EU Legislation will transform the fashion industry – here’s what you need to know

In the European Union, new legislation and policies are coming that will address the textile industry’s challenges with sustainability. It could be hard to wrap your head around what’s actually happening, but understanding the fundamentals will make you and your company stay one step ahead. Here is what you need to know.

• Soon, every product sold in the EU will require a Digital Product Passport (DPP) with information on origins of raw materials, production, distribution, and more. 
• The Product Environmental Footprint (PEF) Methodology is a way to measure a product's environmental impact across its life cycle. 
• Through the Extended Producer Responsibility (EPR) brands will be held responsible for Europe’s 7,5 million tonnes of textile waste.
• The Corporate Social Reporting Directive (CSRD) provides a shared framework, which will harmonize reporting on environmental activities.

Overproduction, pollution, landfills full of unused clothing, opaque supply chains, the release of microplastics from synthetic textiles, greenwashing — the list of problems could go on. The ways of dealing with environmental issues are often as many as there are attempts, and the way forward is complex. One of the solutions that often is highlighted as the most impactful though is regulation and policies.

”Consumers alone cannot reform the global textile sector through their purchasing habits. If we allow the market to self-regulate, we leave the door open for a fast fashion model that exploits people and the planet’s resources. The EU must legally oblige manufacturers and large fashion companies to operate more sustainably”, explains Delara Burkhardt, MEP.

In France, Germany, and the USA, among others, some legislation is already in place. However, fashion is an international industry that employs over 60 million people globally, and relies on supply chains that span national borders and continents. Within the European Union, legislation transforming the fashion and textile industries is already in place or in the works, therefore we’re in a stage where companies could be part of shaping the future of the fashion industry.

”We need to have inputs and ideas from the companies. Both the large ones, which of course have a very strong leverage power and can take initiative, but also the smaller companies, the SMEs. Be mindful that over the next year, a lot of the legislation is now being designed on eco-design, on systems to cover the cost of the textile waste disposals, and most probably will be completed. So, it is now the time to look at this legislation and provide inputs, to make it happen”, says Mauro Scalia, Director of the Sustainability Department at Euratex.

Your company might not be impacted yet, but understanding what will be happening and when, and how to prepare, could help you and your business to comply with new standards and pivot successfully.

The EU Green Deal

It could be hard to fully understand all the legislation and policies coming from the EU which is affecting the textile and fashion industry. Some are industry specific, while others are more general – but will have a large influence on earlier-mentioned industries.

Much of the legislation that is now being presented is connected to the European Green Deal - an action plan presented by the European Commission in 2019. The plan’s primary objective is to make Europe the first climate-neutral continent by 2050. Ambitious targets that need ambitious initiatives and policies.

Due to the Green Deal, the EU has been putting a bigger focus on textiles. This is because it's the industry with the fourth-highest impact on climate change and the environment.

Strategy for Sustainable and Circular Textiles

As a part of the bigger Circular Economy Action Plan — a cornerstone of the Green Deal — the European Commission in 2022 presented The Strategy for Sustainable and Circular Textiles. A vast strategy that aims to create a more sustainable textile industry where textiles are more durable, repairable, reusable, recyclable, and free from hazardous substances.

The strategy has a lot to unpack and will be a major transformation for the industry, where fashion brands need to align with new requirements by 2030. It involves several concrete actions that are being planned, which would affect operations, product design, the lifecycle of products, and companies’ responsibility for products.

The most major change will be how the business model of the fashion industry will transition from selling products – a linear system that will have become circular. Instead, Service-as-a-Product will become inherent in the business models and companies will have a bigger responsibility for what happens with their products post-purchase. Rather than being a disposable product, clothes need to be kept for longer with extended lifecycles. 

Design that sustains

Related to the Ecodesign for Sustainable Products Regulation manufacturers have to comply with product-specific ecodesign requirements. Extending the life of products is one of the crucial actions to create a more sustainable industry. Today, many garments are being discarded because of the failure of seams and zippers, or from color fading. To enhance the longevity of products many actions could be made in the design phase.

