

Almost all of these new regulations will require greater traceability, transparency and increased accountability – even potentially for the actions of vendor partners – most brands will therefore certainly need to harness the power of a raft of new technologies to proactively map out their supply chains effectively from end-to-end, so that they can ensure their partners meet new stringent sustainability and labour rights rules.

From bringing sustainability into the very start of a garment’s design, for example ensuring that no newly banned glitter is part of the spec to developing more sustainable manufacturing methods, to ensuring transparency and compliancy processes are in place with vendors, brands will need to work closely with their suppliers to ensure that everyone falls in line with upcoming EU and US regulations quickly.

In order to ensure that partners have the digital tools they need to be able to meet new compliance requirements, brands may have to consider collaborative part-investment towards infrastructure costs so that they themselves can evidence facts backed up by the robust data required.

However, regardless of whether certain global fashion manufacturers have good enough relationships with their key brand partners to benefit from co-funded initiatives or not, the fact remains that all players in the apparel supply chain will have to adopt new technologies if they want to do business with the Global North.

Given that digital solutions will be essential for meeting regulatory requirements and for creating a more sustainable fashion supply chain, a more collaborative approach, nonetheless, appears to be the most sensible way forward. Sharing best practices, technology solutions and insights into sustainable processes can ultimately expedite the industry’s transition towards a more responsible model. This approach will also help smaller enterprises, which may lack the resources of larger corporations, to catch up and compete on a level playing field.

Collaboration must also extend to governments, NGOs and consumers. Governments can provide tax breaks or subsidies to encourage sustainable practices and innovation. NGOs can advocate change and raise awareness across far-flung territories and consumers, with their purchasing power and reward brands that adhere to ethical and environmental standards.

By working together, the fashion world can transform itself into a more responsible, sustainable and accountable industry, leaving behind a positive legacy for future generations and even setting an example for other sectors to follow. The winds of change may be strong, but with innovation, significant digital transformation, standardisation and global cooperation, the fashion industry will be in a better position to weather any storm that comes its way.