Navigating Key Sustainability Legislation in the EU, US, and UK
The landscape of sustainability legislation has evolved significantly over the past year, particularly in the Global North, impacting suppliers across the apparel value chain. This report outlines key legislative initiatives that suppliers in the Global South and other manufacturing regions need to understand as they navigate the implications of these laws. The report is commissioned by notable organisations, including Crystal International Group Limited and Lenzing Aktiengesellschaft, among others, with support from the Transformers Foundation and GIZ FABRIC Asia.
Overview of Legislative Landscape
The report covers twelve legislative initiatives, including:
- EU Strategy for Sustainable and Circular Textiles
- EU Corporate Sustainability Due Diligence Directive (CSDDD)
- EU Corporate Sustainability Reporting Directive
- New York Fashion Act
- EU Forced Labour Regulation & Guidance
- US Uyghur Forced Labor Prevention Act
- EU Ecodesign for Sustainable Products Regulation
- EU Packaging & Packaging Waste Directive
- EU Microplastics Regulation
- UK Plastic Packaging Tax
- EU Product Environmental Footprint Guide
- EU Textiles Regulation
- EU Taxonomy
- German Due Diligence in the Supply Chain Act
Recent Developments in Sustainability Legislation
The report highlights the momentum gained by various legislations within the EU, UK, and US over the past year. This surge in legislative activity has created an urgent need for suppliers to understand how these laws will affect their operations.
The report includes updated fact sheets for the previously covered legislative initiatives and introduces three new factsheets, specifically focusing on the EU Strategy for Sustainable and Circular Textiles and the German Due Diligence in the Supply Chain Act. Notably, the EU Strategy for Sustainable and Circular Textiles serves as a foundational document, underpinning much of the emerging legislation in the EU.
Key Impacts on Suppliers
The legislative initiatives outlined in this guide will have profound operational and legal implications for apparel suppliers. It is crucial for suppliers to engage with the details of each legislative fact sheet to understand their potential liabilities and responsibilities.
Trend 1: Responsible Purchasing Practices & Shared Responsibility
The CSDDD mandates companies to review their purchasing practices, particularly concerning small and medium-sized enterprises (SMEs). This directive aims to ensure that Human Rights & Environmental Due Diligence (HREDD) responsibilities are shared between brands and suppliers, preventing brands from outsourcing their obligations.
- Key Implications: This shift from a compliance-centred approach to a risk-based approach allows suppliers to advocate for fairer contracts and ethical commercial practices.
- Recommendations: Suppliers should demand transparency from brands regarding their purchasing practices and push for the inclusion of purchasing frameworks in legislation. Initiatives like the Responsible Contracting Project and the Sustainable Terms of Trade Initiative are examples of ongoing efforts to promote fairness in commercial relationships.
Trend 2: Multiple Interpretations and Duplication of Work
The complexity of compliance is heightened by the potential for brands to interpret legal requirements differently, leading to conflicting standards for suppliers.
- Key Implications: Suppliers may face increased operational burdens due to multiple standards and programs, including traceability software and grievance redressal tools.
- Recommendations: Suppliers should engage with brands before they finalise implementation methodologies to mitigate risks associated with multiple interpretations. Collaborating with brands to align operations with OECD Guidelines and UN Guiding Principles can also help minimise compliance challenges.
Trend 3: Increasing Reporting Requirements and Data Requests
With the adoption of various directives, suppliers will encounter escalating data requests regarding their supply chain practices.
- Key Implications: Suppliers must provide visibility into both upstream and downstream supply chain partners, which may alter purchasing behaviours and increase involvement in textile processing.
- Recommendations: Suppliers should enhance their data management capabilities and prepare for compliance with the Global North’s legislative landscape. This includes documenting supply chain orders and improving systems for life cycle assessment data collection.
Trend 4: Potential Legal Implications for Suppliers
Legislation such as the UFLPA, EU Forced Labor Act, and the German Supply Chain Due Diligence Act could expose suppliers to direct legal liabilities.
- Key Implications: Suppliers may face increased scrutiny and potential legal actions, particularly from NGOs and trade unions.
- Recommendations: Suppliers should seek competent legal counsel to navigate potential legal implications and prepare documentation to comply with new regulations. They should also advocate against the transfer of liability from brands to suppliers, emphasising that the ultimate responsibility lies with the importer.
Recommendations for Suppliers
To effectively adapt to the evolving legislative landscape, suppliers should consider the following recommendations:
- Engage with Brands: Actively discuss compliance methodologies with brands to mitigate the risk of conflicting interpretations of regulations.
- Build Data Management Capabilities: Invest in systems for data collection and management to meet increasing reporting demands.
- Collaborate Across Departments: Ensure that compliance efforts are integrated across various departments, not solely within sustainability teams.
- Advocate for Fair Contracts: Leverage collective bargaining power to demand fairer contracts that reflect shared responsibilities under new regulations.
- Stay Informed: Continuously monitor legislative developments and engage with industry bodies to stay abreast of changes that may impact operations.
Conclusion
As the legislative landscape continues to evolve, suppliers must remain vigilant and proactive in adapting to new requirements. The insights provided in this report aim to equip suppliers with the knowledge necessary to navigate the complexities of sustainability legislation effectively.
This report serves as a crucial resource for understanding the implications of sustainability-related legislation and the collective action required from suppliers to advocate for fair practices and shared responsibilities within the apparel industry.