This also includes the selection of materials — for example, textiles composed of poly-blends are often harder to recycle and reintroduce in the product lifecycle. It will also become mandatory that a percentage of the textile is made out of recycled fibers.

Synthetic fibers containing microplastics that through washes are being released into nature is a major concern. To combat this, companies will have to assess several stages of the manufacturing process, for example, pre-wash garments at industrial plants. 

“Driving fast fashion out of fashion”

To tackle the problem of overproduction and fast fashion, companies will be encouraged to minimize their collections per year. Companies that earlier have been relying on presenting several collections, will be encouraged to transition into SAAP providers. Second-hand-, repair- and take-back services will be promoted.

No fashion should go to waste

A common practice within the fashion industry is to destroy unsold or returned textiles. Earlier in May, the European Union governments agreed on a ban on this practice, coming into effect immediately. The ban will be applied in the first stage to larger companies, while medium-sized companies, with less than 250 workers, would have a transition period of four years. Small companies, with fewer than 50, would be exempt.

The European waste management association, FEAD, endorsed the new proposal and stressed the fact that there needs to be a rigid framework, and innovations, to scale up the recycling industry for textile waste.

”Specific EU-level criteria need to be developed to make a distinction between waste and certain second-hand textile products, to avoid that waste streams are falsely labeled as second-hand goods when exported from the EU and in this way escape the waste regime. Exports of textile waste to non-OECD countries have to follow conditions that ensure a sustainable management under the Waste Shipment Regulation”, FEAD declared in a statement.

Product passports

Comprehensible information combined with easy access is one of the best ways to enable customers to do sustainable shopping decisions. As a part of the Ecodesign for Sustainable Products Regulation, the European Commission, most likely, will be introducing Digital Product Passports (DPP) that contain information about the specific product. DPP will for example include information about the product’s supply chain, materials used, how to take care of the product, and how to prolong the life cycle through reparation, recycling, and access to product-related services. 

Final approval of the DPP regulation is anticipated in 2024 and will be applied to three product categories by 2026; consumer electronics, batteries, and apparel. With other product categories to follow.

It is still unclear how much information that DPPs have to disclose, but DPPs will raise wider questions than just the passport itself. Companies have to comply with regulations concerning supply chains, Chain of Custody, data collecting, and traceability. 

As a company, there are things you could be doing to prepare for what's to come. Assess the regulations and what likely will be needed, identify where data is insufficient or missing, and prepare digital ecosystems to work in conjunction with DPPs.

The introduction of DPPs has to digitize the whole textile supply chain and will require investments in digital solutions. This has been acknowledged by the EU and in a report published in May, the EU called on the Commission, the Member States, and the regions to increase their funding to this matter. In the report, the EU calls for a pilot project, funded by Horizon Europe, that will outline the fundamentals, criteria, and infrastructure surrounding DPPs. 

It already exists solutions that could provide DPPs — as a company you could be a step ahead of the curve if you are familiar with these concepts. One example could be to use a third-party provider, the concern with this is that the provider would then be the only one with access and control over the data. There are also blockchain solutions, in which each product is connected to a digital twin.

Claims that withstand scrutiny

In regards to the Green Claims Initiative, the EU will be implementing minimum requirements when presenting environmental claims. Besides that, new requirements have to be presented which provide consumers with information on durability and relevant repair services.

Related to this, the Corporate Sustainability Reporting Directive (CSRD) was coming into effect in January 2023. The new directive is building upon the already existing Non-Financial Reporting Directive, but is extending its scope and requirements.

The main objective of CSRD is that companies need to start, or enhance, their reporting on their environmental, social, and corporate governance (ESG), with an extra focus on activities related to people and the environment.

Reporting on environmental activities is a dubious activity, especially within fashion and textiles. Reports are often insufficient or inconsistent in reporting numbers and metrics, there are also divided opinions on what Sustainability Performance Indicators are most important. The CSRD will be harmonizing the reporting and provide a shared framework.

Currently, CSRD applies to large and listed companies, as well as certain small and medium-sized enterprises (SMEs) with high sustainability impacts.