2024

EU Strategy for Sustainable and Circular Textiles

Edition EU Corporate Sustainability Due Diligence Directive

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 & Provisional Regulation
EU Microplastics Regulation
UK Plastic Packaging Tax
EU Product Environmental Footprint Guide
EU Textiles Regulation
EU Taxonomy
The German Due Diligence in the Supply Chain Act
Lessons for Fashion: How the agricultural sector is tackling

An Apparel
commercial compliance through the EU Directive on unfair trading
practices

Supplier’s Guide 2.0

Key Sustainability Legislation
in the EU, US, and UK
Acknowledgements
This resource was commissioned and led by:
Crystal International Group Limited
Author: Diamond Fabrics Limited (Sapphire Group)
The Remedy Project is a social enterprise that
Lenzing Aktiengesellschaft
works to improve access to justice and remedy for
Pactics Group
migrant workers in global supply chains. They work
constructively with governments, civil society, law
Poeticgem Group
enforcement, and the private sector to translate the Shahi Exports
UN Guiding Principles on Business and Human Rights Simple Approach
into practice. For more information please see www. Sourcery
remedyproject.co. Transformers Foundation

Additional Author:
adelphi consult GmbH has authored the section on the
‘Directive (EU) 2019/633 on unfair trading practices in
the agricultural and food supply chain.

Additional Reviewers:
Business & Human Rights Resource Centre
International Apparel Federation
Michele Crymes
German Institute for Global and Area Studies (GIGA)
Social & Labor Convergence Program
In addition, this research was also supported by:
Yee Chain International Co., Ltd. Deutsche Gesellschaft für Internationale Zusammenarbeit (GIZ) GmbH, GIZ, FABRIC Asia and
Transformers Foundation
Graphic Design:
Fiona Fung

2 An Apparel Supplier’s Guide 2.0: Key Sustainability Legislation in the EU, US, and UK
Contents P.27 P.42 P.62 P.75

EU Strategy for EU Corporate EU Corporate New York

Executive Summary Sustainable and Sustainability Sustainability Fashion Act
for Senior Leaders of Circular Textiles Due Diligence Reporting
Directive Directive
Companies Supplying
Apparel & Beyond P.4 P.88 P.105 P.120 P.137

EU Forced Labour US Uyghur EU Ecodesign EU Packaging and

Introduction P.13 for Sustainable
Regulation Forced Labor Packaging Waste
and Guidance Prevention Act Products Directive and
How to Use this Regulation Provisional Regulation
Document P.16

Glossary P.19 P.147 P.156 P.163 P.171

Overview P.21
EU Microplastics UK Plastic EU Product EU Textiles
Regulation Packaging Tax Environmental Regulation
Footprint Guide

P.178 P.187 P.208

EU Taxonomy German Supply Lessons for fashion: How the agricultural

Chain Due sector is tackling commercial compliance
Diligence Act through the EU Directive on unfair
trading practices

3
Factsheet

Executive
Summary for
Senior Leaders
of Companies
Supplying
Apparel & Beyond

4 An Apparel Supplier’s Guide 2.0 : Key Sustainability Legislation in the EU, US, and UK
 Sustainability-related
legislation is here.
Just a year ago, when we published the first version of this report, we anticipated that a
wave of legislation in the Global North was coming. Within a year, several legislations
have been adopted or gained momentum in the EU, UK & United States. This has created
a heightened need for suppliers in the apparel value chain in the Global South and other
manufacturing regions to understand the impact of the upcoming and adopted legislation on
their operations. Whether you are new to this report or well-versed with last year’s report,
we encourage suppliers to engage with the factsheets to establish whether your company
is directly within scope or whether the brands and retailers for which you produce are in
scope. In either scenario, your company will likely face strong knock-on effects. However, it
is important to emphasize that even if your company is only indirectly in scope, you are still
likely to be impacted and may even be legally liable through new and strengthened contracts
from brands.

This report is commissioned by Crystal International Group Limited, Diamond Fabrics Limited
(Sapphire Group), Lenzing Aktiengesellschaft, Pactics Group, Poeticgem Group, Shahi
Exports, Simple Approach, Sourcery, with support from Transformers Foundation and GIZ
FABRIC Asia.

5 An Apparel Supplier’s Guide 2.0: Key Sustainability Legislation in the EU, US, and UK
An overview of
updates made to This report includes updated fact sheets for the 12 legislative initiatives covered in the 2023
report and three new factsheets covering legislative initiatives not previously included:
this report the EU Strategy for Sustainable and Circular Textiles (ESSCT), the German Due Diligence
in the Supply Chain Act. Some of the updated factsheets underwent major revisions over
the last year and have changed quite a bit, whilst others faced more minor changes and a
section on looking at “Lessons for fashion: how is the agricultural sector is tackling commercial
compliance through the EU Directive on unfair trading practices”.

Although factsheet 0, the EU Strategy for Sustainable and Circular Textiles, is not a piece of
legislation in and of itself, it was included in this report because it is the backbone and driving
force behind much of the emerging legislation in the EU. Thus, it is an important overarching
document for suppliers to understand and connect legislations and directives.

We decided to include the EU Directive on Unfair Trading Practices in the Agriculture and
Food Supply Chain to give suppliers insight into how the agricultural sector, characterized by
similarly asymmetrical commercial relationships, is working to improve issues of imbalanced
bargaining power between buyers and suppliers.

Please note that this guide is in no way the only guide on all legislation. There may be
other legislation or reports that would be relevant for suppliers. Last year, the entities
commissioning this report mapped 60 legislative initiatives with potential implications for
suppliers and selected 12 legislations to cover. We did a similar exercise this year, reviewing
35 pieces of legislation and voting on three factsheets to add to this version of the report.

6 An Apparel Supplier’s Guide 2.0: Key Sustainability Legislation in the EU, US, and UK
Updates to the 2024 Edition

New factsheets

EU Strategy for German Supply Lessons for fashion: How the agricultural sector
Sustainable and Chain Due is tackling commercial compliance through the EU
Circular Textiles Diligence Act Directive on unfair trading practices

Major updates to
factsheets
EU Corporate EU Corporate EU Forced Labour EU Packaging EU Microplastics
Sustainability Sustainability Regulation and Packaging Regulation
Due Diligence Reporting and Guidance Waste Directive
Directive Directive and Provisional
Regulation

Minor updates to
factsheets
New York US Uyghur EU Ecodesign UK Plastic EU Product
Fashion Act Forced Labor for Sustainable Packaging Tax Environmental
Prevention Act Products Regulation Footprint Guide

EU Textiles EU Taxonomy
Regulation

7 An Apparel Supplier’s Guide 2.0: Key Sustainability Legislation in the EU, US, and UK
Key impacts &
recommendations Trend 1: Responsible purchasing practices & shared responsibility

for suppliers Key Implications

The EU Corporate Sustainability Due Diligence Directive (CSDDD) introduced requirements for companies to
The legislative initiatives covered in the review their purchasing practices, particularly when contracting with small and medium-sized enterprises (SMEs).
This aims to ensure that Human Rights & Environmental Due Diligence (HREDD) responsibilities are shared
factsheets will likely have far-reaching
equally between brands and suppliers, thereby preventing brands from outsourcing their HREDD obligations and
operational and legal impacts on
associated costs to suppliers.
us apparel suppliers. The suppliers
commissioning this report reflected on the In this way, CSDDD recognizes the ability of contracts to underpin more balanced trading relationships and
potential implications of these legislations mandates a shift from a compliance-centered approach— in which compliance efforts and costs are easily shifted
based on the factsheets and made some from buyers to suppliers— to a risk-based approach where brands’ purchasing practices become part of the risk
recommendations for fellow and peer equation.

suppliers. However, we encourage senior

managers to direct their teams to engage Reflections & Recommendations
with the details of each factsheet. We
We welcome this renewed focus on purchasing practices in CSDDD and urge all suppliers to be aware that
would also stress that compliance cannot the burden and the risks associated with the legislation cannot and should not be simply passed on to you.
be left to sustainability departments
alone and will require joint efforts across This shift may allow suppliers to advocate for more ethical commercial practices, demand fairer
departments. contracts, and push back on brands’ unfair expectations to fulfill the CSDDD requirements, which are
meant to be a shared responsibility.

There is power in the collective voice of suppliers demanding disclosure from brands on
their purchasing practices and inclusion of purchasing practices frameworks within legislations. Here,
we encourage learning from other sectors—the EU Directive on unfair trading practices in the agri-
food supply chain is a good example of what could be done for our industry. We expect to see industry
bodies and supplier groups advocating for contracts and codes of conduct to reflect the regulation’s
expectation of fairness and shared responsibility. Some examples of ongoing initiatives include the
Responsible Contracting Project, the Sustainable Terms of Trade Initiative, and The Common Framework
for Responsible Purchasing Practices.

8 An Apparel Supplier’s Guide 2.0: Key Sustainability Legislation in the EU, US, and UK
 Trend 2: Multiple interpretations and duplication of work for suppliers

Key Implications

We expect this increased burden of work on suppliers due to two factors:

1. Brands may interpret and operationalize new legal requirements differently, leading to suppliers having to
comply with multiple, conflicting standards. To protect themselves from legal investigations and penalties,
brands have started rolling out more stringent goals, codes of conduct, and contract clauses alongside
unannounced audits, on top of ongoing industry assessments, which adds to existing audit fatigue and the
cost of business. In addition to this, suppliers are also facing the brunt of multiple standards and programs,
such as traceability software and grievance redressal tools.

2. In some cases involving Directives, EU Member States may likely interpret EU requirements differently,
leading to suppliers implementing multiple due diligence processes to identify, prevent, remediate, and
report on social and environmental impacts.

Reflections & Recommendations

Discuss the implications and implementation plans with your customers. It is important to
engage with brands and retailers before they finalize their implementation methodologies, as there is a
serious risk of multiple interpretations.

Actively begin evaluating your operations and collaborate with brands to assess your
value chain for alignment with the OECD Guidelines for Multinational Enterprises and the UN
Guiding Principles on Business and Human Rights. Aligning with the OECD Due Diligence Guidelines and
the UN Guiding Principles may minimize this risk to some extent.

To address some of the remedy requirements in the regulations, suppliers can expect brands to
request that they adopt third-party grievance mechanisms, as they may perceive suppliers’
existing grievance mechanisms as inadequate. This may also have the unintended consequence of eroding
your ability to address problems directly.

9 An Apparel Supplier’s Guide 2.0: Key Sustainability Legislation in the EU, US, and UK
 Suppliers have also renewed their calls for greater commonality in audit requirements and modalities,
given the need to comply with a common set of regulations. We anticipate greater efforts on the part
of industry bodies representing both buyers and suppliers to identify what this commonality
might look like in a bid to address mounting audit costs.

Suppliers must continue as a collective to advocate for harmonization across interpretations

by EU Member States. It gives us hope that, in March 2024, the European Council and the European
Parliament reached a political agreement that if the CSDDD is adopted, the German Supply Chain Act will
need to be harmonized with the CSDDD.

Trend 3: Increasing reporting requirements and data requests

Key Implications

With the adoption of CSDD, EU Forced Labor Act, and ESPR, suppliers will face increasing data requests,
including:

1. Visibility into upstream supply chain partners’ practices and full supply chain traceability. In that sense,
suppliers shoulder a dual role: a lot of this legislation forces them to look in two directions, downstream
towards their clients and upstream towards their (fabric, yarn, and accessory) suppliers.

2. Brands may alter their raw material purchasing behavior and become more involved in textile processing
steps to improve their performance or meet sustainability-related performance and information requirements
when such criteria are imposed (e.g., through ESPR)

Reflections & Recommendations

Suppliers must build capabilities to cope with these increasing demands and align with the expectations set out
in these legislations. You are recommended to:

Map your supply chain and ensure you have documentation for orders as per UFLPA and EU
Forced Labor Act to be prepared for brand requests and potential detentions by Customs Authorities.

10 An Apparel Supplier’s Guide 2.0: Key Sustainability Legislation in the EU, US, and UK
 Allocate sufficient resources to understand and proactively comply with the Global North’s
legislative landscape. Shift internal “compliance” mindsets towards “due diligence” and engage,
adapt, and educate legal, HR, sourcing, and other operational functions to share responsibility with
sustainability or ESG teams.

Develop stronger data gathering and management capacity, including improving systems to
measure and capture life cycle assessment (LCA) relevant data (e.g., energy and water consumption per
produced item, the input of chemicals, etc.). Digitize where possible to avoid a massive administrative
burden.

Trend 4: Potential legal implications for suppliers

Key Implications

Through UFLPA, EU Forced Labor Act, and German Supply Chain Due Dilligence Act there may be direct legal
implications for suppliers. Further, where suppliers are not legally liable, their customers/brands might seek to
create this liability through contractual documents.

Reflections & Recommendations

Suppliers will need competent legal advisors to support them in case of any legal
implications. The German Act, for example, allows NGOs and trade unions to sue on behalf of affected
individuals, which could include actions taken against suppliers if they contribute to their client’s non-
compliance.

As mentioned above, despite all the best efforts on due diligence, there could be an
increased risk of detentions by Customs Authorities. Being prepared to offer all documents
as per the UFLPA and EU Forced Labor Act, along with due diligence practices in such cases, would be
essential to avoid becoming blacklisted by such authorities. Suppliers should also be prepared to push
back on fines and penalties being offloaded by brands onto suppliers in case of detentions as, ultimately,
the onus lies on the importer, i.e., the brand.

11 An Apparel Supplier’s Guide 2.0: Key Sustainability Legislation in the EU, US, and UK
Call to Action How to engage?
for Legislators Resources permitting, we hope that the
factsheets will be updated and expanded as the
We strongly believe that legislation is required to create a level playing field and force legislative landscape evolves. If you would like
companies across the value chain to make changes. Suppliers also want a just transition to support this work, are interested in connecting
(decent work, living wages, and decarbonized economic activity) but based on shared with other suppliers also working on these
responsibility. As legislations gain momentum, we call for enforcement and further issues, or have an interest in advocacy, please
development of legislation to be informed by the following: get in touch with us.

Move away from a top-down approach: Though well-intentioned, much Lastly, this document should not be construed
of the legislation we looked at relies on a top-down approach to sustainability, as legal advice or a legal opinion in any way.
which creates significant hidden work for suppliers who, in most cases, already This document is not intended to create— and
disproportionately bear the burden of sustainability/due diligence relative to their receipt of it does not constitute; a lawyer-
margins. client relationship. The contents are intended
for general informational purposes only, and
Involve the production experts: We see value in implementable and you are urged to consult your legal counsel
equitable legislation but are concerned with the lack of suppliers’ voice within concerning any particular situation and any
legislative development. Involving suppliers could lead to legislation that is better specific legal question you may have.
informed, more equitable, and more impactful, with buy-in from the start.
In addition, many of the legislations covered in
Problem-shifting: We fear that much of the legislation covered in these fact sheets this document remain at the early stages of the
will serve to shift legal responsibility from brands to their suppliers rather than spark relevant legislative procedure. The information
meaningful collective action and shared responsibility. provided herein has been developed based on
the latest draft of the proposed legislation at the
time of writing. It is intended that the guidance
and recommendations provided in this document
will be updated as the legislation develops.

12 An Apparel Supplier’s Guide 2.0: Key Sustainability Legislation in the EU, US, and UK
Introduction UPDATE

a. Objective laws, they may still experience knock-on b. Important legislative context to
effects as they form an integral part of the understand
In July 2023 the first iteration of this guide global apparel value chain and produce
covering, 12 pieces of legislation, was goods for multinational brands and retailers As governments in the Global North embark
published. This document is an update to who have increasing compliance obligations on ambitious plans to transition towards
that guide and includes updates to the 12 as they adopt new practices in order to climate neutrality, inclusive and sustainable
factsheets issued last year as well as three respond to the increased legislation. As such, growth, the body of sustainability legislation
additional factsheets covering new legislation this document aims to: is expanding rapidly.
not previously included.
• Offer a public resource and roadmap for The European Union (EU) is at the forefront
This document is intended to enable suppliers to proactively respond to and of these changes, introducing a plethora
suppliers in the apparel value chain that are prepare for the requirements of these of legislative and non-legislative measures
established or headquartered outside of the Global North laws. to implement priority policies such as the
Global North1, or whose operations are European Green Deal. The European
• Provide a platform for dialogue and
based outside these jurisdictions or whose Green Deal is a cornerstone of the EU’s
information exchange where suppliers and
supply chains extend to the Global South, industrial strategy, comprising a series
manufacturers can explore engagement
to better understand how sustainability- of proposals to make the EU’s climate,
(where possible) with policy makers in
related legislation in the Global North could energy, transport, and taxation policies fit
Global North jurisdictions.
potentially impact them. While suppliers may for reducing net greenhouse gas emissions
not, in all cases, be directly subject to the • Support suppliers in delivering the fashion by at least 55% by 2030, and to secure
obligations created by these Global North industry’s social and environmental the global competitiveness and resilience of
performance goals, and drive meaningful European industry2. There are also sector-
change for rights holders – whether specific initiatives such as the EU Strategy
1
For the purposes of this document, “Global North” encompasses the European
Union, United Kingdom, and the United States. workers, local communities, cotton for Sustainable and Circular Textiles, which
European Commission, A European Green Deal
aim to implement the commitments made
2

farmers– globally.

13 An Apparel Supplier’s Guide 2.0: Key Sustainability Legislation in the EU, US, and UK
under the European Green Deal (see time for companies directly subject to these brands upgrading their internal compliance
infographic on the next page “Snapshot legislations, and for those who have business and value chain requirements based on
of the Legislative Landscape in the relationships with them, to align their the UNGPs and international frameworks.
Global North”), by setting out measures sustainability policies and practices with these Thus, complying with these international
to address the design and consumption of laws. standards could help businesses position
textile products, and promote a greener and themselves to align with brands’ expectations
fairer value chain in the textiles industry. The At a high level, these laws (especially those and easily and effectively adapt to future
legislations covered in this document such as relating to mandatory human rights due legislative requirements, as well as satisfy
the EU Ecodesign for Sustainable Products diligence) can be collectively understood as the requirement of other business partners
Regulation and Digital Product Passport, a legal framework that translates elements and customers. Instead of having to operate
EU Corporate Sustainability Due Diligence of the United Nations Guiding Principles in accordance with different standards of
Directive, EU Regulation on Prohibiting on Business and Human Rights (UNGPs) compliance for each jurisdiction and each
Products Made With Forced Labour on the into binding legal obligations. The UNGPs counterparty, the business can adopt a less
Union Market (Forced Labour Regulation), represent the authoritative framework on fragmented, and thus less burdensome,
are only some of the initiatives taken by the how businesses should operationalize their approach to compliance. Of course, even if
EU to execute on the European sustainability commitments to human rights. As businesses suppliers align with established international
policy objectives3. are increasingly required to comply with frameworks, different brands will continue to
different (and sometimes overlapping) laws set varying detailed procedural requirements
These legislations create legally binding in this area, it is The Remedy Project’s view on their supply chain partners, particularly
obligations on companies to consider that businesses that are able to operate in the near future. We therefore continue to
how they are managing their social and in accordance with the UNGPs and other recommend that suppliers proactively work
environmental impact. Many of these laws international frameworks such as the OECD with brands and retailers on implementation
and regulations have global application Due Diligence Guidance for Responsible to reduce the risk of multiple interpretations.
and/or will impact apparel manufacturing Business Conduct will be more successful in
and sourcing hubs outside of the Global making this transition. Complying with the
North. As such, while these laws originate highest international standards could help
from the Global North such as the EU, future-proof business against future legislative
United Kingdom, and United States, they changes and may also be more efficient
will impact companies operating outside of from a process perspective. Furthermore,
3
See for example the summaries of EU legislation on environment and climate
these jurisdictions. It is therefore a prescient the Remedy Project sees a trend of many change.

14 An Apparel Supplier’s Guide 2.0: Key Sustainability Legislation in the EU, US, and UK
 c. General implications for
companies supplying apparel
Snapshot of the Legislative Landscape in the Global North & beyond

These legislative developments make

EU Industrial Strategy
clear that businesses will need to
re-think the way they approach
EU Green Deal sustainability. This new era of
legislation moves sustainability from
“nice to have” to “must-have” and
Circular Economy Action Plan (CEAP) Reporting legislation
requires companies to implement
human rights and environmental risk
Textiles Plastics Packaging EU Corporate Sustainability Due
≈
New York Fashion & Sustainability management practices. With this
Diligence Directive & Social Accountability Act
transition, we expect to see more
Relevant legislation to date

EU Ecodesign for EU Packaging and

EU Microplastics
Sustainable Products Legislation
Packaging Waste
EU Corporate Sustainability
cross-functional efforts to embed
Regulation and Digital Directive and
Product Passport Provisional Regulation Reporting Directive considerations of human rights and
≈ environmental impacts into business’
EU Textiles Regulation UK Plastic EU Forced Labour Regulation US Uyghur Forced Labor day-to-day operations and overall
Packaging Tax and Guidance ≈ Prevention Act
strategy. In this new landscape, in-
house legal teams must work closely
The foundation for all of this legislation: with procurement and sourcing,
operations, product teams, and
in-house sustainability experts to
UNGPs and OECD Due Diligence Guidelines*
*Non-binding international standards on responsible business conduct
achieve compliance. There must
also be executive and management
level buy-in, and attention given to
Note The legislations, regulations and directives in this diagram are not the complete set laid out under the umbrella strategies.
Head to the European Commission website to learn more. sustainability issues.

15 An Apparel Supplier’s Guide 2.0: Key Sustainability Legislation in the EU, US, and UK
How to Use 1. Key Changes A summary of key changes to the legislation since August 2023.
This Document
2. Overview A summary of the key aspects of the legislation.

This document comprises a

series of factsheets. For each
3. Context A description of the political context and policy objectives that the
legislation, the factsheet will
legislation seeks to address or achieve.
cover the following topics on
the right.

4. Status Whether the legislation is in effect and if not, the current stage of the
legislative procedure. If known, the expected timeline for implementation is
Updates to Factsheets will be also provided. For proposed EU legislation, users may find it helpful to refer
identified by these indicators: to the European Parliament’s infographic for information on the different
stages of the EU legislative procedure.
UPDATE Text Updates

5. Scope This section sets out the types of companies or products that fall within the
scope of the legislation. This may include, for example, an explanation
of the thresholds that a certain company must meet for the legislation to
apply. Our suggestion to suppliers is to start by identifying whether they
are directly in-scope and, if so, review the obligations and compliance
recommendations for companies in-scope (Sections 5 & 6). If a supplier has
established that they are not directly in-scope, it is our suggestion that those
suppliers review whether the brands for which they produce are in scope.
If a supplier’s customer is within scope, our suggestion is to review the
potential implications for suppliers to companies in-scope (see Section 7).

16 An Apparel Supplier’s Guide 2.0: Key Sustainability Legislation in the EU, US, and UK
 6. Obligations for A description of the duties and responsibilities that must be undertaken by
companies in-scope the companies that are directly subject to the legislation.

7. Compliance Suggested recommendations for companies to prepare for compliance with

recommendations the legislation (where the legislation is not yet in effect), or considerations
for companies for companies seeking to improve their compliance (where the legislation
in-scope is already in effect). For the avoidance of doubt, these compliance
recommendations do not constitute legal advice or opinion; companies
should seek legal advice from attorneys concerning any specific situation
or legal question they may have. Moreover, as the text of the laws in
many cases remains subject to change, companies should refer to the most
updated version of the legislation in developing their compliance strategy.
The enforcement actions undertaken by the relevant regulator (once the law
is in effect) will also determine the scope of compliance obligations.

8. Potential In some instances, suppliers in the apparel value chain who are not directly
implications subject to the concerned legislation, may still be impacted by the legislation
for suppliers to as they supply to companies in-scope (i.e., a fashion brand or fashion
companies in-scope retailer in-scope). These may include requirements around transparency
and traceability, or obligations to undergo audits or obtain certifications.
This section sets out the potential implications of the legislation for suppliers.
For the avoidance of doubt, companies in-scope will approach compliance
differently and many of the legislations covered in this document are
in nascent stages of development. Moreover, the enforcement actions
undertaken by the relevant regulator will also affect how companies in-
scope respond to the legislation. As such, the guidance provided herein is
only intended to represent our best estimates of the knock-on effects of the
concerned legislation and is for informational purposes only.

17 An Apparel Supplier’s Guide 2.0: Key Sustainability Legislation in the EU, US, and UK
 9. Penalties for Where applicable or known, the penalties for companies in-scope that fail
non-compliance to comply with the legislation are set out.

10. Form of A description of the key forms of enforcement action that may be taken by
Enforcement the relevant authorities.

11. Reporting/ An overview of the key information disclosure obligations (if any) for
disclosure for companies in-scope.
companies in-scope

12. Access to This section notes where the relevant legislation provides a right for legal
remedy mechanisms action to be taken against a company for alleged non-compliance.
and litigation risk

13. Opportunity Where applicable, opportunities to participate in public consultation.

to participate and
engage in legislative
development

14. Useful resources Links to third-party resources and guidance are provided for further detail
to support compliance on how companies in-scope may approach compliance and how suppliers
or business partners to companies in-scope may prepare for cascaded
compliance requirements.

18 An Apparel Supplier’s Guide 2.0: Key Sustainability Legislation in the EU, US, and UK
Glossary laws that are passed can be implemented
properly or reflect developments in a
Approved: Used as a synonym for adopted
or used in cases of approval of draft versions
particular sector. of the law.
A glossary of key terms used in this
document is set out below. EU Directive: A directive is a legislative act Derogated: Not included or not applied.
that sets out a goal that all EU countries must
Brands: For the purposes of this document, achieve. However, it is up to the individual European Commission: The European
this refers to a multinational company that is countries to devise their own laws on how to Commission is the EU’s politically independent
engaged in the business of offering branded reach these goals5. executive arm. It is responsible for drawing up
apparel products. proposals for new European legislation, and
EU Regulation: A regulation is a binding it implements the decisions of the European
Companies in-scope: Companies that are legislative act. It must be applied in its entirety Parliament and the Council of the EU.
directly subject to the obligations set out in across the EU6.
the relevant legislation. European Council: The European Council
EU negotiation position: A particular is the EU institution that defines the general
Due Diligence: A process that businesses stance taken by a European Institution in a political direction and priorities of the
should carry out to identify, prevent, mitigate, negotiation where it outlines the preferred European Union.
and account for how they address the actual result.
and potential adverse human rights or European Parliament: The European
environmental impacts in their operations, EU provisional agreement: When after Parliament is the EU’s law-making body that is
their value chain and other business negotiations, an informal agreement is directly elected by EU voters every 5 years.
relationships. reached on the text of a legislative proposal
that then needs to be formally approved by Grievance Mechanism: Any routinized,
EU Decision: A “decision” is binding on the European Parliament and the Council of State-based, or non-State-based, judicial or
those to whom it is addressed (e.g., an EU the European Union during the legislative non-judicial process through which grievances
country or an individual company) and is procedure. concerning business-related human rights
directly applicable.4 abuse can be raised and remedy can be
Adopted: When a law is officially approved sought7.
EU Delegated Act: A delegated act is an at the end of the legislative procedure.
EU legislative mechanism to ensure that EU
4,5,6
European Union, Types of legislation
7
UNGPs Principle 25 and commentary

19 An Apparel Supplier’s Guide 2.0: Key Sustainability Legislation in the EU, US, and UK
 UPDATE
Supplier: For the purposes of this document,
unless otherwise specified, this refers to
a supplier in the apparel value chain.
While the information provided herein is
Types of EU legislation
applicable across the entire value chain,
it is primarily intended for Tier 1 suppliers Directive:
and sub-contractors who produced finished A legislative act that sets out a goal for EU countries who then have to devise their
goods for fashion brands and retailers, and own laws on how to reach these goals.
Tier 2 suppliers and sub-contractors who
provide services and goods, such as knitting,
weaving, washing, dyeing, finishing, printing Regulation:
for finished goods, and components (e.g., A binding legislative act which must be applied in its entirety across the EU.
buttons, zippers, soles, down and fusible) and
materials for finished goods.
Decision:
Value Chain: A value chain encompasses A binding law only on those to whom it is addressed (e.g. an EU country or an
all activities related to the production of individual company) and is directly applicable (it does not have to be implemented
goods or the provision of services by a by the recipient.
company, including the development of
the product or the service and the use and
disposal of the product as well as the related Delegated and Implementing Acts:
activities of upstream and downstream Non-legislative acts adopted by the European Commission aimed at supplementing
business relationships of the company. elements of a legislative act for uniform implementation.

Intentionally added: Deliberately utilized

in the formulation of a material or component
where its continued presence is desired
in the final product to provide a specific
characteristic, appearance or quality.

20 An Apparel Supplier’s Guide 2.0: Key Sustainability Legislation in the EU, US, and UK
 Overview UPDATE

The table below provides an overview of the legislative initiatives covered in this
document. This is intended to help suppliers identify, at a quick glance, which of the
legislations covered in this document could potentially be relevant to them and offer
some guidance on where to prioritize their efforts. For example, where the legislation
is in effect or is expected to be taken imminently, suppliers may want to designate
this a priority area. Suppliers may also want to prioritize legislation where significant
investment and resources are required to reach compliance, or there are significant
expected impacts on the apparel value chain.

21 An Apparel Supplier’s Guide 2.0: Key Sustainability Legislation in the EU, US, and UK
 Timing Effort and Expected Indirect Opportunity to
(Likelihood of Investment Required Impact for Apparel participate in public
Legislation Description Implementation)38 for Companies Suppliers to consultation / engage
In-Scope to Comply19 Companies In-Scope 10
2
in legislative process

EU Strategy A non-binding strategic framework N/A N/A N/A Yes, opportunity to

for Sustainable that guides the creation of (non-binding) join sector-specific
and Circular regulations for more sustainable working groups
Textiles and circular life cycle of textile
products.

EU Corporate Creates an obligation on

Sustainability companies globally (that meet
Due Diligence the stated thresholds) to conduct High: Expected to High High No
Directive human rights and environmental come into effect
(CSDDD) due diligence, and make available < 5 years
a complaints procedure.

EU Corporate Requires companies globally

Sustainability (that meet the stated thresholds)
Reporting to report on social and In-effect: companies High Medium Yes, EFRS
Directive environmental sustainability in-scope are required sector-specific
(CSRD) information in accordance with to apply the rules by standards
European reporting standards. 2024 financial year
for reports in 2025

8
For the avoidance of doubt, these estimates have been developed based on public information regarding the expected date that the legislation shall come into effect. As many of these legislations are still in the early stages of
the legislative procedure, the estimates contained herein remain subject to change and will be impacted by the political context, e.g., outcome of the upcoming European Parliament legislation.
9
“High” means that significant effort and investment is required for apparel companies in-scope to attain compliance; medium indicates that some effort or investment is required for apparel companies in-scope to attain
compliance; and “limited” means that the legislation requires companies in-scope to make limited effort or investments to attain compliance.
10
“High” means that suppliers to companies in-scope should expect to make significant changes to their existing business policies, operations, practices, or processes as a result of the law, even though these laws do not directly
impose any obligations on these suppliers. “Medium” signifies that suppliers to companies in-scope should anticipate making some changes to their existing business policies, operations, practices or processes. “Limited” means
that suppliers to companies in-scope are unlikely to be indirectly impacted by the law and therefore will only need to make a few or no changes to their existing business policies, operations, practices or processes

22 An Apparel Supplier’s Guide 2.0: Key Sustainability Legislation in the EU, US, and UK
 Timing Effort and Expected Indirect Opportunity to
(Likelihood of Investment Required Impact for Apparel participate in public
Legislation Description Implementation) 8 for Companies Suppliers to consultation / engage
In-Scope to Comply9 Companies In-Scope 10 in legislative process

New York Creates obligations on fashion

Fashion sellers doing business in New York
Sustainability to conduct environmental and Unknown High High Yes
and Social human rights due diligence, set (uncertain)
Accountability and comply with greenhouse gas
Act emission targets, and produce a
publicly available due diligence
report.

EU Forced Implements a ban on products made

Labour with forced labour from being sold in
Regulation the EU or exported from the EU. High: Expected to High High No
come into effect
< 4 years

U.S. Uyghur Requires importers to prove that the

Forced Labor goods made wholly or in part in
Prevention Xinjiang are not produced using forced In effect High High N/A
Act (UFLPA) labor before they can be imported into
the United States. Importers need to
demonstrate due diligence, effective
supply chain tracing and supply chain
management measures to ensure that
they do not import any goods made by
forced labor.

23 An Apparel Supplier’s Guide 2.0: Key Sustainability Legislation in the EU, US, and UK
 Timing Effort and Expected Indirect Opportunity to
(Likelihood of Investment Required Impact for Apparel participate in public
Legislation Description Implementation) 8 for Companies Suppliers to consultation / engage
In-Scope to Comply9 Companies In-Scope 10 in legislative process

EU Ecodesign Establishes a framework to set

for Sustainable ecodesign requirements for specific
Product product groups to improve their In effect High High Yes
Regulation circularity, energy performance and in 2 years
(including the other environmental sustainability
EU Digital aspects. Companies in-scope will also
Product need to provide a digital product
Passport) passport that shares information
about the product’s environmental
sustainability. Manufacturers, importers,
distributors, dealers, fulfillment services
providers will be required to comply.

EU Packaging The Directive sets requirements

& Packaging and targets for EU countries on the
Waste recovery and recycling of packaging Directive: latest Directive: N/A Directive: N/A Directive: N/A
Directive & waste. There is also a proposed amendment in
Provisional regulation that is intended to widen effect since 2018
Regulation the scope of the Directive and create
direct obligations on companies to
prevent excessive packaging waste Proposal: Expected Medium Medium Directive: No
and minimize the environmental to come into effect
impact of packaging. <5 years (high)

24 An Apparel Supplier’s Guide 2.0: Key Sustainability Legislation in the EU, US, and UK
 Timing Effort and Expected Indirect Opportunity to
(Likelihood of Investment Required Impact for Apparel participate in public
Legislation Description Implementation) 8 for Companies Suppliers to consultation / engage
In-Scope to Comply9 Companies In-Scope 10 in legislative process

EU Prohibits the placement of synthetic

Microplastics polymer microparticles (microplastics)
Legislation on the market on their own or, where In effect This legislation is unlikely to have a No
the microplastics are intentionally direct impact on manufacturers of textile
added to confer a sought-after products for the apparel industry, as
characteristic, in mixtures in a it only addresses the intentional use of
concentration equal to or greater than microplastics in products.
0.01% by weight.

UK Plastic Requires manufacturers and importers

Packaging of plastic packaging to pay a tax on
Tax the relevant products. In effect Limited Limited N/A

EU Product A non-binding framework that

Environmental establishes the steps and rules to
Footprint make an appropriate and comparable N/A Limited Limited Yes, opportunity to
Guide product life cycle assessment. (non-binding) join sector-specific
working groups

EU Textiles
Sets out labelling requirements for textile
Regulation
products made available in the EU.
In effect Medium Limited N/A

25 An Apparel Supplier’s Guide 2.0: Key Sustainability Legislation in the EU, US, and UK
 Timing Effort and Expected Indirect Opportunity to
(Likelihood of Investment Required Impact for Apparel participate in public
Legislation Description Implementation) 8 for Companies Suppliers to consultation / engage
In-Scope to Comply9 Companies In-Scope 10 in legislative process

EU Sets out a classification system for

Taxonomy activities that would qualify as an
environmentally sustainable economic In effect Medium Limited N/A
activity. It also imposes obligations
on financial companies and certain
non-financial companies to publish
key performance indicators relating
to sustainable investments and
environmentally sustainable economic
activities, respectively.

German Requires companies in-scope to establish

Supply a risk management system to identify,
Chain Due minimise, prevent and address human In effect High High N/A
Diligence Act rights and environmental risks, and to
end human rights and environmental-
related violations in their supply chain.

26 An Apparel Supplier’s Guide 2.0: Key Sustainability Legislation in the EU, US, and UK
Factsheet NEW

EU Strategy for Sustainable

and Circular Textiles

1. Overview
On March 30, 2022, the European Commission (the EC) published the “EU
Strategy for Sustainable and Circular Textiles” (the ESSCT) as a part of the
broader European Green Deal. This strategy is integral to Europe’s ambitious
goal to become the first climate-neutral continent by 2050. This strategy aims
to reshape the textiles sector, making it greener, more resilient, and competitive
while reducing its environmental and climate footprint. The ESSCT addresses the
entire lifecycle of textile products and proposes a suite of coordinated actions to
overhaul how textiles are produced, used, and managed at their end of life. The
strategy is employed as a foundational framework to develop binding legislation.
Please find the key changes in Section 1, 2, 3, 4, 5, and 12.

27 An Apparel Supplier’s Guide 2.0 : Key Sustainability Legislation in the EU, US, and UK
Overview (Continued) Strategic Objectives:

EU Strategy for Sustainable and Circular Textiles - Factsheet - NEW*

Nature of a Strategy and Its Legislative Impact The ESSCT is driven by three key plans,
each designed to foster distinct yet
interconnected aspects of the textile
• Strategic Framework: The ESSCT • Legislative Development: By industry’s transformation:
outlines the ambitions and directives for identifying priority areas for action,
future actions but itself does not enact the strategy informs the development
“A New Pattern for Europe”: Focusing
laws. Instead, it serves as a blueprint of regulations and policies that will
on sustainable and circular textiles, this plan
guiding the creation of regulations that implement its objectives. This relationship
includes setting Ecodesign requirements
will operationalize its goals. ensures that strategic goals are translated
to extend the lifecycle of products and
into enforceable laws and standards.
improving the overall sustainability of textiles.

• Impact on Companies: The ESSCT is designed to set out a pathway to a more “Weaving the Industry of Tomorrow”:
sustainable textiles industry, referring to multiple pieces of legislation which result in varied Aimed at creating the enabling conditions
obligations depending on the size of the company and the specific sector involved. As such, for a sustainable industry, this plan promotes
it’s crucial for companies to understand that while the strategy provides the overarching multi-stakeholder collaboration and supports
framework, each accompanying piece of legislation will define specific compliance the transition towards circular business
requirements. Companies should review the obligations specific to each piece of legislation models.
under which they fall within scope to ensure appropriate adaptation and compliance.

“Tying Together a Sustainable

Textiles Value Chain Globally”: This
plan emphasizes the need for environmental
and social due diligence along global value
chains and regulates the export of textile
waste to ensure it is managed sustainably.

