To enhance competitiveness and regain control over its supply chains, the European Union is refining its sustainability regulations. With a new parliament in place, the emphasis has shifted from sustainability as an end goal to sustainability as a means to boost European competitiveness. This shift has created both opportunities and challenges for businesses, particularly in the fashion and textile industries.
The Evolution of EU Sustainability Regulations
The European Green Deal and the Strategy for Sustainable and Circular Textiles, introduced six and three years ago respectively, laid the groundwork for sweeping regulatory changes. Over the past two years, the EU has introduced a flurry of regulations focusing on ecodesign, waste management, forced labor, digital product passports, and supply chain transparency.
However, the recent European elections have brought about a shift in priorities. With a renewed focus on strategic autonomy and industrial competitiveness, the EU is re-evaluating its regulatory framework to balance sustainability goals with economic growth.
Competitiveness Over Compliance?
A major catalyst for this shift was the September 2024 report by former European Central Bank president Mario Draghi, which highlighted Europe’s declining competitiveness compared to other global players, particularly the U.S. The report pointed out that Europe has struggled to capitalize on technological advancements and remains vulnerable due to dependencies on foreign suppliers.
As a response, the EU has introduced the Competitiveness Compass, a roadmap aimed at restoring economic dynamism. One key element is an omnibus simplification package designed to reduce administrative burdens for businesses by 25% for larger firms and 35% for SMEs. Three major regulations currently under review include:
- Corporate Sustainability Reporting Directive (CSRD)
- Corporate Sustainability Due Diligence Directive (CSDDD)
- EU Taxonomy
While simplification aims to reduce bureaucracy and boost competitiveness, concerns have been raised that loosening regulations could dilute sustainability efforts. Some fear this could lead to delays in implementation or outright deregulation.
Implications for the Fashion and Textile Industry
For the fashion and textile sector, these regulatory adjustments present both challenges and opportunities:
- Supply Chain Transparency & Digital Product Passports:
- The push for traceability remains strong, meaning companies must still invest in digital product passports and sustainable supply chain management.
- However, the regulatory uncertainty may slow down long-term investments in these systems.
- Sustainability as a Competitiveness Tool:
- Businesses that align sustainability with innovation and efficiency will likely benefit from policy incentives.
- The EU is expected to provide support for clean industrialization and localized production.
- Compliance Uncertainty:
- Companies that have already invested in compliance frameworks now face a moving regulatory landscape.
- Shifting regulations could erode trust between businesses and policymakers.
How the Industry Can Influence Policy
The evolving regulatory framework presents an opportunity for industry stakeholders to engage in policy discussions. Marta Inchausti Moya, public affairs manager at the Global Fashion Agenda, emphasizes the importance of fashion brands participating in EU policy dialogues.
Engagement strategies include:
- Joining Policy Hubs: Organizations like The Policy Hub act as bridges between policymakers and industry players.
- Participating in Public Consultations: These provide direct input into regulatory decisions.
- Forming Stronger Industry Coalitions: Unlike other industries, fashion has historically lacked a unified lobbying force.
- Developing In-House Public Affairs Teams: As regulations become a central issue, brands are increasingly investing in dedicated public affairs departments.
The Road Ahead
While sustainability remains a core focus, the EU’s shift towards competitiveness signals a new era of regulatory negotiation. Fashion and textile businesses must stay agile, adapting to both sustainability goals and economic pressures. Proactive engagement with policymakers, investment in innovation, and alignment with strategic EU priorities will be key to navigating this evolving landscape.
With deadlines approaching and policies still under debate, now is the time for industry players to influence the future of sustainability regulations in Europe.
