The Global Fashion Summit, which is the largest fashion sustainability event in the world, took place in Copenhagen this week. In attendance were leading conglomerates including LVMH and PVH, innovative startups like Hilos and Circulose, charities like the Or Foundation, and regulators from the E.U.
The focus this year was preparing for the fashion industry’s regulated future. And there were two key takeaways for attendance: Brands should be gathering reliable data across their supply chain. In addition, they should get set to restructure their business model in line with new E.U. regulations while also allocating resources to meet the new requirements.
Data collection importance
Currently, many brands are missing crucial information about their supply chain, products and waste disposal that will be needed when regulations are enacted. Moving forward, brands will be mandated to track their items across the supply chain, including their composition and point of origin and the stakeholders involved at every step.
“Brands normally know what [products are] on the market,” said Sophie Hersan, co-founder of resale platform Vestiaire Collective. “But they don’t know what has been sold and what is the deadstock, the overstock and the waste. There is missing data in the supply chain, and it’s important to rigorously gather that data over a longer period of time, if necessary, to find out what areas of data are missing.”
“We want to be collecting more and more data about the supply chain,” said James Schaffer, chief strategy officer at data intelligence company Worldly, which was rebranded from Higg Inc. in May after a greenwashing scandal related to one of the Higg Index tools it hosts on its platform.
Last month, Worldly announced a partnership with certification services company SGS, formerly Société Générale de Surveillance, that is aimed at bolstering its credibility around sustainability verification. “But we also want our customers and users to start doing different things with the data, like taking action to reduce carbon in the tier two stage where the carbon impact is highest in the supply chain,” said Schaffer.
Confusion around regulation
Most fashion companies will be, or already are, affected by the E.U.’s pending guidelines around greenwashing. The E.U. has also mandated digital product passports, enforced rules on circular production and extended responsibilities for manufacturers.
Although there was a unanimous call for sustainability regulation at the Summit, there was little clarity on when the regulations would be implemented, how they would affect brands of various sizes and what brands should do if regulations are contradictory. This came down to a number of factors.
Cult Scandi brand Ganni has extensively explored which of the regulations will affect the brand. “At the moment, we’re monitoring around 40 different legislations that are somewhat relevant to us, with 16 of them identified as legislation that will directly impact our business,” said Nicolaj Reffstrup, co-founder of the brand. “These include game-changers like the digital product passport and extended producer responsibility.”
Both of these measures place more responsibility on brands to understand, trace and bear responsibility for their supply chains.
The digital product passport requirement will be implemented by the E.U. in the coming years through labels and technology. The intention is to trace where consumer goods come from and impose taxation on those coming from unsustainable sources.
As part of the E.U. Waste Framework Directive, the extended producer responsibility will be defined as “a set of measures taken by Member States to ensure that producers of products bear financial responsibility or financial and organizational responsibility for the management of the waste stage of a product’s life cycle.”
“We are totally embracing regulation because it will level the playing field and push the sustainability agenda forward,” said Reffstrup. “However, we’re more worried that we’re hearing from the E.U. that the majority of the legislation won’t be put into law until 2025 or 2027.”
The delay is due to the E.U. election next year that will decide who is in charge and will no doubt shift how the E.U.’s new consumer product principles are implemented. “In three months, the politicians and representatives in the European Parliament will begin their campaign,” said Isabelle Lefort, who advises the Paris Good Fashion initiative that aims to make Paris the sustainable capital by 2024. “So all the regulations will move forward slowly and some will not be applicable.”
Reffstrup mentioned that some of the regulations contradict each other or don’t provide full coverage for liability.
Challenges for SMEs
Other issues brands will need to contend with include resource allocation to meet regulatory standards. For the collection of data and implementation of digital product passports, large-scale investment may be needed. Although large brands are already investing in this technology, SMEs operating in Europe will need support to meet this level of investment in their own businesses.
“I can’t help but wonder what the future holds for small and emerging brands and designers. They neither have the same bargaining power with their factories nor the budgets to invest in the technologies needed for tracing supply chains to the level that is now required,” said Priya Downes, CEO of underwear brand Nudea, who previously held roles at Chanel and Burberry. Nudea is an SME operating in Europe and is currently making adjustments to meet regulatory requirements.
“Another big challenge for all brands is how to change their business model to one that reduces the volume of items they produce,” said Lefort. Eliminating overproduction and making business model changes are fundamental to [achieving] a more sustainable future. But many businesses are still lagging behind in defining new strategies that move away from goods production.
“In an age where greenwashing has grown rampant, these changes will underpin how companies choose to communicate their internal activities, hopefully on the basis of showing not telling— ultimately allowing consumers to make the final call on how sustainable brands really are,” said Aditi Mayer, climate activist and storyteller.