28 An Apparel Supplier’s Guide 2.0: Key Sustainability Legislation in the EU, US, and UK
2. Context Policy Foundations and Evolution

EU Strategy for Sustainable and Circular Textiles - Factsheet - NEW*

European Green Deal: The ESSCT is a critical component of the Green Deal,
The ESSCT was developed as which aims to make Europe the first climate-neutral continent by 2050. The textiles
a response to the growing sector, with its significant environmental footprint, is pivotal in this transformation.
environmental and social challenges
posed by the textiles sector within the EU Circular Economy Action Plan: The textiles industry is identified in this
EU. This strategy is aligned with the plan as a key area for action due to its substantial impact on resource use, waste
European Green Deal’s ambition to production, and greenhouse gas emissions.
transition to a more sustainable and
resource-efficient European economy, EU Industrial Strategy: This strategy supports the modernization and
recognizing the textiles sector as a competitiveness of Europe’s industrial sectors, including textiles, by promoting
priority for achieving these objectives. innovation in sustainable practices and technologies.

Challenges Addressed by the ESSCT

The ESSCT strives to address the most relevant environmental-related issues within
the textile industry. These issues are characterized by:

Resource Intensity: High Waste Production: Significant

consumption of water, energy, and waste generation, with low rates
raw materials. of recycling and high volumes of
landfill and incineration.

Chemical Usage: Extensive use Social Concerns: Issues related to

of hazardous chemicals affecting labor rights and working conditions
human health and ecosystems. in global supply chains.

29 An Apparel Supplier’s Guide 2.0: Key Sustainability Legislation in the EU, US, and UK
 Stakeholder Engagement and Legislative Framework

EU Strategy for Sustainable and Circular Textiles - Factsheet - NEW*

The development of the ESSCT involved extensive consultations with a
wide range of stakeholders including industry leaders, policymakers,
environmental groups, and consumer advocates. These consultations helped
shape a balanced strategy that addresses both regulatory requirements and
market-based incentives.

Consultative Process

Engaging stakeholders ensured that the strategy addresses real-world

challenges and harnesses industry expertise and insights.

Legislative Impact

While the ESSCT guides legislative development, it is supported by specific

legislative actions that operationalize its goals (discussed below). These
include new regulations on ecodesign, waste management, and producer
responsibilities, which are detailed in subsequent sections of this document.

Implications for Future Policy Development

The ESSCT not only sets the direction for immediate regulatory actions but
also establishes a framework for ongoing policy development as market
conditions and technological capabilities evolve. It anticipates future
challenges and opportunities, ensuring that the textiles sector can adapt and
thrive in an increasingly circular and sustainable economy.

30 An Apparel Supplier’s Guide 2.0: Key Sustainability Legislation in the EU, US, and UK
3. Status Legislative Acts based on the Strategy

EU Strategy for Sustainable and Circular Textiles - Factsheet - NEW*

Since the publication of the ESSCT, the EC Ecodesign for Sustainable Revision of the Waste
has made significant progress in advancing Products Regulation (ESPR): The Framework Directive: Adopted
the legislative and initiative components of the ESPR sets stringent design requirements on July 5, 2023, this proposal
strategy. This section outlines the current status to ensure that textiles are durable, introduces mandatory and
of legislative measures directly derived from easier to repair, and recycle, and harmonized Extended Producer
the strategy and highlights supporting initiatives contain a minimum amount of recycled Responsibility (EPR) schemes for
that are facilitating its implementation. content. The ESPR will also introduce textiles across all EU Member
mandatory criteria for “green States. Under these schemes, textile
public procurement”, in addition to manufacturers and retail brands will
requirements regarding Member be responsible for covering the costs
States’ incentives concerning textile associated with the management of
products. textile waste and will be incentivized
to enhance waste minimization and
Digital Product Passport (DPP): circularity in their operations.
As a critical component of the ESPR,
the DPP aims to provide accessible, Revision of the Textile Labelling
detailed information on each textile Regulation: The Commission will
product, covering aspects such as revise the textile labelling Regulation
materials used, reparability, and (planned for the 4th quarter 2024) to
recyclability. introduce specifications for physical
and digital labelling of textiles.
Directive on Green Claims: This
directive is pending approval and is
designed to prevent greenwashing by
ensuring that all sustainability claims
made by companies are reliable,
verifiable, and based on standardized
methodologies.

31 An Apparel Supplier’s Guide 2.0: Key Sustainability Legislation in the EU, US, and UK
 Relationship with other Global Value Chain Legislative Initiatives

EU Strategy for Sustainable and Circular Textiles - Factsheet - NEW*

Corporate Sustainability Due Diligence Directive (CSDDD):

Although not developed as a direct outcome of the ESSCT, the CSDDD plays a
crucial role in achieving the strategy’s objectives, particularly the “Tying Together
a Sustainable Textiles Value Chain Globally” goal. Adopted on 23 February
2023, this directive introduces comprehensive due diligence obligations for
large companies, including those with more than 250 employees and over €40
million turnover operating in high-impact sectors such as textiles. It mandates
these companies to identify, prevent, mitigate, and account for adverse human
rights and environmental impacts within their own operations and across global
value chains. The CSDDD applies to both EU-based companies and third-country
companies active in the EU, ensuring that significant textile market players engage
in responsible business practices irrespective of their geographic location.

EU Rules on the Shipment of Waste:

Recently adopted regulations aim to control the export of textile waste, ensuring
that non-OECD countries willing to accept EU textile waste can manage it
sustainably, and prevent illegal shipments of waste to third countries. This measure
seeks to increase transparency and sustainability in the global trade of textile
waste, aligning with the broader goals of the ESSCT. The new regulations will
enter into force on 20 May 2024.

32 An Apparel Supplier’s Guide 2.0: Key Sustainability Legislation in the EU, US, and UK
 Supporting Initiatives

EU Strategy for Sustainable and Circular Textiles - Factsheet - NEW*

“ReSet The Trend” Campaign: In alignment with efforts to mitigate the impact of
fast fashion, the “ReSet The Trend” campaign was launched to enhance consumer
engagement and awareness about sustainable fashion practices. This campaign aims
to shift consumer behavior towards more sustainable choices in textile products.

Transition Pathway for the Textiles Ecosystem: Published on June 6, 2023, this
initiative provides a collaborative platform for stakeholders in the textiles sector
to submit commitments to support the ESSCT’s actions. It calls for commitments
to support the actions delineated in the pathway, aiming to facilitate the sector’s
transition to a more sustainable and circular model. The latest hybrid event for
stakeholders is due to take place on 4 June 2024.

Pact for Skills: Launched on 16 December 2021, the initiative supports the creation
of large-scale skills partnership for the textiles ecosystem to prepare the workforce
for green jobs through upskilling, reskilling and acquisition and transfer of green
and digital skills. Organizations ranging from individual companies to industrial
ecosystems are invited to join.
Note
Guidance on Circular Economy Business Models: Expected in 2024, this
While some of these steps are guidance will encourage Member States to support the reuse and repair sectors,
currently in the proposal stage and complementing the legislative focus of the ESSCT with practical, market-based
have not yet been voted into law, strategies.
their adoption and implementation
are expected to significantly advance
the goals of the ESSCT.

33 An Apparel Supplier’s Guide 2.0: Key Sustainability Legislation in the EU, US, and UK
4. Scope Geographic Scope

EU Strategy for Sustainable and Circular Textiles - Factsheet - NEW*

All EU Member States: The ESSCT applies uniformly across the
EU, impacting textile operations in all 27 EU countries. This broad
The ESSCT is intended to set out a pathway
geographic scope ensures that the strategy’s initiatives are implemented
for a circular textiles economy across all
across a diverse and integrated market, promoting uniform standards
Member States. As such, the scope of
and practices throughout the Union.
the ESSCT encompasses all textile-related
companies operating within the EU.
Targeted Business Entities
It important to note that, while the ESSCT
Manufacturers: Textile manufacturers within the EU must adapt their
provides the overarching framework, the
production processes to meet new sustainability criteria, including the use of
applicable scope for compliance will be
recycled materials and the reduction of hazardous substances.
determined by each individual piece of
legislation developed under or in support
Retailers and Distributors: Companies that sell or distribute textiles in
of this strategy, affecting manufacturers,
the EU must ensure their products comply with the ESSCT’s requirements for
retailers, importers, and other relevant entities
durability, reparability, and recyclability.
differently depending on their location, scale
of operations, and legislation in question. Importers: Importers of textile goods into the EU are required to ensure that
their products adhere to the strict environmental standards set out by the ESSCT
However, legislation and regulations
developed by the EU aim in general for Large Enterprises: Specifically, companies with significant operations,
uniformity in scope of application across all defined as those having more than 500 employees and a turnover exceeding
Member States to ensure a standardized EUR 150 million, are subject to rigorous due diligence requirements under
regulatory environment that supports the related legislative measures like the Corporate Sustainability and Due Diligence
Union’s goals for a sustainable and circular Directive.
economy. Any regulation-specific differences
Small and Medium-sized Enterprises (SMEs): While the focus is often
are noted below.
on large corporations, SMEs are also encouraged to align with the ESSCT’s
objectives, with specific initiatives aimed at supporting these businesses through
digital transformation and skills development.

34 An Apparel Supplier’s Guide 2.0: Key Sustainability Legislation in the EU, US, and UK
5. Obligations Regulatory Impact and Business Adaptation

EU Strategy for Sustainable and Circular Textiles - Factsheet - NEW*

for companies Companies operating within the EU must proactively adjust their business models to
incorporate ESSCT-driven legislative changes. This adaptation involves not only meeting
in-scope specific product standards but also engaging in broader sustainability practices that
contribute to the circular economy. Businesses are advised to regularly review legislative
updates and participate in industry forums and consultations to stay informed and
compliant.

EPR: The introduction of EPR schemes under the ESSCT will require businesses to
take responsibility for the entire lifecycle of their products, from production to post-
consumer waste. This includes financial responsibility for collecting and recycling textile
waste and EPR fees paid according to mandatory environmental considerations (eco-
modulation).

Design and Production Changes: Businesses will need to adopt practices that
ensure textiles are durable, repairable, and recyclable. Compliance with the ESPR will
Note require integrating a minimum percentage of recycled materials in new textiles and
meeting design standards that facilitate easier repair and recycling.
As noted above, the ESSCT provides a
strategic framework rather than direct
legislative mandates. It influences Waste Management and Recycling: With the introduction of harmonized EPR
the creation of various legislative schemes, producers are responsible for the end-of-life impacts of their products.
measures that will specify differing This includes financial responsibility for the collection, treatment, and recycling of
obligations based on company size, textile waste, incentivizing companies to minimize waste generation and enhance the
industry sector, and other factors. circularity of their textile products.
Companies are advised to consult
specific legislation relevant to their
operations for detailed compliance
requirements.

35 An Apparel Supplier’s Guide 2.0: Key Sustainability Legislation in the EU, US, and UK
 General Expectations

EU Strategy for Sustainable and Circular Textiles - Factsheet - NEW*

Circular Business Models: Companies Re-use and Repair Obligations: As part
are generally expected to integrate circular of transitioning towards a circular economy,
business practices to minimize waste companies should prepare for potential
and environmental impact. This includes obligations related to the re-use and repair of
enhancing the sustainability of supply chains, textiles. This may involve adapting business
reducing the release of microplastics and models to accommodate these practices more
other pollutants, and improving the overall robustly, ensuring that products are designed
lifecycle management of textiles. with longevity and reparability in mind.

Environmental and Human Rights Digital Product Passports: With the

Due Diligence: Companies should adopt a impending implementation of the ESPR,
comprehensive approach to environmental companies will need to adopt Digital Product
and human rights due diligence throughout Passports. These passports will provide critical
their value chains. This includes identifying, information on the sustainability attributes
preventing, mitigating, and remedying actual and lifecycle of textile products, aiding
and potential adverse impacts. Maintaining consumers in making informed choices and
accurate reports on efforts in this regard will enhancing transparency across supply chains.
be required for transparency and reporting
purposes.

Monitoring and Reporting Legislative Compliance: Companies must stay vigilant and informed about new regulations
Requirements under the ESSCT framework. This includes preparing for new reporting requirements, such as
those related to waste transparency and the environmental impact of products.

Proactive Engagement: To ensure compliance and leverage strategic advantages, companies

should engage with regulatory developments actively. This could involve participating in
stakeholder consultations, aligning internal policies with upcoming requirements, and investing in
systems and technologies that facilitate compliance and sustainability.

36 An Apparel Supplier’s Guide 2.0: Key Sustainability Legislation in the EU, US, and UK
6. Compliance Mapping Responsibility and Costs: in production and transportation, labor

EU Strategy for Sustainable and Circular Textiles - Factsheet - NEW*

recommendations Assess and map the potential costs and
obligations of compliance with the suite of
rights, and human rights. Prepare for
proposed bans on practices like the
for companies legislation and initiatives described here. destruction of unsold products.

in-scope Preparing for Reporting Obligations: Implementing Recycling or Repair

Prepare for new reporting obligations and Programs: Consider implementing
implement appropriate processes, such as recycling or repair programs to promote
Steps in the regulatory process for the
those concerning textile waste transparency, circularity. This may involve partnering with
implementation of the various proposals
green claims, and mandatory sustainability specialized service providers or integrating
under the ESSCT are still underway. Key
disclosures. Develop appropriate processes such practices into existing business models.
compliance steps for companies operating
in the EU or those with an EU presence in and systems to ensure and monitor
compliance. Aligning Internal Policies: Develop and
their supply chain firstly involve consideration
implement internal policies that align with
of the specific legislation and whether the
Reviewing Supply Chains: Conduct the principles and objectives of the ESSCT.
company falls within its scope. From here,
a thorough review of supply chains to These policies should address environmental
companies should consider taking actions
evaluate the impacts of various factors sustainability, labor rights, human rights,
such as the following, as applicable:
such as product durability, repairability, and other relevant considerations.
recyclability, environmental considerations

37 An Apparel Supplier’s Guide 2.0: Key Sustainability Legislation in the EU, US, and UK
7. Potential

EU Strategy for Sustainable and Circular Textiles - Factsheet - NEW*

implications Environmental Compliance: Suppliers Product Innovation and Design:

for suppliers may face increased pressure to comply

with environmental regulations and
Suppliers may need to innovate their
products and manufacturing processes to
to companies standards set forth by the ESSCT’s various meet the sustainability criteria outlined in
regulations, initiatives, and legislation. This the ESSCT. This could involve developing
in-scope could involve measures aimed at reducing eco-friendly materials, incorporating
resource consumption, minimizing waste recycled fibers, or designing products
generation, and improving overall with enhanced durability and
A large focus of the ESSCT is on promoting
environmental performance throughout recyclability.
greener and fairer value chains across
the supply chain.
borders and continents to make an impact
not just on companies based in, or with
operations in, the EU, but on their wider
global supply chains. These include:
Supply Chain Transparency: The Circular Economy Practices: Suppliers
ESSCT emphasizes the importance of may be encouraged or required to
transparency across the textiles supply adopt circular economy practices, such
chain. Suppliers may be required to as product reuse, repair, and recycling.
provide detailed information about the This could involve collaborating with
origins of materials, production processes, stakeholders to establish take-back
and environmental and social impacts programs or investing in technologies that
associated with their products enable closed-loop systems.

38 An Apparel Supplier’s Guide 2.0: Key Sustainability Legislation in the EU, US, and UK
 EU Strategy for Sustainable and Circular Textiles - Factsheet - NEW*
Risk Management: Suppliers will need Market Access: Compliance with the ESSCT Stakeholder Engagement: Suppliers
to assess and mitigate risks related to may become a prerequisite for market access, may need to engage with a diverse range
compliance with ESSCT-related requirements. as consumers and retailers increasingly of stakeholders, including rightsholders,
This may involve conducting thorough due prioritize sustainable and ethically sourced workers, customers, regulators, and civil
diligence on suppliers and subcontractors to products. Suppliers that fail to meet these society organizations, to demonstrate
ensure alignment with sustainability goals. standards may face challenges in accessing their commitment to sustainability and
certain markets or retaining existing address stakeholder concerns effectively.
customers.

Compliance with CSDDD: Suppliers will Forced Labor Compliance: Suppliers

need to adhere to due diligence requirements must ensure that their operations and
mandated by the CSDDD, particularly if they supply chains are free from forced labor,
fall within its scope. This involves identifying, including forced child labor. Compliance
preventing, mitigating, and remedying with upcoming legislative initiatives, such
adverse impacts on human rights and the as those aimed at prohibiting products
environment across their operations and value made by forced labor, is essential to
chains. avoid non-compliance and associated
penalties.

39 An Apparel Supplier’s Guide 2.0: Key Sustainability Legislation in the EU, US, and UK
8. Penalties for 9. Form of 10. Reporting/

EU Strategy for Sustainable and Circular Textiles - Factsheet - NEW*

non-compliance enforcement disclosure
requirements for
Not applicable as the ESSCT is intended Not applicable. Companies should refer to companies
to set out a pathway to a more
sustainable textiles industry and as such
the enforcement measures specific to each
piece of legislation under which they fall
in-scope
refers to multiple pieces of legislation. within scope. Not applicable. Companies should refer to
Companies should refer to the penalties the reporting and disclosure requirements
specific to each piece of legislation under specific to the legislation under which they
which they fall within scope. fall in scope.

11. Access
to remedy
mechanisms and
litigation risk
Not applicable. Companies should refer to
the reporting and disclosure requirements
specific to the legislation under which they fall
in scope.

40 An Apparel Supplier’s Guide 2.0: Key Sustainability Legislation in the EU, US, and UK
12. Opportunity Initial workshops were held across September – October 2022 in relation to the Textiles
Ecosystem Transition Pathway, at which consultations with EU textiles industry stakeholders

EU Strategy for Sustainable and Circular Textiles - Factsheet - NEW*

to participate and were the focus. The final stakeholder consultation report was published on 6 June 2023.
The final report can be found under section 13. Useful resources below.
engage in legislative
It is possible that the ESSCT could lead to additional regulations beyond those currently
developments on the table. The strategy serves as a blueprint for guiding the development of regulations

(if any) and policies aimed at achieving its objectives. While some legislative measures have
already been proposed and adopted, the implementation of the ESSCT may prompt further
regulatory action as market conditions evolve and new challenges emerge.

13. Useful European Commission – EU Strategy for Sustainable and Circular Textiles

resources to Communication from the European Commission – EU Strategy for Sustainable and Circular
Textiles (COM(2022) 141)
support compliance
Textiles Ecosystem Transition Pathway – Stakeholder Consultation Report.

41 An Apparel Supplier’s Guide 2.0: Key Sustainability Legislation in the EU, US, and UK
Factsheet

EU Corporate Sustainability
Due Diligence Directive
Directive of the European Parliament and of the Council on Corporate
Sustainability Due Diligence and amending Directive (EU) 2019/1937

UPDATE

1. Key Updates
After much debate and questions as to whether the CSDDD would pass, the CSDDD
received approval from the European Parliament. Since the Commission’s original
proposal, many key provisions have been adapted or removed. The most relevant
changes are: the thresholds to be a company in-scope have risen dramatically, the
directors’ duties have been removed, and key concepts such as “chain of activities”
and “business partners” have been modified. The key changes are in Section 4, 5, 6,
7 and 10.

42 An Apparel Supplier’s Guide 2.0 : Key Sustainability Legislation in the EU, US, and UK
2. Overview 3. Context

EU Corporate Sustainability Due Diligence Directive ----- Factsheet

The EU Directive on Corporate Sustainability Due Diligence and amending Directive The EU wants to hold companies
(EU) 2019/1973 (CSDDD) will require some companies inside and outside of the EU to accountable for their social and
undertake due diligence on their environmental and human rights impacts and create a plan environmental adverse impacts
to mitigate climate change. – both within their own operations and
throughout their value chains. They also
Due diligence in this context refers to the process businesses should carry out to identify, want to ensure that companies that have
prevent, mitigate, and account for how they address the actual and potential adverse significant operations in the EU are held to
human rights or environmental impacts in their operations, their chain of activities1 and other the same standard across all the different
business relationships2. For example, this may include forced and child labour, inadequate EU countries.
workplace health and safety, workplace exploitation, greenhouse gas emissions, pollution
and biodiversity loss and ecosystem damage. The CSDDD is intended to complement
the proposed EU Corporate Sustainability
Reporting Directive (CSRD). The CSDDD
imposes legal obligations on companies
in-scope to manage human rights and
environmental risks in their operations
and chain of activities. The CSRD requires
companies in-scope to report on a number
of metrics, including how they are managing
these risks.

1
Chain of activities means (1) activities of a company’s upstream business partners related to the production of goods or the provisions of services by the company,
including the design, extraction, sourcing, manufacture, transport, storage, and supply of raw materials, products, or parts of the products and development of the
product or the service, and (2) activities of a company’s downstream business partners related to the distribution, transport and storage of the product, where the
business partners carry out those activities for the company or on behalf of the company. Compared to the original proposal, the concept of ‘chain of activities’ excludes
part of the downstream supply chain, specifically consumer use and product disposal.
2
The concept of ‘business relationships’ includes direct and indirect business partners, irrespective of how structured the business relationship is. Compared to the
original proposal, it is broader as it includes any indirect business relationship. Adapted from the OECD Due Diligence Guidance for Responsible Business Conduct,
Page 15. Due diligence under the CSDDD generally is aligned with the UN Guiding Principles on Business and Human Rights and the OECD Guidelines for Multinational
Enterprises.

43 An Apparel Supplier’s Guide 2.0: Key Sustainability Legislation in the EU, US, and UK
4. Status

EU Corporate Sustainability Due Diligence Directive ----- Factsheet

In order for the CSDDD to be adopted, voted to approve the Directive. Parliament There is currently no guidance on how
the European Commission, the European approved the CSDDD during its April 2024 inconsistencies (if any) between national
Parliament, and the European Council must plenary and the Council gave final approval legislation and the CSDDD shall be
all agree on the text. The first step in this on May 24, 2024. resolved.
process was a proposal by the European
Commission in February 2022. In November Following the adoption, the EU countries Only large companies are expected
2022, the European Council adopted its will have two years to transpose the CSDDD to comply initially, i.e., from two years
negotiating position and general approach into their national laws and communicate the following the entry into force of the
to the CSDDD. relevant texts to the European Commission3. CSDDD. Please refer to Section 5 below
for further details.
In June 2023, the European Parliament, As the CSDDD is an EU Directive, the EU
adopted its negotiating position. On countries may, in theory, establish choose to 3
Article 30, CSDDD

December 14, 2023 the European set higher standards than what is set out in
Parliament and the European Council the CSDDD.
reached provisional political agreement
on the CSDDD. After several weeks of
delays due to insufficient support from the
EU Member States, notably from Germany
and Italy, on March 5, 2024, the Belgian
EU Council Presidency shared with other
Member States and Parliament an updated
text of the CSDDD with certain concessions.
After much back and forth and further
concessions, on March 15, 2024, the
Council approved the Directive. On March
19, 2024, the JURI Committee of Parliament

44 An Apparel Supplier’s Guide 2.0: Key Sustainability Legislation in the EU, US, and UK
5. Scope UPDATE Applicability Thresholds

EU Corporate Sustainability Due Diligence Directive ----- Factsheet

The applicable thresholds to determine whether a company is in-scope are set
out below:
To which companies will the CSDDD
directly apply? Company established Company established
in the EU outside of the EU4
The CSDDD will apply to companies,
irrespective of whether they are incorporated
Companies with more than 1,000 Companies that generated a net
in the EU, provided they meet the applicable
employees on average and net turnover of more than EUR 450
thresholds. In this factsheet, companies
worldwide turnover of more than EUR million in the EU in the financial year
meeting these criteria are referred to as
450 million for the last financial year. preceding the last financial year.
“companies in-scope”.

The ultimate parent company of a The ultimate parent company of a

group that reaches the thresholds set group that reaches the thresholds set
forth above. forth above.

Companies or parent companies with Companies or parent companies with

franchising or licensing agreements franchising or licensing agreements
in the EU with annual royalties in the EU with annual royalties
exceeding EUR 22.5 million and net exceeding EUR 22.5 million in the EU
worldwide turnover of more than and net worldwide turnover of EUR
EUR 80 million in the last financial 80 million in the EU in the financial
year. year preceding the last financial
year.

4
Article 2(2), CSDDD

45 An Apparel Supplier’s Guide 2.0: Key Sustainability Legislation in the EU, US, and UK
 UPDATE Effective Date

EU Corporate Sustainability Due Diligence Directive ----- Factsheet

Each EU Capital Member State has two years to incorporate the CSDDD into its
national laws, regulations, and administrative provisions.

In-scope companies have different timelines to comply with CSDDD obligations

based on the following applicability thresholds:

• Three years after the Directive’s entry into force in 2024, the following
companies would be covered:

• Companies established in the EU with more than 5,000 employees on

average and generated a net worldwide turnover of more than €1.5
billion generated in the last financial year.
For Context
• Companies established outside the EU that generated a net worldwide
SMEs are excluded from direct scope of the turnover of more than €1.5 billion in the last financial year.
CSDDD, although they may still be indirectly • Four years after the Directive’s entry into force, the following companies would
impacted due to actions taken by the larger be covered:
companies in-scope.
• Companies established in the EU with more than 3,000 employees
Similarly, if your company supplies to, or on average and generated a net worldwide turnover of €900 million
produces for, a company in-scope, you may generated in the last financial year.
still be indirectly impacted by the CSDDD as • Companies established outside the EU that generated a net worldwide
its requirements are expected to have knock- turnover of €900 million in the last financial year.
on effects on chain of activities globally.
These implications are set out in more detail in • Five years after the Directive’s entry into force, all companies in-scope would
Section 8. be covered.

46 An Apparel Supplier’s Guide 2.0: Key Sustainability Legislation in the EU, US, and UK
6. Obligations UPDATE Overview

EU Corporate Sustainability Due Diligence Directive ----- Factsheet

for companies The CSDDD, as proposed, will require the companies in-scope to undertake human
in-scope rights and environmental risk-based due diligence in relation to their own operations,
the operations within their group (including their subsidiaries) and chain of activities.
A chain of activities encompasses all activities of a company’s upstream business
partners related to the production of goods or provision of services, including
sourcing, manufacture, transport, and supply of raw materials, and activities of
a company’s downstream business partners connected to the goods, including
distribution, transport and storage, where the business partners carry out those
activities for or on behalf of the company. Downstream activities for company’s
services and disposal of the product are excluded.

A business partner is a legal entity related to the operations, products or services of

the obligated company. It can be related via a commercial agreement or a provision
of services as part of their chain of activities (direct business partners), but also any
performance of business operations (indirect business partners).

Companies in-scope will also be required to adopt and put into effect a transition
plan for climate change mitigation which aims to ensure, through best efforts, that
their business model and strategy are compatible with the transition to a sustainable
economy and with limiting global warming to 1.5°C in line with the Paris Agreement.

47 An Apparel Supplier’s Guide 2.0: Key Sustainability Legislation in the EU, US, and UK
 Due Diligence Obligations5

EU Corporate Sustainability Due Diligence Directive ----- Factsheet

The CSDDD sets out specific requirements that companies in-scope must implement. These
requirements are to:

Integrate due diligence into relevant policies, develop risk

management systems and set up a due diligence policy.

The due diligence policy should include a description of the company’s approach;
a code of conduct followed by the company’s subsidiaries; employees and business
partners, and a description of the processes put in place to integrate and implement
due diligence.

Identify and assess actual and potential adverse impacts from

their business operations or those of their subsidiaries or business
relationships and, where necessary, prioritize potential and actual
adverse impacts.6

Where it is not feasible to prevent or mitigate all identified adverse impacts at the
same time to their full extent, companies would need to prioritize adverse impacts
identified based on the severity and likelihood of the adverse impact.

Take appropriate measures to prevent or, if not possible,

adequately mitigate potential adverse impacts identified4.

Companies would be required to take the following actions, including but not limited to:
i. seeking contractual assurances from direct business partners to ensure compliance
with the company’s codes of conduct (and, as necessary, prevention action plans);
and
ii. making necessary modifications of the company’s business plan, overall strategies
5
Article 4, CSDDD
6
Article 6, CSDDD and operations, including purchasing practices, design and distribution practices;

48 An Apparel Supplier’s Guide 2.0: Key Sustainability Legislation in the EU, US, and UK
 iii. supporting SMEs that are business partners of the company, with training,
knowledge and financial resources where necessary.

EU Corporate Sustainability Due Diligence Directive ----- Factsheet

Where the above-described appropriate actions cannot prevent or adequately
mitigate the potential impact, the company may be required to refrain from entering
into new or extended relations with the relevant partner in the chain of activities value
chain and may be required to temporarily suspend or terminate such relationship as a
last resort.

Take appropriate measures to bring actual identified adverse

impacts to an end or minimize their impact

This could include being required to take the following actions, including but not limited
to developing and implementing a corrective action plan with the implementation of
appropriate measures and monitoring indicators; and seeking contractual assurances
from direct business partners that the partner will ensure compliance with the
company’s code of conduct.

Where the above-described appropriate actions cannot prevent, adequately mitigate,

or bring an end to (respectively) the adverse impact, the company may be required
to refrain from entering into new or extended relations with the relevant partner in the
chain of activities and may be required to temporarily suspend such relationship as a
last resort.

Provide remediation of actual adverse impacts.7

Where a company has caused or jointly caused an actual adverse impact, that
6
Article 6, CSDDD
7
Article 8c, CSDDD company would be required to provide remediation. Where the actual adverse
8
Remediation means restitution of the affected persons, communities or
environment to a situation equivalent or as close as possible to the situation they impact is caused only by the company’s business partner, voluntary remediation may
would be in had the actual adverse impact not occurred, proportionate to the
company’s implication in the adverse impact, including financial or non-financial
be provided by the company. The company may also use its ability to influence the
compensation provided by the company to a person or persons affected by the
actual adverse impact and, where applicable, reimbursement of the costs incurred
business partner causing the adverse impact to enable remediation.8
by public authorities for any necessary remedial measures.

49 An Apparel Supplier’s Guide 2.0: Key Sustainability Legislation in the EU, US, and UK
 Carry out meaningful engagement with stakeholders.9

EU Corporate Sustainability Due Diligence Directive ----- Factsheet

Companies would be required to consult with stakeholders in the following steps of due
diligence process, including but not limited to gather the necessary information on actual
or potential adverse impacts, in order to identify, assess and prioritize adverse impacts;
and the development of prevention and corrective action plans.

Establish a notification mechanism and complaints procedure for use

by the following people and organizations.10
i. those affected or have reasonable grounds to believe they may be affected by an
adverse impact, and their legitimate representatives, such as civil society organizations
and human rights defenders;
ii. trade unions and other workers representatives representing those concerned; and
iii. civil society organizations active and experienced in areas related to the
environmental adverse impact that is the subject matter of the complaint.

The complaints procedure should allow complainants to request appropriate follow-up

from the company andmeet with company representatives to discuss the complaint. A
company would be required to provide a complainant with its reasoning as to whether a
complaint is found to be founded or unfounded, and, if founded, the steps or actions to be
taken.

Conduct annual monitoring.11

Companies should assess their own operations and measures and those of subsidiaries,
where related to the company, those of their business partners, to monitor their
adequacy and effectiveness, after a significant change and at a minimum on an annual
basis. The due diligence policy should be updated accordingly following these reviews.
9
Article 8d, CSDDD
10
Article 9, CSDDD
11
Article 10, CSDDD

50 An Apparel Supplier’s Guide 2.0: Key Sustainability Legislation in the EU, US, and UK
 Climate Change Obligations12 In-scope companies must adopt and put into effect a transition plan for climate change
mitigation that aims to ensure, through best efforts, that their business model and

EU Corporate Sustainability Due Diligence Directive ----- Factsheet

strategy are in line with the obligations under the Paris Agreement to limit global
warming to 1.5°C and the objective of achieving climate neutrality and 2050 climate
neutrality targets, and, where relevant, the exposure of the company to coal-, oil- and
gas-related activities.

This plan should include:

• Time-bound targets related to climate change for 2030 and in five-year steps up to
2050 based on conclusive scientific evidence and including, where appropriate,
absolute emission reduction targets for greenhouse gas for scope 1, scope 2 and
scope 3 greenhouse gas emissions for each significant category;

• A description of decarbonization levers identified and key actions planned to

reach targets referred to in the previous bullet point, including where appropriate
changes in the undertaking’s product and service portfolio and the adoption of new
technologies;

• An explanation and quantification of the investments and funding supporting the

implementation of the transition plan; and

• A description of the role of the administrative, management and supervisory bodies

with regard to the plan.

The transition plan would be required to be updated every 12 months and contain a
description of the progress the company has made towards achieving the targets in the first
bullet point above.
12
Article 15, CSDDD

51 An Apparel Supplier’s Guide 2.0: Key Sustainability Legislation in the EU, US, and UK
7. Compliance Comprehensive Evaluation of Supply Chains: As an initial matter, companies
should undertake an assessment. In addition to this, companies in-scope should review

EU Corporate Sustainability Due Diligence Directive ----- Factsheet

recommendations their subsidiaries and business partners within their value chains, to establish the potential
extent of their due diligence obligations.
for companies
Development of a Robust Governance and Compliance Framework:
in-scope Companies in-scope should consider potential governance and oversight responsibilities
within their organization. Companies in-scope should also review their current procedures
and policies to identify any gaps against the requirements of the CSDDD. For example,
As the CSDDD has been recently adopted, businesses may not have a complaints procedure in place and will need to establish
we suggest the following as general one. Many businesses will need to either adjust and amend their due diligence policies
recommendations to consider at this stage: and practices or implement them for the first time. The due diligence plans should set out
clear actions to achieve the objectives, be forward-looking and supported by specific
milestones.

It is The Remedy Project’s assessment that the CSDDD and other human rights due diligence laws derive from the UNGPs, which provides the
authoritative international framework on how business should respect human rights. Companies in-scope may consider aiming to operate in
accordance with the UNGPs and the OECD Due Diligence Guidance for Responsible Business Conduct as this would likely be more efficient than
seeking to achieve different standards of compliance for each individual piece of legislation.

52 An Apparel Supplier’s Guide 2.0: Key Sustainability Legislation in the EU, US, and UK
8. Potential Suppliers who are in the chain of activities of brands or retailers in-scope, but are not

EU Corporate Sustainability Due Diligence Directive ----- Factsheet

directly subject to the obligations of the CSDDD, could expect to see the following knock-
implications on effects:

for suppliers
to companies Contractual Compliance: Suppliers trading relationships. This also presents

in-scope
should prepare for requests from brands suppliers with an opportunity to advocate
or retailers in-scope to include contractual for a more balanced commercial
assurances in agreements that oblige the relationship with the companies in-scope.
supplier to comply with the brand’s or
Companies that do not fall directly within
retailer’s codes of conduct, and these
scope of the CSDDD, but supply to companies
may be in the form of warranties and
in-scope, will still be indirectly affected by the
indemnities. This could be the case where
CSDDD due to their position in the chain of
there is a direct relationship between the Compliance with Company’s Code
activities of companies in-scope. As explained
supplier and the brand or retailer, but also of Conduct: While most brands or
in Section 6 above, where adverse impacts
where there is an indirect relationship, retailers currently already require their
are identified, companies in-scope may be
and the contractual assurances have been suppliers to comply with their codes
required to temporarily suspend commercial
flowed down from the brand or retailer to of conduct, we would expect that the
relationships within their chain of activities
a sub-supplier, through the Tier-1 supplier. standards in the codes of conduct will
until the impact can be brought to an end
become increasingly stringent, e.g.,
or minimized, so suppliers should keep this
Considering the financial impact that suppliers will be required to undertake
possibility in mind.
implementing CSDDD obligations will their own due diligence on their business
have on suppliers, CSDDD provides the partners. Similarly, brands or retailers
possibility to initiate conversations on may adapt existing auditing processes to
changing practices, such as purchasing better verify compliance e.g., there could
practices, aimed at compensating be a higher frequency of unannounced
suppliers’ efforts. It is also worth noting audits for suppliers that are deemed to
that CSDDD recognises the ability of be high-risk.
contracts to underpin more balanced

53 An Apparel Supplier’s Guide 2.0: Key Sustainability Legislation in the EU, US, and UK
 EU Corporate Sustainability Due Diligence Directive ----- Factsheet
Documentation and Record-Keeping: Development of a Robust Compliance Enhancement of Company’s
Suppliers should also prepare for brands or Framework: Specifically, we would also Complaint Procedure: Brands or
retailers in-scope to include further rights in expect buyers to request information from retailers in-scope may roll-out, strengthen
contracts that would enable them to conduct suppliers to conduct human rights and or expand the scope of existing grievance
more robust verification. This may include the environmental risk assessments, and to verify channels (e.g., third-party helplines,
right to conduct audits, on-site inspections, or compliance with buyer’s codes of conduct. worker voice tools and applications) to
to requests for information (see subsequent This may include providing data such as cover further tiers of their value chain.
bullet for types of expected information demographic information of workers, wages, While many brands or retailers may have
requests). Suppliers should therefore assess working hours, and information to support existing grievance reporting channels,
their internal processes and record-keeping raw materials tracing (e.g., country of origin these may only cover their own facilities
so that when they are agreeing to be subject of materials) and supply chain mapping and or Tier-1 supplier facilities currently.
to these verification measures they can be (e.g., identity and location of sub-suppliers These grievance channels will likely be
confident that they will be able to meet those and sub-contractors). Based on the individual expanded to cover Tier-2 suppliers or
requirements. brand or retailer, it is possible that data even further upstream (depending on the
provided will need to cover service providers individual brands’ or retailers’ approach).
(e.g., janitorial, catering or security services Suppliers will likely be required to
provided at facilities), and extend upstream publicize and socialize the availability
to the source of materials (including e.g., of brands’ or retailers’ grievance
ginners or farmers). Buyers may also request mechanisms to affected rightsholders
suppliers to provide declarations to confirm (e.g., workers in supplier facilities).
the accuracy of the information provided.

54 An Apparel Supplier’s Guide 2.0: Key Sustainability Legislation in the EU, US, and UK
 EU Corporate Sustainability Due Diligence Directive ----- Factsheet
Establishment of Supplier’s Complaint Record-Keeping of Complaint
Procedure: At the same time, we would Procedure: These policy measures will
also expect brands or retailers in-scope likely be accompanied by more proactive
to require their direct suppliers to put in engagement by brands and retailers on
place multiple grievance reporting channels grievance management – for example, brands
(e.g., hotlines, applications) operated by and retailers may require their suppliers to
the supplier themselves or by a third-party provide grievance logs and grievance-related
service provider as well as platforms to solicit data to verify whether the suppliers’ grievance
worker feedback periodically (e.g., surveys, mechanism is effective at resolving grievances
interviews, applications), to cover supplier and actually used by affected rightsholders.
sites. At a minimum, these channels must
provide users the ability to report anonymous,
protect the user’s confidentiality, and be
accompanied by non-retaliation policies.
Brands and retailers will also likely require
suppliers to make a diversity of reporting Given that the CSDDD has been recently adopted, and it is uncertain how its
channels available and offer methods of provisions will apply in practice, brands and retailers in-scope will likely take different
escalating grievances. These grievance approaches to compliance. Suppliers who expect that they will be indirectly impacted
channels must be accompanied by procedures by the CSDDD may already engage in discussions with the brands or retailers who
to track, investigate, and resolve the reported will be directly subject to the obligations of the CSDDD to better understand how
grievances, and a mechanism to communicate the brand or retailer expects to change their current purchasing practices, codes of
/ report how grievances are being resolved. conduct and other policies, due diligence programs, audit and verification practices,
grievance mechanisms and other human rights and environmental risks management
practices in light of the CSDDD.

