Regulation Themes Impacting Fashion Sustainability and How to Leverage Data & Technology to Ensure Compliance — Part 2
Regulation Themes Impacting Fashion Sustainability and How to Leverage Data & Technology to Ensure Compliance — Part 2
Building on the foundational understanding from Part 1 of the importance of leveraging data and technology in the early lifecycle stages of fashion products, Part 2 of this article focuses on supply chain transparency, human labor practices and waste management. These aspects are crucial for achieving sustainability and supporting compliance amidst stringent regulations.
Supply Chain Transparency
The fashion industry’s supply chain has historically been overwhelmingly opaque. So, it is no surprise that this area is a central focus when it comes to sustainability improvements. The Corporate Sustainability Due Diligence Directive (CSDDD) is an approved EU law setting out requirements for fashion businesses to assess and mitigate the environmental and social impact of their supply chains and operations. To understand the overall impact of the many supply chains in fashion retail, transparency and visibility are key. A single fashion product can have dozens of suppliers, so for global retailers with thousands of products, this demonstrates the complexity of tracking the end-to-end lifecycle of products.
As mentioned in Part 1, a key solution to both understanding the sustainability footprint of a product and the many destinations along its supply chain is Digital Product Passports (DPPs). DPPs contain comprehensive information about a product, its materials, components and its entire journey throughout the value chain, from raw materials to end-of-life. By embracing DPPs, a retailer is able not only to verify the entire lifecycle of a product but also optimize resource management and reduce waste. DPPs serve as an authentication system for the circular economy (a particular benefit for those in the luxury resale market) and can even be considered an additional channel for direct-to-consumer communication and product storytelling.
Human Labor
As the industry is dependent on outsourcing and large-scale production, ensuring that those working in the supply chain are treated fairly in terms of appropriate wages, equal opportunities and a safe working environment is critical. Despite regulations such as the proposed New York Fashion Act, German Supply Chain Due Diligence Act, Norway’s Transparency Act and others, many large fashion businesses still struggle to identify risks and breaches of these laws due to the complexities of vast supply chain networks. Safeguarding workers is ethically the right thing to do, and brands face significant backlash from the public, press and regulators should they fail to achieve this.
To enable real-time supply chain monitoring, implementing a supply chain risk control tower can digitally support brands to identify where their supply partners may present a risk both in terms of compliance and broader inefficiencies within the supply chain. With real-time factory monitoring powered by a combination of internal and external data sources, fashion producers can pinpoint confirmed and emerging risks within their supply chain, which can then be acted upon to protect workers and mitigate the risks of compliance breaches.
Labeling & Greenwashing
With an increasing demand for fashion brands to demonstrate action in the fashion sustainability space, many businesses are keen to evidence their efforts in their messaging to customers with labels such as ‘eco-friendly’, ‘made from recycled materials’ or ‘sustainable product range’. However, the European Union (EU) notes that currently, approximately 40% of sustainability claims made by businesses have no supporting evidence. As a result, both consumers and regulators alike are increasingly scrutinizing sustainability messaging in a bid to tackle greenwashing. Whether in marketing campaigns or labeling of the products themselves, regulations such as one of the aim’s of the EU’s proposed Green Claims Directive and the UK’s CMA Green Claims Code is to ensure fashion products are not mis-sold under the guise of unsubstantiated sustainability claims. Going forward, the expectation is that retailers will need to be able to measure and prove any voluntary claims when it comes to sustainability messaging, so ensuring the availability of the accurate data needed for this will be key.
Waste Management
Improving the impact from design to purchase can contribute to a significant change in fashion’s environmental impact. However, end-of-life is increasingly one of the greatest concerns when it comes to sustainability. As a result, regulators are shifting the onus of end-of-life actions to retailers themselves with proposed acts such as California’s Responsible Textile Recovery Act and the EU’s Extended Producer Responsibility and Regulation on Waste Shipments that are planned to make fashion brands responsible for the costs of textile waste management, ban destruction of unsold goods and prohibit international exports of unusable textiles products.
From lifetime guarantees on luxury products, product repair services, take-back, resale to rental services, fashion brands have a wealth of options available when it comes to extending product lifecycles and embedding more circular practices. Additionally, retailers can also take preventative measures regarding inventory that is not fit for resale. Product returns currently place a significant burden on the fashion industry, leading to substantial revenue losses, and retailers are frequently burdened with stock that cannot be resold — particularly online where products cannot be inspected or tried on. Returns forecasting, AI-driven sizing guidance and virtual try-on are all digital solutions that can support fashion retailers to reduce high volumes of returns and excess inventory and operating costs that come with it.
To Sum Up
As outlined in both parts of this blog series, to support companies compliance with regulations, as well as meet the growing consumers’ expectations around sustainable fashion, investing in data-led practices is critical. It not only supports compliance but also fosters responsibility towards people and the planet throughout the product lifecycle.
Read Part 1 of this series.
