There are three main categories of legislation to be aware of and develop your data collection strategy around: due diligence, claims & labeling and sustainability reporting. While not all regulations fit neatly into one bucket. Some, like the EU Ecodesign for Sustainable Products Regulation, will cover aspects from several categories. In this blog post, learn more about the key legislations and the data needed for compliance.
Due diligence
This legislative class requires companies to identify and mitigate environmental and/or social risks along their supply chain. Laws on forced labor require data on a product shipment level to prove that goods have no forced labor in any part of their supply chain, requiring the collection of country-of-origin documentation. Deforestation regulations can require specific locations of individual farms.
Due diligence laws will help you achieve social impact goals, such as implementing living wages or safer working conditions. A code of conduct is not robust enough to achieve social impact goals. To achieve living wages in their supply chains, companies must have visibility of suppliers, access to information about the wages of their employees, and a collaborative relationship with factories to implement wage increases.
Regulations of interest:
- German Supply Chain Due Diligence Act (SCDDA or LkSG)
- EU Ban on Products Made with Forced Labor
- The Garment Worker Protection Act
- EU Corporate Sustainability Due Diligence Directive
- The FABRIC Act
- Norwegian Transparency Act
- Dutch Child Labour Due Diligence Act
- EU Deforestation-free Regulation (EUDR)
- CPSIA and FFA Chemical Testing Requirements for Apparel
Claims and Labeling
Claims and Labeling laws require companies to substantiate any environmental or social claims made with reliable and relevant evidence. Requirements can range from top-line data to highly granular information around the product life-cycle, such as environmental scoring, circularity, traceability, and other sustainability information.
An example is the French Anti-Waste for a Circular Economy Law (AGEC), which relates to the claims and labeling of materials on consumer-facing labels. AGEC requires companies to make weight-based declarations of recycled material content and disclose the traceability of main materials by showing countries of origin.
Regulations of interest in addition to existing advertising laws:
- EU Strategy for Sustainable and Circular Textiles
- EU Green Claims Directive
- The French Climate & Resilience Law – Environmental Labelling for Products
- AGEC: Decree Under the French Anti-Waste for a Circular Economy Law (Décret n° 2022-748)
- EU Empowering Consumers in the Green Transition Initiative
Sustainability Reporting
Sustainability Reporting laws standardize requirements for reporting, such as how to report on targets and progress towards Scope 1, 2, and 3 emissions reduction, both in absolute and relative terms, as well as for the total company and per product.
As many laws are still at the proposal stage, the exact requirements are not yet defined. Leading companies have already started collecting and analyzing granular data per shipment, so they are ready when laws come into force. Beyond what is required by compliance, companies can also use this data to get a granular understanding of their supply chain to accelerate positive social, environmental and business impact.
Regulations of interest:
- EU Ecodesign for Sustainable Products Regulation Proposal (ESPR)
- Digital Product Passport (Under the ESPR)
- UK Competition Market Authority’s (CMA) Green Claims Code
- EU Corporate Sustainability Reporting Directive Proposal (CSRD)
- New York State Fashion Sustainability and Social Accountability Act
- United States Securities and Exchange Commission (SEC) Proposed Climate-Related Disclosure Rules
- Product Environmental Footprint Methodology
Data for Compliance
By now, fashion companies know they need data to comply with regulations. But identifying what data they need to gather is the most important piece in the puzzle.
In the table below, we have called out the data requirements for six major laws facing fashion businesses. Having the data to hand will be central for compliance with other laws and regulations, as many have overlapping data requirements.
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This story is an excerpt from the Traceability Roadmap, TrusTrace's step-by-step guide to implementing traceability in fashion supply chains. Read the full report here.
Last updated on September 24, 2024 with additional links.
