The Realistic Road Ahead for the Greening of the Apparel Industry conference highlighted the magnitude of the Environmental and Social Governance (ESG) legislation that is on the horizon for the global fashion industry.
Euratex's director general Dirk Vantyghem explained that in 2022 the European Commission launched it’s ambitious plan for an EU sustainable strategy. The aim was to push the apparel sector into becoming more sustainable and transparent and at the same time try to maintain a resilient and industrial textiles strategy in Europe.
Ever since the EU has been busy translating that provision into legislation based on big ideas such as transparency and higher quality and circularity.
Crucially, Vantyghem added in the last few months some of these legislations have become a reality.
He noted that one important piece of legislation is Eco Design, which will dictate how to produce a garment from a quality perspective and how that information is shared across the supply chain.
"It’s a very important legislation that has been greenlighted and we’re in the final stage of adopting it. We’ve also agreed a waste framework directive on how we manage our textile waste.
"The final agreement has been made for the framework on waste legislation and we’re entering the operational phase, which is leading to Extended Producer Responsibility (EPR)," Vantyghem said.
Plus, the EU has recently adopted the due diligence legislation, which is about increasing responsibility across the whole supply chain.
Vantyghem also revealed Euratex is still negotiating textile labelling regulation that will decide what will be on labels in future and clarified this involves talking about fibre composition and how to decide the origin.
Creating fashion ESG legislation that is achievable and enforceable
Vantyghem is keen for the legislation to sense for the textile industry and said he is fighting for good quality legislation that will be cohesive and make sense from a technical perspective as well as being achievable and enforceable.
He stated: "There's no point in having a framework that doesn’t work."
Vantyghem also pointed out that Euratex wants to ensure EU legislation has a global dimension.
"There's also no point having it just for the EU – everyone involved in textile and garment manufacturing should be involved in the new legislation. We’re trying to level the playing field worldwide. It’s a difficult process."
Critically, Vantyghem admitted that the apparel and textile market is "not ready" to absorb, pay and buy what's needed to create sustainable products. This leaves the manufacturer in the middle squeezed between an EU legislator that is saying as of tomorrow you have to do this and consumers and brands that are not ready, able or willing to buy and promote sustainable products.
He clarified: "It’s an equation that’s not functioning at the moment. We want to try and get an equilibrium between manufacturers and the demand side."
Euratex's role also includes helping everyone adapt to the change. Vantyghem shared that earlier this month (May), the Horizon Europe partnership programme was announced that is dedicated to a research innovation fund for the industry.
"We need to make sure our companies can adapt and absorb and be ready for a new sustainable environment."
The programme, which has a EUR60bn budget should give some help to SMES on technology and green skills. Plus, Vantyghem explained that in the last few months Euratex has been working with education providers to make sure future workers can cope with the new legislation and the opportunities offered by digitalisation.
The good news from our perspective, he says is that the EU understands that its next priority will be to come up with a a plan, vision and programme to strengthen industrial competitiveness of the European economy while rebalancing the green deal with resilience in the industry.
Türkiye suppliers push for 'responsible' legislation
Istanbul Textile and Apparel Exporter Association's (IHKIB) board member and president of the sustainability committee Selçuk Mehmet Kaya believes being sustainable is about surviving today and existing in the future.
For this reason he urged the sector to change its sustainability and ESG terminology to operating within a responsible supply chain.
Kaya explained: "Of course we’re ready to respond to expectations and we're responsible but if we talk about a cyclical economy and supply chain we also need to be looking at the cost side."
In a similar vein to Euratex's Vantyghem, Kaya pointed out that expectations regarding sustainability usually falls on manufacturers. To achieve the right results he asserted that it must all start with sustainable sourcing and sustainable materials and we need to look at whether these are reusable and how we’re going to certify them.
He shared that in Türkiye there’s many incentives given to renewable energy which is why major companies have invested in it, but he noted logistics in terms of the carbon emissions created from transporting goods is very important.
"One thing we must discuss is the new short supply because we know trade is based on price globally and bringing down cost and distance are two major goals of producers so sourcing from near markets is very critical."
Kaya added: "If we need to reduce carbon emissions then countries such as Türkiye which is in middle of target markets is very important. We have a local advantage not only for Europe but also the US."
He also highlighted that it's critical for suppliers to be taken seriously as true partners to both brands and retailers. Specifically, he pointed out that large scale companies can tackle their logistics problems by working with supplier countries and suppliers that have know-now in terms of in-season stocking and have the flexibility to turn around orders in the most efficient way.
Plus, Kaya joined Vantyghem in arguing the point that consumers attitudes and behaviours have not yet shifted towards solely purchasing sustainable products.
Yet, being socially and sustainably compliant and meeting legislative expectations comes with certain costs, so the key question remains of how are we going to share the costs?
At the very least, Kaya said a compliant supplier should have an advantage compared to a non-compliant one, however there's still no guarantee that if you have the highest score in terms of compliance that you’ll get the highest order.
Fashion brands' ESG reports versus ESG legislation
The SVP of social compliance and audit programme WRAP, Mark Jaeger operates globally but works from the US and highlighted that despite the US being behind on ESG legislation, leading US fashion brands and retailers are taking matters into their own hands when it comes to sustainability.
He explained the US has specific enforceable laws such as against forced labour as opposed to big pieces of ESG legislation, but added: "We should not be misunderstanding the situation - US fashion buyers are moving forward with ESG expectations for their supply chain."
Jaeger clarified that US-based fashion brands and retailers are taking inspiration from the United Nation's 17 sustainable development goals that were put in place in 2015 and are on a path to 2030. He also explained that WRAP's principles can overlaid with the UN's sustainable development goals.
During his session at the conference he invited the audience to look at US retailer Walmart's own ESG report to show that it might not have to follow ESG legislation as yet, but it has created its own set of goals for ESG and expects its suppliers to sit in line with it.
At the other end of the spectrum, Jaeger also shared an ESG report created by a Sri Lanka producer and supplier and stated: "This an affirmative example of how a producer can not just anticipate but get ahead of the requirements."
This Sri Lankan producer is looking at the legislation that is coming from Europe such as the Corporate Sustainability Due Diligence Directive, is taking insight from it and getting in front of that message.
Jaeger's advice for global fashion suppliers is to be prepared: "The world is moving towards mandated human and and environmental protections in global value chains. Most buyers we work with in the US have requirements already for human rights and many buyers have formal ESG programmes like Walmart."
"The winning suppliers and regions will anticipate requirements and work to meet buyer expectations before receiving orders. Be prepared, get ready and we wish you much success," he concluded.
