Fashion suppliers want brands to help with EU green regulations

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Corporate Sustainability Due Diligence Directive (CSDDD) of EU:

The European Union adopted the Corporate Sustainability Due Diligence Directive (CSDDD) in July.
It requires corporations to make their global value chains more sustainable.
The directive focuses on workers’ rights and emissions reduction.
The directive aims to improve labor conditions and workplace safety.

Impact on Low-Income Countries:

Asian countries, especially Bangladesh (world’s second-largest clothing exporter after China), will be significantly affected.
Suppliers in these countries will need to conduct due diligence to protect workers and communities.
Estimated additional investments of 20-30% required to make factories “green”.

Challenges and Concerns:

Legal and Implementation Complexities:
- Countries need to pass laws aligning with the EU directive.
- Brands must devise implementation strategies.
- Courts need precedents to enforce new laws.
Varying Capacities and Plans:
- Different brands have different sustainability goals (e.g., H&M vs. Walmart).
- Smaller producers may struggle to meet specific brand benchmarks.
Financial Burden:
- The fashion industry needs an estimated $1 trillion investment for net-zero transition.
- Suppliers expect brands to share the burden of this transition.

Potential Opportunities

Suppliers may push for more ethical commercial practices and favourable contracts.
Industry associations (like BGMEA in Bangladesh) are creating platforms to support the transition.

Global Clothing Industry:

Market Size: The global apparel market was valued at approximately $1.5 trillion in 2021 and is expected to grow to about $2 trillion by 2026.
Major Players:China, Bangladesh, Vietnam, and India are among the top clothing exporters globally.
Fast Fashion: This trend has significantly impacted the industry, leading to increased production and consumption but also raising sustainability concerns.
Sustainability: There’s a growing focus on sustainable and ethical practices in response to environmental and labour concerns.
E-commerce: Online retail has been rapidly growing, accelerated by the COVID-19 pandemic.

Indian Clothing Industry:

Economic Importance: Textiles and apparel contribute about 2% to India’s GDP and 15% to the country’s export earnings.
Employment: It’s one of the largest employers in India, providing direct employment to over 45 million people.
Export Strength:India is among the world’s largest exporters of textiles and apparel.
Domestic Market: India also has a large and growing domestic market for clothing.
Government Initiatives: The Indian government has introduced several schemes to boost the textile and apparel sector, including the Production Linked Incentive (PLI) scheme.
Challenges: The industry faces challenges such as competition from countries like Bangladesh and Vietnam, need for technological upgradation, and sustainability concerns.

Source: TH