What's Happening?
The European Parliament has voted to significantly relax two major sustainability regulations, the Corporate Sustainability Due Diligence Directive (CSDDD) and the Corporate Sustainability Reporting Directive (CSRD). These regulations were initially designed
to hold companies accountable for environmental and human rights issues within their supply chains. The vote, which passed with 382 in favor and 249 against, results in a scaled-back version of the rules, exempting many companies from compliance and removing key elements. This decision marks a shift towards a more business-friendly approach, reducing the burden on companies to manage and report on environmental and labor risks. The changes reflect a political shift in Europe, influenced by trade negotiations with the U.S. and pressure from business-friendly politicians.
Why It's Important?
The relaxation of these regulations is significant for the fashion industry, which is heavily reliant on global sourcing and has complex supply chains. The original regulations were seen as a major step forward by environmental and labor advocates, as they would have shifted industry action from voluntary initiatives to mandatory compliance. However, the new position means fewer brands will be covered, and the requirements are less stringent. This could potentially allow fashion companies to continue operating without fully addressing environmental and labor issues in their supply chains. While some brands have called for the preservation of the original regulatory ambitions, the current changes suggest a reduced pressure on the industry to improve its practices.
What's Next?
The European Parliament will need to negotiate a final text with EU governments, aiming to complete this process by the end of the year. Despite the relaxation of these specific regulations, other existing regulations will still require the fashion industry to address supply chain issues. The outcome of these negotiations will determine the final scope and impact of the regulations on the industry. Stakeholders, including brands and environmental groups, will likely continue to advocate for stronger accountability measures.
