Regulations in the Fashion Industry – Sustainability Regulations Affecting the Fashion Industry

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The fashion industry has long been flying under the radar of regulations when it comes to greenwashing. The few regulations that do exist aren’t enforced very well and haven’t brought about significant changes, even though many well-known companies like Allbirds, Pangaia, etc. have been labelling their products as sustainable.

But things are starting to change. In Europe and the United States, where many big fashion companies are based, governments are introducing new rules and laws that could completely transform the industry. These regulations include rigorous supply chain requirements, full disclosure in emission reporting, stringent guidelines for labelling products as sustainable, and incentives to promote more responsible business models.

Model Ramp Walk for showcasing sustainability for fashion

In this article, we’ll cover key regulations that are reshaping the fashion industry, including strict penalty against greenwashing.

Understanding Sustainable Fashion

Sustainable fashion is an approach to designing, producing, and consuming clothing that focuses on environmental, social, and economic sustainability. It encourages ethical practices and conscious product-consumption by the consumers, aiming to minimize the negative impact of the fashion industry on the environment. 

Sustainable fashion prioritizes the use of recycles, organic, or biodegradable raw materials that does not require a lot of chemicals to produce. Additionally, reducing water and energy use along with participating in less waste across the entire production process is crucial too. However, sustainability goes beyond the environmental aspect. 

Companies must ensure fair wages, safe working conditions, and respect for workers’ rights. Uplifting of local communities and economies through sourcing locally is important as well. There should be transparency regarding supply chain practices and production processes. Circular economy must be focused upon by designing high-quality, durable clothing with a longer lifecycle, so that frequent replacements are not necessary. 

Sustainable Fashion is a movement of slow fashion, with more durable products, prioritizing quality over quantity and slower production schedules. Naturally, it often comes with a higher price due to higher quality materials but it is important to choose long-term sustainability over short-term profits. 

Sustainable Fashion Regulations Implemented in the United States 

1. New York Fashion Act

In November 2022, New York State amended the Fashion Sustainability and Social Accountability Act (in the proposal stage) requiring fashion sellers, operating in New York and with more than $100 million in annual revenue worldwide, to be accountable to environmental and social standards.

● Supply chain mapping: Fashion brands must trace and map at least 50% of their suppliers by volume across all tiers of the supply chain.

● Due diligence: Fashion companies must disclose their due diligence policies and actions taken to identify and mitigate their potential adverse social and environmental impacts.

● Impact reduction targets: Fashion companies must disclose the climate change targets they have adopted for impact reductions and for tracking due diligence implementation.

● Adverse Impacts disclosure: Finally, the fashion companies must disclose the annual volume of materials they produce, baseline and targets for greenhouse gas emissions, and use of recycled materials within 18 months.

If the fashion companies fail to meet their targets, the New York state’s attorney general could fine them up to two percent of their annual revenues. Many fashion brands have pledged their support for the bill and if passed, it will establish New York as the global leader in thoughtful accountability for the fashion industry.

Sustainable Fashion Regulations Implemented in the European Union

1. European Union (EU) Corporate Sustainability Reporting Directive

Corporate Sustainability Reporting Directive (CSRD) came into effect on January 5, 2023, enforcing all large companies and all listed SMEs (except micro-enterprises), to report on sustainability. Companies must submit and publish their first sustainability report in 2025 for the 2024 financial year aligned with the new CSRD rules. Information submitted must be certified by an auditor or an independent certifier.

The new CSRD requirements will apply to the following companies:

European companies

● All companies with securities listed on EU-regulated markets, except micro-companies.

● Net turnover of more than €40 million (in the preceding financial year) to be considered as a large company or SME.

● Listed SMEs benefit from an additional 1 year for implementation, requiring mandatory reporting starting on or after January 1, 2026.

● Non-listed SMEs have the option to report on a voluntary basis.

Non-European companies

● Companies with a net turnover in the EU of more than €150 million (in each of the last two consecutive financial years) and with at least one subsidiary or branch in the EU.

