What do the EU changes mean for the fashion industry?

With its “Simplification Omnibus Package”, the European Commission is driving changes to the guideline on the sustainability reporting of companies (CSRD) and the directive on the entrepreneurial duty of care in sustainability (CSDDD). A leaked draft triggered a heated debate because it reveals significant changes to the thresholds of the reporting obligation, the implementation periods and the duties of care. While some see these changes as necessary simplifications, others argue that they weaken the accountability of companies.

So what changes (possibly)? Who is against and why? And what potential effects are there for the fashion industry?

What changes (ultimately)?

1. Higher thresholds in the obligation to report

One of the most important adjustments is to raise the threshold values ​​for the obligation to report. According to the leaked draft, the requirement for net sales for reporting companies would increase from EUR 150 million to 450 million euros and 1,000 employees, which would result in a considerable number of US and non-EU companies from the area of ​​application of the CSRD (Ropes & Gray, Littenberg et al., 2025). However, the guideline remains extremely relevant for global fashion groups – many of which exceed these threshold values.

2. Adaptation of the reporting along the value chains

Another important change affects the reporting on the value chain, which has long been a controversial topic for fashion brands due to its complex global supply chains. The leaked draft suggests reducing the report by restricting the obligation to obtain data from companies that are not directly subject to the CSRD. This could facilitate compliance with the regulations for fashion brands that work with small delivery companies.

However, the strategic sustainability consultant Peter Suasso de Lima de Prado expresses concerns about certain restrictions in the changes. He argues that the liberation of companies with fewer than 500 employees could be counterproductive from the risk mapping. “The size is not the risk – you should decide where to focus,” he notes, pleading for a greater scope for discretion for companies in monitoring the supply chain. Its perspective is particularly relevant for fashion brands, since smaller manufacturing companies often play a crucial role in their supply chains, but can nevertheless represent considerable risks to the environment and human rights.

3. Change of diligence duties

The CSDDD changes aim to specify the duties of care, especially with regard to the risk assessment. Ropes & Gray observes that the proposed changes limit the obligation of the companies to rate actual and potential adverse effects on their direct business partners: inside (animal 1 delivery company). An in -depth assessment of indirect partners: inside would only be necessary if plausible risks are found.

For the fashion industry – where supply chains often extend over several levels – this shift could reduce the effort to comply with the regulations. Some experts: Inside, however, warn that this could also weaken the accountability. Suasso de Lima de Prado points out that the changes should facilitate compliance with the regulations, but can accidentally restrict the flexibility in coping with risks.

4. Industry -specific standards on ice

Another important proposed change is the extension of the surveillance period of annual reviews at a time every five years. While this may seem like relief for companies, Suasso de Lima de Prado argues that this misunderstands the dynamics of the supply chain. “The integration of monitoring into existing processes costs less than large periodic exercises,” he explains and suggests that companies should carry out ongoing ratings instead of relying on irregular, large -scale audits.

The leaked draft also suggests that industry -specific report standards as part of the CSRD indefinite. Originally, these tailor -made sustainability reports for industries such as the fashion industry should provide. In view of the fact that the industry is one of the most environmentally harmful, this delay could hinder the efforts to develop clear, industry -specific guidelines on topics such as textile waste and carbon emissions.

5. Materiality and warranty: No fundamental revision

Despite speculation, that the European Commission could do not cancel double materiality – which is required by companies to report on both financial and ecological/social effects – it is not canceled in the decomposed draft. This means that fashion companies not only have to disclose how sustainability issues affect their business result, but also their broader effects on society and the environment.

With regard to the guarantee, the draft maintains the request of a limited guarantee of sustainability reports. However, the obligation to ensure a reasonable warranty by 2028 is canceled, which means that the requirements are effectively frozen at a lower level. Companies still have to deliver credible data, but they could be faced with less strict review procedures.

6. Debate on civil liability and maintenance costs

The leaked changes suggest that punishments are bound to 5 percent of the global sales, and to remove private laws that would enable third parties to sue companies for non -compliance. Suasso de Lima de Prado points out that legal liability remains a gray area and emphasizes that “the call on the market (the court of public opinion) is often a greater business risk than judgments”. This is particularly relevant for fashion brands in which the trust of consumers: inside plays an important role in brand value.

Who is against the changes and why?

Environmental and human rights activist: inside

Many sustainability experts: Inside and NGOs argue that these changes water down the accountability of companies. Critics: Inside, indication that the increase in report thresholds can reduce the number of companies that have to disclose sustainability information and enable medium -sized companies to work with less transparency. Similarly, the reduction of diligent duties for indirect delivery companies could weaken the protection against human rights violations and environmental damage in global supply chains.

EU member states with strict sustainability guidelines

Countries such as France, Germany and Denmark have campaigned for stricter sustainability measures for companies in the past. While these nations support the simplification of compliance requirements, they also support the maintenance of high environmental and social standards. Some political decision-makers: Inside, fear that the reduction in reporting obligations and the delay in the implementation dates could hinder progress in the direction of the EU’s climate and human rights objectives.

Fashion brands and industry players: inside

The reactions are mixed within the fashion industry. Larger brands with extensive sustainability initiatives could be concerned that reduced transparency requirements could lead to Greenwashing allegations. On the other hand, medium -sized companies and smaller delivery companies could welcome the lower report load, since the costs for compliance with the regulations are a significant challenge.

Effects on the sustainability efforts of the fashion industry

As is well known, the fashion industry is one of the most environmentally harmful industries that are responsible for considerable carbon emissions, water consumption and concerns with regard to labor rights. The CSRD and CSDDD were developed to improve transparency and entrepreneurial responsibility in coping with these problems. However, the proposed changes could change the direction of the sustainability efforts in the following way:

• Less transparency in the supply chains: With reduced reporting obligations for value creation partners: Inside, companies could experience less control over the environmental and work practices of their delivery companies. This could slow down the efforts to improve the conditions in textile production centers such as Bangladesh, Vietnam and India.

• Relocation of regulation to voluntary obligations: If industry-specific standards are abandoned, fashion brands could increasingly rely on voluntary sustainability initiatives such as the Science Based Targets Initiative (SBTI) or the HIGG index of the Sustainable Apparel Coalition. While some companies have robust volunteers, others could reduce their sustainability investments in the absence of regulatory pressure.

• Longer implementation periods: The delay in the CSDDD implementation gives brands more time to adapt their procurement and care processes. Although this may reduce the short-term costs for compliance with the regulations, this also means a slower progress in coping with critical human rights and environmental problems.

• Potential competitive disadvantages: Companies that have already invested strongly in sustainability reporting could be disadvantage compared to competitors: inside that benefit from reduced compliance obligations. This could lead to unequal competitive conditions within the industry.

outlook

While the final form of these changes remains uncertain, one thing is clear: the fashion industry must remain vigilant. The displacement of the report thresholds may be the regulatory stress for smaller players: reduce inside, but for larger brands, compliance with the regulations remains a complex challenge. Sustainability experts such as Suasso de Lima de Prado emphasize that despite these changes, the best approach is to align the care language on established framework works such as the UN guiding principles and the OECD guidelines.

Ultimately, the EU sustainability guidelines develop, but their core goals – the strengthening of entrepreneurial responsibility and responsible business practices – remain. Whether these adjustments will be the right balance between simplification and maintaining strong sustainability standards is a debate that will continue to develop in the coming weeks.