55 An Apparel Supplier’s Guide 2.0: Key Sustainability Legislation in the EU, US, and UK
9. Penalties for Each EU country will designate one or more supervisory authority responsible for

EU Corporate Sustainability Due Diligence Directive ----- Factsheet

non-compliance overseeing compliance with the CSDDD.

These supervisory authorities can initiate investigations on their own. The supervisory
authority may also initiate a investigation where a third party raises substantiated
concerns, and there is sufficient information to indicate a potential breach of the
CSDDD.13 Any natural and legal persons (this includes any individual, company, or civil
society organization whether located inside or outside the EU) may submit substantiated
concerns to any supervisory authority when they have reasons to believe, on the basis
of objective circumstances, that a company in-scope is failing to comply with the national
law provisions adopted pursuant to the CSDDD.14

Supervisory authorities may impose the following penalties if non-compliance is found:

• order the company to end the infringing actions;

• order the company to not engage in certain conduct;

13
Article 18 (2), CSDDD
14
Article 19 (1), CSDDD • order the company to take remedial action proportionate to the infringement and
15
Article 19 (1), CSDDD
16
Article 18 (5), CSDDD necessary to bring it to an end;

• impose interim measures in case of imminent risk of severe and irreparable harm; and

• impose penalties.15

Companies in-scope may also be liable for civil damages if they fail to mitigate, put an
end to, or minimize identified adverse human rights or environmental impacts, and this
failure led to damage being caused.16

However, where the damage is caused by the company’s indirect partner with whom
it has an established business relationship, the company will not be held liable, if it has

56 An Apparel Supplier’s Guide 2.0: Key Sustainability Legislation in the EU, US, and UK
 taken steps to mitigate, end or minimize the adverse impact, unless the actions taken by
the company could not be reasonably be expected to adequately address the adverse

EU Corporate Sustainability Due Diligence Directive ----- Factsheet

impact.17

In other words, where (hypothetically):

• The sub-tier supplier of a brand in-scope was required to comply with the brand’s
code of conduct;

• The brand in-scope implemented robust measures to verify the sub-tier suppliers’
compliance with the code; and

• The brand in-scope implemented risk mitigation plans to address any identified
adverse impacts… the brand may not be held liable for damages caused by the sub-
tier supplier.

By contrast, if the brand in-scope required their sub-tier supplier to comply with the brand’s code of conduct but
did not undertake compliance verification or risk mitigation measures, the brand in-scope may still be held liable
for damages caused by the sub-tier supplier. This is because the measures undertaken by the company could not
be reasonably expected to be sufficient to mitigate, end or minimize adverse impacts. This provision highlights the
importance of ensuring that any due diligence actions undertaken are genuinely effective and responsive to the
risks identified, and do not only exist on paper.

17
Article 22 (1), CSDDD

57 An Apparel Supplier’s Guide 2.0: Key Sustainability Legislation in the EU, US, and UK
10. Form of Investigations/Supervision.

EU Corporate Sustainability Due Diligence Directive ----- Factsheet

Enforcement Where a supervisory authority identifies non-compliance pursuant to an investigation (as
described in Section 9 above), the company will be granted an appropriate period of time
for remedial action (if possible)18. The supervisory authorities may also order the concerned
As noted above, enforcement comes in the company to stop the infringing conduct as set out above.
form of investigation and related powers,
sanctions, and civil liability:
Penalties.

Each EU country establishes their own rules on penalties for infringements. As such, the
form of sanctions may differ based on the EU country. The penalties should be effective,
proportionate, and dissuasive.19 Any pecuniary penalties (i.e., fines) should be based on the
company’s turnover, at a maximum of 5% of net worldwide turnover.20 The type and extent
Article 22 (1), CSDDD
of penalties imposed will depend on:21
18

19
Article 18 (4), CSDDD
20
Article 20 (1), CSDDD
21
Article 20 (3), CSDDD • The nature, gravity and duration of the infringement, and the severity of the impacts
resulting from that infringement;
• Any investments made and any targeted support provided;
• Any collaboration with other entities to address the impacts concerned;
• Where relevant, the extent to which prioritization decisions were made;
• Any relevant previous infringements by the company of national provisions adopted
pursuant to the Directive found by a final decision;
• The extent to which the company carried out any remedial action with regard to the
concerned subject-matter;
• The financial benefits gained from or losses avoided by the company due to the
infringement; and
• Any other aggravating or mitigating factors applicable to the circumstances of the case.

58 An Apparel Supplier’s Guide 2.0: Key Sustainability Legislation in the EU, US, and UK
 Civil Liability.

EU Corporate Sustainability Due Diligence Directive ----- Factsheet

As above, complainants may be entitled to compensation by way of damages stemming
from non-compliance with the CSDDD if:
• The company intentionally or negligently failed to comply with the obligations under
the CSDDD, when the right, prohibition or obligation is aimed to protect the natural or
legal person; and
• As a result of a failure, as referred to in the previous bullet point, a damage to the
natural or legal person’s legal interest protected under national law was caused.

11. Reporting/ Companies in-scope who are not subject to reporting requirements under Articles 19a and 29a
of Directive 2013/34/EU22 must publish a statement on their website on an annual basis on the
disclosure matters covered by the CSDDD. The statement must be published in an official language of

requirements the European Union of the Member State of the applicable supervisory authority no later than
12 months after the balance sheet date of the applicable financial year. Companies voluntarily
for companies reporting should publish their disclosures by the date of publication of their annual financial
statements. The European Commission will adopt delegated acts specifying the content and criteria
in-scope for such reporting no later than March 31, 2027.23

There are no other reporting or disclosure requirements under the CSDDD, as these obligations
will be largely covered by the CSRD. However, CSDDD and CSRD set different requirements for
what companies fall under their scope of application. CSDDD applies to companies with more
than 1,000 employees and a net worldwide turnover of more than EUR 450 millions, while CSRD
applies to large companies with an annual net turnover of EUR 50 millions and 250 employees,
22
Directive 2013/34/EU on the annual financial statements, listed SMEs and public interest entities with over 500 employees (please see Section 4 of CSRD for
consolidated financial statements and related reports of certain types
of undertakings.
a detailed explanation of the scope of application).
23
Article 11, CSDDD

59 An Apparel Supplier’s Guide 2.0: Key Sustainability Legislation in the EU, US, and UK
12. Access Each EU country must ensure that natural and legal persons are entitled to submit
‘substantiated concerns’ to any supervisory authority when they have reasons to suspect

EU Corporate Sustainability Due Diligence Directive ----- Factsheet

to remedy non-compliance by a company in-scope. The supervisory authority shall, as soon as possible,
inform the complainant of the result of the assessment of their concern and provide reasons.
mechanisms Each EU country must ensure that such complainants with a legitimate interest in the matter
have access to a court or other independent and impartial public body competent to
and litigation risk review the procedural and substantive legality of the decisions, acts, or failure to act of the
supervisory authority.24

As above, companies in-scope can face civil liability for non-compliance with their
obligations under the CSDDD, and so should be aware of the litigation risks in this respect.25

There is no indication that further public engagement or participation is requested or

13. Opportunity possible in relation to the CSDDD.

to participate
and engage
in legislative
developments

24
Article 19, CSDDD
25
Article 22, CSDDD

60 An Apparel Supplier’s Guide 2.0: Key Sustainability Legislation in the EU, US, and UK
 14. Useful resources to

EU Corporate Sustainability Due Diligence Directive ----- Factsheet

support compliance

European Commission, Proposal for a Directive of the European Parliament and of

the Council on Corporate Sustainability Due Diligence and amending Directive (EU)
2019/1937

European Commission, Just and sustainable economy: Companies to respect human

rights and environment in global value chains

European Commission, Questions and Answers: Proposal for a Directive on corporate

sustainability due diligence

European Commission and European Parliament, Proposal for a Directive of the

European Parliament and of the Council on Corporate Sustainability Due Diligence and
amending Directive (EU) 2019/1937.

European Council, Proposal for a Directive of the European Parliament and of the
Council on Corporate Sustainability Due Diligence and amending Directive (EU)
2019/1937

61 An Apparel Supplier’s Guide 2.0: Key Sustainability Legislation in the EU, US, and UK
Factsheet

EU Corporate Sustainability
Reporting Directive
UPDATE

1. Key Updates
On October 17, 2023, the European Commission adopted a delegated directive that
adjusted the reporting threshold for large companies. This summary has also been
updated to provide an overview of (1) EU Member States’ progress in transposing the
Directive into national law and (2) the adoption of the first 12 European Sustainability
Reporting Standards (ESRS). The adoption of sector-specific standards has been post-
poned. The main changes relate to Section 3, 4, 6, 11, 13 and 14.

62 An Apparel Supplier’s Guide 2.0 : Key Sustainability Legislation in the EU, US, and UK
2. Overview

EU Corporate Sustainability Reporting Directive ----- Factsheet

The CSRD sets out how companies must report on their social and environmental performance.
It includes what types of information they need to disclose and how those disclosures should be
The EU Corporate Sustainability Reporting made. Companies in-scope will need to follow the reporting requirements set out in the ESRS,
Directive (CSRD) took effect on January which specifies the detailed reporting requirements. The ESRS are being developed by EFRAG
5 2023, although the first wave of (European Financial Reporting Advisory Group).2
companies in-scope are not expected to
start reporting until their 2024 financial CSRD reporting is intended to help a company’s stakeholders better understand its sustainability
year (with the first report to be produced performance and impact. Such stakeholders may include:
in 2025). Building on the current EU Non-
Financial Reporting Directive (NFRD1),
the CSRD will require detailed qualitative • Investors and asset managers, who • Customers, who want to understand
and quantitative sustainability disclosures want to better understand the risks and and, where necessary, report on
from a substantially expanded universe of opportunities that sustainability issues sustainability risks and impacts
companies. pose for their investments and the impacts throughout their own value chains;
of those investments on people and the
environment;

• Civil society actors, including non- • Policy makers and environmental

governmental organizations and agencies, as part of monitoring
social partners that wish to better hold environmental and social trends and
companies to account for their impacts on to inform public policy.
people and the environment;

1
The NFRD requires companies to provide disclosures on: their efforts to
protect the environment, how they treat their employees, how they plan to
adhere to general human rights, how they mitigate corruption or bribery,
and how they promote diversity in their work environment.
2
EFRAG is a private association established with the encouragement of
the Commission to serve the public interest. Its member organizations
are European stakeholders and national organizations and civil society
organizations

63 An Apparel Supplier’s Guide 2.0: Key Sustainability Legislation in the EU, US, and UK
3. Context 4. Status

EU Corporate Sustainability Reporting Directive ----- Factsheet

The CSRD provides a framework for The CSRD entered into force on January 5, On July 31, 2023, EFRAG adopted
harmonizing EU sustainability reporting 2023. However, as a European Directive, the first set of ESRS, consisting of two
standards and aims to align EU reporting it does not directly create obligations for general cross-cutting ESRS and ten topical
standards and internationally recognized companies in-scope. Those obligations will ESRS, as a delegated act.3 EFRAG may
sustainability reporting and accounting be created under each EU country’s national develop, and the European Commission
standards and frameworks. In November laws based on the CSRD. EU countries will may adopt, additional sector-specific and
2023, the GRI-ESRS Interoperability Index have until July 6, 2024, to transpose the other ESRS. On February 8, 2024, the
was made publicly available. This index CSRD into their national laws. As of February European Parliament and the European
allows entities reporting under ESRS to be 29, 2024, five EU Member States (Czechia Council reached a political agreement to
considered as reporting ‘with reference’ (in part), Finland, France, Hungary and delay the adoption of sector-specific ESRS
to the GRI standards. However, with other Romania) have approved implementing and the standards specifying the reporting
international standards on sustainability legislation to transpose the CSRD into national obligations of Third-Country Companies
reporting, such as the IFRS and TCFD, law, an additional eight Member States have (as defined below) to June 30, 2026.
there are differences to be assessed with introduced implementing legislation but not
regard to their interoperability with ESRS. yet approved it, and a further eight Member
Please refer to the comparative analysis States have held consultations regarding
provided by EFRAG to learn more about transposing the CSRD into national law.
the similarities and differences in these
requirements.

3
A delegated act is an EU legislative mechanism to ensure that EU laws that are
passed can be implemented properly or reflect developments in a particular sector.

64 An Apparel Supplier’s Guide 2.0: Key Sustainability Legislation in the EU, US, and UK
 UPDATE The sustainability reporting requirements for companies in-scope4 will take effect on a staggered basis, as follows:

EU Corporate Sustainability Reporting Directive ----- Factsheet

Criteria Implementation5
Category
Large company or parent company of a large group that is Financial years starting on or after January 1, 2024, with the
Companies already subject to
1 incorporated in the EU which (i) is a public interest entity and (ii) first report to be produced in 2025
reporting under the NFRD has more than 500 employees on average.

Large companies incorporated The company must meet two of the following criteria: Financial years starting on or after January 1, 2025, with the
in the EU (including EU • Balance sheet total of EUR 25 million first report to be produced in 2026
subsidiaries of non-EU parent 2 • Annual net turnover6 of at least EUR 50 million; and/or
companies) not already subject • An average of 250 employees during the financial year
to the NFRD

The company must have securities listed on an EU-regulated market Financial years starting on or after January 1, 2026, with the first
SMEs incorporated in the EU and meet two of the following criteria (to the extent not covered by report to be produced in 2027.
that are listed on EU-regulated 3 categories 1 and 2, a Listed SME): However, for the first two years following 2026, SMEs will have
• Balance sheet total of at least EUR 4 million; the option to opt out from the reporting requirements, so long
markets (other than micro-
• Annual net turnover of at least EUR 8 million; and/or as they indicate in their management report why they did not
companies) • An average of 50 employees during the financial year. disclose sustainability information.

The non-EU company must meet the following criteria (Third-Country Financial years starting on or after January 1, 2028, with the
Large companies not Companies): first report to be produced in 2029
• Annual net turnover of EUR 150 million in the EU for each of the
incorporated in the EU with 4
last two consecutive financial years; and
certain EU ties • At least one subsidiary that is a Large Undertaking (as defined
in category 2) or a Listed SME (as defined in category 3) or EU
branch that generated net turnover of more than EUR 40 million
in the prior financial year

4
It must be noted that the term used in the CSRD is an “undertaking” rather than a “company”. But for the purposes of readability, the term “company” will be used in this factsheet. Undertakings is an EU
legislative term that refers to any entity that is engaged in the economic activity of offering goods or services on a given market, regardless of its legal status and the way in which it is financed. As such, the term
“undertaking” is broader than a “company” as an undertaking could be an entity without formal legal status.
5
Reporting will occur in the following financial year for each of the above financial years.
6
“Net turnover” is generally defined as the amounts derived from the sale of products and the provision of services after deducting sales rebates and value added tax and other taxes
directly linked to turnover.

65 An Apparel Supplier’s Guide 2.0: Key Sustainability Legislation in the EU, US, and UK
5. Scope The CSRD casts a wide net, substantially wider than the NFRD. Please refer to the table in Section 4
above for the criteria to determine whether a company would fall within the scope of the CSRD. The

EU Corporate Sustainability Reporting Directive ----- Factsheet

European Commission estimates that approximately 49,000 companies will be required to comply with
the CSRD, compared to an estimate of only 11,600 companies that are required to comply with the
NFRD.

6. Obligations Overview

for companies The CSRD will require the company’s management report to include (in a clearly identifiable
dedicated section) information necessary to understand the company’s impacts on sustainability
in-scope matters, and how sustainability matters affect the company’s development, performance,
and position. “Sustainability matters” broadly encompasses environmental, social, and
human rights and governance factors. The CSRD provides an exemption for subsidiaries, if the
subsidiary’s parent company includes the subsidiary in the parent company’s consolidated
management report.

Types of Disclosures Required

As noted above, the specific disclosures required to be made are set out in the ESRS. The CSRD
more generally states that sustainability matters to be addressed in the management report are
required to include the following:
• A brief description of the company’s business model and strategy, including, but not
limited to, the resilience of the company or group’s business model and strategy in relation
to sustainability risks; and how the company’s business model and strategy consider its
stakeholders’ interests and its impacts on sustainability matters;
• Sustainability targets, a description of the progress the company has made towards
achieving those targets, and a statement of whether the company’s targets, as related to
environmental matters, are based on conclusive scientific evidence;

66 An Apparel Supplier’s Guide 2.0: Key Sustainability Legislation in the EU, US, and UK
 • Any incentive schemes linked to sustainability matters;
• Indicators relevant to its sustainability-related disclosures;

EU Corporate Sustainability Reporting Directive ----- Factsheet

• A description of the due diligence processes regarding sustainability matters;
• The principal actual or potential adverse impacts connected with the company’s own
operations and within its value chain and actions taken to identify and track these impacts;
• Actions taken by the company, and the result of such actions, to prevent, mitigate, remediate
or bring an end to actual or potential adverse impacts; and
• Principal risks to the company related to sustainability matters.

To the extent applicable, reported information is required to address the company’s own
operations and its value chains – both within and outside the European Union – including its
products and services, its business relationships, and its supply chain.7

On December 22, 2023, EFRAG published Draft EFRAG IG 2.8 Draft EFRAG IG 2 is draft value
chain guidance that explains how to navigate the value chain requirements of the ESRS, contains
FAQs for implementing value chain reporting under the ESRS and includes an upstream and
downstream value chain map that explains the coverage of the upstream and downstream value
chain.

Double Materiality

The CSRD takes a “double materiality” approach to reporting. Companies in-scope are required
to report both on (i) how sustainability matters affect their business; and (ii) the external
impacts of their activities on people and the environment. This is consistent with the approach
taken under the voluntary Global Reporting Initiative (GRI) standards. The concept of double
materiality is further explained in the draft ESRS 1 (General requirements).

7
For the first three years of reporting, if information regarding the value chain is not available, the undertaking must instead explain the efforts made to obtain the necessary information
about its value chain, the reasons why not all of the necessary information could be obtained and its plans to obtain the necessary information in the future.
8
https://www.efrag.org/Assets/Download?assetUrl=/sites/webpublishing/SiteAssets/Draft+EFRAG+IG+2+VCIG+231222.pdf

67 An Apparel Supplier’s Guide 2.0: Key Sustainability Legislation in the EU, US, and UK
 On December 22, 2023, EFRAG also published Draft EFRAG IG 1.9 Draft EFRAG IG 1 provides
draft guidance concerning the materiality assessment required by the ESRS; Draft EFRAG IG

EU Corporate Sustainability Reporting Directive ----- Factsheet

1 explains the ESRS approach to materiality, illustrates how the materiality assessment is to be
performed, explains how companies can take account of other frameworks and standards while
making the assessment,and includes FAQs on impact and financial materiality, the materiality
assessment process, stakeholder engagement and disaggregation and reporting.

Limited Assurance

Companies in-scope will have to seek limited assurance of the sustainability information
disclosed. This means that companies in-scope will need to engage a third-party auditor to verify
the information disclosed, although the degree of assurance required is less onerous than what
is required for financial auditing. Assurance standards are to be adopted by the European
Commission before October 1, 2026.

The European Commission has indicated that its goal is to eventually adopt a “reasonable
assurance” standard, potentially as early as 2028. Reasonable assurance would entail more
extensive procedures, including consideration of internal controls of the reporting company and
substantive testing to detect flaws.

Equivalence

The CSRD includes an equivalence mechanism. This means that where a company is subject
to multiple reporting requirements across different jurisdictions, it may be able to attain some
reporting exemptions where the other reporting requirements are considered equivalent to
the ESRS. However, the European Commission has not postponed the deadline to issue the
equivalent standards to 2026 and it is unclear at this stage how this equivalence mechanism will
operate in practice and which other reporting standards will be considered equivalent to the
9
https://www.efrag.org/Assets/Download?assetUrl=/sites/ ESRS.
webpublishing/SiteAssets/IG+1+Materiality+Assessment_final.pdf

68 An Apparel Supplier’s Guide 2.0: Key Sustainability Legislation in the EU, US, and UK
7. Compliance As an initial matter, there should be an
assessment of whether your company
For multinationals, in almost all cases,

EU Corporate Sustainability Reporting Directive ----- Factsheet

it will make the most sense for primary
recommendations is in-scope. For most multinationals, the responsibility for sustainability disclosure
threshold question will be whether any globally to sit in the headquarters
for companies of their incorporated in the EU are large (whether with the sustainability, legal,

in-scope
companies / large undertakings (i.e., compliance, finance or another team).
Category 2 companies as per the table in Of course, regional, and local personnel
Section 4 above). Larger multinationals also in other parts of the world also have an
Companies in-scope can prepare for will need to assess whether they might be important part to play and will need to be
reporting under the CSRD by taking subject to reporting as a non-EU company. integral to data collection and reporting.
the following steps: Multinationals that do not currently meet a
CSRD compliance threshold should consider Companies in-scope also should conduct
whether their EU growth strategy needs to a preliminary CSRD gap assessment.
monitor when the company reaches CSRD The gap assessment should focus on
threshold and prepare for compliance with gaps between expected required CSRD
the CSRD. disclosures (as detailed in EFRS 1 and
ESRS 2 standards) and other current
Companies in-scope should determine and expected voluntary and mandatory
where primary responsibility for CSRD sustainability disclosures (including those
compliance will sit, e.g., at the parent expected to be required by the SEC’s
level or subsidiary level. There has been climate risk disclosure rules if applicable).
a trend to increase the centralization
of responsibility for sustainability Companies in-scope should set up a
disclosures at the parent company level process for ongoing monitoring of the
to ensure consistency across mandatory significant number of CSRD-related
and voluntary disclosures and reduce developments that will occur over the next
compliance costs. few years.

69 An Apparel Supplier’s Guide 2.0: Key Sustainability Legislation in the EU, US, and UK
8. Potential implications 9. Penalties for

EU Corporate Sustainability Reporting Directive ----- Factsheet

for suppliers to companies in-scope non-compliance
Suppliers to companies in-scope may analysis to determine what information is Each EU country will set their own
experience some indirect impact as the readily available and where their ESG data enforcement and penalty rules under the
CSRD pushes for greater transparency and collection and reporting systems may need CSRD. Therefore, a company operating
standardization of sustainability reporting to be upgraded or expanded. Suppliers in Germany may pay more or less in
standards. Brands and retailers in-scope should also consider where further and penalties for non-reporting or non-
may require suppliers to provide information independent verification will be required to compliance than a company in Spain.
to support their reporting process. For validate the accuracy of datasets. Note that
example, companies in-scope are likely this gap analysis will need to be updated
to develop key performance indicators to when the draft sector-specific standard is
measure sustainability-related performance published by EFRAG.
and require their suppliers to report in
accordance with these indicators.

Suppliers to companies in-scope may also

consider reviewing the sector-agnostic
EFRS standards (EFRS 1 and ESRS 2)
to understand what kinds of data and
information they may be required to provide
to support companies in-scope report under
the CSRD. Suppliers may conduct a gap

70 An Apparel Supplier’s Guide 2.0: Key Sustainability Legislation in the EU, US, and UK
10. Form of Please refer to Section 9.

EU Corporate Sustainability Reporting Directive ----- Factsheet

Enforcement

11. Reporting/ General and topical standards

disclosure The European Commission adopted general standards,which provide for general
requirements (ESRS 1) and general disclosures (ESRS 2), in addition to 10 topical
requirements (if any) draft standards across each of the environmental, social and governance pillars.
Companies in-scope will need to report according to the general and topical
for companies standards.

in-scope
Environment Social

Climate change (ESRS E1) Own workforce (ESRS S1)

The ESRS will specify the forward-
looking, historical, qualitative, Pollution (ESRS E2) Workers in the value chain (ESRS S2)
and quantitative information to be Water and marine resources (ESRS E3) Affected communities (ESRS S3)
reported by companies in-scope. Biodiversity and ecosystems (ESRS E4) Consumers and end-users (ESRS S4)
On July 31, 2023, the European Resource use and circular economy (ESRS E5)
Commission adopted twelve ESRS,
consisting of two general cross-cutting
ESRS and ten topical ESRS, as further
Governance
described below. Additional sector-
specific and other ESRS are currently Business conduct (ESRS G1)
being developed by EFRAG.

71 An Apparel Supplier’s Guide 2.0: Key Sustainability Legislation in the EU, US, and UK
 Sector-specific standards

EU Corporate Sustainability Reporting Directive ----- Factsheet

The second set of standards will include sector-specific standards including sectors
covered by GRI sector standards (agriculture, coal mining, mining, oil and gas
(upstream) and oil and gas (mid- to downstream)) and sectors characterized as
high impact, (textiles, energy production, road transport, motor vehicle production
and food/beverages). These standards shall set out the disclosure requirements
that are specific to each sector; companies in-scope that fall within the identified
sectors will also need to ensure that their reporting is aligned with the sector-specific
standards in addition to the sector agnostic standards described above. EFRAG has
noted that its sector-specific standards will be mapped to the sector-specific SASB
standards in subsequent versions of the ESRS to avoid inconsistencies. On February
8, 2024, the European Parliament and the European Council reached a political
agreement to delay the adoption of sector-specific ESRS to June 30, 2026.

The second set of EFRAG standards will also include ESRS for SMEs. The intent
behind standards specific to SMEs is to enable them to report in accordance with
standards that are proportionate to their capacities and resources, and relevant to
the scale and complexity of their activities. The reporting standards for SMEs are to
be included in the ESRS to be adopted by June 30, 2026.

Additionally, EFRAG is developing a voluntary reporting standard for use by non-

listed SMEs to enable them to respond to requests for sustainability information in an
efficient and proportionate manner. A draft of the voluntary standard is expected
to be issued in the first half of 2024 and will be open to a four-month public
consultation.

72 An Apparel Supplier’s Guide 2.0: Key Sustainability Legislation in the EU, US, and UK
12. Access These risks may include:

EU Corporate Sustainability Reporting Directive ----- Factsheet

to remedy • Misleading and inaccurate ESG disclosures or “greenwashing” by companies may result

mechanisms and in liability in relation to investors who have suffered loss as a result of any untrue or
misleading statements, or omissions.
litigation risk
• The potential for sanctions for breaches of prospective supply chain due diligence
requirements under the CSDDD, such as debarment from public procurement, loss of
While there is no access to remedy export credit and fines. Companies also face significant reputational and financial
mechanisms under the CSRD, it is worth damage from governance and oversight failures of supply chain risks where there are
noting that non-compliance could lead to allegations over poor labour practices, human rights abuses, and slavery.
reputational and financial damage. Activists
are targeting management and boards • Claims by asset managers for indemnity and contributions to meet regulatory penalties
of certain companies that fail to take a or damages arising from misleading ESG disclosures provided by companies.
proactive stance on ESG issues, and social
and mainstream media are quick to expose • Employees feel more emboldened to call out their employers for non-compliance with
companies’ failings in ESG areas. This their published ESG standards.
stakeholder accountability and public scrutiny
fed by a desire for change, is expected to • Climate-related legal action brought by environmental groups continues to rise, with
result in an increase in enforcement and The Hague District Court recently ordering Royal Dutch Shell to reduce its carbon
litigation risks relating to sustainability emissions by 45% (compared to 2019 levels) by 2030. In July 2021, Royal Dutch Shell
performance for corporates. These risks may confirmed its intention to appeal the court ruling. During the same week, investors
include: in energy company Chevron, voted to cut emissions generated by the use of the
company’s products. These developments are likely to lead to further transformations
with the energy sector (including in relation to transport and mining), with companies
increasingly likely to face similar lawsuits from environmental groups, together with
pressure from investors to reduce their contributions to climate change.

73 An Apparel Supplier’s Guide 2.0: Key Sustainability Legislation in the EU, US, and UK
13. Opportunity As noted above, additional ESRS standards are under development by EFRAG. Please refer
to the EFRAG website for information on opportunities to participate.

EU Corporate Sustainability Reporting Directive ----- Factsheet

to participate and
engage in legislative
developments

14. Useful European Commission, Corporate sustainability reporting

European Commission, Adjustments of the size criteria for micro, small, medium-sized and
resources to large undertakings or groups

support compliance EFRAG, Sustainability reporting standards

EFRAG, ESRS Q&A Platform

EFRAG, Draft EFRAG IG 1

EFRAG, Draft EFRAG IG 2

74 An Apparel Supplier’s Guide 2.0: Key Sustainability Legislation in the EU, US, and UK
Factsheet

New York Fashion

Sustainability and Social
Accountability Act
UPDATE

1. Key Updates
Since the Fashion Sustainability and Social Accountability Act’s (the Fashion Act)
introduction, two other U.S. states – Massachusetts and Washington – have introduced
their own versions of the Fashion Act. A draft amended version of the Fashion Act has
been circulated among industry groups and other stakeholders, but not yet formally
introduced (and therefore not reflected herein). The main changes relate to Section 2,
4, 5 and 6.

75 An Apparel Supplier’s Guide 2.0 : Key Sustainability Legislation in the EU, US, and UK
2. Overview 3. Context

New York Fashion Act ----- Factsheet

If passed, the Fashion Sustainability and Social The purpose of the proposed Fashion Act is garment workers employed in California.
Accountability Act (Fashion Act) would to require fashion sellers to map their supply In describing the impetus for this proposed
require “fashion sellers” doing business chains and perform due diligence. This legislation, the New York State Senate
in New York1 to conduct environmental and includes identifying, preventing, mitigating, sponsor of the proposed Fashion Act,
human rights due diligence, set and comply accounting for, and taking remedial action Senator Alessandra Biaggi, elaborated
with greenhouse gas emission targets, and to address actual and potential adverse that “as a global fashion and business
produce a publicly available due diligence impacts to human rights and the environment capital of the world, New York State has
report. in their own operations and in their supply a moral responsibility to serve as a leader
chain. The proposed Fashion Act would in mitigating the environmental and social
“Fashion sellers” is defined under the proposed additionally lead to the creation of a impact of the fashion industry.” Since the
Fashion Act as “any business entity which fashion remediation fund to support affected Fashion Act’s introduction, two other U.S.
sells articles of wearing apparel, footwear, communities or workers harmed by adverse states – Massachusetts and Washington –
or fashion bags, that together exceed USD labour-related or environmental impacts. have introduced their own versions of the
100 million in annual gross receipts,2 but shall Fashion Act.
not include the sale of used wearing apparel, If passed, the Fashion Act would make
footwear, or fashion bags, nor shall it include New York the first state in the United States At the federal level, a proposed amendment
multi-brand retailers, except where the apparel, to pass a law that would hold fashion to the Fair Labor Standards Act of 1938,
footwear, and fashion bag private labels of companies accountable for their role in named the Fabric Act, has been proposed.
those companies together exceed USD 100 climate change and human rights impacts. Its The bill requires garment industry employers
million in global revenue”. As such, the term introduction follows the California Garment to pay at least the hourly minimum wage,
“fashion sellers” may include fashion brands, Worker Protection Act which came into and to be registered with the Department of
fashion retailers or fashion manufacturers. force on January 1, 2022, with the aims Labor, and prohibits piece rate pay.
of preventing wage theft, mandating fair
pay and improving working conditions for
1
So long as a fashion seller conducts transactions in New York State for the
purpose of financial or pecuniary gain or profit, it could be subject to the Fashion
Act, even if it does have a storefront the State.
2
of property, the performance of services, or the use of property or capital,
including rents, royalties, interest, and dividends, in a transaction that produces
business income, in which the income, gain, or loss is recognized, or would be
recognized if the transaction were in the United States, under the internal revenue
code, as applicable for purposes of this

76 An Apparel Supplier’s Guide 2.0: Key Sustainability Legislation in the EU, US, and UK
4. Status 5. Scope

New York Fashion Act ----- Factsheet

Overview Tier one suppliers would mean those
The bill was initially introduced to the
suppliers who produce finished goods
New York State legislature in October
The Fashion Act would cover any fashion seller to the fashion seller, including their
2021, reintroduced in January 2023, and
doing business in New York that has annual subcontractors (e.g., sewing and
is currently pending before the Consumer
worldwide gross receipts3 exceeding USD 100 embroidering services).
Protection Committee. Further, a draft
million. A fashion seller does business in New
amended version of the Fashion Act
York where it conducts transactions in New York Tier two suppliers would mean
has been circulated among industry
State for the purpose of financial or pecuniary suppliers to tier one suppliers, including
groups and other stakeholders, but not
gain or profit. This means that a fashion seller subcontractors, who provide services
yet formally introduced.
could still do business in New and goods, such as knitting, weaving,
York even if it does not have a storefront there. washing, dyeing, finishing, printing for
The Fashion Act would need to pass both
finished goods, and components and
the New York State Assembly and the
The proposed Fashion Act will require fashion materials for finished goods when they
New York State Senate before it can
sellers to conduct and report on the due are stand-alone operations and not
become law. As such, there are significant
diligence of their suppliers from tiers one to four. integrated with tier one. Components
hurdles to overcome before the Fashion
The different tiers are defined in the following include buttons, zippers, rubber soles,
Act can be passed into law. Therefore,
ways: down and fusibles.
it remains unclear when (if at all) the
Fashion Act will take effect.
Tier three suppliers would mean
It should be noted that the definition of tiers
suppliers to tier two suppliers, including
included in the Act does not necessarily
subcontractors, who process raw
reflect the complex reality of how a supply
materials (e.g. such as ginning, spinning
chain is structured. The Act does not define
and supply chemicals).
a supply chain and it is therefore not clear
whether its application extends to indirect
Tier four suppliers would mean to
3
Gross receipts is defined in the Fashion Act as gross amounts realized, otherwise suppliers irrespective of how established
known as the sum of money and the fair market value of other property or services
companies, including subcontractors,
received, on the sale or exchange of property, the performance of services, or
the use of property or capital, including rents, royalties, interest, and dividends, in the business relationship with the relevant
a transaction that produces business income, in which the income, gain, or loss is who supply raw materials to tier three
recognized, or would be recognized if the transaction were in the United States, supplier is.
under the internal revenue code, as applicable for purposes of this section. suppliers.

77 An Apparel Supplier’s Guide 2.0: Key Sustainability Legislation in the EU, US, and UK
6. Obligations Supply chain mapping

New York Fashion Act ----- Factsheet

for companies Under the proposed Fashion Act, companies would have the following supply chain
mapping obligations:
in-scope Within 12 months of the Fashion Act going into effect, map at least 75% of
tier one suppliers by volume (i.e., units)
The proposed Fashion Act requires fashion
Within two years of the Fashion Act going into effect, map at least 75% of
sellers to map tiers one to four of their supply
tier two suppliers by volume, within 24 months.
chains and undertake human rights and
environmental due diligence, in compliance
Within three years of the Fashion Act going into effect, map at least 50% of
with the OECD Guidelines for Multinational
tier three and tier four suppliers by volume or dollar value.
Enterprises and OECD Due Diligence
Guidance for Responsible Supply Chains • the mean wages of workers and how this compares with local minimum
in the Garment or Footwear Sector for the wage and living wages4;
parts of their business relating to apparel, • the percentage of unionized factories; and
footwear, or fashion bags. Fashion sellers will
• the hours worked weekly by month and the hours and frequency of
also be required to develop and submit an
overtime by firm and country
annual due diligence report to the Office of
the Attorney General.
Due diligence obligations

In line with the OECD Guidelines for Multinational Enterprises and the OECD Guidance
for Responsible Supply Chains in the Garment and Footwear Sector, the proposed
Fashion Act requires fashion sellers to, at a minimum:

• Embed responsible business conduct in the company’s policies and management systems;
4
Living wage is defined as the remuneration received for a standard workweek by • Identify areas of significant risks in the context of its own activities and business and
a worker in a particular place sufficient to afford a decent standard of living for
such worker and their family. Elements of a decent standard of living include food,
water, housing, education, health care, transportation, clothing, and other essential
supply chain relationships;
needs including provision for unexpected events. Living wage shall be determined
exclusive of overtime wages and by net wages including in-kind and cash benefits, • Identify, prioritize, and assess the significant potential and actual adverse impacts of
and any other relevant deducting taxes and deductions.
those risks;
• Cease, prevent, or mitigate those risks;
78 An Apparel Supplier’s Guide 2.0: Key Sustainability Legislation in the EU, US, and UK
 • Track the implementation and results; and
• Provide for or cooperate in remediation in the event of an adverse impact.

New York Fashion Act ----- Factsheet

Cease, prevent, or mitigate risks

Notably, the proposed Fashion Act lists out ways that fashion sellers can cease,
prevent, or mitigate adverse impacts of human rights and environmental risks.
This includes, but is not limited to:

• Incentivizing improved supplier performance on workers’ rights and environment

impact by embedding responsible purchasing practices in its supply chain
relationships and contracts, including:
• Contract renewals, longer term contracts, price premiums
• Providing reasonable assistance to suppliers so that they can meet applicable
human rights and environmental standards (including carbon emission
reduction targets); and
• Developing pricing models that account for the cost of wages, benefits, and
investments in suitable work5

• Utilizing responsible exit or disengagement strategies;

• Consulting and engaging with impacted and potentially impacted stakeholders and
rights holders and their representatives; and

• Establishing quantitative baseline and reduction targets on greenhouse gas emissions.

With respect to the requirement to provide for or cooperate in remediation in the event of an
Remediation
adverse impact, the proposed Fashion Act stipulates that the remedies provided should seek to restore
affected persons to the position they would have been if the adverse impact had not happened. Further,
fashion sellers should consult with affected rightsholders and their credible representatives to determine the
appropriate remedy.

5
Specifically, as reflected in freight on board prices together with traditional pricing considerations such as quantities being purchased, cost of materials, and skill requirements

79 An Apparel Supplier’s Guide 2.0: Key Sustainability Legislation in the EU, US, and UK
7. Compliance The proposed Fashion Act will entail additional compliance obligations for companies
in-scope, as they will be required to map most of their tier one to tier four suppliers.

