Regulation and Roadblocks Cramping Apparel’s Style

February 13, 2024
By Melanie Stern

The fashion industry is an iconic representation of “what’s next” in personal brand, business attire and uniform ware.

Its power to shape the world’s style has come under scrutiny over incidences of sourcing misrepresentations and carbon-intense practices, as well as associations of worker exploitation, slave trade and human trafficking.

Regulations meant to thread environmental, social and governance (ESG) standards through apparel’s supply chain operations present the best of intentions and discrepancies. As the 2024 rollout of predetermined compliance measures continues, manufacturers struggle with finding the right fit.

The “Wearwithal”

Geopolitics is fraying apparel industry executives’ optimism in sector growth, noted as a primary concern by 62 percent of survey participants in The State of Fashion 2024 report, published annually by the Business of Fashion (BoF) and McKinsey & Company. Economic factors were also cited as leading indicators for trepidation, as financial and inflationary instability, respectively, prompted 55 percent and 51 percent of respondents affirming those fears, though the numbers offered a more than 40 percent improvement year-over-year.

While some moved the needle anticipating better performance in 2024, survey indicators projected a stalled or contracting market, increasing levels of uncertainty amid compliance mandates coming to a head.

Reuters reported roadblocks to the European Union’s (EU) corporate sustainability due diligence directive (CSDDD), as Germany and Italy indicated a reversal in support of the measure last week. The law would require large companies to report on their environmental footprints and labor practices across supply chains, revealing subversive practices.

To pass, the European Parliament’s final vote requires 15 EU countries, representing 65 percent of its population, in favor.

Making New Patterns

Sustainable practices in the textile-centric industries began with early recommendations from the EU, enacting the European Circular Economy Stakeholder Platform in 2018. The intent was to generate collaboration among public authorities, business leaders, social partners and others toward building cohesive strategies supporting the environment.

According to the European Commission, there is dire need for change in the textile sector: On average, EU textile consumption generates the fourth highest environmental impact on climate change. The textile industry requires immense water and land use — the third highest — and stands in fifth position for primary raw materials applications and greenhouse gas emissions (GHG).

With each passing year and the escalation of evidence from carbon-intense industries inducing extreme climate change events, more regulation from the EU and other geographic regions was set with corresponding benchmarks in place to mitigate risks.

The summer of 2023 saw the EU Strategy for Sustainable and Circular Textiles take hold, executing the tenets of the European Circular Economy Stakeholder Action Plan, the European Industrial Strategy and the European Green Deal. Collectively, the programs embodied a “how-to” for multinational supply chains to enable production and use of textiles in a socially responsible and sustainable manner. But progress only goes as far as the geographic boundaries of adoption allow.

Fashion with Altruistic Function

Goals set forth by the European Commission include textile product durability, repairability and recyclability, ensuring the use of chemical-free substances and recycled fibers, citing that with higher quality fabric product longevity is achieved, reducing the consumer clothing “purchase-to-disposal” life cycle.

However, the sustainability measures go beyond procurement choices, production processes and merchandise finale. Commission members included objectives in the repair and reuse of existing apparel and accessory items, regenerating the old to create the new, reducing incineration, waste and landfill footprints.

Engaging greater transparency across the value chain is part of textile industry’s operational redesign, with accurate and verifiable labeling requirements, and the induction of a digital product passport (DPP) that stores sustainability data from product design to end-of-life.

Suppliers and manufacturers will be more mindful of demand forecasting and supply balance avoiding overproduction and overconsumption. Other areas to be addressed involve the use of synthetic textiles and subsequent microplastics emissions and promoting consumer awareness and advocacy for the commission’s initiatives, worldwide.

Embracing the Trend

This year’s New York Fashion Week, which ends on Wednesday, carries all the ingenuity and catwalk surprises that its reputation is built upon. The show features luxury eyewear designer Corey Woods and custom haute-couture champion Ashleigh Renee, though their brand stories promoting their event presence were remiss in mentioning associated sustainability practices.

In line for 2024 are new regulations for the U.S. fashion industry, set to impact strategic relationships in procurement, manufacturing, shipping and logistics. The New York Fashion Sustainability and Social Accountability Act, introduced in January 2022 and revised in February 2023, will affect apparel, footwear and handbag brands exceeding US$100 million in annual revenue.

Methodology behind the act’s construct begins at procurement, where early adoption of socially responsible practices brings risk visibility to the forefront. Throughout the value chain, it ensures traceability for the most at risk or highest volume products and the necessary reporting revealing materials’ origin, energy use and various logistics employed and GHG metrics throughout the product cycle.

Companies found noncompliant could face penalties upwards of two percent of their New York state annual revenue, to be contributed to a fund supporting environmental or worker protection projects.

Advocacy for apparel workers’ rights is found in The Fashioning Accountability and Building Real Institutional Change (FABRIC) Act, introduced in May 2022 by Sen. Kirsten Gillibrand (D-NY), amending the 1938 Fair Labor Standards Act.

Ferrara Manufacturing, Hickey Freeman, Public Thread, American Federation of Labor and Congress of Industrial Organizations (AFL-CIO), United Auto Workers (UAW) and over 300 other companies and agencies support its provisions toward improving worker wages, manufacturing and brand standards.

The bill includes a multimillion-dollar grant program supporting manufacturers’ equipment costs, safety improvements, training and workforce development, and provides offshore companies a pathway to operate on U.S. soil through a 30 percent reshoring tax credit.

A Cut Above

The global apparel industry is responsible for more than $1.5 trillion — a behemoth of trade and opportunity contingent upon consumer acceptance of goods. The State of Fashion 2024 report indicated slowed consumer confidence, as discretionary spending and household savings dwindle.

Nonetheless, consumer demand for new footwear, apparel, furniture and other textile-based products appears insatiable and representative of a disposable society. Retailers and last-mile delivery companies enabled an unsustainable model for consumer consumption: cheaper and faster may not be available with increased ESG regulations.

Through a convergence of ESG practices and consumer priorities need to be part of a higher consciousness, fashion can play an integral role. Germany’s global data and business intelligence solutions provider Statista found in a 2022 study that 60 percent of respondents indicated sustainability as a slightly-to-extremely important factor in clothing purchases.

Garment suppliers and manufacturers can develop a head-to-toe approach in procurement, design, production, distribution and sales by incorporating a “you are what you wear” mentality, promoting the concept to their customers. Progress to that end and success are being made by companies involved in such practices, with workers, customers and the planet as beneficiaries.

(Photo credit: Getty Images/Filadendron)

About the Author

Melanie Stern

About the Author

Melanie Stern is Manager, Communications at Institute for Supply Management®.