2. French Anti-Waste for a Circular Economy Law (Loi AGEC)

France adopted in 2020 an ambitious law to shape a system-wide transition towards a circular economy. The French Decree requires to have verified environmental labelling starting 2023 and applies to all fashion producers, importers, distributors, or other parties with an annual turnover above €50 million, who are responsible for placing at least 25,000 pieces of waste-generating consumer products on the French market.

Environmental label requirements are being enforced progressively over the coming years, starting with the biggest companies, and working down to SMEs. In 2024, the law applies to companies with annual turnover above €20 million and putting at least 10,000 pieces of waste-generating consumer products on the French market. From 2025, the law will apply to companies with annual turnover above €10 million and putting at least 10,000 pieces of waste-generating consumer products on the French market.

Article R541-222 states that all the mandatory product information related to environmental qualities and characteristics must be made available on a dedicated website or web page. This information should be titled: “product sheet relating to the qualities and environmental characteristics” or “fiche produit relative aux qualités et caractéristiques environnementales”. The information that must appear in “French” language on this product sheet for textile products (apparel, footwear, and home textile) is as follows:

Traceability: Country of manufacturing of the following three operations:

Apparel: Weaving/Knitting, Dyeing/Printing, Apparel Manufacturing

Footwear: Stitching, Assembling, Finishing

Presence of plastic microfibers

Labels must display “releases plastic microfibers into the environment during washing” or “rejette des microfibres plastiques dans l’environnement lors du lavage” if more than 50% of the product is made of synthetic fibers by weight.

Recycled material content

Labels must display “product containing at least X% recycled material” or “Produit comportant au moins X% de matiere recyclées” if the product contains recycled material content in terms of global proportion in weight.

Hazardous substances

Brands must disclose if any hazardous substance material has concentration greater than 0.1% in the product materials or trims.

Labels must display “contains a substance of very high concern” (“contient une substance extrêmement préoccupante”) alongside with the name of the present hazardous substance, if the substance material is listed in I or II of Article L. 5232-5. When the dangerous substance is not listed, Labels must display “contains a harmful substance” (“contient une substance nocive”). The information shall be made available no later than six months after the substance has been identified as a hazardous substance.

Recyclability

Brands must determine the recyclability of their products which is defined as the capacity to efficiently recycle waste from identical or similar products. Labels must display “majority of the product is recyclable” or “produit majoritairement recyclable”, when the following five criteria are fulfilled:

I. Recycled material produced by the recycling processes represents more than 50% of the mass of collected waste.

II. The ability to be effectively collected throughout France via local collection points.

III. The ability to be sorted, i.e. sent to recycling systems to be recycled.

IV. The absence of items or substances that disrupt sorting, recycling or limit the use of recycled materials.

V. The ability to be recycled on an industrial scale, in particular a guarantee that the quality of the recycled material obtained is sufficient to ensure the sustainability of outlets and that the recycling system has the proper capacity to handle the products that may be integrated into the system.

Labels may display “product entirely recyclable” or “produit entièrement recyclable“, when the recycled material produced by the recycling processes used represents more than 95% of the mass of collected waste. However, recyclability requirement does not apply to clothing, household linen and footwear as determined by Refashion.

Further, companies must provide separate information regarding the primary packaging with which the product is sold. This information must be provided within the same product digital label but must be calculated and displayed separately from the information displayed for the textile product. Requirements include disclosures on the recycled content of the packaging, the recyclability of the packaging, and the presence of hazardous substances.

Companies are forbidden to display environmental allegations such as “biodégradable” (biodegradable) or “respectueux de l’environnement” (environmentally friendly) or “neutre en carbone” (Carbone neutral) on products or their packaging.

3. EU Product Environmental Footprint (PEF)

The European Commission adopted the use of Product Environmental Footprint (PEF) method in March 2022, helping companies to calculate their environmental performance based on a science-based standardized framework. The PEF method measures impact across 16 environmental indicators such as carbon emissions, water use, freshwater ecotoxicity, and land use. The PEF methodology supports the objectives of the EU’s “European Green Deal” and circular economy ambitions.