New York Fashion Act ----- Factsheet

recommendations They will also be required to conduct due diligence, in line with the OECD Guidelines for
Multinational Enterprises and the OECD Guidance for Responsible Supply Chains in the
for companies Garment and Footwear Sector.

in-scope They will need to take a risk-based approach to due diligence, meaning that they will
be required to prioritize actions to address issues based on the likelihood and severity
of harm. Companies in-scope will also need to consider how their purchasing practices
can be improved to cease, prevent, or mitigate adverse human rights and environmental
impacts. They will need to sample and report on wastewater chemical concentrations
and water usage for 75% of tier two dyeing, finishing and garment washing suppliers by
volume.

Companies in-scope will be required to establish quantitative baseline and reduction

targets for greenhouse gas emissions. They will need to carefully track compliance
with reduction targets, since observed derogations will need to be remedied within an
eighteen-month period.

As a matter of practicality, we would expect that companies in-scope would report in

accordance with the OECD Guidelines for Multinational Enterprises and the OECD
Guidance for Responsible Supply Chains in the Garment and Footwear Sector.

80 An Apparel Supplier’s Guide 2.0: Key Sustainability Legislation in the EU, US, and UK
8. Potential Information requests

New York Fashion Act ----- Factsheet

implications
• Information requests to support mapping process for fashion sellers in-scope.
Companies in-scope will need to report on the name, address, parent company,

for suppliers to product type and number of workers at each site by country for suppliers across all
four tiers. As such, it is expected that fashion sellers will rely on upstream suppliers
companies to provide some of this information.

in-scope • Tier-one suppliers should expect disclosure requests relating to wages of workers,
hours logged, hours and frequency of overtime by firm and country, percentage of
unionized factories. This will require suppliers to fashion sellers in-scope to have in
It should be noted that the
place the relevant corporate governance practices and human resources system to
definition of tiers included in the
accurately record and report on these data points.
Act does not necessarily reflect
the complex reality of how a • Fashion sellers in-scope will likely be more stringent on suppliers’ compliance with
supply chain is structured. It reporting on payment of wages. The proposed Fashion Act holds fashion sellers
could present a difficulty for to be jointly and severally liable6 for the payment of wages to employees and
suppliers to work out what subcontracted workers of tier one suppliers.
disclosure requirements might be
applicable or passed on to them. • Fashion sellers will be liable for both lost wages and an additional equal
On a general note, for suppliers amount as liquidated damages.7
that are in the value chain of • Where non-compliance is identified (e.g., workers are being paid below
companies in-scope, but do not minimum wage, or have not received their overtime wages) fashion
fall directly within the scope of sellers will likely exert significant pressure on suppliers to remediate these
the proposed Fashion Act, we violations.
would expect to see:
Suppliers should expect companies-in-scope to impose contractual liability for failure to
provide information, or provision of inaccurate or incomplete information. The proposed
6
Joint and several liability makes all parties in a lawsuit responsible for
Fashion Act requires fashion sellers to conduct effective due diligence and report on this.
damages up to the entire amount awarded. That is, if one party is unable to
pay, then the others named must pay more than their share.
Failure to do so could render them liable to a fine of up to 2% of their annual revenues
Liquidated damages is a term used in legal contracts to refer to financial
and being publicly listed by the New York State Attorney General as non-compliant with
7

compensation for the loss suffered by the injured party.

81 An Apparel Supplier’s Guide 2.0: Key Sustainability Legislation in the EU, US, and UK
 the Fashion Act. Considering these potential consequences, fashion sellers are likely to
require suppliers across all tiers to provide accurate and timely information so that they

New York Fashion Act ----- Factsheet

can comply with the requirements. Fashion sellers in-scope are likely to expect suppliers
to provide well-triangulated data to support their due diligence activities, including from
social audits, worker interviews, worker engagement tools, among other data sources.

Science-based targets and The proposed Fashion Act mandates that fashion sellers set and comply
environmental impact monitoring with near-term and long-term greenhouse gas emissions targets in line
with the Paris Agreement.

Greenhouse gas emission reduction targets must cover Scope Two and Three
emissions, and at a minimum, align with Science-Based Targets Initiative’s most recent
target validation criteria.8 Fashion sellers with global revenues over USD 1 billion will
need to use the absolute contraction approach to calculate Scope Three emissions. To
set greenhouse gas emission targets, fashion sellers will first need to determine their
baseline greenhouse gas emissions, before developing reduction targets. Fashion
sellers will be required to report on greenhouse gas emissions inventory annually.
Within four years of the Fashion Act coming into force, fashion sellers will be required
to use primary data to determine the greenhouse gas emissions inventory of the most
significant suppliers in tiers two and three contributing to greenhouse gas emissions.
Significant suppliers mean suppliers representing 75% and 50% of fabric (by volume) in
tiers two and three, respectively.

Suppliers to companies in-scope should be prepared to share emissions

data to support this baseline assessment. Moreover, suppliers will likely also
face pressure to set emission targets, reduce their emissions, and report annually on
8
As promoted by the World Resources Institute, CDP, United Nations Global these emission targets. Suppliers may consider seeking support from companies in-scope
Compact, and the World Wildlife Fund.

82 An Apparel Supplier’s Guide 2.0: Key Sustainability Legislation in the EU, US, and UK
 to achieve these reductions given that companies in-scope are required by the Fashion
Act to provide “reasonable assistance” to suppliers to meet environmental standards.

New York Fashion Act ----- Factsheet

Within two years of the Fashion Act coming into force, fashion sellers
will need to sample and report on the water usage and wastewater
chemical concentrations for tier two dyeing, finishing and garment
washing suppliers supplying 75% of fabric by volume. These reports must
be independently verified by a verification body that has been duly accredited by the
New York Department of State. Where the samples show concentrations that are out
of compliance with the Zero Discharge of Hazardous Chemical Program’s most recent
Wastewater Guidelines, fashion sellers will be required to develop corrective plans to
remedy wastewater treatment and make adequate progress in remediating wastewater
pollution concentrations within three years the Fashion Act coming into force. This
will place remediation obligations on relevant tier two dyeing, finishing and garment
washing suppliers.

Stakeholder Engagement The proposed Fashion Act requires fashion sellers to identify and address salient human
rights and environmental issues in their supply chain. To track and monitor progress,
fashion sellers will need to consult and engage with impacted and potentially impacted
stakeholders, rightsholders, and their credible representatives. This could lead to
fashion sellers requiring suppliers to implement additional worker voice and grievance
channels to engage with affected stakeholders, so they can determine the effectiveness
of interventions. This may also require engagement with stakeholders such as trade
unions and civil society organizations that represent affected rightsholders, and a greater
push for social dialogue at between suppliers and workers, especially where there are
restrictions on the right to freely associate under local laws.

83 An Apparel Supplier’s Guide 2.0: Key Sustainability Legislation in the EU, US, and UK
 Incentives for suppliers

New York Fashion Act ----- Factsheet

Given the importance of suppliers’ performance with respect to social and
environmental responsibility, fashion sellers may use tools such as scorecards to
select suppliers with a demonstrable commitment in these areas. This is particularly
important given fashion sellers will need to develop time bound corrective action
plans for suppliers to address any gaps. Suppliers may be held contractually liable
if the identified issues are not addressed within the agreed upon time or face
commercial consequences (e.g., reduction of purchasing orders). Accordingly,
suppliers who have established frameworks in place to prevent, mitigate and address
social and environmental issues are likely to be more attractive to fashion sellers.

The proposed Fashion Act envisages that fashion sellers can cease, prevent, or
mitigate key social and environmental risks in their supply chain in several ways,
including the provision of reasonable assistance to suppliers so that they can meet
applicable human rights and environmental standards. This could result in additional
training or other capacity-building activities organized by the fashion seller, to ensure
that suppliers understand the content of these standards and are able to comply.

As a matter of good practice, it is recommended that suppliers to fashion sellers in-scope seek to operate in accordance with the OECD
Guidelines for Multinational Enterprises and the OECD Guidance for Responsible Supply Chains in the Garment and Footwear Sector.

84 An Apparel Supplier’s Guide 2.0: Key Sustainability Legislation in the EU, US, and UK
9. Penalties for 10. Form of

New York Fashion Act ----- Factsheet

non-compliance enforcement
A fashion seller may be fined up to 2% of they are full-time, part-time, on a fixed or The New York Attorney General is
its annual revenues for failing to conduct temporary contract, directly contracted, responsible for monitoring, investigating,
due diligence or file a due diligence report, or hired through an intermediary. This and enforcing the Fashion Act. Further,
as required by the Fashion Act. Fined amounts provision means that where a fashion seller any person may report non-compliance to
will be deposited into a fashion remediation cancels placed orders, delays payments, or the Attorney General’s office.
fund, which will be used to support labour uses forced majeure clauses to avoid paying
remediation and environmental benefit suppliers for booked orders, they may still
projects. The New York Attorney General will be held liable to pay the wages of their
also publish a list of the businesses that were suppliers’ employees.
found to be in violation, every year.

Fashion sellers will also be held jointly and

severally liable for the payment of their
tier one suppliers’ employees’ wages and
an additional equal amount as liquidated
damages, where there are lost wages.
‘Wages’ are interpreted broadly and
can include overtime wages, paid leave,
incentives, bonuses, and severance payments.
‘Employee’ is also construed broadly and
includes all workers, regardless of whether

85 An Apparel Supplier’s Guide 2.0: Key Sustainability Legislation in the EU, US, and UK
11. Reporting/ As explained in Section 6, the proposed
Fashion Act requires fashion sellers to
14). Compliance with greenhouse gas
emissions reduction targets will also need

New York Fashion Act ----- Factsheet

disclosure develop and submit a due diligence report to
the New York Attorney General on an annual
to be reported. For fashion sellers with
global revenue over USD 1 billion, the
requirements basis. Absolute Contraction Approach must be
used to calculate scope three emissions.
for companies With respect to suppliers from tier one to

in-scope tier four, the report must include the name,

address, parent company, product type
Fashion Sellers will be required to sample
and report on wastewater chemical
and number of workers at each site by concentrations and water usage, in line
country. Additionally, with respect to tier with the Zero Discharge of Hazardous
one suppliers, the report must also include Chemicals Programs’ most recent
the mean wages of workers and how this wastewater guidelines.
compares with local minimum wage and living
wages, the percentage of unionized factories, The same report, excluding the additional
and the hours worked weekly by month, and information pertaining to workers of
the hours and frequency of overtime by firm tier one suppliers, must be published
and country. and publicly available for download
on the fashion seller’s website. If the
The report will need to include greenhouse fashion seller does not have a website,
gas emissions inventory, reported in line with the fashion seller will be required to
the most recent Greenhouse Gas Protocol provide a written disclosure to a person
Corporate Accounting and Reporting requesting this information within 30 days
Standard, Scope Two Guidance, and the of receiving the request.
most recent Corporate Value Chain Scope
Three accounting and reporting standard
set by the World Resource Institute and
the World Business Council for Sustainable
Development (see resources set out in Section

86 An Apparel Supplier’s Guide 2.0: Key Sustainability Legislation in the EU, US, and UK
12. Access 14. Useful resources

New York Fashion Act ----- Factsheet

to remedy to support compliance
mechanisms and
litigation risk
The New York State Senate, Senate Bill Number S4746

The New York State Senate, Assembly Bill A4333

Fashion sellers are jointly and severally OECD, Guidelines for Multinational Enterprises
liable for payment for the wages of their
tier one suppliers’ employees. See Section OECD, Due Diligence Guidance for Responsible Supply Chains in the Garment & Footwear
9 for further details. Garment

ZDHC, Wastewater Guidelines Version 2.1 (November 2022)

GHG, A Corporate Accounting and Reporting Standard

GHG, Scope 2 Guidance

13. Opportunity GHG, Corporate Value Chain (Scope 3) Accounting and Reporting Standard
to participate Science-Based Targets, Understand the methods of science-based climate action
and engage
in legislative
developments
Stakeholders can reach out to New York
State Senators and Assembly members with
their views on the proposed Fashion Act.

87 An Apparel Supplier’s Guide 2.0: Key Sustainability Legislation in the EU, US, and UK
Factsheet

EU Forced Labour
Regulation and Guidance
EU Proposed Regulation on Prohibiting Products Made With Forced
Labour on the Union Market and EU Forced Labour Guidance

UPDATE

1. Key Updates
Upon approval by the European Parliament, the Regulation Prohibiting Products made
with Forced Labour on the Union Market (the Forced Labour Regulation) is expected to
be adopted, published in the Official Journal of the European Union, and go into effect
three years thereafter. The approved text of the Forced Labour Regulation provides
more detail on what the preliminary investigation process and investigation process
will entail. It also introduces the development of a forced labour online portal for keep
information, reporting and tools. The main changes relate to Section 4, 9, 10 and 14.

88 An Apparel Supplier’s Guide 2.0 : Key Sustainability Legislation in the EU, US, and UK
2. Overview UPDATE The Forced Labour Single Portal • A list of publicly available information
sources of relevance for the

EU Forced Labour Regulation and Guide ----- Factsheet

The Forced Labour Regulation requires the implementation of the Forced Labour
European Commission to develop a Forced Regulation, including sources which
The Regulation
Labour Single Portal, a public website make available disaggregated data
On September 14, 2022, the European including key information and tools related on the impact and victims of forced
Commission published a proposal for the to the Forced Labour Regulation. The Forced labour, such as gender-disaggregated
Forced Labour Regulation. On March 5, Labour Single Portal will include: data or data about forced child
2024, the European Parliament and the labour, allowing to identify age- and
• A list of, and contact information for, all gender-specific trends;
European Council reached a provisional deal
Member State Authorities responsible for
on the text of the Forced Labour Regulation.
enforcing the Regulation; • A dedicated centralized mechanism
The Parliament approved the Forced Labour
for the submission of information
Regulation during its April 2024 plenary. The • Guidelines to be issued by the European on alleged violations of the Forced
Regulation is expected to be published in the Commission (further discussed below); Labour Regulation, including
European Journal in the first half of 2024 and
information on the company or
would take effect 36 months after its formal • A database of forced labour risk
products concerned, reasons and
publication. geographic areas or products containing
evidence for substantiating the
indicative, non-exhaustive, evidence
The objective of the Forced Labour allegation and, where possible,
based, verifiable and regularly updated
Regulation1 is to prevent products made with supporting documents (the Single
information on forced labour risks
forced labour (including forced child labour) Information Submission Point);
in specific geographic areas or with
from being sold in the EU market or being and
respect to specific products or product
exported from the EU. This includes products groups, including with regard to forced • Any decisions taken under the Forced
of any type, including their components, from labour imposed by state authorities (the Labour Regulation to ban a particular
all sectors and industries, at any stage of the information will be required to be sourced product, as well as any withdrawal of
supply chain. from international organizations, in such a ban and the result of reviews.
particular the ILO and the United Nations
Organization, or from institutional,
research, or academic institutions);

1
A regulation is a binding legislative act. It must be applied in its entirety across the EU.

89 An Apparel Supplier’s Guide 2.0: Key Sustainability Legislation in the EU, US, and UK
 The Guidelines

EU Forced Labour Regulation and Guide ----- Factsheet

18 months after the Forced Labour Regulation international organizations, in particular Previous Forced Labour
enters into force, the European Commission, the International Labour Organization Guidance
in consultation with relevant stakeholders, will (the ILO), civil society, business
issue guidelines which will include, among other organizations and experience from The European Commission and
things: implementing EU legislation setting out European External Action Service
due diligence requirements with respect to previously published a forced labour
• Guidance on due diligence in relation forced labour2. guidance in July 2021, to assist EU
to forced labour, including forced child businesses in taking appropriate
labour, that takes into account applicable • Guidance on how to engage in dialogue measures to address the risk of forced
national and EU legislation setting out due with Member State authorities, in labour in their operations and supply
diligence requirements with respect to forced particular on the type of information to be chains (the Guidance).3 This Guidance
labour, guidelines and recommendations submitted. is non-binding and is intended to
from international organizations and, the provide practical guidance for European
• Guidance on how to submit information
size and economic resources of operators, companies, ahead of the introduction of
via the single information submission
companies, different types of suppliers along a mandatory due diligence obligations.
point.
the supply chain and different sectors.
• Guidance for Member States on the This factsheet will primarily discuss the
• Guidance on due diligence in relation to
method for calculating financial penalties Forced Labour Regulation but where
forced labour imposed by state Authorities.
and the applicable thresholds. applicable, the information provided in
• Guidance on best practices for bringing the Guidance is also referenced.
• Further information to facilitate the
an end and remediating different types of
competent authorities’ implementation of
forced labour.
the Regulation.
• Information on risk indicators of forced
As the Forced Labour Regulation has yet to 2
The proposal envisages the adoption of delegated and implementing
labour, including on how to identify them, acts by the European Commission aimed at supplementing and specifying
enter into force, these guidelines are not yet the key concepts of the legislative act, including how to identify the
based on independent and verifiable information on risk indicators.

available.
information, including reports from European Commission, New EU guidance helps companies to combat
3

forced labour in supply chains. Note that the link to download the
guidance is currently broken on the date of access (March 29, 2023).

90 An Apparel Supplier’s Guide 2.0: Key Sustainability Legislation in the EU, US, and UK
3. Context 4. Status

EU Forced Labour Regulation and Guide ----- Factsheet

The Forced Labour Regulation was first On March 5, 2024, the European Parliament and European Council reached a provisional
announced by Ursula von der Leyden, the deal on the text of the Forced Labour Regulation. On March 13, 2024, the European Council
President of the Commission, in her State approved the adoption of the Forced Labour Regulation. The Parliament approved the Forced
of the Union address in September 2021. Labour Regulation during its April 2024 plenary. Once formally adopted and published in the
Official Journal of the European Union, the Forced Labour Regulation would enter into force
The Forced Labour Regulation and start applying three years later.
complements to Corporate Sustainability
Due Diligence Directive and Corporate
Sustainability Reporting Directive by
increasing the stakes if a company does
not conduct supply chain due diligence

5. Scope
and appropriately exclude forced labour
from its supply chain. It highlights the
importance for companies to enforce their
human rights due diligence programs. The Forced Labour Regulation covers all products of any type, including their components,
irrespective of sector or origin, including for example:

• Products manufactured in the EU for consumption in the EU;

• Products manufactured in the EU for export outside of the EU; and
• Products manufactured outside of the EU for sale in the EU (i.e., imported goods).

The Forced Labour Regulation does not target specific companies or industries, although the
European Commission has recognized that forced labour has been more frequently reported in
certain sectors, including services, textiles, mining, and agriculture.

91 An Apparel Supplier’s Guide 2.0: Key Sustainability Legislation in the EU, US, and UK
 The prohibition on forced labour will apply to all economic operators, which are defined as
natural or legal persons or associations of persons placing or making products available

EU Forced Labour Regulation and Guide ----- Factsheet

on the EU market or exporting products from the EU. For ease of readability, we will
use the term “company” in this factsheet, instead of economic operator.

Points to Note • The Forced Labour Regulation defines “making [products]

available on the market” as supplying a product for
distribution, consumption, or use within the EU market in the
course of commercial activity. When the product is sold online or
through other means of distance sales, the product is considered
to be made available in the EU if it is targeted at end users or
consumers in the EU. The scope includes both products sold in
exchange for payment and offered for free.

• The “placing of products” under the Forced Labour

Regulation means the first instance of making a product
available on the EU market.

• Based on these definitions, the Forced Labour Regulation has a

wide-reaching scope and broad extra-territorial application. For
example, a garment supplier incorporated in Bangladesh that
produces garments at its factories in Bangladesh and exports the
garments to the EU for distribution by a European retailer may
be subject to investigation under this Forced Labour Regulation.

92 An Apparel Supplier’s Guide 2.0: Key Sustainability Legislation in the EU, US, and UK
 The Forced Labour Regulation will require competent authorities to demonstrate that there is
“substantial concern” that forced labour was involved at some stage of the supply chain before

EU Forced Labour Regulation and Guide ----- Factsheet

preventing a product from being made available in the EU market or exported from the EU
market. A “substantiated concern” would mean a reasonable indication and based on
objective, factual and verifiable information, for the competent authorities to suspect that the
product was likely made with forced labour.

The definition of “forced labour” means forced or compulsory labour, including forced child
labour, as defined in Article 2 of the Convention on Forced Labour, 1930 (No. 29) of the ILO,
i.e., “all work or service which is extracted from any person under the menace of any penalty
and for which the said person has not offered him or herself voluntarily”.

Points to Note • Based on the Forced Labour Regulation, a product made

with forced labour is any product where forced labour has
been used in whole or in part at any stage of its extraction,
harvest, production, or manufacture, including working or
processing related to a product at any stage of its supply chain.

• For example, if a cotton shirt is found to have used cotton that

was farmed by workers in a situation of forced labour, the cotton
shirt would be considered a product made with forced labour.

93 An Apparel Supplier’s Guide 2.0: Key Sustainability Legislation in the EU, US, and UK
6. Obligations

EU Forced Labour Regulation and Guide ----- Factsheet

We recommend that companies placing guidelines have yet to be published. As
for companies or making available products on the EU such, it is not possible at this early stage

in-scope market or exporting such products should

take appropriate measures to identify and
to provide further specificity with respect
to companies’ obligations.
eliminate any forced labour risks in their
supply chains. The scope of the measures That being said, the existing Guidance
and due diligence depends on the proximity published by the European Commission
to possible forced labour in the supply and European External Action Service
chain, the specific type of products and the offers a framework for undertaking due
resources of the relevant company. In other diligence with respect to forced labour
words, companies in-scope should take a risks. For the avoidance of doubt, this
risk-based approach to due diligence. A risk- Guidance is non-binding and the advice
based approach recognizes that companies provided therein may not be aligned
may not have the resources to identify or with the final text of the Forced Labour
respond to all risks of forced labour related Regulation. As such, the below is
to their activities and business relationships provided for information purposes only:
at the same time. As such, companies should
prioritize their efforts based on the severity According to the Guidance, due
and likelihood of harm, focusing their diligence should correspond with
attention and resources at their higher-risk risks and appropriate to a company’s
operations and business relationships. circumstances and context. Due diligence
should cover both the company’s own
The Forced Labour Regulation does not activities and its business relationships,
include any formal or specific measures e.g, its upstream supply chain. It may also
or due diligence obligations. However, it be important to consider how particular
provides that the European Commission will risks affect different groups, including
issue guidelines within 18 months after the women, religious or ethnic minorities.
entry into force. As explained above, these

94 An Apparel Supplier’s Guide 2.0: Key Sustainability Legislation in the EU, US, and UK
The Guidance sets forth the following a six-step framework for effective due
diligence which is based on OECD due diligence framework:

EU Forced Labour Regulation and Guide ----- Factsheet

The Guidance also recommends specific
Embed responsible business conduct into the company’s policies and
measures to address forced labour,
management systems
including:

Identify and assess actual or potential adverse impacts in the company’s Policies and management systems should
operations, supply chains and business relationships. be tailored to the risk of forced labour.

Risk factors should be considered as part

Cease, prevent, and mitigate adverse impacts. of the due diligence process.

Considerations when carrying out in-

Track implementation and results. depth risk assessment of certain high-risk
suppliers or supply chain segments.

Communicate how impacts are addressed. Considerations when taking action to

address risks of forced labour.

Provide for or cooperate in remediation when appropriate. Considerations for responsible

disengagement.

Considerations for remediation.

95 An Apparel Supplier’s Guide 2.0: Key Sustainability Legislation in the EU, US, and UK
7. Compliance actual or potential risk of forced labour.
Manufacturing and/or sourcing countries,
value chain to report allegations of
forced labour. Grievance mechanisms

EU Forced Labour Regulation and Guide ----- Factsheet

recommendations or raw materials supply chains (e.g.,
cotton), that are identified as higher
should be considered by companies to
be a “must-have” and a proactive way
for companies risk or ‘red flags’ should be subject to of engaging with risk, rather than a
enhanced due diligence. This process of risk “nice to have”.
in-scope prioritization will enable companies in-scope
to determine where to place their time and
resources. In determining whether there is
a violation of the Forced Labour
• Conduct a comprehensive supply chain Regulation, the competent authorities
Given the broad scope of the Forced Labour
mapping and request upstream suppliers will take into account among other
Regulation and significant consequences of non-
and business partners to provide data to things, information on the company’s
compliance, companies in-scope should already
enable traceability of materials. actions taken to identify, prevent,
ensure that they have an effective due diligence
mitigate, bring to an end or remediate
program to identify and address the risk of • Require upstream suppliers and business
risks of forced labour in their operations
forced labour in their operations, supply chains partners to implement their own forced
and supply chains with respect to
and business relationships. This may include labour due diligence programs and
the product(s) under assessment. The
(but is not limited) to the following measures: disclose how they are seeking to identify
competent authorities may also request
and address the risk of forced labour. Any
information on those actions from other
information or data provided by upstream
• Ensure that their policies (e.g., a human relevant stakeholders, including any
suppliers and business partners should be
rights policy, or supplier code of conduct) persons related to the products and
verified, through conducting audits and
and management systems address the risk of geographical areas under assessment.
on-site investigations, deploying worker
forced labour and are effectively embedded
engagement tools, and engaging with Where the competent authorities find
within their day-to-day business conduct and
relevant stakeholders (e.g., trade unions, that the company’s due diligence actions
operations.
civil society, and worker organizations). effectively identify, prevent, mitigate,
• Conduct and strengthen risk assessments bring to an end or remediate the risk of
• Implement an effective grievance mechanism
in their own operations and in sourcing forced labour in their operations and
that is accessible to any stakeholder in their
practices to identify and assess the supply chain, they may not initiate an
investigation.

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8. Potential It is expected that these measures will Suppliers should also expect companies

EU Forced Labour Regulation and Guide ----- Factsheet

implications cascade up the supply chain, and
consequently, that many suppliers will in turn
in-scope to require them to have an
effective grievance mechanism in place,
for suppliers to require their upstream suppliers and business and to socialize the grievance mechanisms
partners to provide similar declarations and operated by companies in-scope.
companies contractual assurances. However, companies Companies in-scope may also seek to

in-scope should be wary of over-reliance on such

declarations, and must ensure that they
provide support and tools to their suppliers
to build their upstream business partners’
proactively conduct robust due diligence capacities to identify and address forced
programs and have an effective grievance labour risks.
mechanism in place.

Suppliers should expect that companies In the event that suppliers are faced with
in-scope will be strengthening their due Suppliers should also implement their own forced labor allegations through complaints
diligence programs. Today, many European due diligence systems to identify, prevent addressed to the centralized mechanism
and US-headquartered apparel brands and remediate the risk of forced labour in established by the Commission, suppliers
already have due diligence programs and their operations and supply chain. These can prepare for such an eventuality
policies that stipulate zero tolerance for systems should be aligned with the OECD by (i) being rigorous in conducting a
forced labour. It is anticipated that these due diligence framework. Suppliers may find thorough mapping of their supply chain;
brands and retailers (if they aren’t already industry-wide tools and standards helpful.4 (ii) implementing robust due diligence
doing so today) will seek “no forced labour” Suppliers may also invest in supply chain programs that provide a well-rounded
declarations from suppliers in light of the traceability technology or participate in view of risks and an assessment of salient
Forced Labour Regulation. Brands and industry-wide supply chain mapping tools. risks; and maintaining detailed records of
retailers will also request their suppliers to However, as explained above, it is important due diligence findings and action taken to
provide contractual assurances, which may be that suppliers ensure that any such tools address risks identified. It would also be
in the form of warranties and indemnities. or industry-wide schemes are effective helpful to suppliers to develop and continue
and backed up by robust datasets and to improve their operational level grievance
methodology. mechanism which is a fundamental part of
early risk identification and mitigation.
4
For example, the YESS Standards for Spinning & Fabric.

97 An Apparel Supplier’s Guide 2.0: Key Sustainability Legislation in the EU, US, and UK
9. Penalties for Pursuant to the Forced Labour Regulation, if a competent authority finds
that the forced labour prohibition has been violated, it will adopt a

EU Forced Labour Regulation and Guide ----- Factsheet

non-compliance decision:
• prohibiting the placing or making the relevant products available on the EU market and their
export from the EU;
• ordering the company concerned to withdraw the relevant products from the EU market
where they have already been placed or made available on the EU market or to remove
content from an online interface referring to the relevant product or listing the relevant
product; and
• ordering the company to dispose of the relevant products product or parts of the product
by recycling them, or, in the case of perishable products, by donating them for charitable or
public interest purposes (or, in each case, when that is not possible, by render inoperable
those products.

UPDATE In the event disposal of the product would disrupt a supply chain of strategic or critical
importance for the EU, the lead competent authority may instead order the product concerned
to be withheld for a defined period of time, which shall be no longer than the time necessary
to eliminate forced labour for the product concerned, at the cost of the company. If, during this
time, the company demonstrates that they have eliminated forced labour from the supply chain
without changing the product and by having brought to an end the forced labour identified in
the decision, the lead competent authority would review such decision. If the company does not
demonstrate that they have eliminated forced labor from the supply chain of the relevant
product, they would be required to dispose of the product in the manner set forth above.

Companies will be granted at least 30 business days to comply with the decision (or, in the
case of perishable goods, animals, and plants, at least 10 business days).

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 UPDATE If a company fails to comply with a decision within the time limit provided,
the lead competent authority will be responsible for enforcing the decision by

EU Forced Labour Regulation and Guide ----- Factsheet

ensuring the following:

• The company is prohibited from placing or making available the products concerned on the
EU market and exporting them from the EU market;
• The products concerned already placed or made available on the EU market are withdrawn
by relevant authorities, in accordance with EU and national laws;
• The products concerned remaining with the company are disposed of in accordance with the
Forced Labour Regulation, at the expense of the company; and
• Access to the products and to listing referring to the products concerned is restricted by
requesting the relevant third party to implement such measures.

If a company fails to comply with a decision within the time limit provided,
the competent authority will be required to impose penalties on the company.
Member States will be required to lay down rules on penalties applicable to non-
compliance with a decision, which would be required to give due regard to the
following:

• The gravity and duration of the infringement;

• Any relevant previous infringements by the company;
• The degree of cooperation with the competent authorities; and
• Any other mitigating or aggravating factor applicable to the circumstances of the case, such
as financial benefits gains, or losses avoided, directly or indirectly, from the infringement.

There is no standard penalty amount and as such the form and amount of penalty will depend
on the relevant EU country’s rules.

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10. Form of UPDATE In assessing the likelihood of a violation, competent authorities will
be required to use the following criteria in prioritizing the products

EU Forced Labour Regulation and Guide ----- Factsheet

enforcement suspected to have been made with forced labour:
• Scale and severity of the suspected forced labor, including whether forced labor
imposed by state authorities should be a concern;
Within 12 months of the Forced Labour
Regulation entering into force, each • Quantity or volume of products placed or made available on the EU market; and
EU Member State would be required to • Share of the part suspected to have been made with forced labour in the final product.
designate competent authorities which
would be responsible for enforcing The assessment of the likelihood of a violation will be required to be
the Forced Labour Regulation. If the based on all relevant, factual and verifiable information available,
suspected forced labour is taking place including, but not limited to, the following:
in the territory of a Member State, the
relevant Member State authority will
• Information and decisions encoded in the information and communication system
act as the lead competent authority
referred to in Article 34 of Regulation (EU) 2019/1020 the European Parliament
in the investigation. However, if the
and of the Council, including any past cases of compliance or non-compliance of a
suspected forced labour is taking place
company with the Regulation;
outside the territory of the EU, the
• The database of forced labor risk areas or products housed on the Forced Labor
European Commission will act as the
Single Portal;
lead competent authority conducting the
investigation. • The risk indicators and other information provided pursuant to guidelines to be issued
by the European Commission;
Competent authorities will be required to • Submissions made pursuant to via the Single Information Submission Point;
follow a risk-based approach in assessing • Information received by the lead competent authority from other authorities relevant
the likelihood of a violation, initiating and for the implementation of the Forced Labour Regulation, such as Member States’ due
conducting the preliminary phase of the diligence, labor, health or fiscal authorities, on the products and companies under
investigations and identifying the products assessment; and
and companies concerned. • Any issues arising from meaningful consultations with relevant stakeholders, such as
civil society organizations and trade unions.

100 An Apparel Supplier’s Guide 2.0: Key Sustainability Legislation in the EU, US, and UK
Investigations by competent authorities well as from the European External Action are received. Competent authorities will
will be carried out in two phases: (i) Service and EU Delegations in relevant third then have 30 business days after receipt

EU Forced Labour Regulation and Guide ----- Factsheet

a preliminary phase and (ii) an countries. of information from the company to
investigative phase. Competent conclude the preliminary stage of their
authorities will bear the burden of The company will be required to respond to investigation and determine whether there
establishing that forced labour has requests from competent authorities within is a substantial concern of violation of the
been used at any stage of production, 30 business days from the day such requests Forced Labour Regulation.
manufacture, harvest, or extraction of a
product.
UPDATE

Before initiating an investigation, the

If competent authorities determine there is a substantiated concern of
competent authorities would be required
forced labour, an investigation will proceed to the next phase. If that
to request from the concerned company,
occurs, notice will be provided to the company concerned within three
and, where relevant, other product
business days from the date of the decision to initiate the investigation.
suppliers, information on actions taken
The notice will be required to include the following:
to identify, prevent, mitigate, bring to an
end or remediate risks of forced labour
• The initiation of the investigation and the possible consequences thereof;
in their operations and supply chains with
respect to the products under assessment. • The products subject to the investigation;
Competent authorities may also request • The reasons for the initiation of the investigation, unless it will jeopardize the outcome of the
information on those actions from investigation; and
other relevant stakeholders, including • The possibility for the company to submit any other document or information to the lead
the persons or associations having competent authority, and the date by which such information must be submitted.
submitted relevant, factual, and verifiable
information to the Single Information
Upon request, companies under investigation will be required to submit any information relevant and
Submission Point and any other natural or
necessary for the investigation, including information identifying the products under investigation and,
legal persons related to the products and
where appropriate, identifying the part of the product to which the investigations should be limited,
geographical areas under assessment, as
the manufacture, producer or product supplier of those products or parts thereof. Companies will be
provided between 30 and 60 business days to submit any such information, subject to the right to
request an extension of that deadline with a justification.

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 UPDATE During the investigation, lead competent authorities will be permitted to collect information from
or interview any relevant persons who consent to be interviewed for the purpose of collecting

EU Forced Labour Regulation and Guide ----- Factsheet

information relating to the subject matter of the investigation, including relevant companies and any
other stakeholders.

In exceptional situations, lead competent authorities may conduct field inspections. Where the risk
of forced labour is located in the territory of a Member State, the competent authority may conduct
its own inspections. Where the risk of forced labor is located outside of the territory of the EU,
the Commission may carry out all necessary checks and inspections, provided that the companies
concerned provide their consent and the government of the third country in which the inspections
are to take place has been notified and raises no objection.

Within a reasonable period of time, and ideally within nine months, from
the date of initiating the investigation, the lead competent authority will
be required to adopt a decision as to whether the company has violated
the Forced Labour Regulation. If the competent authority cannot establish
a violation, they will be required to close the investigation and inform the
company. If the competent authority establishes a violation, they will be
required to adopt a decision containing the following information:

• The findings of the investigation and the information and evidence underpinning the findings;
• Reasonable time limits for the company to comply with the orders, which shall not be less than
30 business days (and, in the case of perishable goods, animals and plants, not less than 10
business days);
• All relevant information and in particular the details allowing the identification of the product
concerned, including
• details about the manufacturer, producer, product suppliers and, where appropriate,
production site;

102 An Apparel Supplier’s Guide 2.0: Key Sustainability Legislation in the EU, US, and UK
 UPDATE The European Commission would be required to adopt implementing acts further specifying the
details of the information to be included in the decision.

EU Forced Labour Regulation and Guide ----- Factsheet

Customs authorities would, in cooperation with the competent
authorities, enforce the Forced Labour Regulation by controlling entry
into or exit from the EU of products made with forced labour. Where
customs authorities identify a product entering or leaving the EU market
that may, according to a decision, be in violation of the Forced Labour
Regulation, the customs authorities would be required to suspend the
release for free circulation or export of that product until either of the
following conditions has been satisfied:

• The Member State Authorities or the Commission, as applicable, have not requested
the customs authorities to maintain the suspension within four business days of the initial
suspension (or two business days for perishable products, animals and plants); or
• The Member State Authorities or the Commission, as applicable, informed the customs
authorities of their approval for release for free circulation or export pursuant to the
Regulation.

11. Reporting/ Not Applicable.

disclosure requirements
for companies in-scope

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12. Access to remedy Companies that have been affected by a
decision of a Member State authority (but not
13. Opportunity

EU Forced Labour Regulation and Guide ----- Factsheet

mechanisms by the European Commission) would have to participate
access to a court or a tribunal to review the
and litigation risk procedural and substantive legality of the and engage
in legislative
decision.

Competent authorities would be required to give

the concerned companies a reasonable time of
If the concerned company can provide
evidence showing it has complied with the
developments (if
at least 30 days to comply with their decision.
decision and eliminated forced labour from any)
its operations or supply chain for the relevant
Companies affected by a decision would be
product, the competent authority must
permitted, at any time, to submit a request for
withdraw its decision. Public consultation for the Forced Labour
a review containing new substantial information
Regulation has closed.
that was not brought to the attention of the
competent authority during the investigation
and which demonstrates that the products
are in compliance with the Forced Labour

14. Useful resources to

Regulation. The competent authority would be
required to issue a decision on the request for
a review within 30 business days of receipt of
the request. If the company is able to provide
support compliance
evidence it has complied with the decision and
European Council, Regulation on prohibiting products made with forced labour on the Union
eliminated forced labour from its operations
market
or supply chain with respect to the products
concerned, the competent authority would be European Commission, Questions and Answers: Prohibition of products made by forced labour
required to withdraw its decision for the future, in the Union Market
inform the company and remove it from the
European Commission, Factsheet Forced Labour Ban
Forced Labor Single Portal.

104 An Apparel Supplier’s Guide 2.0: Key Sustainability Legislation in the EU, US, and UK
Factsheet

U.S. Uyghur Forced

Labor Prevention Act
UPDATE

1. Key Updates
U.S. Customs and Border Protection (CBP) has been actively enforcing the Uyghur
Forced Labor Prevention Act (the UFLPA). The first case challenging an entity’s
inclusion on the UFLPA Entity List began proceedings in January 2024 (see Chapter 10).
Updates to the Strategy (as defined herein) were issued on July 26, 2023. The Updates
relate to evaluation and description of forced-labour schemes and UFLPA entity list. The
main changes relate to Section 2, 3, 4, 5, 8, 10 and 14.

