How will upcoming regulation impact the fashion and luxury industries?

24.05.2022Azul Stengel, Co-founder of LienzoPhoto by Augustin Wong

“No net emissions of greenhouse gases by 2050”.

The European Green Deal clearly states the necessity to reduce all GHG emissions as Climate Change and environmental degradation are an existential threat to the world. As a result of this ambitious goal, they have laid out an agenda, aimed at reducing GHG emissions in Europe through the European Climate pact, and pledging to become climate neutral by 2030.

Signed earlier this year, the 2030 agenda sets out laws and guidelines that will have a direct impact on the fashion industry across the globe. As a result, we can see the incorporation of regulations that foster a transition towards a sustainable economy across the world, especially in the USA. One of the first areas the regulation is concerned with is the need for transparency. Companies dealing in the retail, fashion and luxury sectors will be subject to regulatory requirements regarding disclosure of their environmental and social impact.

So, how will this affect the fashion and luxury industry?

Transparency is not the only requirement that will be demanded in upcoming regulations. Across the multiple steps of the production process, the industry will have to adapt.

This adaptation can be seen in the design process or better said, eco-design. An alternative that aims at incorporating the whole life cycle of the product from the early stages of production. Starting at the conception of the product, a sustainable design will make the product more resilient, recyclable, and will account for the end-of-life. By designing consciously, one can incorporate circularity from the start, and calculate the impact that sourcing, production and waste will have on the environment and society. As part of the requirements, this information will be incorporated into the reports companies are asked to disclose annually.

Sourcing has been identified as one of the most important sources of GHG gasses and negative environmental impact across the production chain. By investing in sustainable materials and moving away from synthetic fabrics, companies can reduce their carbon footprint from the beginning, creating effective change. It is not only in the environmental sense that companies can create a positive impact through sourcing. Local communities are deeply affected by farming and bad working conditions. Companies should engage with these communities and provide them with living wages and fair working conditions.

The following step would be to look into logistics and move away from carbon-intensive methods of transportation of raw materials, fabrics and products across the world. By creating an efficient transportation grid that is based on renewable energy solutions, a company can effectively reduce their carbon footprint.

Furthermore, packaging and the use of plastics have become a focal point for the upcoming requirements. As such, companies should look into innovative packaging, and incorporate recycling within their end-of-life waste management.

To foster transparency across the production chains, the governments are encouraging the use of EcoLabels, to inform the consumers on the origin of the products and manufacture, and their impact. As such, branding, marketing and communication will also have to take a turn to properly communicate the impact the company is making to its final consumers and stakeholders.

The majority of companies within the fashion and luxury industries will be within the scope of upcoming regulation, and while not all companies will be affected just yet, some have already started to implement changes in a voluntary manner. Disclosure of their GHG emissions, water use, waste disposal and social engagements has become a major trend across the industry. The market has clearly demanded more visibility from the fashion industry and the governments are now enforcing it. The implementation of these regulations will transversally affect companies, from the financial departments, passing through creative and manufacturing processes and finalising in consumer behaviour.