The European Commission is adopting category-specific rules for the apparel and footwear industry. PEF Category Rules (PEFCR) for the apparel & footwear¹ industry are designed to ensure that all fashion brands follow a common framework to calculate and share the environmental impacts of their products. PEFCR is based on globally accepted International Organizations for Standardization (ISO) standards, e.g., 14040 and 14044. We also covered the importance of PEF in making fashion sustainable in an earlier blog.

The PEF Category Rules (PEFCR) for the apparel & footwear industry are developed by a multi-stakeholder working group, called the Technical Secretariat, and completed with inputs from two public consultations and several industry expert reviews. The PEFCR, once enforced, will also drive wider adoption of product footprint labels and digital product passports.

I. Specific rules tailored to 13 apparel & footwear categories such as shirts, pants, dresses, boots, swimwear, etc.

II. Increases the consistency and comparability of the environmental impact of two items in the same product category.

III. Allows scalability with a standardized set of calculation rules with pre-defined, validated assumptions to do product footprint calculations at scale, reducing cost and improving accessibility for the fashion industry.

IV. Informs and encourages eco-design approaches for product designers by focusing innovation efforts on identified areas of improvement, and by including durability and repairability metrics.

4. European Green Deal

The EU has launched the European Green Deal, an ambitious plan aimed at transforming Europe into a more sustainable and climate-neutral economy. The implications of the European Green Deal on the fashion industry are significant:

Carbon Neutrality

The European Green Deal aims to achieve carbon neutrality by 2050, which means that the net greenhouse gas (GHG) emissions will be reduced to zero. The fashion industry, known for its significant carbon footprint due to its energy-intensive production processes, transportation, and use of fossil fuel-derived materials, will need to reduce its emissions to align with this goal. This may involve adopting renewable energy sources, improving energy efficiency in production, and promoting sustainable transportation and logistics.

Circular Economy

The European Green Deal promotes the transition to a circular economy, where products are designed to last longer, waste is minimized, and materials are recycled and repurposed. This has significant implications for the fashion industry, which has been notorious for its “fast fashion” model of producing cheap, disposable clothing that contributes to overconsumption and waste. The circular economy approach encourages fashion companies to adopt sustainable practices such as reducing waste in production, promoting clothing repair and maintenance, and increasing the use of recycled materials.

Sustainable Materials

The European Green Deal emphasizes using sustainable materials in production processes. This includes reducing the use of virgin resources and promoting the use of recycled or upcycled materials. The fashion industry, which relies heavily on natural resources such as water, energy, and raw materials like cotton and leather, can benefit from adopting sustainable materials. This may involve exploring innovative materials such as organic cotton, hemp, and recycled polyester, as well as implementing certification systems for sustainable materials.

Consumer Awareness

The European Green Deal strongly emphasizes consumer awareness and empowerment, eliminating the scope for greenwashing. This means that consumers are encouraged to make informed choices, demand sustainable products, and engage in circular economy practices such as repair, reuse, and recycling. The fashion industry will need to respond to this shift in consumer behavior by providing transparent information about its sustainability efforts, offering sustainable choices, and educating consumers on responsible consumption habits.

Conclusion

Fashion companies must keep up with evolving regulations and adapt their business practices accordingly to remain compliant and stay ahead of the sustainability curve. The various environmental regulations present both challenges and opportunities for the fashion industry. These regulations call for a paradigm shift towards circular economy practices, sustainable materials, carbon neutrality, social responsibility, consumer awareness, and policy and regulatory compliance.

The fashion industry needs solutions that are automated to do calculations with limited resources, scalable to cover their entire collection, and accurate to represent the real situation in the supply chain. Sustainability platforms like Carbon Trail empower sustainability teams, even with limited expertise, to avoid greenwashing, comply with various environmental regulations, and accelerate their decarbonization journey.


References

1. The PEFCR Apparel and Footwear website

Co-Founder & CTO

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