105 An Apparel Supplier’s Guide 2.0 : Key Sustainability Legislation in the EU, US, and UK
2. Overview 3. Context

U.S. Uyghur Forced Labor Prevention Act ----- Factsheet

The UFLPA is an amendment to the U.S. Tariff that the goods were not mined, On June 17, 2022, the DHS delivered
Act of 1930 (the Tariff Act). Section 307 of produced, or manufactured wholly to Congress its Strategy to Prevent the
the Tariff Act prohibits the importation into or in part by forced labor, otherwise Importation of Goods Mined, Produced,
the United States of goods, wares, articles, the goods will not be permitted to enter or Manufactured with Forced Labor
and merchandise mined, produced, or the United States. This can be done, in in the People’s Republic of China (the
manufactured wholly or in part in any foreign theory, by demonstrating due diligence, Strategy). The Strategy sets out
country by forced labor, including by forced effective supply chain tracing and guidance to importers on how they can
child labor. supply chain management measures become eligible for an exception to the
to ensure that goods are not made, rebuttable presumption. Updates to the
The UFLPA establishes a rebuttable in whole or in part, by forced labor. Strategy were issued on July 26, 2023
presumption for purposes of Section 307 (the Strategy Updates).
of the Tariff Act that goods produced in the
Xinjiang Uyghur Autonomous Region of China
(XUAR), or by persons working with the The Forced Labor Enforcement Task Force (the FLETF), chaired by DHS, then developed a
XUAR government for purposes of pairing strategy for supporting the enforcement of Section 307 to prevent the importation into the
and other government-sponsored labor United States of goods produced with forced labor in China.
programs are produced using forced labor
and therefore prohibited from being imported Further, on June 13, 2022, CBP issued an Operational Guidance for Importers (the Guidance)
into the United States under Section 307 of that complements the Strategy. The Guidance reflects CBP’s interpretation of the UFLPA and
the Tariff Act. Specific entities found by the therefore offers practical information to importers on how they may seek to comply with the
U.S. Department of Homeland Security (DHS) UFLPA.
to be associated with forced labor in XUAR
are set forth on a published list (the UFLPA On January 19, 2024, the House Select Committee on the Chinese Communist Party sent a
Entity List). letter to the DHS Secretary regarding strengthening enforcement of the UFLPA. If implemented,
the actions detailed in the letter would impact importers and their downstream commercial
In effect, importers of goods produced customers.
in XUAR will need to be able to prove

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4. Status 5. Scope

U.S. Uyghur Forced Labor Prevention Act ----- Factsheet

The UFLPA was signed into law on December Under the UFLPA, all goods, wares, articles and merchandise mined, produced or
23, 2021, and the forced labor presumption manufactured, wholly or in part, (i) in XUAR, or (ii) by persons working with the XUAR
went into effect on June 21, 2022. CBP has government for purposes of pairing and other government-sponsored labor
been actively enforcing the UFLPA. Statistics programs, are presumed to be made from forced labor and therefore prohibited from being
around UFLPA enforcement actions taken imported into the United States under Section 307 of the Tariff Act.
are available on CBP’s website. Hundreds of
shipments relating to the apparel, footwear This presumption applies to all goods made in, or shipped through any country, if the product
and textiles sectors have been subjected to includes inputs from XUAR. For example, a shirt that contains cotton grown in XUAR would
CBP detainment and investigation. The main fall under the presumption, irrespective of where the finished shirt was produced, or where the
countries of origin of the detained apparel ginning, spinning or fabric mill processes occurred.
shipments include China, Vietnam, the
Phillipines, Nicaragua, and Sri Lanka.
UPDATE

The forced labor presumption applies unless it is determined by the Commissioner that it has
been rebutted. In order to find that an exception exists, the Commissioner of CBP must find that:

• By clear and convincing evidence, the goods in question were not produced wholly or in
part with forced labor;
• The importer has fully complied with guidance and implementing regulations issued pursuant
to the Act; and
• The importer has completely and substantively responded to all inquiries for information
submitted by the Commissioner to ascertain whether the goods were produced wholly or in
part with forced labor.

107 An Apparel Supplier’s Guide 2.0: Key Sustainability Legislation in the EU, US, and UK
6. Obligations for Importers should work to ensure that their supply chains are free of forced labor and
be able to produce a paper trail to prove it. According to the Strategy, importers

U.S. Uyghur Forced Labor Prevention Act ----- Factsheet

companies in-scope should have in place due diligence, effective supply chain tracing and supply
chain management measures to ensure that they do not import any goods mined,
produced, or manufactured wholly or in part with forced labor from the XUAR.

Due Diligence Obligations For purposes of the Strategy, due diligence includes assessing, preventing, and mitigating
forced labor risks in the production of goods imported to the United States. According to
the Strategy, an effective due diligence system in any industry may include the following
elements:

stakeholder engagement, forced labor risk assessments, a code of conduct addressing

the risk of forced labor, training and monitoring compliance of suppliers, remediation and
public reporting.

Supply Chain Tracing The Strategy indicates that effective supply chain tracing is a critical first step of due
diligence and that importers are required to know their suppliers and labor sources at all
levels of the supply chain.

• Importers should conduct comprehensive supply chain tracing by mapping and

showing the chain of custody of goods and materials, from raw materials to the
buyer of the imported goods or materials.

According to the Strategy, importers should be aware that if their imports have inputs from
factories that source materials from both within the XUAR and outside the XUAR, they risk
having their imports subject to detention as it may be more difficult to verify that the supply
chain for imports is using only non-XUAR materials that have not been replaced by or
commingled with XUAR materials at any point in the manufacturing process.

108 An Apparel Supplier’s Guide 2.0: Key Sustainability Legislation in the EU, US, and UK
 Supply Chain Supply chain management measures form a part of importers’ due diligence and are taken to
Management Measures prevent and mitigate identified risks of forced labor. According to the Strategy, effective supply

U.S. Uyghur Forced Labor Prevention Act ----- Factsheet

chain management measures include:

• Having a process to vet potential suppliers for forced labor before entering into an agreement
with them;

• Requiring that agreements with suppliers require corrective action by suppliers if forced labor
is identified in the supply chain and outlining consequences if corrective action is not taken
(including a termination of contractual relationship).

• Having access to supplier documentation, personnel, and workers to verify the absence of
forced labor indicators, including at the recruitment stage.

Types and Nature The Guidance then sets out the following five categories of types and nature of information that
of Information Required may be required by the CBP if importers seek to rebut the UFLPA’s forced labor presumption
to Request (i.e., to release a detained shipment) or as may be requested by CBP:

i. Due diligence system information;

ii. Supply chain tracing;

iii. Supply chain management measures;

iv. Evidence that goods were not mined, produced, or manufactured wholly or in part in the
XUAR; and

v. Evidence that goods originating in China were not mined, produced or manufactured wholly
or in part by forced labor.

The Guidance provides a further explanation of the detailed information that CBP will consider.
A summary is provided in this factsheet, and we would recommend that companies in-scope
refer to the Guidance for further detail.

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 1. Due Diligence System Information

U.S. Uyghur Forced Labor Prevention Act ----- Factsheet

Importers’ due diligence systems should be designed to ensure that importers will not
import goods that are mined, produced, or manufactured by forced labor. According to the
Guidance, documentation showing a due diligence system or process that may include the
following:

• Engagement with suppliers and other stakeholders in order to assess and address forced
labor risks;

• Mapping of supply chain and assessment of forced labor risks from raw materials to the
production of imported goods;

• Developing a written code of conduct for suppliers, forbidding the use of forced labor and
addressing the use of Chinese government labor schemes;

• Trainings on forced labor risks for employees and agents who select and interact with
suppliers;

• Monitoring of compliance with the code of conduct;

• Remediation of any forced labor conditions identified or termination of supplier

relationships if remediation is not possible or not completed in a timely manner;

• Independent verification of the implementation and effectiveness of the due diligence

system; and

• Reporting performance and engagement.

110 An Apparel Supplier’s Guide 2.0: Key Sustainability Legislation in the EU, US, and UK
 2. Supply Chain Tracing Information

U.S. Uyghur Forced Labor Prevention Act ----- Factsheet

Supply chain tracing information may be provided by importers or requested by the CBP in
order to demonstrate that imports are either not within the purview of the UFLPA as supply
chains are wholly outside of the XUAR and unconnected to listed entities or to show that
imports are free of forced labor and in compliance with the UFLPA. This includes evidence
pertaining to (i) the overall supply chain; (ii) merchandise or any component thereof; and
(iii) miner, producer, or manufacturer.

Points to Note Refer to the Guidance for a detailed list of the types of
evidence that CBP may request. In particular, for products
made with cotton, CBP has specified that importers may
consider submitting the following evidence (although this is not
intended to be an exhaustive list):1

• Provide sufficient documentation, including any records

that may be kept in the ordinary course of business (e.g.,
purchase orders, payment records, etc.), to show the entire
supply chain, from the origin of the cotton at the bale level
to the final production of the finished product.

• Provide a flow chart of the production process and maps of

the region where the production processes occur. Number
each step along the production process and number any
additional supporting documents associated with each step
of the process.

• Identify all the entities involved in each step of the

production process, with citations denoting the business
records used to identify each upstream entity with whom the
importer did not directly transact.
1
Appendix A. Commodity-Specific Supply Chain Tracing Document

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 3. Supply chain management measures

U.S. Uyghur Forced Labor Prevention Act ----- Factsheet

Information on supply chain management measures may include internal controls to
prevent or mitigate forced labor risk and remediate any use of forced labor identified in
the mining, production, or manufacture of imported goods. Importers should also be able
to demonstrate that documents provided are part of an operating system or an accounting
system that includes audited financial statements.

4. Evidence that goods were not mined, produced, or manufactured

wholly or in part in the XUAR

Evidence that goods were not mined, produced, or manufactured wholly or in part in the
XUAR includes documentation that traces the supply chain for the goods (as set out above
under “supply chain tracing information”).

5. Evidence that goods originating in China were not mined, produced

or manufactured wholly or in part by forced labor

Evidence that goods originating in China were not mined, produced, or manufactured wholly
or in part by forced labor may include (but is not limited to):

• Supply chain map identifying all entities involved in production of the goods;

• Information on workers at each entity involved in the production of the goods in China,
such as wage payment and production output per worker;

• Information on worker recruitment and internal controls to ensure that all workers in China
were recruited and are working voluntarily; and

• Credible audits to identify forced labor indicators and remediation of these if applicable.

112 An Apparel Supplier’s Guide 2.0: Key Sustainability Legislation in the EU, US, and UK
 Points to Note The Strategy includes an explanation of what CBP would consider
to be a credible audit. A credible audit should include the

U.S. Uyghur Forced Labor Prevention Act ----- Factsheet

following key elements:

• Unannounced arrival at the worksite and at a time when the

workforce, especially workers at risk of forced labor, are likely
to be present;

• Examination of ILO indicators of forced labor, in particular

intimidation or threats, abuse of vulnerability, restriction of
movement, isolation, abusive working conditions and excessive
overtime.

• Worker, management, and labor broker or recruiter interviews

completed in the interviewee’s native language and free of
employer or government intimidation;

• Unrestricted access to the worksite and any associated

locations, such as cafeterias and dormitories, to observe
conditions; and

• Review of documents and other information to provide

additional proof of compliance and to identify or corroborate
discrepancies in the information and observations of the
worksite and associated facilities. This should also include
documentation of the supplier’s involvement with labor transfer
programs in China, receipt of workers from XUAR, and
measures to ensure voluntary participation by all workers in
the supply chain.

113 An Apparel Supplier’s Guide 2.0: Key Sustainability Legislation in the EU, US, and UK
7. Compliance

U.S. Uyghur Forced Labor Prevention Act ----- Factsheet

• Whether the auditing program undertaken In determining whether to grant an
recommendations by the company meets CBP’s definition of exception to the rebuttable presumption
credible audits under the UFLPA, the CBP will take into
for companies consideration the effectiveness of the
• Whether the company’s supply chain
in-scope tracing is sufficiently comprehensive to
concerned company’s due diligence
systems, and supply chain management
meet CBP’s requirements (this is likely to measures. As such, it is critical that
be challenging with respect to chain of companies focus on strengthening their
Companies in-scope (i.e., importers custody issues for companies in-scope that risk management systems and practices.
to the United States) should engage in the production of products that
implement a robust due diligence contain cotton) Companies in-scope should also review
system, conduct supply chain
the CBP Guidance and verify whether
tracing, and implement the supply • Whether the company could better
they have access to the information
chain management measures engage with its stakeholders (including civil
and types of evidence that may be
described in the CBP Strategy society partners) to identify, and address
requested by the CBP. Companies in-
documents. Where the company in- forced labor risk
scope may need to request information
scope has existing due diligence programs
• Whether the company could invest in from suppliers to address any information
and supply chain management measures,
improving the capacity of their suppliers gaps. Companies in-scope may also
and already conducts supply chain
to identify and address forced labor risk, need to upgrade document and record
tracing, the company should evaluate
e.g., by offering trainings. management systems to ensure that this
their current systems to determine
information is readily available and easily
whether there are any gaps based on the
accessible.
CBP Strategy. Areas that may warrant
heightened attention could include:

114 An Apparel Supplier’s Guide 2.0: Key Sustainability Legislation in the EU, US, and UK
8. Potential Suppliers to companies in-scope should expect to be subjected to renewed requests for
information from buyers relating to their due diligence policies and processes, supply chain

U.S. Uyghur Forced Labor Prevention Act ----- Factsheet

implications tracing and management processes. The information requested will likely cover all the
categories described in Section 6 above and include (but is not limited to):2
for suppliers to
companies in-scope
Documentation showing a due diligence system or process to identify, monitor and
remediate forced labor risks, especially with respect to any sourcing and production
in China, including e.g., a supplier code of conduct that prohibits use of forced labor;
While the CBP Guidance is aimed at U.S.
importers, suppliers face the risk of repercussions Documentation tracing the supply chain that demonstrates their goods are either not
from their clients’ goods being held at U.S. subject to the UFLPA because their supply chains are wholly outside of Xinjiang and
customs. If this occurs, the client may come to the unconnected to listed entities, or to show that their imports are free of forced labor
supplier and ask them to provide evidence of the and in compliance with the UFLPA, such as (but not limited to):
supply chain and that forced labor is not involved. • Detailed description of supply chain including imported merchandise and
To mitigate against this risk and to be able to components thereof, including all stages of mining, production, or manufacture;
provide the necessary information to clients, • Shipping records, including manifests, bills of lading (e.g., airway/vessel/trucking);
suppliers will also need to: • Certificates of origin;
• Mining, production, or manufacturing records;
• implement effective due diligence policies and
processes Evidence showing that goods originating in China were not produced or
• undertake supply chain tracing manufactured wholly or in part by forced labor
• develop supply chain management processes • Information on workers at each entity involved in the production of the goods in
• properly document these policies and processes. China such as wage payment and production output per worker.

In other words, the requirements imposed on Companies in-scope are also likely to request suppliers to make declarations or affidavits that
companies in-scope will likely cascade up the they do not source from XUAR, and that their goods are not produced (wholly or partly) by
supply chain to suppliers. forced labour. These disclosures will be subjected to independent verification and assurances
will likely to be sought in the form of contractual indemnities and warranties that aim to
protect the buyer if the disclosures made around supply chain tracing and management and
2
This is non-exhaustive list. Please refer to the Guidance for further details on the
due diligence practices are incorrect.
documentation required.

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9. Penalties for 10. Form of enforcement

U.S. Uyghur Forced Labor Prevention Act ----- Factsheet

non-compliance
Enforcement Actions

While not dictated by the UFLPA, generally, The CBP is the main enforcement agency under the UFLPA and may use detention,
failure by importers to take appropriate exclusion, forfeiture, and seizure in order to enforce the UFLPA.
remedial action after they learn of forced
labor in their supply chain can expose them
to potential criminal liability if they continue to
Detention The CBP has five days (excluding weekends and holidays) from
benefit, financially or by receiving anything of
the date on which goods are presented for examination by the
value, from participating in a venture engaged
CBP to determine whether they should be released or detained.
in forced labor, while knowing of or recklessly
If goods are not released within this five-day period, they will be
disregarding the forced labor. The CBP also has
considered to be detained goods.
the authority to issue civil penalties against those
who facilitate import of goods produced with
Exclusion The CBP can prohibit the entry of goods that it considers to be
forced labor.
in violation of the UFLPA. If the CBP has not made a decision on
admissibility within 30 days after the goods are presented to the
CBP for examination, the goods are considered excluded.

Seizure / Import of goods determined to be in violation of the UFLPA

Forfeiture can be subject to seizure and forfeiture. Once CBP has made
a decision to seize a shipment, the case will be referred to the
Fines, Penalties and Forfeitures (FPFO) officer at the port of entry.

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 Responding to enforcement action

U.S. Uyghur Forced Labor Prevention Act ----- Factsheet

The CBP will provide importers with notice when enforcement actions are taken, such as
a Customs Detention Notice or a Notice of Seizure which shall contain information on
the action to be taken and the rights of the relevant importer. In response to such notices,
importers may provide information to the CBP and request an exception to the UFLPA’s
rebuttable presumption.

• Importers that receive a detention notice concerning their shipments may respond to
such notice within the applicable timeframe which is typically 30 days from the date
that the goods were presented for examination by the CBP and request an exception
from the UFLPA’s rebuttable presumption.
• Importers that receive an exclusion notice can file an administrative protest within the
applicable timeframe to request an exception from the UFLPA’s rebuttable presumption.
• Importers that receive a seizure notice may utilize a petition process to request an
exception to the UFLPA’s rebuttable presumption.

Importers can also identify other shipments that have identical supply chains to ones that
have been previously reviewed by CBP and determined to be admissible to facilitate a
quicker release of identical shipments.

Importers can also argue that goods fall outside the scope of the UFLPA in response to
enforcement action by the CBP and provide information to that effect to the CBP. The
information provided must show that the goods and their inputs are sourced completely
outside the XUAR and have no connection to entities on the UFLPA Entity List. If the CBP
finds that the information provided by importers shows that the goods are outside the
scope of the UFLPA, the importers will not need to obtain an exception from the UFLPA’s
rebuttable presumption and the CBP will release the contested shipments, provided that
they are otherwise in compliance with U.S. law.

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 CBP’s approach to enforcement

U.S. Uyghur Forced Labor Prevention Act ----- Factsheet

The Strategy sets out the following four high-priority sectors for enforcement: (i) silica-
based products (including polysilicon); (ii) apparel; (iii) cotton and cotton products; and
(iv) tomatoes and downstream products. The Strategy also includes an initial UFLPA Entity
List and a process for updating the UFLPA Entity List going forward. The Strategy Updates
reiterate these high priority sectors.

According to the Strategy, the CBP shall employ a risk-based approach to enforcement
that is dynamic in nature and prioritizes the highest-risk goods based on current data and
intelligence. The CBP shall also prioritize illegally transshipped goods with inputs from the
XUAR and goods imported to the United States by entities that, although not located in the
XUAR, are related to an entity in the XUAR (whether as a parent, subsidiary, or affiliate)
and likely to contain inputs from that region.

UPDATE

Selected litigation

On June 9, 2023, the printing and imaging company Ninestar and its affiliates were
added to the UFLPA Entity List. Ninestar denies that it used forced labor and sued the U.S.
government. On January 18, 2024, the U.S. Court of International Trade heard arguments
in Ninestar’s request for a preliminary injunction to remove Ninestar from the Entity List. This
will be the first case challenging an entity’s inclusion on the UFLPA Entity List.

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11. Reporting/ 12. Access to remedy

U.S. Uyghur Forced Labor Prevention Act ----- Factsheet

disclosure mechanisms and litigation risk
requirements Please refer to Sections 9 and 10 above relating to penalties for non-compliance.
(if any) for
companies in-scope
13. Opportunity to participate and
The UFLPA contains reporting requirements
for the Commissioner, who shall submit to the
engage in legislative developments
appropriate congressional committees and
make available to the public, no later than Not applicable.
30 days after making a determination of an
exception from the rebuttable presumption a
report identifying the good and the evidence
considered if an exception should be granted. 14. Useful resources
to support compliance
U.S. DHS, Strategy to Prevent the Importation of Goods Mined, Produced, or Manufactured
with Forced Labor in the People’s Republic of China

U.S. DHS, 2023 Updates to the Strategy to Prevent the Importation of Goods Mined, Produced,
or Manufactured with Forced Labor in the People’s Republic of China

U.S. CBP, Operational Guidance for Importers

US CBP, Uyghur Forced Labor Prevention Act Statistics

119 An Apparel Supplier’s Guide 2.0: Key Sustainability Legislation in the EU, US, and UK
Factsheet

EU Ecodesign for Sustainable

Products Regulation
(including EU Digital Product Passport)
UPDATE

1. Key Updates
A public consultation on the proposal was held from January 31, 2023 to May 12,
2023 and a provisional agreement on the draft ESPR was reached between the
European Parliament and Council on December 4, 2023. The main changes can be
found in Section 3.

2. Overview
On March 30, 2022, the European Commission published the proposal for a new
Ecodesign for Sustainable Products Regulation (the ESPR). Its objective is to create a
framework of ecodesign requirements for specific product categories.

120 An Apparel Supplier’s Guide 2.0 : Key Sustainability Legislation in the EU, US, and UK
Overview (Continued)

EU Ecodesign for Sustainable Products Regulation ----- Factsheet

A series of delegated acts1 will set criteria for different product groups (referred to in this Digital Product Passport or DPP
factsheet as product-specific rules). The ESPR will thus enable the setting of EU-wide
performance and information requirements for almost all categories of physical goods placed The DPP will electronically register,
on the market (with some exceptions). These requirements will relate to: process, and share information about
products’ environmental sustainability,
UPDATE
material information and design,
and other relevant aspects to enable
(a) product durability and reliability;
individuals and corporate consumers
(b) product reusability; to make informed choices about their
(c) product upgradability, reparability, maintenance and refurbishment; purchases. It will also help the public
authorities in performing checks and
(d) the presence of substances of concern in products;
controls.
(e) product energy and resource efficiency;
(f) recycled content in products;
(g) product remanufacturing and recycling;
(h) products’ carbon and environmental footprints;
(i) products’ expected generation of waste materials.

1
A delegated act is an EU legislative mechanism to ensure that EU laws that are
passed can be implemented properly or reflect developments in a particular sector.

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3. Context 4. Status

EU Ecodesign for Sustainable Products Regulation ----- Factsheet

The proposal builds on the existing Ecodesign use as well as reduce the EU’s material The ESPR is a proposal published on
Directive which currently only covers energy- dependencies. It will achieve this objective March 30, 2022 by the European
related products. The ESPR is one of the by making materials last for longer, ensuring Commission. A public consultation on the
many ambitious proposals of the European that product value is retained for as long as proposal was held from January 31,
Commission aimed at bringing companies in possible and boosting the use of recycled 2023 to May 12, 2023 and a provisional
line with the Green Deal ambitions and EU’s content in products. agreement on the draft ESPR was reached
sustainability goals. The ESPR lays down a between the European Parliament and
framework for setting ecodesign requirements The main objectives of the ESPR are Council on December 4, 2023. The
based on the sustainability and circularity therefore to reduce the negative life cycle Regulation was adopted on May 27,
aspects listed in the EU Circular Economy environmental impacts of products. The 2024. Once adopted, the ESPR will be
Action Plan. The ecodesign approach is ESPR also aims to boost the supply of, and published in the Official Journal of the
applicable to a very broad range of products demand for, sustainable goods, and deliver European Union and will enter into force
and sets a wide range of targeted product sustainable production. At the same time, the after 20 days from its publication. The
requirements. This will contribute to achieving ESPR will standardize ecodesign requirements Regulation will be applicable from 2 years
the EU’s overall climate, environmental and across the EU. Harmonized standards across after its entry into force.
energy goals, while supporting economic the EU shall enable more efficient means of
growth, job creation and social inclusion. compliance and proper enforcement. Since the ESPR is a framework regulation,
The ESPR aims to promote the separation of the new ecodesign requirements will be
economic development from natural resource applicable to specific groups of products
only after the adoption of the product-
specific rules.

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5. Scope Application of the ESPR

EU Ecodesign for Sustainable Products Regulation ----- Factsheet

The ESPR shall apply to any physical good that is placed on the EU market or put into
service in the EU, including components and intermediate products. This will not apply
to certain items like food, feed, medicinal products for human use, veterinary medicinal
products, living plants, animals and micro-organisms, products of human origin, products of
plants and animals relating directly to their future reproduction.2

Points to • The ESPR covers the supply of any product (except for the excluded
Note categories above) for distribution, consumption or use on the EU market
in the course of a commercial activity, whether in return for payment or
free of charge.
Specified in Article 1(2) of the ESPR.
• This broad definition means that a range of companies will fall
2

within the scope of the ESPR, including manufacturers; importers and

distributors; dealers; and fulfilment service providers (collectively
referred to as “economic operators” in the ESPR). The obligations of
each of these categories of companies in-scope are set out below.

• Except in the case of importers, a company may be subject to the ESPR

regardless of its place of incorporation or headquarters location. Any
company supplying products in the EU and meeting the definition above
will be obliged to comply with the ESPR.

Application of the DPP

All companies within the scope of the ESPR will have to provide a DPP. The European
Commission plans to implement this requirement by product group. There is ongoing public
consultation regarding obligation (please see section 12 below). The EU Circular Economy
Action Plan identifies seven priority sectors: These sectors are electronics and ICT; batteries
and vehicles; packaging; plastics; textiles; construction and buildings; and food and water.

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6. Obligations Obligations of Manufacturers

EU Ecodesign for Sustainable Products Regulation ----- Factsheet

for companies In-scope manufacturers should ensure that their products are designed and manufactured
in accordance with the ESPR’s ecodesign requirements as well as relevant product-specific
in-scope rules (yet to be developed, but which will include aspects such as durability, reliability,
reusability, upgradability, etc., as similarly set out in the list in section 1 above). In -scope
manufacturers will also need to provide the requisite information to demonstrate the
This section sets out the obligations for
product’s environmental sustainability. The ecodesign requirements that will determine
each type of economic operator under
whether a product is environmentally sustainable have yet to be developed but will include
the ESPR.
aspects such as durability, reliability, reusability, upgradability, etc. as set out in the list in
Section 1 above.

Points to Note • The ESPR defines “manufacturer” in two ways: either a

natural or legal person who manufactures a product or
who has such a product designed or manufactured, and
markets that product under its name or trademark, or in
the absence of such manufacturer or importer, a natural or
legal person who places on the market or puts into service
a product. It is not yet clear how this definition will be
interpreted once the proposal becomes effective. Hence,
suppliers should carefully consider whether they could
possibly fall under either definition.

In-scope manufacturers will be required to carry out specified conformity assessment procedures
(or have them carried out on their behalf) and supply required technical documentation. Details
for these requirements will be specified in product-specific rules to be developed. Manufacturers
will be required to retain technical documentation and declarations of conformity for 10 years
3
Article 21(3) of the ESPR. after the product has been placed on the market (subject to any product-specific rules).3

124 An Apparel Supplier’s Guide 2.0: Key Sustainability Legislation in the EU, US, and UK
 In-scope manufacturers will also be required to ensure that series and mass production
procedures continue to conform to applicable requirements and that the products bear a type,

EU Ecodesign for Sustainable Products Regulation ----- Factsheet

batch or serial number or other element allowing their identification.4

If a manufacturer believes or has reasons to believe that it has released a product that does not
conform with the requirements and/or product-specific rules, then the manufacturer is obligated
to take immediately corrective measures to bring that product into conformity, including
withdrawing or recalling the product where appropriate. The manufacturer shall immediately
inform the market surveillance authorities of the EU countr(ies) in which the product was made
available regarding the non-compliance and the corrective measures it has taken.5

Obligations of Importers and Distributors

The obligations of the importers and the distributors under the ESPR are similar to that of the
manufacturers. The importer6 and the distributors7 are under obligation to ensure that the
product bears the required CE marking, or the alternative conformity marking as laid down in
the relevant product-specific rules, and that a DPP is available in relation to the product.

Points to Note • Under the ESPR, a ‘distributor’ means any natural or legal person
in the supply chain, other than the manufacturer or the importer,
who makes a product available on the market.
• An “importer” means any natural or legal person established in
the EU who places a product from a third country (i.e., non-EU
country) on the EU market.
• An importer or distributor shall be considered a manufacturer
for the purpose of the ESPR and will be subject to the obligations
4
Articles 21(4), 21(5) and 21(6) of the ESPR.
5

6
Articles 21 (7), 21(8) and 21(9) of the ESPR.
Article 23 of the ESPR
of a manufacturer, if they place a product covered by product-
Article 24 of the ESPR
specific rules under their name or trademark or modify such
7

8
Article 28 of the ESPR.

a product already placed on the market in a way that affects

compliance.8

125 An Apparel Supplier’s Guide 2.0: Key Sustainability Legislation in the EU, US, and UK
 Obligations of Fulfilment Service Providers

EU Ecodesign for Sustainable Products Regulation ----- Factsheet

The fulfilment service providers will ensure that the conditions during warehousing, packaging,
addressing, or dispatching for products covered by the product-specific rules do not jeopardize
the products’ compliance with the requirements set out in the relevant rule9.

Obligations of Dealers

The dealers will ensure that the DPP is easily accessible to their customers and that they have
access to any relevant information required by the product-specific rules, including in case of
distance selling10. The dealer will provide a DDP11, display the labels provided in accordance with
the ESPR, make reference to the information included in labels and not provide or display other
labels, marks, symbols or inscriptions that are likely to mislead or confuse customers12.

Points to Note • Under the ESPR, ‘dealer’ means a retailer or any other natural or
legal person who offers products for sale, hire, or hire purchase,
or displays products to customers in the course of a commercial
activity, whether or not in return for payment.

Labelling

If required by the applicable product-specific rules, the economic operator placing the product
on the market or putting it into service shall ensure that the products are accompanied by printed
labels or deliver the printed labels or digital copies of the labels to the dealer.13 The economic
operator will ensure that the labels are accurate, make reference to the information included in
9
Article 27 of the ESPR.
the label and not provide or display any other labels, marks or symbols which is likely to mislead
Articles 25(1) and (2) of the ESPR.
or confuse customers with respect to the information included on the label.14
10

11
Article 25 (2) of the ESPR
12
Article 25(3) of the ESPR.
13
Articles 26(1) and 26(2) of the ESPR.
14
Article 26(3) of the ESPR.

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 Obligations of Online Marketplaces and Online Search Engines

EU Ecodesign for Sustainable Products Regulation ----- Factsheet

The ESPR also specifies the obligations of online marketplaces concerning market surveillance.
Online marketplaces shall be required to cooperate with the market surveillance authorities to
ensure effective market surveillance measures; inform the market surveillance authorities of any
action taken in cases of non-compliant products; establish a regular exchange of information
on offers that have been removed; and allow online tools operated by market surveillance
authorities to access their interfaces in order to identify non-compliant products.15 Online
marketplaces would be required to design and organize their online interfaces in a way that
would enable dealers to comply with the requirements of the Digital Services Act regarding
pre-contractual information and product safety information. The EU countries would be required
to empower their market surveillance authorities to order an online marketplace to remove
15
Article 29 of the ESPR. products that do not comply with the ecodesign requirements.
16
Article 30(1) of the ESPR.
17
Article 30(2) of the ESPR.

Information Obligations

Where the products are made available on the market online or through other means of
distance sales by the economic operators, the relevant product will clearly and visibly state
the name, registered trade name or registered trademark of the manufacturer, as well as the
postal or electronic address where they can be contacted and the information to identify the
product, including its type and, where available, batch or serial number or any other product
identifier.16

The economic operators will provide, if requested, the market surveillance authorities with
the name of any economic operator who has supplied them with a product or any economic
operator to whom they have supplied a product, the quantities and exact models.17

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 Digital Passport Product Obligations

EU Ecodesign for Sustainable Products Regulation ----- Factsheet

The ESPR requires that the following product information are made digitally available18:
durability; reliability; reusability; upgradability; reparability; energy use
or energy efficiency; and recycled content.

Details regarding the required information will be set out in product-specific rules (to be
developed)19. A DPP is required to be made available in relation to each product before it can
be marketed or put into service20.

The information requirements to be set out in the delegated acts will specify the following in
relation to the DPP21:
• information to be included in the DPP;
• the types of bar code, symbol, or other automatic identifier (“data carrier”) to be used;
• the layout in which the data carrier shall be presented and positioned;
• whether it will correspond to model, batch, or item level;
• the manner in which the DPP shall be made available to consumers;
• who shall have access to the product DPP and what information they will be able to access;
• who can add to or update the information contained in the DPP; and
• the period for which the DPP will be made available.

The data carrier must connect to a unique product identifier, and be physically present on the
product, packaging or accompanying documentation.22 This data carrier and the unique product
18
Article 5 (1) of the ESPR.
identifier must comply with the ISO/IEC standard 1549:201523. The data included in the DPP
Article 7(1) of the ESPR.
shall be stored by the manufacturer, authorized representative, importer, distributor, dealer or
19

20
Article 8(1) of the ESPR.
21
Article 8 (2) of the ESPR.
22
Article 9 (1) (a) and (b) of the ESPR. fulfillment service provider responsible for its creation or by operators authorised to act on their
23
Article 9 (1) (c) of the ESPR.
24

25
Article 10 (c) of the ESPR.
Article 10 (d) of the ESPR.
behalf.24 Where the latter, those operators cannot sell, re-use or process the data beyond what
is necessary for the storage services.25

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7. Compliance Anticipated impact of the ESPR

EU Ecodesign for Sustainable Products Regulation ----- Factsheet

recommendations At a broad level, the ESPR is expected to bring greater focus on ecodesign and

for companies
circularity, while reducing risk of greenwashing practices in product labelling and
terminating the practice of destructing unsold textiles and footwear. Manufacturers

in-scope should expect to comply with a wide range of ecodesign criteria, that cover all
aspects of consumer experience and usage of products through to their disposal. This
will likely necessitate the re-design of products and even business models. Similarly,
In this section, we have included our requirements to use recycled content in garments will likely have significant impact
observations on how the ESPR is on materials sourcing practices today. At the same time, manufacturers, and other
expected to impact the apparel value market participants (importers and distributors, online marketplaces, and dealers)
chain. shall need to ensure transparency and accuracy in the way that they label products
as “sustainable”.

Compliance with the DPP

In relation to the DPP requirement specifically, some broad compliance

recommendations can be made at this stage, pending details on the specific product
information requirements:

• Companies in-scope should undertake internal and external information gathering

to identify any gaps in current data points of businesses and supply chains,
relating to the durability; reliability; reusability; upgradability; reparability;
energy use or energy efficiency; and recycled content of products.

• Consider whether additional contractual obligations may need to be added with

new and existing suppliers to ensure that specific data points can be requested,
and so organisations should consider this in their existing and any template
agreements.

129 An Apparel Supplier’s Guide 2.0: Key Sustainability Legislation in the EU, US, and UK
 • Companies in-scope should also consider the DPP requirements in the
procurement stage, as well as in relation to current suppliers and other members

EU Ecodesign for Sustainable Products Regulation ----- Factsheet

of the value chain.

• The process of DPP data collection will need to be built into current practices and
processes of companies in-scope, to ensure that the data flows in the supply chain
can facilitate the DPPs in the future. The DPP can be created at any step between
raw materials and distribution, however the earlier in the process it is created, the
easier the data collection will be.

• New processes and procedures will also need to be implemented by companies

in-scope to ensure that the data carrier can be created and physically present on,
or provided with, the product as required by the ESPR. Companies in-scope could
decide on the data carrier that will work best for their product at this stage, for
example a QR code, watermark, barcode, etc.

• Any in-scope companies should consider their own capabilities, including

technical capabilities to meet the requirements of the ESPR, for example to ensure
interoperability of IT systems and to ensure that cooperation within the value
chain can be achieved.

• Companies in-scope should begin discussions and planning internally to ensure

that different areas of the business are aware of, and able to contribute to, the
implementation of the preparation as set out above. For example, these steps to
prepare for the DPP may require input from technology, research and design,
marketing, finance, production, and procurement teams.

• Companies are banned from destroying unsold textiles and footwear (see chapter
10).
It remains to be seen how the requirements of the DPP will be aligned with the PEF
Guide and Methodology, and companies in-scope should also be mindful of how
these two initiatives may overlap.

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8. Potential Overall Impact of the ESPR Impact of the DPP

EU Ecodesign for Sustainable Products Regulation ----- Factsheet

implications As noted in Section 7 above, it is difficult
to predict with specificity how the ESPR will
Suppliers should expect to see further
information requests and data collection
for suppliers to practicably impact suppliers in the value from companies in-scope to support them
chain of companies in-scope, as the ESPR is in meeting the disclosure requirements of
companies still in the nascent stages of the legislative the DPP. While it will only be possible to

in-scope procedure, and the product-specific rules have

yet to developed. Nonetheless, as explained
determine the specific types of information
that will be required when the product-
above, it is anticipated the ESPR will have specific rules are available, suppliers
knock-on effects on the apparel industry should be prepared to provide data
globally as it will likely impact product design regarding product durability; reliability;
and potentially even business models. reusability; upgradability; reparability;
energy use or energy efficiency; and
recycled content of materials used.
Suppliers could already start reviewing
internal record keeping and data collection
processes to be prepared for these types of
information requests.

131 An Apparel Supplier’s Guide 2.0: Key Sustainability Legislation in the EU, US, and UK
9. Penalties for • the CE marking has been affixed in violation of Article 30 of Regulation (EC) No
765/2008 or of Article 39 of the ESPR;

EU Ecodesign for Sustainable Products Regulation ----- Factsheet

non-compliance • the CE marking has not been affixed;

If an EU country makes one of the • the identification number of the notified body has been affixed in violation of Article 39 of
following findings, it will require the the ESPR or has not been affixed where required;
concerned economic operator to put an
• the EU declaration of conformity has not been drawn up;
end to the non-compliance concerned:26
• the EU declaration of conformity has not been drawn up correctly;

• the technical documentation is not available, not complete or contains errors;

• the information referred to in Article 21(6) or Article 23(3) of the ESPR is absent, false or
incomplete; or

• any other administrative requirement provided for in Article 21 or Article 23 of the ESPR
or in the applicable product-specific rules, is not fulfilled.

If the non-compliance persists, the concerned EU country will take all appropriate measures to
restrict or prohibit the product being made available on the market or ensure that it is recalled
or withdrawn from the market.27

The EU countries will lay down the rules on penalties applicable to infringements of the ESPR
and shall take all measures necessary to ensure that they are implemented. The penalties
provided for shall be effective, proportionate, and dissuasive, taking into account the extent of
non-compliance and the number of units of non-complying products placed on the market.28 As
such the amount and form of penalties may differ across the EU countries.
26
Article 65(1) of the ESPR.
27
Article 65(2) of the ESPR.
28
Article 68 of the ESPR.

