The Lectra Observatory—dedicated to innovation and transformation within the fashion industry, among other things—has identified the key regulations and proposals governing traceability and transparency within the sector.
“Regulations are crucial, as they encourage the implementation of more sustainable practices and create common standards,” Maria Modroño, chief marketing and communications officer at Lectra, said. “By mapping the most advanced transformations, whether they are already in force or in the process of being implemented, the Lectra Observatory has fulfilled its objective of analyzing key transformations and helping Lectra customers and our ecosystem partners successfully adapt to them.”
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In its latest white paper, “Mapping of global traceability and transparency regulations for sustainable fashion,” Lectra outlines 22 current and future regulations in North America, Europe and Australia. The paper is structured into three major categories: due diligence, information duties and market entry barriers.
Due Diligence
In 2018, the Organization for Economic Cooperation and Development (OECD) defined “due diligence” as a tool for the Responsible Business Conduct, defining it as “the process through which enterprises can identify, prevent, mitigate and account for how they address their actual and potential adverse impacts.”
In recent years, Lectra said, a more specific tool has emerged: Corporate Sustainability Due Diligence. This materialized to help companies avoid “adverse impacts” on the environment, workers, human rights, bribery, consumers and corporate governance due to their operations. The new “risk screening” is more demanding, considering its scope expands beyond companies’ own organizations and subsidiaries, reaching into their supply chains.
“With this new approach, companies are entrusted with a whole new set of responsibilities, reaching beyond their own organizations and businesses, into their entire value chain and other potential business relationships,” the paper said.
While the United Nations Guiding Principles on Business and Human Rights (UNGPs) and the OECD’s Due Diligence Guidance for Responsible Business Conduct promote due diligence, they haven’t been binding. However, they have served as “catalysts” for adopting regulations.
“For fashion companies, this lawmaking wave means more time and expertise spent on tracing risk factors throughout their manufacturing and sales operations—foreseeing critical yet challenging homework in an especially opaque and widespread value chain,” Lectra said. “In other words, fashion players throughout the planet will need to equip themselves with traceability solutions—the cornerstone to sustainable due diligence and information reporting.”
Information Duties
Considering the rise of greenwashing—a 2020 European Commission study found that 53.3 percent of examined environmental claims in the EU were vague, misleading or unfounded—there’s a growing need to provide transparent information to the consumer.
The EU’s Proposal for a Directive that Empowers Consumers for the Green Transition (ECGT) regulation acts against misleading claims and corporate greenwashing, per the paper. Adding to this regulation is the Green Claims Directive (GCD), which will “establish on what grounds brands will be able to produce and communicate green claims.” Though these two directives are similar, they have different objectives—the former aims to protect consumers against greenwashing, while the latter wants to impose a framework for companies to substantiate their claims by complying with a certain number of requirements.
Market Entry Barriers
But the best way to avoid potential damages, Lectra said, is to prevent bad players from the jump, perhaps through barriers to entry.
“In fashion, regulations on social and environmental conditions for product entry are therefore starting to increase,” Lectra said. “This greatly impacts new fashion brands or existing brands who wish to address a new market and need to think and/or act ahead.”
The EU’s 2007 REACH regulation, for example, was one of the first directives with “high implications” for the textile industry. More recently, laws have become even more specific, such as the Uyghur Forced Labor Prevention Act (UFLPA), a United States federal law in force since June 2022.
“This regulatory pressure will undoubtedly change textile’s playing field, creating new liabilities, distributing new constraints and roles. It presents both challenges and opportunities for fashion companies,” Lectra said. “They will have to keep up with the evolving regulations, find the means to stay compliant and at the forefront of sustainability. But the expected outcome—a culture of trust, transparency and accountability across the value chain, with safe, dignified working conditions, circular economies and a healthier planet—is more than an opportunity, it’s our future.”
