A Paradigm Shift in Fashion Supply Chains: The Corporate Sustainability Due Diligence Directive
27.09.2023
Alberto Bailin, Co-Founder of Lienzo
Photo by Jeremy Bishop
In an era marked by growing awareness of environmental and social issues, the fashion industry has come under intense scrutiny for its often unsustainable practices. From exploitative labor conditions to environmental degradation, the sector has faced calls for accountability and transparency. In response to these challenges, the European Union has taken a pioneering step by introducing the Corporate Sustainability Due Diligence Directive, aiming to address human rights issues along fashion supply chains worldwide. This article explores the key aspects and implications of this groundbreaking directive, which will come into force in 2026 and will affect all companies with more than 250 employees or more than 40 million euros revenues.
Overview of the Directive
The Corporate Sustainability Due Diligence Directive (1) is a legislative framework designed to make companies more accountable for their social and environmental impact. While it targets businesses in various industries, its focus on the fashion sector is particularly noteworthy. The directive aims to ensure that companies, especially those operating in the fashion industry, take responsibility for the entire lifecycle of their products, from raw material sourcing to production and consumption.
Human Rights Along Fashion Supply Chains
One of the central concerns of the directive is the protection of human rights within fashion supply chains. Many fashion brands source their materials and labor from countries with lax labor laws, leading to exploitative working conditions and low wages. The directive addresses this issue by requiring companies to conduct due diligence to identify and prevent human rights abuses within their supply chains.
Transparency and Reporting
To ensure accountability, the directive mandates greater transparency in reporting, more specifically on the extra-financial report, one of the requirements of the CSRD (2). Companies will be required to disclose information about their supply chain operations, environmental practices, and efforts to protect human rights. This transparency will enable consumers and stakeholders to make informed choices and put pressure on companies to improve their practices.
Legal Liability
The directive introduces the concept of legal liability for companies that fail to meet their due diligence obligations. This means that companies can be held legally responsible for human rights violations and environmental damage occurring within their supply chains. This provision is a significant step towards ensuring that businesses take their responsibilities seriously and make genuine efforts to prevent harm.
Environmental Impact
In addition to human rights, the directive also addresses environmental concerns. The fashion industry is notorious for its wasteful practices, with tons of clothing ending up in landfills each year. The directive encourages companies to adopt sustainable practices, reduce waste, and minimize their environmental footprint. By doing so, it aligns with broader European Union efforts to combat climate change and promote circular economy principles.
All in all, we can state that the directive is a necessary step to address the fashion industry's underlying systemic issues. By holding companies accountable for their actions, it encourages a shift towards more sustainable and ethical practices, ultimately benefiting both people and planet. The Corporate Sustainability Due Diligence Directive is thus a bold and forward-thinking move by the European Union to address the urgent issues plaguing the fashion industry and other sectors. By targeting human rights abuses and environmental degradation within supply chains, it seeks to create a more responsible and sustainable business environment. While it may face challenges and criticisms, its potential to bring about positive change in the fashion industry and beyond is undeniable. As the directive takes effect, it sends a clear message that the fashion world must evolve towards greater transparency, accountability, and sustainability to meet the demands of a more conscientious global consumer base.