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10. Form of The ESPR provides for the notified bodies to carry out conformity assessments in accordance
with the assessment procedures which will be provided for in the product-specific rules.29

EU Ecodesign for Sustainable Products Regulation ----- Factsheet

enforcement If a manufacturer does not meet the relevant requirements or corresponding harmonised
standards, common specifications or other technical specifications, the notified bodies can
require that manufacturer to take appropriate corrective measures in view of a second and
final conformity assessment, unless the deficiencies cannot be remedied, in which case it
shall not issue a certificate or approval decision. After the certificate or approval decision
is already issued and during the monitoring of conformity, if the notified bodies finds that
a product or the manufacturer does not comply or no longer complies, it shall require the
manufacturer to take appropriate corrective measures and shall suspend or withdraw the
certificate or approval decision.

EU countries will, at least every 2 years, plan market surveillance activities to ensure
appropriate checks are performed in relation to the ESPR.30 The European Commission
is empowered to lay down minimum numbers of checks to be performed under market
surveillance on specific products or specific requirements.31 Where market surveillance
authorities identify non-compliance, they will require the economic operator to take
appropriate and proportionate corrective action within a reasonable period. Where this
action is not taken within the period, the authorities will take all appropriate provisional
measures to prohibit or restrict the product being made available, to withdraw it or recall it.32

29
Article 53 of the ESPR.
30
Article 59 (1).
31
Article 60 (1).
32
Article 63.

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11. Reporting/ 1. Customs controls related to the DPP product-specific rule.35 However, to alleviate
overly burdensome compliance costs, the

EU Ecodesign for Sustainable Products Regulation ----- Factsheet

The European Commission will set up a
disclosure registry for DPPs and specify the information
ESPR exempts most micro, small and medium-
size enterprises from this obligation.
requirements (if
contained within such DPPs that needs to
be stored in the registry.33 The economic
3. Monitoring and Reporting
any) for companies operator placing the product on the market
is responsible for ensuring that information
Obligations of Economic Operators

in-scope is uploaded to the registry in relation to the The European Commission may require the
manufactures, their authorized representatives
product in question.34
or importers to make available to the
2. Destruction of Unsold Consumer European Commission, information on the
Products quantities of a product, to collect, anonymize
or report in-use data etc. in accordance with
Any economic operator that discards unsold
the criteria specified in the ESPR.36
consumer products directly, or on behalf of
another economic operator, will be required 4. Information requested by
to disclose the number of unsold consumer Competent National Authority
products discarded per year, differentiated
The manufacturers and importers will, further
per type or category of products, the reasons
to a reasoned request from a competent
for the discarding of products, and the
national authority, provide all the information
delivery of discarded products to prepare for
and documentation necessary to demonstrate
re-use, remanufacturing, recycling, energy
the conformity of the product, including the
recovery and disposal operations. Destruction
technical documentation in a language that
is considered as the discarding or intentional
can be easily understood by that authority.
damaging of these products after which
That information and documentation shall
they become waste, including recycling,
be provided in either paper or electronic
incineration and landfilling. The information
form. The relevant documents will be made
will be disclosed by the economic operator on
33
Article 13 (1) and (2) of the ESPR. available within 10 days of receipt of a
34
Article 13 (4) of the ESPR. a freely accessible website or otherwise made
35
Article 20 of the ESPR. request by a competent national authority.37
36
Article 31 of the ESPR. publicly available, subject to any applicable
37
Articles 21(9) and 23(8) of the ESPR

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12. Access There are no specific remedy mechanisms or litigation risks in the ESPR. These may be

EU Ecodesign for Sustainable Products Regulation ----- Factsheet

specified in the product-specific rules.
to remedy
mechanisms
and litigation risk

Opportunity to comment on DPP requirements

13. Opportunity The European Commission is currently seeking views on the categories of new products
to participate and measures to address first, so that it can set priorities transparently and inclusively. The
feedback and consultation period started on January 31, 2023 and expired on May 12,
and engage 2023. The provided input is expected to shape many elements related to the DPP requirements

in legislative specifically, for example the level of application (item/batch/model), required and optional
DPP information and data management requirements.

developments Opportunity to propose self-regulation measures

(if any)
Note that two or more economic operators may submit a self-regulation measure establishing
ecodesign requirements for products to the European Commission as an alternative to a
delegated act.38 The economic operators must demonstrate that their measures achieve the
same objectives as those set out by the ESPR, in a quicker or at a lesser expense way. The
European Commission may reject measures or request that amendments be made. After
approval, the economic operators must report to the European Commission on a regular basis
detailing progress made.39 The provision must also be made for the monitoring of measures
by independent experts. The market share in terms of volume of the signatories to the self-
38
Article 18 (1) of the ESPR.
39

40
Article 18 (4) of the ESPR.
Article 18 (3)(b) of the ESPR.
regulation measure in relation to the products covered by that measure is at least 80% of units
placed on the market or put into service.40

135 An Apparel Supplier’s Guide 2.0: Key Sustainability Legislation in the EU, US, and UK
14. Useful

EU Ecodesign for Sustainable Products Regulation ----- Factsheet

resources
European Commission, Sustainable products: Commission consults on new product
priorities

to support European Commission, Green Deal: New proposals to make sustainable products the
compliance norm and boost Europe’s resource independence

European Commission, Proposal for a REGULATION OF THE EUROPEAN PARLIAMENT

AND OF THE COUNCIL establishing a framework for setting ecodesign requirements for
sustainable products and repealing Directive 2009/125/EC

European Commission, Commission welcomes provisional agreement for more sustaina-

ble, repairable and circular products

World Business Council for Sustainable Development, The EU Digital Product Passport
shapes the future of value chains: What it is and how to prepare now

World Business Council for Sustainable Development, The EU Digital Product Passport:
how can companies prepare for it today?

136 An Apparel Supplier’s Guide 2.0: Key Sustainability Legislation in the EU, US, and UK
Factsheet

EU Packaging and
Packaging Waste Directive
and Provisional Regulation
Directive 94/62/EC on Packaging and Packaging Waste and Provisional
Regulation

UPDATE

1. Key Updates
On March 4, 2024, the Council of the EU and the EU Parliament’s representatives
reached a provisional political agreement on the Proposal for a regulation on
packaging and packaging waste (PPWR). The PPWR has provided more clarity on the
main requirements of PPWR, as detailed below. The main changes relate to Section 1,
3, 4, 5, and 6.

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2. Overview

EU Packaging & Packaging Waste Directive & Provisional Regulation ----- Factsheet
The directive 94/62/EC on packaging and member states’ representatives within the
packaging waste (Directive) is part of EU Council and to the EU Parliament’s
a set of the EU rules on packaging and environment committee for endorsement.
packaging waste, including design and waste If approved, the text will then need to
management. The Directive was last amended be formally adopted by both institutions
in 2018 as part of the Circular Economy before it can be published in the EU’s
Package.1 An ambitious revision is currently Official Journal and enter into force. The
under legislative procedure. On November regulation will be applied from 18 months
30, 2022 the European Commission put after the date of entry into force.5
forward a proposal2 for amending Regulation
EU 2019/10203 and Directive (EU) This factsheet will discuss both the
2019/9044, and repealing the Directive (the requirements of the current Directive and
UPDATE Proposal). The European Union’s Council expected changes under the Proposal.
and Parliament then adopted its position on
the Proposal in November and December The Directive sets Essential Requirements
2023 respectively. On March 4, 2024, the (as defined in Section 5 below) and
Council of the EU and the EU Parliament’s targets for EU countries regarding the
representatives reached a provisional political recovery and recycling of packaging
agreement on the Proposal for a regulation waste. It vastly covers
on packaging and packaging waste (PPWR).
PPWR considers the full life-cycle of i. the substances in packaging;
packaging and establishes requirements to ii. the recyclability of packaging;
1
The First Circular Economy Action Plan was published in 2018. For a summary ensure that packaging is safe and sustainable iii. the management of waste packaging;
of its implementation see Implementation of the first Circular Economy Action
Plan, link. The second Circular Economy Package was published on 30 by requiring that all packaging is recyclable and
November 2022, link.
2
European Commission, Proposal for a revision of EU legislation on Packaging and that the presence of substances of iv. the labelling of packaging.
and Packaging Waste, 30 November 2022, link.
3
Regulation (EU) 2019/1020 of the European Parliament and of the Council of
20 June 2019 on market surveillance and compliance of products.
concern is minimised. The provisional
Directive (EU) 2019/904 of the European Parliament and of the Council of
agreement will now be submitted to the
4

5 June 2019 on the reduction of the impact of certain plastic products on the
environment.
5
Packaging: Council and Parliament strike a deal to make packaging more
sustainable and reduce packaging waste in the EU, 4 March 2024, link.

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3. Context 4. Status

EU Packaging & Packaging Waste Directive & Provisional Regulation ----- Factsheet
The Directive regulates what kind of 1. Increase of packaging waste due to The Current Directive
packaging can be placed on the EU market, more single-use packaging, high level of
and how packaging waste should be both avoidable packaging, and higher share of The Directive was first adopted on
managed and prevented. However, despite plastics in packaging; December 20, 1994. It has been
the implementation of the Directive, the amended several times to account for
2. Systemic issues with packaging circularity
European Commission has observed that changes in packaging technology and
due to commonly used design features
packaging and packaging waste continue consumption. The latest amendment to
that inhibit recycling, and unclear
to have an increasingly serious impact on the Directive entered into force on July 4,
packaging labelling; and
the environment. As such, the European 2018. The EU countries were required to
Commission considers that the current 3. Systemic issues in EU’s ability to reduce transpose the Directive into national law
Directive has failed to manage and reduce the use of virgin materials in new by July 5, 2020.
the negative environmental impacts of packaging.6
packaging. It has identified three groups of
interlinked problems to solve:

6
European Commission, Executive summary of the impact assessment report
accompanying the document Proposal for a Regulation of the European Parliament
and the Council on packaging and packaging waste, 30 November 2022, link.

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5. Scope The Directive covers all packaging placed on the European market and all packaging waste,
whether it is used or released at industrial, commercial, office, shop, service, household, or

EU Packaging & Packaging Waste Directive & Provisional Regulation ----- Factsheet
any other level, regardless of the material used.7

Packaging means all products made of any materials of any nature to be used for the
containment, protection, handling, delivery, and presentation of goods, from raw materials
to processed goods, from the producer to the user or the consumer. ‘Non-returnable’ items
used for the same purposes shall also be considered to constitute packaging.8 It includes all
sales packaging or primary packaging, grouped packaging or secondary packaging, and
transport packaging or tertiary packaging. Packaging used for textiles falls under the scope
of the Directive.

6. Obligations Under the current Directive:

for companies The Directive does not apply to companies directly, but instead creates obligations for EU
countries to implement measures at national level to prevent the production of packaging
in-scope waste, and to promote reuse of packaging, recycling, and recovery of packaging waste.
EU countries are therefore required to ensure that packaging placed on the EU market
meet the following essential requirements.

1. Essential Requirements

All packaging placed on the EU market to comply with three essential categories of
requirements (the Essential Requirements):9

• Manufacturing and composition of packaging: packaging must be designed

7
Article 2, Directive
and manufactured adequately to (i) reduce its volume and weight to the minimum, (ii)
Article 3, Directive
permit its re-use or recovery including recycling, and (iii) limit the presence of noxious
8

9
See Annex II – Essential requirements on the composition and the reusable
and recoverable, including recyclable, nature of packaging
or hazardous substances and materials.

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 • Re-usable nature of packaging: packaging must be designed and manufactured
adequately to (i) allow for multiple use/trips/rotations, (ii) allow for safe reuse

EU Packaging & Packaging Waste Directive & Provisional Regulation ----- Factsheet
processes, and (iii) be recoverable once the packaging is no longer re-used.

• Recoverable nature of packaging: packaging must be designed and manufactured

adequately to allow for (i) its recovery in the form of material recycling, (ii) its recovery
in the form of energy recovery, (iii) its recovery in the form of composting, and (iv) its
biodegradability to be complete if advertised as biodegradable packaging.

2. Targets

The Directive sets multiple targets for the EU countries to achieve the above-mentioned
objectives, notably:
10
Article 6.

• 3 years after the entry into force of the Directive, all packaging placed on the market
shall comply with Essential Requirements;

• No later than 5 years after the implementation of the Directive in national laws, at
least 50% of all packaging should be recovered, at least 15% of which by weight per
packaging material being recycled10;

• By December 31, 2025, at least 65% by weight of all packaging waste should be
recycled. The recycling targets per material were set at: 50% of plastic, 25% of
wood, 70% of ferrous metals, 50% of aluminum, 70% of glass, and 75% of paper
and cardboard.

• By December 31, 2030, at least 70% by weight of all packaging waste should be
recycled. The recycling targets per material were set at: 55% of plastic, 30% of
wood, 80% of ferrous metals, 60% of aluminum, 75% of glass and 85% of paper
and cardboard.

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 • The concentration levels of heavy metals present in packaging should not
exceed 600 ppm by weight no later than 2 years after the implementation

EU Packaging & Packaging Waste Directive & Provisional Regulation ----- Factsheet
of the Directive in national laws, should not exceed 250 ppm by 3 years
after the implementation, and not exceed 100 ppm by weight 5 years after
implementation.

3. Producer Responsibility

The EU countries must also establish responsibility schemes to encourage the design of
environmentally friendly packaging by making sure that producers bear the financial and/or
organizational responsibility for the waste management of their packaging.11

Under the PPWR:

If enacted, PPWR would change the rules from being a directive to a regulation. It would create
direct obligations on companies in-scope. For example, manufacturers that place packaging on the
EU market would need to ensure that the packaging is designed and manufactured in accordance
with the requirements sent out in the regulation around substances used in packaging, minimum
recycled content, recyclable and compostable packaging, reusable packaging, and packaging
minimization. Any supplier of packaging or packaging materials will also be required to provide
the manufacturer with all the information and documentation necessary for the manufacturer to
demonstrate that the packaging conforms with the requirements of the Proposal.

Notably, if enacted EU manufacturers and importers into the EU will need to comply with PPWR.
PPWR therefore does not differentiate between companies incorporated in the EU, and those
incorporated outside the EU.
11
Article 12 of the Directive

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 UPDATE The main requirements of PPWR are to:

EU Packaging & Packaging Waste Directive & Provisional Regulation ----- Factsheet
• reduce unnecessary packaging and promoting reusable and/or refillable packaging
solutions —(i) introduces a restriction on placing on the market of food contact packaging
containing per- and polyfluorinated alkyl substances (PFASs) above certain thresholds,
(ii) includes 2030 and 2040 headline targets for minimum recycled content in plastic
packaging (but exempts compostable plastic packaging and packaging whose plastic
compenent represents less than 5% of the packaging total weight from such targets) and
(iii) sets a maximum empty space ratio of 50% in grouped transport and e-commerce
packaging and manufacturers are to reduce packaging unless the packaging is already
protected when PPWR is enacted.

• set new binding re-use targets for 2030 and indicative targest for 2040—(i) the targets
vary based on the type of packaging used; micro-enterprises are exempt and economic
operators are given the option to form pools of up to five final distributors to meet re-use
targets for beverage packaging; (ii) includes a 5 year renewable five-year of exemption in
specific cases and (iii) includes an obligation for take-away businesses to offer possibility of
bringing own containers at no additional charge and by 2030 take-away activities should
aim to get 10% of products in packaging which is suitable for re-use.

• set up deposit return systems to ensure the separate collection of at least 90% per annum
of single-use plastic bottles and metal beverage containers by 2029—member states would
be exempt from requirement to introduce a DRS if they reach a separate collection rate of
above 80%iin 2026 and they submit an implementation for achieving 90% target.

• restrict certain packaging formats (including single-use plastic packaging for fruit and
vegetables, condiments, sauces within the HORECA sector, for small cosmetic and toiletry
products, and for very lightweight plastic bags).12

12
Packaging: Council and Parliament strike a deal to make packaging more
sustainable and reduce packaging waste in the EU, 4 March 2024.

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7. Compliance recommendations 8. Potential

EU Packaging & Packaging Waste Directive & Provisional Regulation ----- Factsheet
for companies in-scope implications for
suppliers
The Directive does not, by itself, create any specific obligations for companies. The
obligations under the Directive largely fall upon the EU countries themselves to meet
recycling targets for packaging waste, and to introduce measures to promote the use of Suppliers to companies which are subject
reusable packaging, such as deposit-return schemes, economic incentives, and requirements to national law requirements or measures
relating to the minimum percentages of reusable packaging placed on the market for each to promote the use of reusable packaging
type of packaging. and/or reduce packaging waste or
the PPWR will likely face pressure to
However, companies that produce and use packaging should refer to the relevant EU source packaging that use biobased,
country’s regulations on packaging and packaging waste, and if enacted the PPWR, and biodegradable, and compostable plastics
ensure that any packaging produced or sourced for use is compliant with national laws and as alternatives to conventional plastics.
measures and the PPWR. If enacted, PPWR will be applied from 18 months after the date of They are likely to face pressure to reduce
entry into force.13 the quantity of packaging used, and to
use reusable and refillable packaging
solutions, or otherwise ensure that
packaging is recyclable or compostable.

13
Packaging: Council and Parliament strike a deal to make packaging more
sustainable and reduce packaging waste in the EU, 4 March 2024, link.

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9. Penalties for 11. Reporting/ disclosure requirements

EU Packaging & Packaging Waste Directive & Provisional Regulation ----- Factsheet
non-compliance for companies in-scope
There are no reporting obligations on companies. However, there are reporting
Not applicable as the Directive does not
requirements for the EU countries. Specifically, the EU countries must create and/or
prescribe penalties for non-compliance for
enable databases on packaging and packaging waste to facilitate the monitoring of
companies in-scope. To be defined under the
the Directive’s implementation.14 A European Commission decision15 decided on the
PPWR.
format and rules regarding the calculation, verification, and reporting of data through
the databases. A second European Commission decision16 later introduced new rules to
improve the quality of reporting received. European Commission decisions are binding,
meaning that addressees of the decisions (in this case, the EU countries) must comply with
the decision. To be defined, if any, under the PPWR.

10. Form of
enforcement
12. Access to remedy
mechanisms and litigation risk
Not applicable under the Directive.
To be defined under the PPWR.

Not applicable under the Directive. To be defined, if any, under the PPWR.

13
Packaging: Council and Parliament strike a deal to make packaging more
sustainable and reduce packaging waste in the EU, 4 March 2024, link.
14
Ibid.
15
2005/270/EC: Commission Decision of 22 March 2005 establishing the formats
relating to the database system pursuant to Directive 94/62/EC of the European
Parliament and of the Council on packaging and packaging waste, link.
Commission Implementing Decision (EU) 2019/665 of 17 April 2019 amending
Decision 2005/270/EC establishing the formats relating to the database system
pursuant to European Parliament and Council Directive 94/62/EC on packaging and
packaging waste, link.

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 13. Opportunity to participate and

EU Packaging & Packaging Waste Directive & Provisional Regulation ----- Factsheet
engage in legislative developments
Not applicable with respect to the Directive. In regards to the Proposal, the European
Commission opened a feedback period from 1 December 2022 to 24 April 2023 to collect
feedback on the Proposal which it will summarize and present to the European Parliament
and Council to help with the legislative debate.

14. Useful resources

to support compliance
Consolidated text: European Parliament and Council Directive 94/62/EC of 20 December
1994 on packaging and packaging waste

European Commission, Proposal for a revision of EU legislation on Packaging and

Packaging Waste

European Commission, Packaging waste

146 An Apparel Supplier’s Guide 2.0: Key Sustainability Legislation in the EU, US, and UK
Factsheet

EU Microplastics Regulation
UPDATE

1. Key Updates
The Microplastics Proposal passed the 3-month scrutiny of the European Parliament and
the Council and was adopted on September 25, 2023. The first of the new measures,
including a ban on loose glitter made of plastic for textile purposes (with exceptions),
entered into force on October 17, 2023, see Section 5 for more details. The Commission
is expected to issue a detailed Q&A to support the implementation of the new rules.1

1
The timeline is undefined.

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2. Overview 3. Context

EU Microplastics Regulation ----- Factsheet

The Commission Regulation (EU) 2023/2055 The European Commission has been working on tackling plastic pollution for a long time. To
of September 25, 2023 (the Microplastics reduce all sources contributing to microplastic pollution, the European Commission published
Regulation)2 is a legislative initiative which the European Green Deal, the new Circular Economy Action Plan (CEAP) and the Zero Pollution
aims to reduce the intentional release of Action Plan. The latter includes a target to reduce microplastic emissions by 30% by 2030.
microplastics in the environment. In doing
so, the Microplastic Regulation hopes to The European Commission requested the European Chemicals Agency (ECHA) to prepare
ultimately reduce environmental pollution a restriction dossier concerning the use of intentionally added microplastics to consumer or
and potential risks to human health. The professional use products. In parallel, the CEAP presented a set of initiatives to establish
European Chemicals Agency (ECHA) a comprehensive and sustainable product policy framework to address the release of
estimates that more than 42,000 tons of microplastics. To this end, the European Commission will address the presence of microplastics
microplastics intentionally added to products into the environment.
are released in the EU every year. The
The ECHA concluded that microplastics intentionally added to certain products are released into
Microplastics Regulation is expected to result
the environment in an uncontrolled manner, and recommended restricting them. Based on this
in a 70% reduction of quantified emissions
evidence, the Commission drafted the Microplastics Proposal that was adopted on September
(500,000 tons over 20 years) that would
25, 2023.
otherwise occur.

2
Amending Annex XVII to Regulation (EC) No 1907/2006 of the European
Parliament and of the Council concerning the Registration, Evaluation, Authorisation
and Restriction of Chemicals (REACH) as regards synthetic polymer microparticles.

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4. Status The European Commission published the Microplastics Proposal on August 30, 2022. The
Registration, Evaluation, Authorisation, and Restriction of Chemicals (REACH) Committee

EU Microplastics Regulation ----- Factsheet

discussed the Proposal on September 23, 2022, and again on March 1, 2023.

The Microplastics Proposal passed the 3-month scrutiny of European Parliament and the Council,
and was adopted on September 25, 2023 under the Commission Regulation (EU) 2023/2055
amending Annex XVII to Regulation (EC) No 1907/2006 of the European Parliament and of
the Council concerning the Registration, Evaluation, Authorisation and Restriction of Chemicals
(REACH) as regards to synthetic polymer microparticles.

UPDATE The first of the new measures, including a ban on cosmetics containing microbeads and loose
2
Specified in Article 1(2) of the ESPR. glitter, entered into force on October 17, 2023. Other measures will come into force in stages,
giving affected stakeholders time to switch to alternatives.

Most recently, on January 29, 2024, the European Council and European Parliament reached a
provisional political agreement on a proposal to remove microplastics and other micropollutants
from urban wastewater. Under this proposal, at least 80% of the costs needed to remove
pollutants in the sewage treatment process would be covered by pharmaceutical and cosmetic
producers, in line with the ‘polluter pays’ principle. By 2045, the provisional agreement
would require EU member states to remove a broad spectrum of micropollutants from urban
wastewater before is released into the environment.

This provisional political agreement would have a significant financial impact on producers of
cosmetics, chemicals, and medicines in the European Union. Under the proposal:

• companies would have to cover the costs of gathering and verifying data on how their
products impact wastewater;

• there would be potential cost implications arising from product reformulation to meet the
proposed environmental risk minimisation requirements; and

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 • new product formulations would be subject to regulatory scrutiny by medicines regulatory
authorities, to ensure compatibility with the new requirements without adversely affecting the

EU Microplastics Regulation ----- Factsheet

safety, quality, and efficacy of the reformulated products.

As a next step, the provisional agreement will be submitted to the EU members’ representatives
with the European Parliament’s Environment Committee. Then, if formally adopted by both
institutions, the directive will be published in the European Union’s Official Journal. Considering
that the Microplastics Regulation states that “a big part of microplastic pollution forms
unintentionally, for example as a result of [...] the washing of synthetic clothes” and that the
EU Environment Agency says that “about 8% of European microplastics released to oceans are
from synthetic textiles and the percentage of microplastics deriving from washing textiles is even
higher”, it is likely that further legislative developments will address the issue.

UPDATE

5. Scope Certain types of products are derogated from the sale ban:

• Products that contain microplastics but do not release them or their release can be
minimised (e.g. construction materials);
The Microplastics Regulation applies to
manufacturers, importers, and industrial
• Products used at industrial sites; and
downstream users of microplastics and of
products within the scope of the legislation. • Products already regulated by other EU legislation (e.g. medicinal products, food and feed).
The Microplastics Regulation adopts a
wide definition of microplastics, covering • While these products can still be sold, their manufacturers will have to (i) report the
all synthetic polymer particles below 5mm estimated microplastic emissions from these products to the ECHA annually and (ii)
that are organic, insoluble and resist (bio) provide instructions on how to use and dispose of the product to prevent microplastics
degradation. emissions.

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 As outlined above, the Microplastics Regulation includes transitional periods aimed at providing

EU Microplastics Regulation ----- Factsheet

sufficient time for businesses to comply with the restriction and transition to suitable alternatives.
More specifically, the Microplastics Regulation sets the following transitional periods:

Immediately (from October 17, 2023) for microplastics themselves and when
intentionally added (e.g. to certain cosmetics and loose glitter);

4 years after the entry into force (from October 17, 2027) for the use of microplastics in
rinse-off cosmetic products;

5 years after the entry into force (from October 17, 2028) for the use of microplastics
in detergents/waxes/polishes and air care products, fertilizing products outside the
scope of application of Regulation (EU) 2019/ 1009, for products for agricultural and
horticultural uses;

6 years after the entry into force (from October 17, 2029) for the use of microplastics in
the encapsulation of fragrances, leave-on cosmetic products, medical devices within the
scope of Regulation (EU) 2017/745, granular infill for use on synthetic sports surfaces;

8 years after the entry into force (from October 17, 2031) for the use of microplastics in
plant protection products and biocidal products; and

12 years after the entry into force (from October 17, 2035) for the use of microplastics
in lip products, nail products and make-up (additionally, from October 17, 2031 until
October 16, 2035, suppliers of these products must include the following statement on
the label or packaging of the product: ‘This product contains microplastics’).

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6. Obligations The Microplastics Regulation prohibits the placement of synthetic polymer microparticles
(microplastics) on the market on their own or, where the microplastics are intentionally

EU Microplastics Regulation ----- Factsheet

for companies added to confer a sought-after characteristic, in mixtures in a concentration equal to or greater
than 0.01% by weight.3 This would include (but is not limited to) use of microplastics cosmetic
within scope products or detergents/waxes/polishes and air care products. Specifically, the sale of non-
biodegradable, insoluble plastic glitter for textiles purposes is banned when glittered articles
serve purely or primarily a decorative function and the glitter can detach from the article under
normal use.

Certain uses and sectors are excluded from this prohibition:

i. textiles in case the decorative function of the product containing glitter is secondary
microplastics for use at industrial sites

ii. medicinal products within the scope of Directive 2001/83/EC of the European Parliament and
of the Council and veterinary medicinal products within the scope of Regulation (EU) 2019/6
of the European Parliament and of the Council

iii. EU fertilizing products within the scope of Regulation (EU) 2019/1009 of the European
Parliament and of the Council

iv. food additives within the scope of Regulation (EC) No 1333/2008 of the European Parliament
and of the Council

v. in-vitro diagnostic devices (if potential release can be minimized by setting conditions of use
and disposal)

vi. microplastics that are both (a) contained by technical means throughout their whole life cycle
and (b) microplastic containing wastes arising are incinerated or disposed of as hazardous
waste

vii. microplastics that permanently lose their particle form

3
Polymers that occur in nature and that have not been chemically modified and
polymers that are biodegradable are excluded.
viii. microplastics that are permanently enclosed in a solid matrix during end use.

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 Any manufacturer, importer or downstream user responsible for
placing a substance or mixture containing a microplastic falling

EU Microplastics Regulation ----- Factsheet

within the exclusions set out in (i), (ii), (vi), (vii) or (viii) above must
ensure that the label, safety data sheet, or instruction, provides any
relevant instructions for use to avoid releases of microplastics to the
environment, including at the waste life-cycle stage. The instructions
must be clearly visible, legible, and indelible and the label written
in the official language(s) of the EU country or countries where the
substance or mixture is placed, unless the concerned country or
countries provide(s) otherwise.

7. Obligations The Microplastics Proposal shall not have direct effects on manufacturers of textile products for
the apparel industry, as it only addresses the intentional use of microplastics in products. While
for companies textiles products are a major source of microplastics pollution, the release of microplastics from
textile products (also referred to as microfibres) primarily originate from the washing of synthetic
in-scope textiles during textile manufacturing, garment wearing and end-of life disposal. This form of
microfiber release or shedding is categorized as unintentional release of microplastics, and
therefore does not fall within the scope of this Microplastics Regulation.

However, more broadly, this legislative initiative highlights that regulatory bodies are actively
engaged in addressing microplastics pollution. Although there are currently no EU regulations
that address microfibres unintentionally released by textiles, future regulation curbing plastic
microfibre pollution is expected. For example, France has already taken legislative steps to
regulate microfibre pollution through the introduction of the Anti-Waste for a Circular Economy
Law. The UK is reportedly working on a similar bill to address microfibre pollution. In addition,
the EU strategy for sustainable and circular textiles also confirms that the European Commission
intends to address the unintentional release of microplastics from synthetic textiles.

153 An Apparel Supplier’s Guide 2.0: Key Sustainability Legislation in the EU, US, and UK
8. Potential 10. Form of
The ECHA has no enforcement responsibilities;
therefore, enforcement of REACH regulations is a

EU Microplastics Regulation ----- Factsheet

implications enforcement national responsibility. Each EU country must put
in place an official system of controls and adopt
for suppliers legislation specifying penalties for non-compliance
with the provisions of REACH.

See discussion in Section 6 above.

9. Penalties for 11. Reporting/ Importers or downstream users that place products
falling within certain excluded uses/sectors shall

non-compliance disclosure be subject to reporting requirements. They will

be required to send the identity of the polymer(s)
requirements for used, a description of the use of the microplastic,
the quantity of microplastics used in the previous
companies
Not applicable.
year, and the quantity of microplastics released

in-scope to the environment (either estimated or measured

in the previous year) to the ECHA. The proposed
reporting requirement is expected to help ensure
that significant emissions are not occurring from
the excluded uses/sectors.

154 An Apparel Supplier’s Guide 2.0: Key Sustainability Legislation in the EU, US, and UK
 EU Microplastics Regulation ----- Factsheet
12. Access to remedy
mechanisms and litigation risk
Not applicable.

13. Opportunity to participate and

engage in legislative developments
The Microplastics Regulation was open to public consultation from February 22, 2022 to
May 17, 2022. There are no current opportunities to participate and engage in the legislative
process.

14. Useful resources

to support compliance
European Commission, Comitology Register, COMMISSION REGULATION (EU) …/… of
XXX amending Annex XVII to Regulation (EC) No 1907/2006 of the European Parliament
and of the Council concerning the Registration, Evaluation, Authorisation and Restriction of
Chemicals (REACH) as regards synthetic polymer microparticles

ECHA, Annex XV Restriction Report Proposal for a Restriction (2019)

155 An Apparel Supplier’s Guide 2.0: Key Sustainability Legislation in the EU, US, and UK
Factsheet

UK Plastic Packaging Tax

UPDATE

1. Key Updates
No key updates since previous publication.

2. Overview
The Finance Act 2021, Part 2 sets out an environmental tax system by legislating to
implement the Plastic Packaging Tax (PPT). The PPT, which has been in force since April
1, 2022, is designed to encourage the use of more recycled plastic.1 The PPT applies to
plastic packaging manufactured in, or imported into, the UK that contain less than 30%
recycled plastic content. PPT receipts in financial year 2022 totalled £276 million,
exceeding the government’s estimate of £235 million.2

1
To qualify as recycled plastic, it must be plastic waste recovered from either (i) pre-consumer plastic that is recovered from waste generated in a manufacturing
process and processed by a reprocessing facility or (ii) post-consumer plastic that is generated by households or commercial, industrial, or institutional facilities
in their role as end user of the product that can no longer be used for its intended purpose.
2
https://www.gov.uk/government/statistics/plastic-packaging-tax-ppt-statistics/plastic-packaging-tax-ppt-statistics-commentary

156 An Apparel Supplier’s Guide 2.0 : Key Sustainability Legislation in the EU, US, and UK
3. Context 5. Scope

UK Plastic Packaging Tax ----- Factsheet

The PPT is seen to be more than just a The PPT applies to manufacturers who undertake the last substantial modification4 of plastic
tax. The purpose of the PPT is to provide packaging and importers of finished plastic packaging components (whether or not, filled with
a financial incentive for businesses to goods) that contain less than 30% recycled plastic content into the UK. A component must meet
use recycled plastic packaging and find the definition of ‘packaging’ to be liable for the PPT. Packaging is defined as “a product that
sustainable solutions. With greater demand is designed to be suitable for use, whether alone or in combination with other products, in the
for recycled plastic, this will increase the containment, protection, handling, delivery or presentation of goods at any stage in the supply
amount of recycling and collection of chain of the goods, from the producer of the goods to the consumer or user.” For example, where
plastic waste, diverting it away from landfill an apparel company imports t-shirts packaged in poly bags into the UK, and the poly bags contain
or incineration. By promoting the use of less than 30% recycled plastic content, the apparel company may be subject to the PPT. Of the
recycled plastic, the PPT will help reduce total plastic packaging manufactured in and imported to the UK, 39% was declared as taxable
carbon emissions and support the UK’s goal under the PPT.
of reaching net-zero emissions by 2050, an
important step in overall climate change Manufacturers and importers may be exempt from the PPT if they fall within the following
reduction. categories:

Exempted Packaging Categories

4. Status Four packaging components are exempted from the PPT. They are products:
• used for the immediate packaging of human medicinal products
The PPT was passed on November 4, 2021 • permanently recorded as set aside for non-packaging use
and entered into force on April 1, 2022. The
• used as transport packaging for imported goods
tax is charged at a rate of:
• used in aircraft, ship, and rail goods stores.
£200 per tonne from April 1, 2022

£210.82 per tonne from April 1, 2023

3
https://www.gov.uk/government/publications/changes-to-plastic-packaging-tax-rates-from-1-april-2024/increase-to-plastic-packaging-tax-rates-from-1-april-2024
4
A substantial modification is any process that changes the shape, thickness, weight, or structure of a packaging component.
£217.85 per tonne from April 1, 2024 3

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 Only the plastic packaging used for human medicinal products and plastic packaging
permanently recorded as set aside for non-packaging use must be included when calculating

UK Plastic Packaging Tax ----- Factsheet

the total weight of plastic packaging manufactured or imported.

Excluded Product Categories

Three types of products relate to packaging which do not typically contribute to plastic
pollution, and which do not need to be included when calculating the total weight of plastic
packaging manufactured or imported. They are products which are designed to be:
• used for the long-term storage of goods
• an integral part of the goods
• reused for the presentation of goods.

There is a deferral of liability to the PPT for plastic packaging which is exported outside
the UK within 12 months. Where tax has been paid and the related plastic packaging
components are subsequently exported, credit or repayment will be issued for the tax paid.

6. Obligations The responsibility for paying PPT falls predominantly with importers of filled or unfilled plastic
packaging into the UK and UK manufacturers of plastic packaging.
for companies
Registration Requirements
within scope
Companies that manufactured in the UK or imported 10 or more tonnes of plastic packaging
into the UK in the last 12 months, must register with the HM Revenue & Customs (HMRC) for
PPT, even where the plastic packaging is not taxable. Likewise, companies that expected to
import into the UK or manufacture in the UK 10 tonnes or more of finished plastic packaging
components in the following 30 days, should also register.

158 An Apparel Supplier’s Guide 2.0: Key Sustainability Legislation in the EU, US, and UK
 Companies falling within these thresholds must register, even if the plastic packaging meets the
recycled content criteria or is one of the exempt examples of packaging categories. In other

UK Plastic Packaging Tax ----- Factsheet

words, you may still need to register, even if you are not liable for payment of PPT.

A manufacturer or importer must register within 30 days of meeting the 10-tonnes threshold.
Where the taxpayer is a part of a group of companies, the 10-tonnes threshold test applies to
each individual company within the group, and not to the group on a combined basis. There are
anti-avoidance provisions to prevent companies from attempting to separate business activities to
avoid the PPT by keeping each entity under the threshold.

De Minimis Exception

Companies that place less than 10 tonnes of plastic packaging onto the UK market in the past
12 months do not need to register for and pay PPT. For example, an apparel company that
imports products into the UK that are packaged with polybags will not need to register with the
HMRC for PPT if they use less than 10 tonnes of plastic packaging (cumulative across any rolling
12-month periods). Nevertheless, it is recommended that companies keep records event if the
threshold is not met in the event that the threshold is later met and records are required for the
prior 12-month period.

Submission of quarterly returns

A company in-scope is required to submit quarterly returns to HMRC detailing weights of

plastic packaging components which are in the scope of the tax, those containing 30% or more
recycled content, and those which are exempt, manufactured quantities, imported quantities
and exports amongst other things. All the information submitted must be supported by sufficient
evidence.

159 An Apparel Supplier’s Guide 2.0: Key Sustainability Legislation in the EU, US, and UK
 Determination of amount of PPT payable

UK Plastic Packaging Tax ----- Factsheet

The PPT applies to plastic packaging on a per component basis. Plastic packaging made from
different components of materials are classed as plastic packaging if they are predominantly
plastic by weight. The taxable base will be calculated based on the weight of the whole
packaging, if plastic is the dominant component by weight. If a packaging is made up of several
plastic packaging components, each component must be taken into account for PPT. Further
details on the calculation of PPT are set out in the Plastic Packaging Tax (General) Regulations
2022.

