Regulation Themes Impacting Fashion Sustainability and How to Leverage Data & Technology to Ensure Compliance (Part 1)
The fashion industry, once largely unregulated in terms of sustainability, is increasingly under global scrutiny concerning its impact on both people and the planet. As production and consumption have rapidly evolved in recent years, the need for regulation has similarly intensified. This shift has led to the introduction of over 20+ ESG regulations, each significantly impacting global fashion retailers — a trend that will undoubtedly continue in the coming years.
In this 2-part blog series, we introduce seven themes impacting fashion sustainability, and how data plays a key role in preparing for compliance.
The Importance of Addressing the Environmental Impact of Fashion's Rapid Growth
Accelerated trend cycles, fueled by social media, alongside greater product accessibility and availability through omnichannel shopping and production advancements, have drastically expanded the average wardrobe. With an ever-growing number of products moving through a largely linear product lifecycle, the challenge arises not only from what to do with all these products at the end of their lifespan — where 92 million tons of clothing ends up in landfills — but also from addressing the significant environmental impact at earlier stages of the lifecycle. Heavy use of natural resources, overreliance on synthetic and unrecyclable materials and increased carbon emissions have captured the attention of regulators aiming to drive substantial change to mitigate the industry’s impacts. Therefore, fashion brands should not only look to assess the sustainability of their operations due to increasing regulations, but also how to mitigate the financial and publicity risks associated with not having a proactive ESG approach.
How to Improve Practices & Comply with ESG Regulations
Data and technology will play a fundamental role in improving practices and supporting compliance with ESG regulations. From supporting supply chain transparency and efficiency to enabling accurate reporting and impact measurement, data and technology are not only able to provide the procedural foundations for preparing for compliance but can also enable truly sustainable growth. Outlined below is an overview of seven key areas addressed in forthcoming global fashion sustainability regulations, alongside an understanding of how data and technology solutions can be leveraged to support meeting them:
Reporting
From California’s Climate Corporate Data Accountability Act —expected to come into effect in January 2026 — to the EU Corporate Sustainability Reporting Directive (CSRD), ESG reporting is foundational in understanding sustainability and the subsequent impact of business practices. Whilst many global retailers may voluntarily disclose ESG efforts today, this will become mandatory for most as the EU publishes its new framework for ESG reporting (European Sustainability Reporting Standards) expected in 2026. For accurate, real-time reporting, fashion retailers need the quality and availability of data required to do this. This is where a strong data foundation can support not only in reporting, but in many other areas too.
Financial Risk
In recent years, the escalating environmental effects of climate change — ranging from droughts and wildfires to floods — have resulted in severe human and environmental consequences, as well as significant financial repercussions. Consequently, regulations such as California’s Climate-Related Financial Risk Bill and the UK’s Climate-Related Financial Disclosure (CFD) legislation promoted as a way to support both businesses and investors in mitigating the climate-related risks that result from business practices. As fashion businesses operate in a challenging market, both in terms of consumer appetite and waning appetite from investors, allocating budget in accurate ESG reporting can provide an opportunity to boost their sustainability performance both reputationally and financially.
Eco Design
By mid-2025, the EU’s Eco-design for Sustainable Products Regulation (ESPR) will be expanded to include textiles. With a reported 80% of a product’s environmental impact determined at the design stage, ESPR aims to ensure products are designed to be durable, reusable, repairable, recyclable and energy- and resource-efficient. As part of this initiative, relevant retailers will need to assess and measure the environmental impact of their products from conception. One way to achieve this is via AI design support, enabled by machine learning and leveraging first-party data designed to provide design recommendations and adjustments to reduce the environmental impact of products.
As part of ESPR, another key digital solution will be Digital Product Passports (DPPs) — a concept aimed at promoting sustainability and transparency in product lifecycles. They are digital records or systems that store detailed information about a product, including its materials, origin, manufacturing process, usage and end-of-life options (e.g., recycling or disposal). The idea is to provide a comprehensive "passport" for each product, enabling better tracking, reuse and recycling.
To be continued…
In Part 2 of this series, we will explore how data and technology play a critical role in other parts of the fashion lifecycle, including supply chain transparency, labor practices and waste management.
