After decades of omissions in the clothing and textile industry in relation to environmental regulations, something is now supposed to change – at least in Europe – by law. The European Parliament is currently tackling the social and environmental impact through a number of initiatives.
A week ago, the EU Parliament approved a plenary resolution on the EU supply chain law (EU Corporate Sustainability Due Diligence Directive – CSDDD) with a majority: 366 MPs voted in favor, 225 against and 38 abstained.
CSDDD
The Corporate Sustainability Due Diligence Policy aims to ensure that large companies take action against suppliers who do not comply with certain rules relating to their social and environmental practices and addresses areas such as child labour, slavery, labor exploitation, pollution , environmental degradation and loss of biodiversity.
“Companies will be required to identify and, where appropriate, prevent, terminate or mitigate the negative impacts of their activities in these areas. They also need to monitor and assess the impact of their partners in the value chain, not only at the subcontracting companies, but also in the areas of sales, distribution, transport, storage, waste management and other areas,” the European Parliament said in a press release .
The rules would apply to all EU-based companies with more than 250 employees and a global turnover of more than 40 million euros, as well as parent companies with more than 500 employees and a global turnover of more than 150 million euros. This met with considerable criticism, especially from German medium-sized companies and associations.
In addition, the rules would also apply to non-EU companies with a turnover of more than EUR 150 million if at least EUR 40 million of this is generated in the EU.
Sanctions and damages threaten
But that is not all; the directive would also oblige companies to put in place a transition plan consistent with the Paris Agreement target of limiting global warming to 1.5 degrees Celsius. For companies with more than 1,000 employees, the achievement of targets will have a direct impact on executive variable compensation.
Companies that do not comply with the provisions of the directive would be liable for damages and could be subject to sanctions by national supervisory authorities. These include “naming and shaming”, the withdrawal of the company’s goods from the market or fines of at least 5 percent of worldwide net sales. Companies outside the EU would be threatened with exclusion from public contracts in the EU. The proposal builds on a similar plan by the European Commission to ban the sale of forced labor products on the EU market, which the committee has yet to decide on.
As a next step, the European Parliament will now start its negotiations with the member states on the final text of the legislation. They had already set their position on the draft directive in November 2022.
“The support of the European Parliament is a turning point in thinking about the role of business in society. A corporate responsibility law must ensure that the future lies with companies that treat people and the environment in a healthy way – and not with companies that have turned environmental damage and exploitation into a revenue model,” comments Dutch politician Lara Wolters.
“Most companies take their duty to people and the environment seriously. We help these companies with this ‘fair business law’. And at the same time, we’re taking out the few big cowboy companies that don’t play by the rules,” adds Wolters.
Even fast fashion is on the loose
An important part of the EU’s current efforts to address issues in the fashion industry comes in the form of legislation and proposals aimed primarily at ending fast fashion. Most recently, Parliament adopted recommendations for the EU strategy for sustainable and circular textiles, which call for textile products sold in the EU to be “more durable, more easily reusable, repairable and recyclable”. Throughout the supply chain, production should also respect human, social and labor rights, as well as environmental and animal welfare.
The proposal is part of the European Green Deal package, which aims to make almost all physical goods on the EU market greener, circular and energy efficient throughout their life cycle. Other proposals in the package include creating a legal framework to ensure climate targets can be met, as well as new rules that give consumers more information so they can make more sustainable choices.
ESPR
Last year, the European Commission also passed a new Ecodesign for Sustainable Products Regulation (ESPR), which is now under debate in the European Parliament and could come into force in 2025. The bill would introduce a digital passport for a range of products, including clothing, and would prohibit the destruction of unsold clothing.
“Consumers alone cannot reform the global textile sector through their buying habits. If we allow the market to regulate itself, we open the door to 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. The people and the planet are more important than the profits of the textile industry”, Delara Burkhardt, Member of the European Parliament, explains the need for the ESPR.
The urgency for stricter regulation is highlighted in a report released this week by the European Commission, identifying 18 member states at risk of failing one or both of the 2025 targets for packaging waste reuse and recycling and 2035 targets for landfill to miss. These countries included Portugal, Spain, Sweden, France, Ireland, Greece and Ireland. In contrast, nine countries, including Austria, Belgium, Germany, Italy and the Netherlands, are well on the way to achieving the 2025 targets. The report notes that there are significant disparities in waste management across the EU, adding that reforms are needed to improve quotas.
Other legal initiatives
Other new laws that the European Parliament is aiming for are aimed in particular at dealing with textiles that have a negative impact on the environment, such as microplastics. This issue was driven by a policy paper published earlier this year calling on the EU to make filters mandatory in washing machines. In April, the EU Commission also welcomed the positive vote on a proposal by the Reach Committee to restrict microplastics that are intentionally added to products. The proposal is currently subject to a three-month scrutiny by the European Parliament and the Council before it can be adopted by the Commission.
The European Union has also agreed to ban the import of products linked to deforestation and plans to impose strict controls and due diligence on companies that want to place such products on the EU market. In accordance with the law, companies are also required to collect accurate geographic information about the acreage from which their materials come so that they can be verified for compliance.
Finally, the European Parliament has also voted for stricter rules for online purchases, which are intended to protect consumers from dangerous products and enable faster recalls.