7. Compliance As explained in Section 5 above, the responsibility for paying PPT falls predominantly
with importers of filled or unfilled plastic packaging into the UK and UK manufacturers of
recommendations plastic packaging. As a first step, companies should check whether the packaging they
manufacture, or import is subject to the PPT. If they are within scope, the manufacturer
for companies or importer should work out the weight of the packaging and register with HMRC. These
companies in-scope will be required to file quarterly tax returns and make payment of taxes.
in-scope
Companies in-scope are required to keep accounts, records and supporting evidence for six
years (including any measurement of weight) for all the information submitted on the PPT
return. Please refer to the HMRC’s website for further information on the record-keeping
requirements: https://www.gov.uk/guidance/record-keeping-and-accounts-for-plastic-
packaging-tax

160 An Apparel Supplier’s Guide 2.0: Key Sustainability Legislation in the EU, US, and UK
8. Potential 9. Penalties for 10. Form of

UK Plastic Packaging Tax ----- Factsheet

implications non-compliance enforcement
for suppliers Where a company in-scope fails to register, HMRC shall carry out compliance checks
file returns, or pay the tax, there is a based on the filed returns, although the
At a broader level, the PPT is likely to £500 fixed penalty, and a daily penalty triggers that would prompt a compliance
encourage companies that use and of £40 for each day, after the first, on check are not specified in the case of PPT.
purchase plastic packaging to explore which the concerned company continues
incorporating more recycled content into to default. Interest on late payments may
packaging, or alternative packaging also apply. There can be criminal penalties
materials – as the PPT makes use of plastic in cases of fraudulent evasion of PPT and
packaging more costly.5 Suppliers should for misstatements and false documents and
also note that the recycled plastics supply conduct involving such offences.6
chain carries its own human rights risks,
and therefore it would be advisable to
conduct human rights due diligence when 11. Reporting/
sourcing recycled plastics.
disclosure
5

6
Companies should also be mindful that the supply chain of recycled materials carry their own set of human rights risks.
Please refer to Sections 77 to 81 of the Finance Act 2021.
requirements for
companies
in-scope
Please refer to Section 5 for discussion on
registration requirements and submission of
quarterly returns.

161 An Apparel Supplier’s Guide 2.0: Key Sustainability Legislation in the EU, US, and UK
12. Access or manufacturer (where required). It
is recommended that such companies

UK Plastic Packaging Tax ----- Factsheet

to remedy keep records of due diligence checks
undertaken and retain any evidence that
mechanisms and demonstrates that they are not liable for
payment of PPT.
litigation risk
As explained in Section 8 above, companies
that fraudulently evade payment of PPT, make
misstatements or provide false documents in 13. Opportunity to participate and
relation to their returns, may be subject to
criminal action. engage in legislative developments
In addition, although it is the manufacturer
Not applicable.
or importer of packaging components that
is primarily liable for the PPT, downstream
companies in the supply chain may also be
held secondarily liable for unpaid tax, if they
should have known, or ought to have known,
14. Useful resources
that PPT has not been paid. For example, if to support compliance
you purchase plastic packaging components
in the UK from a UK packaging manufacturer,
UK HMRC, Records and accounts you must keep for Plastic Packaging Tax Guidance
or if you distribute imported goods in the
UK that have been packaged in plastic, you UK HMRC, Check which packaging is subject to Plastic Packaging Tax
could be held secondarily liable for a failure
UK Legislation, Finance Act 2021, Part 2
to pay PPT. In such cases, these downstream
customers should conduct due diligence to UK Legislation, Plastic Packaging Tax (General) Regulations 2022
ensure that PPT has been paid by the importer

162 An Apparel Supplier’s Guide 2.0: Key Sustainability Legislation in the EU, US, and UK
Factsheet

EU Product Environmental
Footprint Guide
Product Environmental Footprint Guide and Methodology

UPDATE

1. Key Updates
The Product Environmental Footprint has been in a transitional phase since the end
of the pilot phase in 2018 and is now expected to be completed by the end of 2024,
see Section 3 for more details. The key changes are in Section 3 and 4. Particular
attention should be given to the PEF Category Rules for Apparel and Footwear set out
in Section 4.

163 An Apparel Supplier’s Guide 2.0 : Key Sustainability Legislation in the EU, US, and UK
2. Overview 3. Context

EU Product Environmental Footprint Guide ----- Factsheet

The Product Environmental Footprint (PEF) The PEF Guide outlines a common framework The PEF Guide is part of a set of
Guide is a multi-criteria measure of the for all the steps and specific rules necessary to interrelated EU initiatives (including the
environmental performance of a good or make an appropriate and comparable life cycle EU ecolabel initiative) to establish a
service throughout its life cycle. A product’s assessment. The objective of the PEF Guide is to coherent product policy framework
lifecycle includes supply chain activities such make the EU market for green alternatives more that will make sustainable products,
as extraction of raw materials and production attractive by ensuring transparent assessment services, and business models the
processes as well as the product’s use and of a product’s environmental impact, the norm. This framework aims to transform
final waste management processes. The PEF European Commission hopes that the negative consumption patterns so that emissions
Guide provides a method for modelling environmental impacts of products can be and waste levels are reduced. PEF
the environmental impacts of the flows of reduced. methodologies are already being utilized
material/energy and the emissions and waste by EU policymakers in the context of
associated with a product throughout its life The PEF Guide and Methodology considered certain EU policies and legislation such as
cycle. the recommendations made by similar, widely the Taxonomy Regulation, the Sustainable
recognised product environmental accounting Batteries Initiative, and the Green
methods and guidance documents, including Consumption Pledge.
ISO standards and other methodological guides
such as the International Life Cycle Reference
Database Handbook, ISO 14040-44, ISO
14064, PAS 2050, WRI/WBCSD, GHG protocol
and others.

164 An Apparel Supplier’s Guide 2.0: Key Sustainability Legislation in the EU, US, and UK
4. Status

EU Product Environmental Footprint Guide ----- Factsheet

As a European Commission Recommendation, guidance on how to conduct PEF studies for implementing the PEF methods. The
there are no legal consequences or specific product categories - including for the aims of the transition phase are to
requirements arising from the PEF Guide. apparel and footwear sector. The purpose provide a framework for monitoring
A recommendation simply allows the EU is to develop a common scientifically-based the implementation of existing PEFCRs
institutions (in this case, the European methodology to ensure environmental and OEFSRs, developing new PEFCRs
Commission) to make their views known and footprint comparability between two items, and OEFCRs and new methodological
to suggest a line of action without imposing and to assist in implementing eco-design developments.
any legal obligation on those to whom it is principles. The continued development
addressed. of the PEFCRs is intended to provide a The transition phase is expected to be
basis for further policy development and completed by the end of 2024. This
The PEF methodology is still under implementation. means that using the PEF methodology
development following its initial pilot phase is not yet mandatory. The culmination of
between 2013-2018 during which the The European construction sector is currently the transition phase by the end of 2024 is
methodologies were tested with more than the only category in which the PEF Guide approaching, the European Commission
300 companies and 2000 contributing has resulted in some mandatory changes in will continue to refine the nuances of
stakeholders in different fields of activities, product life cycle assessments. The EN15804 PEF and has conducted a second public
including food and feed, IT equipment, standard for construction companies was consultation for the PEFCR for apparel
batteries, and detergents. amended to align with the methodology set and footwear.
out in the PEF Guide. The amended standard
The European Commission is working to is the EN 15804+A2 standard.
develop the PEF Product Category Rules
(PEFCRs) and Organisation Environmental The PEF has been in a transitional phase
Footprint Sector Rules (OEFSRs) which since the end of the pilot phase in 2018
aim to provide more detailed technical and until the possible adoption of policies

165 An Apparel Supplier’s Guide 2.0: Key Sustainability Legislation in the EU, US, and UK
5. Scope Objectives of the PEF Guide

EU Product Environmental Footprint Guide ----- Factsheet

The PEF Guide aims to provide detailed and comprehensive technical guidance on how to
conduct a PEF study. PEF studies may be used for a variety of purposes, including internal and
external applications (as described below). It is primarily aimed at technical experts who need
to develop a PEF study, for example engineers and environmental managers in companies and
other institutions. However, no expertise in environmental assessment methods is needed to use
the PEF Guide for conducting a PEF study.

Based on a life-cycle approach, the PEF Guide provides a method for modelling the environmental
impacts of the flows of material/energy and resulting emissions and waste streams associated
with a product from a supply chain perspective (from extraction of raw materials, through
use, to final waste management). A life cycle approach takes into consideration the spectrum
of resource flows and environmental interventions associated with a product or organization
from a supply chain perspective. It includes all stages from raw material acquisition through
processing, distribution, use, and end-of-life processes, and all relevant related environmental
impacts, health effects, resource-related threats, and burdens to society.

Applications of PEF Studies

Potential applications of PEF studies may be grouped depending on a company’s in-house or

external objectives:

• In-house applications may include support to environmental management, identification of

environmental hotspots, and environmental performance improvement and tracking, and
may implicitly include cost-saving opportunities;

• External applications (e.g., Business-to-Business (B2B), Business-to-Consumers (B2C))

cover a wide range of possibilities, from responding to customer and consumer demands,
marketing, benchmarking, environmental labelling, supporting eco-design through supply
chains, green procurement and responding to the requirements of environmental policies

166 An Apparel Supplier’s Guide 2.0: Key Sustainability Legislation in the EU, US, and UK
 at European or EU country level. Benchmarking could, for example, include defining an
average performing product (based on data provided by stakeholders or on generic

EU Product Environmental Footprint Guide ----- Factsheet

data or approximations) followed by a grading of other products according to their
performance versus the benchmark.

PEFCRs

The PEF Category Rules will aim to provide detailed technical guidance on how to conduct a
PEF study for various specific product categories. PEFCRs shall provide further specification at
the process and/or product level. It is envisaged that PEFCRs for specific product categories
will typically provide further specification and guidance in addition to the PEF methodology to
assist with:
• defining the goal and scope of the study;
• defining relevant/irrelevant impact categories;
• identifying appropriate system boundaries for the analysis;
• identifying key parameters and life-cycle stages;
• providing guidance on possible data sources (including the geographic level at which data
should be collected);
• completing the Resource Use and Emissions Profile phase; and
• providing further specification on how to solve multi-functionality problems.

PEF Category Rules for Apparel & Footwear

The PEFCRs for Apparel and Footwear are currently under development. Informed by a multi-
stakeholder group that includes public consultations (the latest conducted in March/April
2024), it aims to create a set of rules for 13 categories of garments and footwear. Products
will be categorized according to 16 environmental impact indicators, including climate change,
water, land use, and human health. A score will be assigned to each product and used by
consumers to understand the environmental impacts of products within the same category.

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6. Obligations for
8. Implications for suppliers

EU Product Environmental Footprint Guide ----- Factsheet

companies
in-scope to companies in-scope

As noted above, there are currently no While it is not yet clear when and how the PEF methodology will become required practice, it is likely
direct obligations arising for companies, that suppliers will face increasing requests for data regarding the environmental impact of materials
save where the relevant PEF methodologies used and production processes. Suppliers will likely be requested by brands to disclose information
have been adopted into existing regarding their sourcing practices, and their approaches to water usage, energy usage, waste
legislation, policies, or standards (i.e., management and recycling. The credibility and accuracy of this data will be important, and likely
in the construction industry where the result in the need to conduct specific environmental impact assessments covering the lifecycle of a
EN15804+A2 standard has been adopted product. Where brands do not source materials directly, they will likely require their suppliers to map
which aligns the pre-existing EN15804 the entire upstream value chain (from mills, to ginners, up to farm-level) and conduct environmental
standard with the methodology set out in the due diligence on these business partners. These disclosure and due diligence requirements will
PEF Guide). likely be reflected in expanded supplier codes of conduct and standards, which brands will require
suppliers to demonstrate compliance with.

The development of the PEF methodology for the textile sector will most likely necessitate further
updates of existing industry tools such as the Higg PM, which is currently aligned with the Draft EU

7. Compliance PEF. The data and methodology used by these industry tools to substantiate product environmental
impact claims will naturally need to be reviewed and potentially reassessed once the final PEFCR for
recommendations apparel products is available.

for companies In connection with the increased volume of data requests, brands will likely also request suppliers
to provide indemnities and warranties regarding the quality and accuracy of disclosures. Where
in-scope suppliers are found to have provided poor disclosures, or fail to disclose the requested information,
they shall face liabilities.
Not applicable as explained in Section 5.

168 An Apparel Supplier’s Guide 2.0: Key Sustainability Legislation in the EU, US, and UK
 At a macro-level, as brands conduct increasingly accurate product environmental impact
assessments, they will also explore areas in which they can use more sustainable materials and

EU Product Environmental Footprint Guide ----- Factsheet

eco-friendly production processes. The quantitative data will help brands identify areas where the
design and manufacture of products could be improved to minimize environmental impact. This
may result in changes to product design, substitution of raw materials for recycled or renewable
alternatives, and upgrade of production processes (e.g., dyeing practices) to minimize water
usage, energy usage, and waste discharge.

9. Penalties for 10. Form of 11. Reporting/

non-compliance enforcement disclosure
requirements for
Not applicable. Not applicable.
companies in-scope
Not applicable.

12. Access to remedy

mechanisms and litigation risk
Not applicable.

169 An Apparel Supplier’s Guide 2.0: Key Sustainability Legislation in the EU, US, and UK
13. Opportunity t-shirt, boots, cleats, court, dress shoes/
heel, other athletic shoes, sandals and
14. Useful

EU Product Environmental Footprint Guide ----- Factsheet

to participate and sneakers); resources
engage in legislative • Cut flowers and potted plants;
to support
developments • Flexible packaging (low, medium and
high functionality flexible packaging);
compliance
(if any) • Synthetic turf; and European Commission, Environmental
Footprint methods
In 2019, the Directorate General for the • Marine fish (wild caught marine fish and
Environment and the Directorate General for marine fish from marine open net pen European Environmental Bureau, The
the Internal Market, Industry, Entrepreneurship aquaculture). EU Product Environmental Footprint
and SMEs of the European Commission Methodology
(DG ENV and DG GROW) issued a call for The deadline to apply to join these working
volunteers to assist in the development of new groups was in August 2019, however
PEFCRs following the end of the 2013-2018 further applications to join may be made by
pilot phase. contacting the working group coordinator.
The relevant contact details for the working
As a result, working groups were set up for the group coordinators can be found at https://
following product categories to focus on the ec.europa.eu/environment/eussd/smgp/ef_
development of PEFCRs in these areas: transition.htm. Further details regarding the
composition of working groups can be found
• Apparel (including accessories, dresses, here: https://ec.europa.eu/transparency/
hosiery, underwear, leggings/ tights, expert-groups-register/screen/expert-
baselayer, jacket, jersey, pants, shirts, skirt, groups/consult?lang=en&groupID=470.
socks, sweater and cardigans, swimwear,

170 An Apparel Supplier’s Guide 2.0: Key Sustainability Legislation in the EU, US, and UK
Factsheet

EU Textiles Regulation
Regulation (EU) 1007/2011 on Textile Fiber Names and Related Labelling
and Marking of the Fiber Composition of Textile Products (Textiles
Regulation)

UPDATE

1. Key Updates
No key updates since previous publication. Please see added information in Section 3,
5 and 12.

2. Overview
Regulation (EU) 1007/2011 on Textile Fiber Names and Related Labelling and
Marking of the Fiber Composition of Textile Products (the Textiles Regulation)
regulates fiber names and related labelling requirements for textile products. Textiles
products that are made available on the EU market should be labelled, marked or
accompanied with commercial documents that meet the requirements set out in the
Textiles Regulations.

171 An Apparel Supplier’s Guide 2.0 : Key Sustainability Legislation in the EU, US, and UK
3. Context 4. Status 5. Scope

EU Textiles Regulation ----- Factsheet

The Textiles Regulation was put in place to The Textiles Regulation was adopted by the Companies planning to sell textiles
protect consumer interests and ensure that European Union on October 18, 2011, and products in the EU market (including
businesses that sell textile products across was effective from May 8, 2012. It repealed retailers and manufacturers) must
the EU were consistent in the way that they and replaced the previous laws. ensure that the products are labelled or
labelled or marked the products. marked in accordance with the Textiles
It is currently under review and a general Regulation. In general, textile products
EU-wide legislation around textile labelling public consultation took place until April must carry a label clearly identifying
and marketing was first introduced in the 2024 to allow for amendments that will the composition of all textile fibers used
1970s. Changes have been made over time allow consumers access to all the relevant and indicating any non-textile parts of
to the laws in response to fibre and material information on textiles, resort to compliance animal origin. These labels must be firmly
technological developments to included more costs for companies, and regulatory attached to the product.
requirements for the labelling and marketing consistency.
of textile products. Textile products1 exclusively composed of
textile fibres (e.g., clothing), or products
containing at least 80% by weight of
textile fibres (such as furniture, umbrella,
and sunshade coverings), fall within the
scope of the Textiles Regulations.

1
Article 3(1)(a) defines a textile product as “any raw, semi-worked, worked,
semi- manufactured, manufactured, semi-made-up or made-up product
which is exclusively composed of textile fibres, regardless of the mixing or
assembly process employed.”

172 An Apparel Supplier’s Guide 2.0: Key Sustainability Legislation in the EU, US, and UK
6. Obligations Textile labels2 are mandatory in the EU for textiles intended for sale to the end consumer.
In the case of business-to-business sales, textile labels may be replaced or supplemented by

EU Textiles Regulation ----- Factsheet

for companies accompanying commercial documents.

in-scope The manufacturer of the product must ensure that the label or marking complies with
the Regulation, and that the information provided is accurate. If the manufacturer is not
incorporated in the EU, these obligations shall fall upon the importer. Distributors will also
need to comply with the Textiles Regulation where they place a product on the market under
their name or trademark, attach the label by themselves or modify the content of the label.3

National authorities can check textile products for conformity with the information displayed
on the label at any stage of the marketing chain, such as:
• when requesting customs clearance
• at distributor’s warehouses
• at wholesale or retail outlets.

Textile labels and The Textiles Regulation lays down requirements on the use of textile fibre names and related
fibre names labelling and marking of fibre composition of textile products when they are made available
on the EU market. In a nutshell, textile labels must:
• be durable, easily legible, visible, accessible, and securely attached;
• give an indication of the fibre composition;4 and
• use only the textile fibre names listed in the Textiles Regulation for the description of fibre
2
According to the definition in the Textiles Regulation, ‘labelling’ means
compositions.
affixing the required information to the textile product by way of attaching
a label.
3
Article 15. For the purposes of the Regulation, a distributor means a
manufacturer placing a product on the market under his name or trademark, Where there are any non-textile parts of animal origin in the product (e.g., fur, leather, bone,
attaching the label himself or modifying the content of the label.
4
There are some exceptions for listing the fibre composition, for example,
visible, isolable fibres which are purely decorative and do not exceed 7% of
or down feathers), the label should also state that the product ‘contains non-textile parts of
the weight of the finished product do not have to be considered in the fibre
compositions.
animal origin’.

173 An Apparel Supplier’s Guide 2.0: Key Sustainability Legislation in the EU, US, and UK
 All labels of textiles products sold in one or more EU countries must include translations
in all the official national languages where the textile products are made available to the

EU Textiles Regulation ----- Factsheet

consumer.

Purity Textiles products can only be described as “100%”, “pure”, or “all” if it is composed
exclusively of one fibre type. The manufacturer may choose whether to use those terms or to
refer, for example, to a 100% cotton shirt simply as “cotton”.

For finished textile products made from two or more fibres, the fibre contents should be
itemized and followed by their percentage of the total product (i.e., “cotton 80%, polyester
15%, nylon 5%”). For finished textile products with two or more distinct textile components
(i.e., a jacket with a separate lining), textile labelling should be made separately for each
component.

Types and The types and names of textile fibres that can be used are limited to the list in Annex I of the
names of fibres Textiles Regulation on textile names and related labelling. If the textile product contains a
textile fibre that is not among those listed in the Textiles Regulation, it is possible to apply for
a new fibre type to be added. Currently, there is debate around how to differentiate recycled
fibers from virgin fibers and how to streamline the process for registering new names in light
of emerging technologies.

Cotton The term “cotton” may be used only to describe the fibre obtained from the bolls of the
cotton plant (Gossypium). The term “cotton linen union” may be used only for products
having a pure cotton warp and a pure flax weft, in which the percentage of flax accounts for
not less than 40% of the total weight of the fabric. This name must be accompanied by the
composition specification “pure cotton warp - pure flax weft”.

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 Wool • Has not previously been part of a finished product;

EU Textiles Regulation ----- Factsheet

• Has not been subjected to any spinning and/or felting processes (other than those
required in the manufacture of the product); and
• Has not been damaged by treatment or use.

The terms “virgin wool” or “fleece wool” may be used to describe wool contained in
products that are made from a mixture of texture fibres. In such cases, the wool fibre must:
• Not have been previously incorporated in a finished product;
• Not be damaged by treatment; and
• Account for at least 25% of the total weight of the mixture.

7. Compliance Companies in-scope should ensure that textile products that are made available on the EU market
are labelled in accordance with the requirements of the Textiles Regulation. The composition of
recommendations a textile product should be determined through robust testing and inspection, as the information
provided on the labels must be accurate.
for companies
Note that wash care labels, country of origin, size label, and manufacturer identification are not
in-scope specifically required by the Textiles Regulation. Having said that, it is strongly recommended to
include this information as certain EU countries may require such information, or they might be
covered by other legislations or industry standards.

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8. Potential 9. Penalties for Not applicable.

EU Textiles Regulation ----- Factsheet

implications non-compliance
for suppliers
The Textiles Regulation is focused
on protecting consumers from
10. Form of
The ECHA has no enforcement responsibilities;
misrepresentation in the labelling of
therefore, enforcement of REACH regulations is
textiles products, rather than addressing
the environmental and human rights enforcement a national responsibility. Each EU country must
put in place an official system of controls and
impacts of textile products or production
adopt legislation specifying penalties for non-
processes. As such, it is not highly
compliance with the provisions of REACH.
relevant to the scope of suppliers’
sustainability obligations.

That being said, suppliers to companies

in-scope should expect to receive
requests for specific labeling and 11. Reporting/ Importers or downstream users that place products
falling within certain excluded uses/sectors shall
information relating to the purity and
types of fibres used. These disclosures
disclosure be subject to reporting requirements. They will
be required to send the identity of the polymer(s)
will likely be subject to independent requirements for used, a description of the use of the microplastic,
verification and brands in-scope may the quantity of microplastics used in the previous
seek assurances from suppliers relating companies year, and the quantity of microplastics released
to the accuracy of the information
provided. in-scope to the environment (either estimated or measured
in the previous year) to the ECHA. The proposed
reporting requirement is expected to help ensure
that significant emissions are not occurring from the
excluded uses/sectors.

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 12. Access to remedy

EU Textiles Regulation ----- Factsheet

mechanisms and litigation risk
Not applicable.

13. Opportunity to participate and

engage in legislative developments
New initiatives may be launched by the time of the proposal submission set on for the first
quarter of 2025.

14. Useful resources

to support compliance
YourEurope, Textile Label

EURlex, REGULATION (EU) No 1007/2011 OF THE EUROPEAN PARLIAMENT AND OF

THE COUNCIL of 27 September 2011 on textile fibre names and related labelling and
marking of the fibre composition of textile products and repealing Council Directive 73/44/
EEC and Directives 96/73/EC and 2008/121/EC of the European Parliament and of the
Council

177 An Apparel Supplier’s Guide 2.0: Key Sustainability Legislation in the EU, US, and UK
Factsheet

EU Taxonomy
UPDATE

1. Key Updates
The definition of “environmentally sustainable” activities, as set out by the EU
Taxonomy, is expanding. This includes climate change adaption and water and marine
resources. Moreover, on January 15, 2024, five non-governmental organizations
(NGOs) initiated a legal challenge against the European Commission challenging
certain rules that would allow certain aviation and shipping activities to be classified
as sustainable if they meet certain efficiency criteria, even if they operate on fossil
fuels. The key changes are in Section 5, 6, 7, 11, 13 and 14. Particular attention should
be given to disclosure obligations set out in Section 6.

2. Overview
The Taxonomy has been in force since 2020. It defines what counts as an “environmentally
sustainable economic activity” so that investors can more easily decide which companies
are operating in a climate-friendly way.

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3. Context 4. Status

EU Taxonomy ----- Factsheet

The Taxonomy – alongside the Sustainable The Taxonomy was published in the Official Journal of the European Union on June 22,
Finance Disclosure Regulation (the SFDR) and 2020, and entered into force on July 12, 2020. The first two objectives that are set out
the Low Carbon Benchmarks Regulation – forms below (climate change mitigation and climate change adaptation) have applied since
one of the pillars of the European Commission’s January 1, 2022. The three other objectives (circular economy, pollution prevention and
sustainable finance and climate change agenda. protection of biodiversity and ecosystems) have started applying on January 1, 2023.
The Taxonomy aims to facilitate the EU’s
goal to become carbon neutral by 2050 and
achieve the UNSDGs. By providing a tool that
harmonizes the understanding of sustainable
finance across the EU countries and businesses,
it aids investors to redirect capital into “green” 5. Scope
projects and businesses.

The Taxonomy applies to:

The Taxonomy seeks to achieve these objectives
• Financial companies that offer financial products;1
by creating a standard framework in the EU to
• Companies that are subject to the EU Non-Financial Reporting Directive (the
determine what types of economic activity would
NFRD) or the Corporate Sustainability Reporting Directive (the CSRD); and
be classified as environmentally sustainable. The
standardization of environmental sustainability • EU countries.
classification across the EU aims to improve
clarity and reduce complexity for investors and For the purposes of this factsheet, the financial companies and non-financial
businesses alike. companies that fall within the scope of the Taxonomy will be collectively referred to
as “companies in-scope”.
The European Commission plans to expand the
framework to include social objectives.

1
Including corporate bonds that are made available as environmentally sustainable, alternative investment funds, IBIPs, pension products, pension
schemes, UCITS, PEPPs and a portfolio managed under the MiFID II Directive.

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6. Obligations Companies in-scope must include in their non-financial statement, consolidated non-financial
statement information or sustainability statement how and to what extent their activities are

EU Taxonomy ----- Factsheet

for companies associated with economic activities that qualify as environmentally sustainable (defined below).
In particular, companies must disclose:
in-scope
• The proportion of their turnover derived from products or services associated with economic
activities that qualify as environmentally sustainable; and
• The proportion of their capital expenditures and proportion of operating expenditures related
to assets or processes associated with economic activities that qualify as environmentally
sustainable.

The Taxonomy provides guidance on how to determine whether an activity qualifies as

environmentally sustainable. An economic activity qualifies as environmentally sustainable
if it meets the following four conditions:

1. It contributes substantially to one or more environmental objectives2 or is an enabling

2
While the TSC sets out the criteria for making a substantial contribution, the
activity;3
European Commission outlined that activities would make a substantial contribution
when it has a low impact on the environment, has the potential to replace 2. It does not significantly harm (DNSH)4 any of the environmental objectives;
high impact activities, reduce impact from other activities and makes a positive
environmental contribution. 3. It is carried out in compliance with minimum safeguards5; and
3
Enabling activities are those activities that do not lock-in assets that could
undermine long-term environmental goals or have a positive impact on the basis
4. It complies with technical screening criteria (the TSC) set out by the Commissions (e.g., the
of lifecycle considerations thereby directly assisting another activity to make a
substantial contribution to one or more of the other objectives. Delegated Act supplementing Article 8 of the Regulation).6
4
Significant harm is defined for each environmental objective in the Taxonomy. For
example, a significant harm to the climate change mitigation objective would be
where an activity leads to significant greenhouse gas emissions. When assessing
harm, both the environmental impact of the activity itself and the environmental
impact of the products and services provided by that activity throughout their life
cycle must be taken into account, in particular by considering the production, use
and end of life of those products and services.
5
Minimum safeguards means procedures implemented by an Undertaking that is
carrying out an economic activity to ensure alignment with the OECD Guidelines
for Multinational Enterprises and the UN Guiding Principles on Business and
Human Rights, including the principles and rights set out in the eight fundamental
conventions identified in the Declaration of the International Labour Organization
on Fundamental Principles and Rights at Work and the International Bill of Human
Rights.
6
The TSC are a set of rules and metrics used to evaluate whether an economic
activity can be considered environmentally sustainable under the Taxonomy. For
more information see Section 12 below.

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 The Taxonomy articulates six environmental objectives:

EU Taxonomy ----- Factsheet

Objective 1 Climate change mitigation7

TAn activity that meets the first objective are those that substantially contribute to stabilizing
greenhouse gas emissions. The Taxonomy refers to the long-term temperature goal of the Paris
Agreement, namely keeping the global average temperature below 2°C and limiting global
temperature to 1.5°C above pre-industrial levels, and it describes ways in which an economic
activity can contribute to climate change mitigation.

Objective 2 Climate change adaptation

Climate change adaptation is demonstrated in an economic activity that either substantially

reduces the risk of the adverse impact of the current climate and the expected future climate on
that economic activity or substantially reduces that adverse impact, without increasing the risk of
an adverse impact on people, nature, or assets.

Where there are any non-textile parts of animal origin in the product (e.g., fur, leather,
bone, or down feathers), the label should also state that the product ‘contains non-textile parts of
animal origin’.

Objective 3 Sustainable use and protection of water and marine resources

An economic activity that contributes substantially to achieving the good status of bodies of
water, including bodies of surface water and groundwater or to preventing the deterioration
of bodies of water that already have good status, or the good environmental status of marine
7
The Climate Delegated Act was adopted to, among other topics, establish
technical screening criteria for determining the conditions under which a specific waters or preventing the deterioration of marine waters that are already in good environmental
economic activity qualifies as contributing substantially to climate change mitigation
and adaption was adopted to, among other topics, establish technical screening
criteria for determining the conditions under which a specific economic activity
status.
qualifies as contributing substantially to climate change mitigation and adaption

181 An Apparel Supplier’s Guide 2.0: Key Sustainability Legislation in the EU, US, and UK
 Transition to a circular economy
Objective 4

EU Taxonomy ----- Factsheet

An activity that contributes to the transition to a circular economy where it contributes to
improving efficiency, durability, recyclability and prolonging the use of resources to maximize its
value for as long as possible. Contribution could come through the use and choice of materials,
facilitating repurposing, reducing food waste across the supply chain, and developing “product-
as-a-service” business models and circular value chains.

Objective 5 Pollution prevention and control

Pollution is understood as the introduction of pollutants, which are substances, vibrations, heat,
noise, light or other contaminants present in air, water, or land, which may harm, damage or
impair human health or the environment, into air, water and land. An economic activity would
substantially contribute to meeting this objective by preventing or reducing pollutant emissions,
improving quality of air, water or soil, and minimizing negative impacts on human health and
environment where economic activity takes place, and by cleaning up litter and other pollution.

Objective 6 The protection and restoration of biodiversity and ecosystems

Biodiversity includes diversity within species between species and ecosystems. An economic
activity would substantially contribute to the protection and restoration of biodiversity and
ecosystems where it enhances ecosystem services through the sustainable use of land,
management, agricultural practices, and forest management as well as the conservation of nature
and biodiversity. Ecosystem services are grouped into the categories of provisioning services,
regulating services, supporting services and cultural services.

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7. Compliance 8. Implications for suppliers

EU Taxonomy ----- Factsheet

recommendations to companies in-scope
for companies Suppliers that do not fall directly in scope environmental impact, and the outcomes
in-scope of the reporting obligations under the and impact of such risk management
Taxonomy may still experience knock-on practices using KPIs.
effects, especially where they are in the
As explained in Section 5 above, the Taxonomy
value chain of a company in-scope. The Non-financial companies that can
includes only a few binding obligations on
Taxonomy will likely increase transparency demonstrate substantial contribution to
companies in-scope. Please refer to Section 11
around companies’ contributions to the the circular economy in the manufacture
below for more details.
environment and impact investors’ decision- of textile and apparel products will likely
making. Financial market participants that attract more investment.9 This in turn may
There is a phased-in approach for companies in- are incentivized to increase their share of incentivize these non-financial companies
scope to begin reporting. As of January 2024, Taxonomy-aligned financial products will to change their business practices to better
non-financial entities are required to report seek to invest in companies that qualify as align with the environmental objectives set
on eligibility and alignment for the previous engaging in environmentally sustainable out in the Taxonomy. It is expected that
calendar year. Information on these timelines economic activities under the Taxonomy. companies in the apparel industry will
can be found on the European Commission’s change to focus on more resource-efficient
website.8 Financial companies will expect investee manufacturing processes, durability of
companies, which may include apparel materials, and circularity (re-use and
suppliers, to provide data on KPIs relating repair of products, and minimizing textile
to their environmental objectives. As waste).
such, suppliers should seek to conduct
environmental impact assessments, and
report on their processes to manage their
8
https://ec.europa.eu/sustainable-finance-taxonomy/.
9
By contrast, those that demonstrate poor environmental risk management could
see greater challenges in accessing capital.

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9. Penalties for 10. Form of enforcement

EU Taxonomy ----- Factsheet

non-compliance Not applicable.

While there are no penalties for non-

compliance under the Taxonomy, there are
reputational impacts for non-compliance.
For example, lenders based in the EU may
set preferential rates for those businesses
11. Reporting/disclosure requirements
that integrate ESG risks within their
investment strategies and/or regularly
(if any) for companies in-scope
disclose compliance with ESG-related
regulations and guidance. Companies that Reporting obligations for non-financial companies in-scope
disclose their alignment to the Taxonomy
may be viewed as more attractive amongst As noted in section 6, the Taxonomy requires companies that are subject to the NFRD or the CSRD
investors thereby leading capital to flow to disclose the proportion of their activities that align with the Taxonomy criteria as activities that
into projects, investments and businesses qualify as environmentally sustainable in their non-financial statement, consolidated non-financial
that are environmentally sustainable. statement or sustainability statement. These companies in-scope must report on the following key
performance indicators:
Furthermore, penalties may be established
at the national level by the EU countries. • The proportion of turnover derived from the products or services associated with economic
These may include penalties for misleading activities that qualify as environmentally sustainable; and
disclosures. • The proportions of their capital expenditure and operating expenditure related to assets or
processes associated with Taxonomy activities that qualify as environmentally sustainable. This
obligation is supplemented by the Disclosures Delegated Act,which provides specific metrics for
turnover, capital expenditure and operating expenditures along with a reporting template.

Specific metrics for these key performance indicators and a reporting template can be found in
Annex I to the Disclosures Delegated Act.

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 Reporting obligations for financial companies in-scope

EU Taxonomy ----- Factsheet

Key performance indicators

Financial companies are required to report their KPIs in the form of Green Asset Ratio
(GAR)/Green Investment Ratio (GIR). The main KPIs for financial companies relate to
the proportion of taxonomy-aligned economic activities in their financial activities, such as
lending, investment, and insurance.

Sustainable investments

Where a financial product invests in an economic activity that contributes to an

environmental objective under Article 9 of the SFDR (i.e., a sustainable investment), a
financial market participant must disclose information on the environmental objective to
which the investment underlying the financial product contributes.10 This should include
an explanation how and to what extent the investments relate to economic activities
that are environmentally sustainable under the Taxonomy. Financial market participants
must also specify the proportion of investments in the financial product that are made in
environmentally sustainable economic activities.

The same obligations apply to financial products that fall under Article 8 of the SFDR,
however, disclosure should be accompanied by the following statement: ‘The “do no
significant harm” principle applies only to those investments underlying the financial
product that take into account the EU criteria for environmentally sustainable economic
activities. The investments underlying the remaining portion of this financial product do not
take into account the EU criteria for environmentally sustainable economic activities.’
For all other financial products, information that must be disclosed under the SFDR must
be accompanied by the following statement: ‘The investments underlying this financial
10
Article 5, Taxonomy
product do not take into account the EU criteria for environmentally sustainable economic
activities.”
185 An Apparel Supplier’s Guide 2.0: Key Sustainability Legislation in the EU, US, and UK
 EUR-Lex, Commission Notice on the
12. Access to request, claiming that the Taxonomy did not
contravene environmental law. In response, interpretation of certain legal provisions

EU Taxonomy ----- Factsheet

remedy Greenpeace announced that it would file a
lawsuit to the European Court of Justice in
of the Disclosures Delegated Act under
Article 8 of EU Taxonomy Regulation on
mechanisms and April 2023. the reporting of eligible economic activities
and assets 2022/C 385/01
litigation risk On January 15, 2024, five NGOs initiated European Commission, Draft Commission
a legal challenge against the European Notice on the interpretation and
Not applicable.
Commission challenging certain rules that implementation of certain legal provisions
would allow certain aviation and shipping of the Disclosures Delegated Act under
activities to be classified as sustainable if they Article 8 of EU Taxonomy Regulation on
meet certain efficiency criteria, even if they the reporting of Taxonomy-eligible and
13. Opportunity operate on fossil fuels. The NGOs expect Taxonomy-aligned economic activities and

to participate
the Commission to respond by June 2024. assets (second Commission Notice)
By 27 June 2024, no official response by the
European Commission, Draft Commission
and engage Commission was issued.
Notice on the interpretation and
implementation of certain legal provisions
in legislative of the Disclosures Delegated Act under

developments 14. Useful Article 8 of the EU Taxonomy Regulation

on the reporting of Taxonomy-eligible and

Opportunities for legislative developments

resources to Taxonomy-aligned economic activites and
assets (third Commission Notice)
may be possible via legal actions. For support compliance EU Technical Expert Group on Sustainable
example, in September 2022, environmental
groups, such as Greenpeace, Client Earth, European Commission, EU taxonomy for Finance, Taxonomy: Final report of the
and World Wildlife Fund, requested an sustainable activities Technical Expert Group on Sustainable
internal review in response to the inclusion of Finance
European Commission, EU Taxonomy
natural gas and nuclear energy within the list Navigator EU Technical Expert Group on Sustainable
of green investments under the Taxonomy. The Finance, Taxonomy Report: Technical
European Commission, Amendments to the
European Commission rejected the group’s Annex
Disclosures Delegated Act

186 An Apparel Supplier’s Guide 2.0: Key Sustainability Legislation in the EU, US, and UK
Factsheet

The German Due Diligence

in the Supply Chain Act
NEW

1. Overview
The German Supply Chain Due Diligence Act (the Act) is intended to mitigate human
rights and specified environmental-related risks in company operations and supply
chains that can lead to human rights violations.1 Please see added information in
Section 3, 4, 9 and 12.

1
The German authorities have given no indication at present about how the integration of CSDDD will be with the Act. The German authorities are investing
significant resources in developing guidance and enforcement structures around the Act and there is currently no official guidance around the application of
CSDDD to a landscape that has already embedded the Act.

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2. Context 3. Status

The German Due Diligence in the Supply Chain Act ----- Factsheet - NEW*
In 2016, Germany’s Federal Government based in Germany with more than 500 The Act was passed by the German Parliament
published its National Action Plan (the NAP) employees would incorporate human on June 11, 2021. It was passed by a wide
implementing the UN Guiding Principles on rights due diligence into their processes by margin, with 412 votes in favor, 159 against
Business and Human Rights (the UNGPs). 2020. Subsequent reviews by the Federal and 59 abstentions. The Act took effect on
The NAP set out the Federal Government’s Government indicated this goal was not January 1, 2023, initially applying to larger
expectations concerning corporate human close to being achieved. A study released enterprises with at least 3,000 employees in
rights due diligence. In the NAP, the in July 2020 indicated that between 13% Germany. These enterprises were expected to
Federal Government indicated it expects and 17% of the companies surveyed met have their due diligence and risk management
all enterprises to exercise human rights due the requirements of the NAP. As a result systems fully operational starting in 2023. As
diligence in accordance with the UNGPs of the perceived inadequacy of voluntary of January 1, 2024, the Act’s applicability
commensurate with their size, the sector compliance, momentum for mandatory expands to include smaller enterprises that
in which they operate and their position in human rights due diligence legislation have at least 1,000 employees in Germany.
supply and value chains. began to build. By the start of 2024, all enterprises meeting
these employee thresholds are expected to
At the time the NAP was issued, the Federal On February 12, 2021, the political parties fully comply with the Act. In May 2024, the
Government indicated compliance would that formed the coalition government at EU Corporate Sustainability Due Diligence
be reviewed annually starting in 2018 and the time announced they had reached Directive (the CSDDD) was adopted. Due to
that, in the absence of adequate compliance, a consensus on the key terms of a new the stricter reporting requirements set out by
the Federal Government would consider mandatory human rights due diligence the Directive, the Act will require harmonisation
further action, including legislation. The framework. accordingly.
goal was that at least 50% of all enterprises
In March 2024, the European Council and
the European Parliament reached political
agreement on the EU Corporate Sustainability
Due Diligence Directive (the CSDDD). If the
CSDDD is adopted, the Act will need to be
harmonized with the CSDDD.

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4. Scope A company is subject to the Act if it meets two threshold requirements:

The German Due Diligence in the Supply Chain Act ----- Factsheet - NEW*
The company has its head office, principal place of business, administrative
headquarters, registered office, or branch office in Germany. This includes retail outlets
of foreign companies as long as they are registered in Germany and have more than
1000 employees

Starting in 2024, the Act applies to companies with 1,000 or more employees in
Germany, down from 3,000 in 2023. Employees at subsidiary companies (including
employees posted abroad) are included. Temporary workers also are included if their
assignments last more than six months.

5. Obligations Risk Management System

for companies Companies within the scope of the Act must establish an appropriate and effective risk
management system to identify, minimize, prevent, and address human rights risks and
in-scope environment-related risks, as well as to end violations of human rights-related or environment-
related obligations in their supply chains, particularly when the company has caused or
contributed to these risks or violations. A “supply chain” encompasses all products and
services of a company within the scope of the Act and includes all steps in Germany and
abroad necessary to produce the products and services, from the extraction of raw materials
to delivery to the end customers. This includes actions of a company in its own business
operations and the actions of direct and indirect suppliers.

The risk management system must consider the company’s employees, the employees in its
supply chain and other persons directly affected by its economic activity or the economic
activity of a company in the supply chain. Specific requirements include:

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 • Designating a responsible person (e.g., appointing a human rights officer);

The German Due Diligence in the Supply Chain Act ----- Factsheet - NEW*
• Senior management must seek information on a regular basis (at least once per
year) about the work of the person responsible for monitoring risk management. This
requirement is specific to this regulation’s implementation and involves oversight beyond
standard performance reviews to ensure compliance with the Act’s mandates; and

• Incorporation of preventative measures and remedial measures.

Complaint Procedure Companies within the scope of the Act are required to establish a complaints procedure that is
easily accessible to both internal and external stakeholders. The complaints mechanism must be:

1. Documented and publicly available.

2. Managed by the company or an entity that is independent of the operational processes
being monitored, ensuring that the complaints are handled without bias and that the
confidentiality of the complainant is maintained.
3. Subject to an annual review to ensure that it remains effective in identifying, addressing, and
resolving complaints.

The complaint procedure is intended to enable the reporting of human rights risks and
environment-related risks as well as violations of human rights-related or environment-related
obligations within the company’s own operations and those of its direct suppliers.

Companies may either establish an internal complaints procedure or entrust a third party to
manage the complaints procedure on their behalf. This external entity must also adhere to
the same standards of accessibility, impartiality, and confidentiality as required by the Act.
Regardless of whether the procedure is managed internally or externally, companies must
review these procedures at least annually and on an ad hoc basis as warranted by new
developments or emerging issues within the company’s operations or its supply chain.

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 Definitions Human Rights Risk: A “human rights risk” within the meaning of the Act refers to a

The German Due Diligence in the Supply Chain Act ----- Factsheet - NEW*
situation in which there is a sufficient likelihood, based on factual circumstances, that a
violation of protected human rights may occur. This encompasses risks associated with
violations such as forced labor, child labor, discrimination, and other abuses that undermine
fundamental human rights as recognized in international human rights laws and standards.
The full list of human rights-related obligations is found in Section 2 of the Act, paragraph 2,
numbers 1–12.

Environmental-Related Risk: An “environment-related risk” is defined in the Act as a

condition that, based on factual circumstances, presents a sufficient probability of leading
to significant adverse impacts on the environment. This includes, but is not limited to,
pollution of air, water, and soil; improper handling or disposal of hazardous materials;
and other activities that could lead to the degradation of natural resources. The full list of
environmental-related obligations found in Section 2 of the Act, paragraph 3, numbers 1–8.

Violation of a Human Rights-Related/Environmental-Related Obligation:

An “environment-related risk” is defined in the Act as a condition that, based on factual
circumstances, presents a sufficient probability of leading to significant adverse impacts
on the environment. This includes, but is not limited to, pollution of air, water, and soil;
improper handling or disposal of hazardous materials; and other activities that could lead
to the degradation of natural resources. The full list of environmental-related obligations
found in Section 2 of the Act, paragraph 3, numbers 1–8.

Risk Analysis Companies within scope of the Act must conduct a risk analysis, at least annually, to “identify
human rights and environment-related risks in its own business area and at its direct suppliers.”
A risk analysis should also be carried out on an as-needed basis if the company expects a
significant change or significant expansion of the risk situation in its supply chain (see Section 5 for
a comprehensive definition of “supply chain”). The results of the analysis must be communicated
internally to relevant decision-makers (e.g., the Board or the purchasing department).

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 A “direct supplier” is a business that has a contract with a company within the scope of the Act
to provide goods or services that are essential for making the company’s products or for the

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services it offers.

Preventive Measures If a company within the scope of the Act identifies human rights or environment-related risks in
their own operations or at their direct suppliers, it must take “appropriate preventive measures.”

For the company’s own operations, these measures include:

1. Issuing a policy statement on its human rights strategy, which articulates the company’s
priority human rights and environmental risks and the company’s strategy for addressing
these issues.
2. Developing and implementing procurement strategies and purchasing practices that prevent or
minimize identified risks.
3. Conducting training programs in the relevant business areas.
4. Implementing risk-based control measures to verify compliance with the human rights strategy
contained in the policy statement.

For direct suppliers, the preventive measures include:

1. Considering human rights and environmental expectations 2 when selecting a direct supplier.
2. Including obligations in contracts that require suppliers to adhere to specified human rights
and environmental practices and address them in the supply chain.
3. Providing training to suppliers on how to comply with the standards agreed to in the contracts.
4. Establishing risk-based controls to regularly assess supplier compliance with the human rights
strategy.
These measures should be regularly reviewed at least annually and additionally on an ad hoc
basis to ensure they remain effective and responsive to new challenges or significant changes in
the supply chain.

192 An Apparel Supplier’s Guide 2.0: Key Sustainability Legislation in the EU, US, and UK
 Remedial Action If a violation of human rights or environmental standards has occurred or is imminent within the
company’s own business operations in Germany or at its direct suppliers, the company must take

The German Due Diligence in the Supply Chain Act ----- Factsheet - NEW*
remedial action to prevent, end, or minimize the violation.

The Act specifies:

• In its own business operations in Germany, the company must end the violation.
• For violations at its business operations abroad or at direct suppliers, the company must make
efforts to end the violation or, where this is not immediately possible, minimize it as effectively
as possible.

Specific steps include:

1. Immediate Response: Develop and implement a plan to end or minimize the violation,
including a concrete timeline.
2. Collaboration: Work collaboratively with the direct supplier to develop and implement
this remedial plan. Consider forming alliances with other companies or organizations to
strengthen the remedial efforts. This could involve joining sector initiatives or collaborating
with NGOs.
3. Supplier Suspension: Consider temporarily suspending the direct supplier while remedial
actions are formulated and implemented.
4. Supplier Termination:
• Termination of the supplier contract is required if:
• The violation is deemed very serious,
• The remedial plan fails to address the violation effectively,
• No less severe alternative solutions are available, and
• Efforts to influence the supplier to change practices are unlikely to succeed.
The company must evaluate the effectiveness of these remedial measures at least annually.

193 An Apparel Supplier’s Guide 2.0: Key Sustainability Legislation in the EU, US, and UK
 Indirect Suppliers Indirect suppliers are subject to a lower duty of care compared to direct suppliers. The term
“duty of care” in a business context refers to a company’s legal and ethical responsibility to

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take reasonable steps to ensure they do not cause harm or allow harm to be caused to others,
particularly concerning human rights and environmental impacts.

For indirect suppliers — those who are part of the supply chain but do not have direct contractual
agreements with an in-scope company—the obligations to monitor and enforce compliance with
human rights and environmental standards are activated only when there is actual evidence, or
“substantiated knowledge,” of potential violations. This approach recognizes that companies
typically have less control over indirect suppliers compared to direct suppliers.

Upon obtaining substantiated knowledge of a potential violation, an in-scope company must:

1. Carry out a risk analysis to assess the nature and severity of the issue.

2. Implement appropriate preventive measures tailored to mitigate the identified risks for the
indirect supplier. This might involve working directly with the supplier or engaging with broader
industry efforts to improve standards and practices, which could include supporting sector-
specific or cross-sector initiatives.

3. Take remedial action to prevent, cease, or minimize the violations.

4. Update its policy statement, if necessary, to reflect any new understandings or strategies
developed in response to these risks

Documentation and Records Companies within the scope of the SCDDAAct must continuously document their due diligence
Maintenance efforts. This documentation should include:

Due Diligence Documentation: Companies must document their efforts to meet due diligence
obligations. This includes records on the identification and handling of human rights and
environmental risks or violations. The documentation must be updated continuously and retained
for at least seven years from its creation.
194 An Apparel Supplier’s Guide 2.0: Key Sustainability Legislation in the EU, US, and UK
 Annual Report: An annual report on due diligence obligations must be prepared. This report
should reflect the previous financial year’s activities and must be made publicly available on the

The German Due Diligence in the Supply Chain Act ----- Factsheet - NEW*
company’s website no later than four months after the financial year-end. It should be kept for
seven years and clearly state:

• Whether any human rights or environmental risks or violations have been identified,
and if so, which ones.
• The actions taken to fulfill due diligence obligations, with reference to the measures
described in the Act, especially those related to the company’s policy statement and
complaints received.
• The company’s assessment of the impact and effectiveness of these measures.
• Conclusions drawn from this assessment for future due diligence measures.

No Identified Risks: If no risks or violations are identified, the company should include in its
report an explanation of this, and no further detailed disclosures are required as per the second
paragraph.

Protection of Secrets: When documenting and reporting, companies must also consider the
protection of business and trade secrets.

6. Compliance
Companies subject to the Act should implement and maintain the above programs to ensure
recommendations compliance with the Act’s due diligence obligations. Keep in mind that the Act requires annual

for companies
repetition of certain acts (e.g., annual risk assessment). Ensure that a system is in place to repeat
and grow diligence processes as appropriate.

in-scope
195 An Apparel Supplier’s Guide 2.0: Key Sustainability Legislation in the EU, US, and UK
7. Potential 1. Contractual Compliance: In agreements
with in-scope companies, suppliers must
in-depth evaluations of suppliers’ practices,
more detailed reporting requirements,

The German Due Diligence in the Supply Chain Act ----- Factsheet - NEW*
implications provide assurances that they are upholding
the required human rights and environmental
and potentially, more stringent contractual
obligations that mirror the rigorous standards
for suppliers to standards. This also involves extending these of the Act.
commitments to their own supply chain.
companies in- It is important to note that the Act sets out
2. Training and Education: Suppliers must
scope engage in training programs for their staff
due diligence obligations upon companies
in-scope which cannot be transferred to
to maintain awareness and adherence to
suppliers. The German Federal Office for
The Act outlines clear requirements for the Act’s human rights and environmental
Economic Affairs and Export Control (BAFA),
direct suppliers to companies that are provisions. Such programs should include
the responsible governmental agency for
covered by the law. These direct suppliers initial and ongoing training to keep all levels
enforcing the Act, has publicly stated that
must actively manage and verify that their of the supplier’s organization informed and
they are paying particular attention to the
operations adhere to human rights and compliant with the contract.
prevention of risk and responsibility shifting
environmental standards. Specifically, 3. Verification Mechanisms: Suppliers to suppliers.
direct suppliers are expected to: should establish agreed-upon procedures
with their clients to check that they are Suppliers should ensure that the burden
indeed following the human rights strategies. of compliance is not shifted to them and
These checks should be tailored to identify remind brands that they are not legally liable
risks and confirm ongoing compliance. under the Act but they should be prepared
to respond to the effects arising from the
As noted in Section 5 above, the Act imposes a implementation of such obligations and to
series of requirements on companies within its cooperate in the provision of information that
scope, which, in turn, have a cascading effect might be helpful to support the companies
on suppliers. As these in-scope companies in-scope in achieving compliance. Suppliers
work to align with the Act, suppliers must be should ask for technical support and/or
prepared for a heightenedlevel of scrutiny financial assistance in the event that these
and an increased need for transparency in compliance-related requests present a
their operations. This will likely involve more burden.

196 An Apparel Supplier’s Guide 2.0: Key Sustainability Legislation in the EU, US, and UK
To effectively respond to companies’ requirements of the clients. This framework a proactive measure for suppliers to manage
demands, suppliers are advised to should include policies and procedures for risks and demonstrate their commitment to

The German Due Diligence in the Supply Chain Act ----- Factsheet - NEW*
undertake the following proactive regular risk assessment, preventive measures, due diligence. This mechanism should align
measures: and remedial actions. with the principles outlined in Section 8 of
the Act and ensure the confidentiality and
protection of complainants.
Comprehensive Evaluation of Supply Contractual Compliance: Prepare to meet
Chains: Suppliers should conduct thorough contractual requirements that may be imposed
environmental and human rights due diligence by clients. These contracts might stipulate specific Anticipate Legal Implications: Be
of their own supply chains to identify and compliance standards or require periodic aware that non-compliance could lead to
address any human rights or environmental reporting on your due diligence practices. It is legal challenges not only for their clients but
risks. This includes assessing working important suppliers understand and negotiate also for the suppliers themselves. The Act
conditions, environmental impact, and any these terms to ensure they are feasible and allows NGOs and trade unions to sue on
potential areas of non-compliance (see Section aligned with their operational capabilities. behalf of affected individuals, which could
2 of the Act for the full list of human rights and include actions taken against suppliers if they
environmental obligations). contribute to their client’s non-compliance.
Training and Capacity Building: Develop
training programs for staff to ensure they Suppliers must be ready to adapt these
Documentation and Record-Keeping: understand the Act’s requirements and how measures as client requirements evolve.
Maintain detailed records of due diligence they relate to the supplier’s operations. Training Being proactive in these areas will not only
activities, such as audits, risk assessments, should cover the identification and mitigation of help ensure compliance but also strengthen
and remedial actions. This documentation will risks, as well as procedures for reporting and business relationships by demonstrating a
be crucial for demonstrating compliance to addressing potential issues. commitment to ethical practices. Furthermore,
clients and regulatory bodies. contractual responsibilities, including those
related to human rights and environmental
Establishment of a Complaints standards, can indeed be passed down from
Development of a Robust Compliance Procedure: Suppliers should set up a clear and companies in scope to their suppliers. It is
Framework: Implement a compliance accessible process for raising and addressing therefore important for suppliers to engage
management system tailored to the specific grievances within their operations. This reflects in open dialogue with their clients to clarify
needs of the supplier’s operations and the the obligation of in-scope companies but is also these responsibilities and establish mutually
agreeable compliance processes.

197 An Apparel Supplier’s Guide 2.0: Key Sustainability Legislation in the EU, US, and UK
8. Penalties for 9. Forms of enforcement

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non-compliance The Federal Office for Economic Affairs and Export Control (BAFA) is charged with reviewing
whether a subject company has complied with the Act. Among other things, it can require the
Subject companies that fail to comply subject company to address reporting deficiencies within a reasonable time period. It also is
with the requirements of the Act, either empowered to, with three months’ notice, require a subject company to submit a plan to remedy
intentionally or negligently, may be substantive compliance deficiencies, as well as to provide a subject company with specific
subject to administrative fines. Depending action items to fulfill its obligations. It is important to reiterate that the Act allows NGOs and
upon the nature of the violation, the trade unions to sue on behalf of affected individuals, which could include actions taken against
fine can be up to €8 million. However, suppliers if they contribute to their client’s non-compliance.
if the company has an average annual
turnover over the last three years of more
than €400 million, the fine for failing
to take remedial measures to address 10. Reporting/disclosure requirements
a violation of a human rights-related or
an environment-related obligation in the
(if any) for companies in-scope
subject company’s own business and at
Subject companies are required to annually report on their diligence no later than four months after
its direct suppliers can be up to 2% of
the end of their fiscal year (April 30, for companies with a December 31 fiscal year-end). The report
average annual sales. If a potential fine
is required to discuss:
exceeds €175,000, the subject company
• The human rights and environmental risks identified;
also can be excluded from public
• The actions taken in response to complaints received, detailing how such feedback has informed
procurement for up to three years.
the company’s due diligence measures to address human rights and environmental concerns;
• How the subject company assesses the impact and effectiveness of the measures taken; and
• The conclusions drawn from the assessment for future measures.

BAFA has an online questionnaire accessible through its website that subject companies need to fill
out to satisfy annual reporting under the Act. Completing the online questionnaire submits the report
to BAFA. The report (i.e., the completed questionnaire) is required to be published on the subject
company’s public website no later than four months after each fiscal year end and kept available
for seven years.

198 An Apparel Supplier’s Guide 2.0: Key Sustainability Legislation in the EU, US, and UK
11. Access are applied effectively when a company does
not meet its responsibilities under the Act.
Germany’s key supermarkets, alleging
human rights abuses on banana and

The German Due Diligence in the Supply Chain Act ----- Factsheet - NEW*
to remedy For suppliers, this creates a direct impact. They
pineapple plantations in Latin America.
The complaint argues that ample evidence
mechanisms and could face legal challenges if they are found was put forward to expose low wages,
to be part of the problem, particularly if their
litigation risk
disastrous working conditions, and
actions—or lack of action—lead to a company suppression of trade unions and, while
being sued. Thus, it’s crucial for suppliers to competitors addressed the concerns, Rewe
collaborate with the company to avoid being and Edeka ignored them.
involved in such legal issues.
As noted above, the Act requires in-scope On the Act’s one-year anniversary, BAFA
companies to develop a complaint procedure issued a release summarizing enforcement
through which affected individuals or of the Act to date. BAFA conducted
individuals with knowledge of possible For example on April 24, 2023, the 486 checks on companies during 2023,
violations can report the human rights and/ Bangladeshi union National Garments Workers focusing on the automotive, chemicals,
or environmental risks and violations. Further, Foundation (NGWF), with support from the pharmaceuticals, mechanical engineering,
BAFA has set up an online complaint form, European Center for Constitutional and Human energy, furniture, textiles and the food and
with an option for anonymity, whereby known Rights (ECCHR) and the African Women’s beverage industries. Through its complaints
or suspected violations of the Act can be Development and Communication Center procedure, BAFA received 38 complaints,
reported. (FEMNET), filed a complaint with BAFA against of which 20 were unrelated to the Act’s
Amazon, IKEA and Tom Tailor, arguing that due diligence obligations or were not
Non-governmental organizations (NGOs) factories supplying goods to these retailers do sufficiently substantiated; BAFA contacted
and trade unions have the right to take not have adequate safety measures in place companies in six cases.
legal action in German courts on behalf of to protect factory workers and therefore the
individuals who have suffered harm due companies are not in compliance with their due
to a company’s actions. This means that diligence obligations under the Act.
these organizations can help people use
existing laws to seek justice. However, the On November 3, 2023, international aid
Act itself doesn’t create new reasons to sue a organization Oxfam filed a complaint with
company—it just ensures that the current laws BAFA against Rewe and Edeka, two of

199 An Apparel Supplier’s Guide 2.0: Key Sustainability Legislation in the EU, US, and UK
12. Comparison The Act and the CSDDD aim to reinforce the responsibility of companies regarding the impact of
their activities on human rights and the environment. However, there are key differences between

The German Due Diligence in the Supply Chain Act ----- Factsheet - NEW*
with other Due the two that merit discussion. A detailed comparison between the two reveals the following
distinctions and overlaps in terms of due diligence, risk management, complaints mechanism,
Diligence Laws reporting requirements, legal consequences, and penalties for non-compliance. As noted above,
if the CSDDD is formally adopted, the Act will need to be harmonized with the CSDDD. Note, as
a European Directive, upon enactment, the CSDDD would be required to be transposed into EU
Member State national law. Member States would have two years to transpose the Directive into
national law, or in Germany’s case, amend the Act.

Due Diligence Requirements

Both the Act and the CSDDD require companies to integrate due diligence into their policies
and risk management systems. The Act specifies that risk management must be part of all
relevant business processes, including the establishment of a due diligence policy statement
and preventive measures in the company’s own area and vis-à-vis direct suppliers. The
CSDDD is aligned with the six steps defined by the OECD Due Diligence Guidance for
Responsible Business Conduct, which includes integrating due diligence into policies and
management systems and identifying and assessing adverse impacts.

Risk Management System

The Act mandates an effective risk management system to identify and minimize human
rights and environmental risks, with specific responsibilities assigned within the enterprise,
including the appointment of a human rights officer and regular information-seeking by
senior management. The CSDDD stipulates that due diligence should be integrated into all
relevant policies and risk management systems, with the due diligence policy developed in
consultation with employees and their representatives.

200 An Apparel Supplier’s Guide 2.0: Key Sustainability Legislation in the EU, US, and UK
 Complaint Procedure

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The Act requires companies to establish a transparent and accessible internal complaints
procedure, enabling the reporting of human rights and environmental risks and violations.
The procedure must be reviewed at least annually or when there’s a significant change
in risk situations. The CSDDD also requires companies to establish a fair and accessible
procedure for handling complaints, with measures to prevent retaliation against
complainants.

Reporting Requirements

Companies subject to the Act must document their due diligence efforts and prepare an
annual report, publicly available for at least seven years, detailing identified risks, actions
taken, and assessments of the effectiveness of measures. The CSDDD requires companies to
publish an annual statement on their due diligence efforts, which, from January 2029, must
be submitted to the European Single Access Point (ESAP) for accessibility. Companies would
not have to report under the CSDDD if they are required to report under the Corporate
Sustainability Reporting Directive.

Legal Consequences and Penalties for Non-Compliance

The Act sets out fines for various violations, with a tiered penalty system based on the
severity of the non-compliance and the turnover of the company, going up to 2% of the
average annual turnover for serious offences. Similarly, the CSDDD requires Member
States to lay down rules on penalties for infringements, with considerations for the nature
and severity of the impacts, investments made, and remedial actions taken by the company.
The maximum limit of pecuniary penalties must be not less than 5% of the net worldwide
turnover.

201 An Apparel Supplier’s Guide 2.0: Key Sustainability Legislation in the EU, US, and UK
13. Compliance Specific Considerations for the Act: While
aligning with the CSDDD will ensure a high
Long-Term Compliance Strategy: In
the long term, as the CSDDD becomes

The German Due Diligence in the Supply Chain Act ----- Factsheet - NEW*
Approaches level of compliance, particularly concerning
the substantive human rights and environmental
transposed into national law and
national implementation frameworks are
protections covered by the law, companies must established across the EU, companies will
not overlook the specifics of the Act, particularly need to adapt their compliance strategies
To ensure compliance with both the Act and the its reporting requirements. The Act mandates accordingly. This adaptation should include
CSDDD (as it may be harmonized into national detailed annual reporting and has established regular reviews of compliance frameworks
law and the Act), companies should adopt online platforms for this purpose, which are to ensure they remain effective and
a comprehensive approach to due diligence already operational. These reports require comprehensive, covering all substantive
that encompasses a broad spectrum of human specific data and documentation that may go rights and environmental protections as
rights and environmental protections. Although beyond the general disclosures anticipated they evolve under EU law.
the CSDDD has yet to be formally approved, by the CSDDD. Therefore, companies need to
preparing for its requirements will provide integrate these specific reporting obligations into In conclusion, while the CSDDD offers a
a solid foundation for compliance with the their overall compliance strategy. broader scope of compliance, starting
Act and vice versa, given the overlap in their with the Act provides a practical and
protective scopes. Addressing Broader and Future effective groundwork for German
Obligations: Furthermore, companies should companies or suppliers. By proactively
Strategic Compliance Planning: Firstly, review the substantive rights and environmental aligning their due diligence systems to
companies should align their due diligence protections outlined in both pieces of legislation. meet the CSDDD’s expected standards,
processes with the provisions outlined in While compliance with the Act offers a companies set themselves up for success to
the CSDDD, as this will broadly cover robust framework, the CSDDD introduces comply with current German regulations
the requirements of the Act. This includes additional protections related to hazardous but also prepare to meet future EU-wide
implementing rigorous risk management systems, waste, endangered species, maritime law, obligations.
establishing effective complaints procedures, and ozone protection, which are not fully
and ensuring transparent reporting and covered by the SCDDAAct. Companies should
remediation processes. The CSDDD’s expansive therefore enhance their compliance programs
approach provides a structured framework to incorporate these additional international
that companies can follow to address risks treaties and obligations.
throughout their entire supply chain.

202 An Apparel Supplier’s Guide 2.0: Key Sustainability Legislation in the EU, US, and UK
14. Opportunity to 15. Useful resources to support

The German Due Diligence in the Supply Chain Act ----- Factsheet - NEW*
participate and compliance
engage in legislative BAFA Q&A Guidance
developments (if any) Federal Ministry of Labor and Social Affairs’ overview of diligence obligations and
recommendations

There is no indication that further public BAFA’s Guidance on Conducting a Risk Analysis (Identifying, weighing, and prioritizing”
engagement or participation is requested in link at bottom of page).
relation to the Act. BAFA’s Guidance on the Principle of “Appropriateness” under the Act (in German)
(Handout Adequacy” link at bottom of page)
Unofficial English translation of the Act

203 An Apparel Supplier’s Guide 2.0: Key Sustainability Legislation in the EU, US, and UK
16. Table Treaty/Convention ACT CSDDD

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of Rights ILO Convention No. 29

ILO Convention No. 87

ILO Convention No. 98

ILO Convention No. 100

ILO Convention No. 105

ILO Convention No. 111

ILO Convention No. 138

ILO Convention No. 182

International Covenant on Civil and Political Rights (ICCPR)

International Covenant on Economic, Social and Cultural

Rights (ICESCR)
Convention on the Rights of the Child

Minamata Convention on Mercury

Stockholm Convention on Persistent Organic Pollutants

Basel Convention on Hazardous Wastes

Convention on Biological Diversity

Convention on International Trade in Endangered Species

(CITES)
United Nations Convention on the Law of the Sea (UN-
CLOS)
Vienna Convention for the Protection of the Ozone Layer

204 An Apparel Supplier’s Guide 2.0: Key Sustainability Legislation in the EU, US, and UK
Table of Rights Substantive Human Right ACT CSDDD

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(continued) Right to life

Prohibition of torture and cruel, inhuman, or degrading

treatment
Right to liberty and security

Prohibition of arbitrary interference with privacy, family, or

home
Freedom of thought, conscience, and religion

Right to fair and favorable work conditions

Prohibition of discrimination in employment

Prohibition of child labor

Prohibition of forced labor

Right to freedom of association and collective bargaining

Prohibition of slavery and human trafficking

Right to an adequate standard of living – wage

Right to health – in the context of pollution

Right to education – child rights

Rights related to marriage, family, parents, and children

Right to participate in cultural life and enjoy benefits of

science
Rights to water and sanitation

Right to housing

205 An Apparel Supplier’s Guide 2.0: Key Sustainability Legislation in the EU, US, and UK
Table of Rights Substantive Human Right (continued) ACT CSDDD

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(continued) Right to food

Rights of indigenous peoples

Prohibition of environmental degradation

Right to a healthy environment

Prohibition of unlawful land and resource appropriation

Substantive Environmental Right ACT CSDDD

Prohibition of mercury-added products (Minamata

Convention)
Prohibition of mercury in manufacturing (Minamata
Convention)
Prohibition of improper mercury waste treatment
(Minamata Convention)
Prohibition of certain chemical productions and uses
(Stockholm Convention)
Environmentally sound waste management
(POPs Convention)
Control of hazardous waste export (Basel Convention)

Ban on hazardous waste export to non-Annex VII countries

(Basel Convention)
Import of hazardous wastes from non-parties (Basel
Convention)
Avoiding or minimizing adverse impacts on biological
diversity

206 An Apparel Supplier’s Guide 2.0: Key Sustainability Legislation in the EU, US, and UK
Table of Rights Substantive Environmental Right (continued) ACT CSDDD

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(continued) Prohibiting wildlife trade without CITES permit

Prohibition of importing or exporting certain hazardous

chemicals (Rotterdam Convention)
Prohibition of unlawful production, consumption, import,
export of substances depleting the ozone layer
Obligation to avoid or minimize adverse impacts on natural
heritage (World Heritage Convention)
Obligation to avoid or minimize adverse impacts on
wetlands (Ramsar Convention)
Obligation to prevent pollution from ships (MARPOL
73/78)
Obligation to prevent marine pollution by dumping
(UNCLOS) X

207 An Apparel Supplier’s Guide 2.0: Key Sustainability Legislation in the EU, US, and UK
Factsheet

Lessons for fashion: How

the agricultural sector
is tackling commercial
compliance through the EU
Directive on unfair trading
practices
NEW

1. Overview
It is notable how few of the pieces of legislation covered in this guide address
purchasing practices and inequity across the fashion value chain. Unlike the other
factsheets in this guide, this section aims to give suppliers insight into how the
agricultural sector, characterised by similarly asymmetrical commercial relationships, is
working to improve these issues through the EU Directive on unfair trading practices.

208 An Apparel Supplier’s Guide 2.0 : Key Sustainability Legislation in the EU, US, and UK
1. Context The food supply chain is highly vulnerable to unfair trading practices, as there are

Lessons for Fashion - Factsheet - NEW*

significant imbalances between a large number of farmers and smaller suppliers of partly
perishable and non-perishable products and a few large processors, distributors and food
The EU Directive 2019/633 on unfair trading
retailers. Farmers and small suppliers often do not have the means to defend themselves
practices in business-to-business relationships
against unfair trading practices such as late payment, leading them to reluctantly accept
in the agricultural and food supply chain
unfair terms in order to maintain business relationships, which causes significant problems
(UTP Directive) recognises that unfair trading
in the availability of working capital and cash flow. Unfair trading practices not only
practices are widespread in the EU and can
jeopardise the livelihoods of farmers and small suppliers who are particularly exposed to
have harmful effects, particularly for small
biological and meteorological risks, but also the supply of food for the EU population.
and medium-sized enterprises (SME) in the
Recognising the strategic nature of the agricultural sector, the importance of small farmers
agricultural and food supply chain. The main
and the stark imbalance of power in the supply chain, the EU adopted the UTP Directive
objectives of the UTP Directive are:
to improve the protection of farmers and smaller suppliers by banning certain unfair
practices. As part of a wider governance strategy (Farm to Fork), this Directive also aims
• to protect farmers, farmers organisations to improve the position of farmers in the agri-food supply chain.
and other weaker suppliers of agricultural
and food products against stronger buyers; The EU Directive 2019/633 was adopted on 17 April 2019. Member states were
mandated to incorporate the Directive into their national legislation by 2021. In Germany,
• to prohibit a range of unfair trading
the UTP Directive has been transposed into the Agrarorganisationen-und Lieferketten-
practices that are considered the most
Gesetz (Agricultural Organisations and Supply Chains Act,”AgrarOLkG”), which entered
harmful;
into force on 9 June 2021.
• the enforcement of the unfair trading
practices by authorities in each EU
Member State and coordination among the
authorities; and

• to introduce a uniform minimum standard of

protection across the EU.

209 An Apparel Supplier’s Guide 2.0: Key Sustainability Legislation in the EU, US, and UK
2. Scope and the

Lessons for Fashion - Factsheet - NEW*

relevance of size Who can be a supplier? Who can be a buyer?
in the agri-food • Farmers, including their organisations • Producer organisations, incl. cooperatives
supply chain (e.g. cooperatives) buying from their farmer members

• Processors (food industry) • Processors

The Directive aims to protect the entire • Distributors, e.g. wholesalers • Distributors, e.g. wholesalers
agri-food supply chain, in particular
• Producer organisations, incl. • A retailer or retail association
farmers and weaker suppliers who
cooperatives
sell agricultural and food products to • Public authorities
economically more powerful buyers,
• Also, buyers outside the EU
including groups of buyers and public
sector organisations. The Directive does
not apply to the final consumer. Note
The Directive applies if at least either the supplier or the buyer is based in the EU.
Source: European Commission: The Directive on unfair trading practices in the agriculture and food supply chain

The Directive takes a stepwise approach to protecting weaker suppliers from economically stronger buyers based on their turnover. For example, farmers
with a turnover of less than €2 million would be protected from buyers with a turnover of more than €2 million. Farmers with a turnover of between €2
million and €10 million would be protected from buyers with a turnover of €10 million or more. This tiered system ensures that suppliers with a turnover of
up to €350 million are protected from stronger buyers. A supplier who sells to public sector organisations is protected against unfair commercial practices
irrespective of the actual turnover.

210 An Apparel Supplier’s Guide 2.0: Key Sustainability Legislation in the EU, US, and UK
3. Obligations: Black practices Grey practices

Lessons for Fashion - Factsheet - NEW*

how unfair
1. Payments later than 30 days for perishable 1. Return of unsold products
purchasing agricultural and food products
2. Payment of the supplier for stocking, display

practices are 2. Payment later than 60 days for other agri-

food products
and listing

defined and
3. Payment of the supplier for promotion
3. Short-notice cancellations of perishable agri-
4. Payment of the supplier for marketing
prohibited
food products
5. Payment of the supplier for advertising
4. Unilateral contract changes by the buyer
6. Payment of the supplier for staff of the buyer,
5. Payments not related to a specific
The Directive targets 16 unfair trading fitting out premises
transaction
practices that are deemed most
6. Risk of loss and deterioration transferred to
harmful. The Directive classifies unfair the supplier
trading practices into “black” and
“grey” categories. Black practices are 7. Refusal of a written confirmation of a supply
agreement by the buyer, despite request of
unconditionally prohibited, while grey
the supplier
ones are permissible if both supplier and
buyer consent in a clear and unambiguous 8. Misuse of trade secrets by the buyer
manner beforehand. This requirement for 9. Commercial retaliation by the buyer
clear and unambiguous agreement aims
to ensure transparency and predictability, 10. Transferring the costs of examining customer
complaints to the supplier
clarifying the rights and obligations of
both parties.

211 An ApparelAn
Supplier’s Guide 2.0:
Apparel Supplier’s Key
Guide Sustainability
2.0: Legislation
Key Sustainability in the
Legislation EU,
in the US,
EU, US,and
and UK
UK
4. Enforcement Weaker suppliers often refrain from pursuing their rights due to concerns about potential
commercial reprisals and the financial risks associated with litigation. The Directive underscores

Lessons for Fashion - Factsheet - NEW*

and reporting several measures aimed at addressing these barriers:

Suppliers have the option to submit a complaint to the national enforcement authority.
EU Member States have designated an
authority to enforce the Directive. The Suppliers can choose whether to file a complaint with the authority in their own
enforcement authorities are authorised, EU Member State or with the authority in the EU Member State where the buyer is
for example, to act upon a complaint, located.
conduct investigations, terminate an
The complainant has the right to request anonymity and specify which information is
infringement, or impose fines and other
to be treated confidentially. If confidential information needs to be disclosed in order
sanctions.
to resolve the complaint, the complainant is informed by the corresponding authority
and can decide on how to proceed. The complainant and the buyer may also agree to
There are no reporting requirements for in-
make use of alternative dispute resolution procedures (e.g. ombudsperson).
scope companies. Enforcement authorities
publish an annual report including the Suppliers may seek the assistance of a producer organisation (e.g. a cooperative) or
number of complaints received and the other relevant organisations to represent them and file complaints on their behalf.
number of investigations opened or closed
during the previous year. For each closed Authorities are authorised to initiate investigations on their own initiative, e.g. on the
investigation, the report shall include a basis of anonymous information.
summary description of the matter, the
outcome of the investigation and, where
The German enforcement authority, the Federal Agency of Agriculture and Food (Bundesanstalt
appropriate, the decision taken, subject to
für Landwirtschaft und Ernährung, BLE), conducted six proceedings in 2022, only two of which
confidentiality requirements.
were based on complaints. Companies were supported in the application of the law in over
50 cases. According to a survey by the EU Directorate-General for Agriculture and Rural
Development, fear of retaliation and low expectations of enforcement authorities are the main
reasons why unfair trading practices are still not reported on a large scale (EU Directorate-
General for Agriculture and Rural Development 2024).

212 An Apparel Supplier’s Guide 2.0: Key Sustainability Legislation in the EU, US, and UK
5. Conclusion The commercial practices and dynamics between buyers and suppliers in the garment

Lessons for Fashion - Factsheet - NEW*

industry are similar to those in the agri-food supply chain, even if the conditions are
different. Late payment and last-minute order changes or cancellations can have serious
consequences for suppliers and rightsholders. Fashion suppliers and their respective
representative bodies must ensure that policy makers are aware of the impact of these
harmful practices on the supply chain and incorporate responsible purchasing practices
into policies relevant to the fashion industry.

6. Sources https://eur-lex.europa.eu/legal-content/EN/TXT/?uri=CELEX:32019L0633
https://agriculture.ec.europa.eu/common-agricultural-policy/agri-food-supply-chain/unfair-
trading-practices_en
https://agriculture.ec.europa.eu/document/download/292c98d9-5df5-4c9e-b92f-
090b5b171afd_en?filename=brochure-utp-directive_en.pdf
https://agriculture.ec.europa.eu/news/commission-delivers-report-implementation-eu-rules-
against-unfair-trading-practices-food-supply-2024-04-23_en
https://www.ble.de/SharedDocs/Pressemitteilungen/EN/2023/230317_UTP_en.html

213 An Apparel Supplier’s Guide 2.0: Key Sustainability Legislation in the EU, US, and UK