Regulations Remain A Moving Target, But Fashion Still Has A Strong Mandate For Change
26th February 2025
A broad-brush recalibration of reporting rules has changed the letter of the law, but for brands pursuing meaningful sustainability goals, compliance was always a stepping stone towards a more strategic shift with a much deeper return.
While the recent EU Omnibus has changed the tenor and the timeline for some transparency and due diligence reporting, other critical compliance requirements remain intact and enforced. And far from seeing it as an offramp, leading brands are looking at deregulation as an opportunity to distinguish themselves by committing to tangible change
In recognition of this, TextileGenesis and The Interline are partnering to tell a series of stories about the mechanics, the methods, and the mandates for compliance in 2025.
After TextileGenesis’ launch of a new Compliance & Risk Management module, built from the foundations of fibre-forward and product-backwards traceability that have made the company an authority in granular, systematised visibility at the institutional level (with more than 2 Billion garments tracked), we explain why regulatory compliance remains an immediate and tangible concern – and we look at the three prongs that make up an effective solution.
In fashion and textiles, the last few years of debate and uncertainty have created a false sentiment that the urgency has fallen out of legislations covering different elements of sustainability, transparency, due diligence and disclosure. Some regulations have failed to come into force – and others that have been adopted have seen their language softened to the point that sponsors and companies that fall under their aegis alike have questioned their utility. This was especially true in the “EU Omnibus” which altered the timeline and the structure of enforcement across several different sets of regulations.
But behind this deflation in how fashion feels about the trajectory of legislation, is a very different reality – one where punitive enforcement, the impounding of imports, and fines with measurable impact on brands’ bottom lines are not just here, but are scaling upwards and outwards quickly.
On a purely numerical basis, we can count the number of legislations that are either approaching adoption (albeit sometimes in an altered form) or that are already in force. This is a total of more than 30 across major markets: 9 in the European Union, 5 in the United States, 2 each in the United Kingdom, France, and Australia, and pioneering rules in the Nordic countries, Japan, India, Brazil, and more.
While it’s often spoken about as an EU-led initiative, regulating what products can be made from, the territories their upstream journeys can touch whilst still meeting high (and rising) environmental and ethical bars, and how the companies selling them disclose that information, is now a global drive, manifesting itself in the New York Fashion Act, the CSRD, CSDD, the Green Claims Directive, Extended Producer Responsibility and many more.
By a similar token, the direct impact of the enforcement of those legislations is also being keenly felt, today, in different markets. In the USA, where the Uyghur Forced Labour Prevention Act (UFLPA) was signed into law at the end of 2021, the fashion industry alone has already had shipments withheld at ports – at the point where finished products are just a last-mile-logistics challenge away from stores and consumers – with a combined value of more than $90 million USD, the majority of which was not later released.
And although that particular piece of law is focused on a specific selection of regions and a single dimension (the inalienable human rights of a particular ethnic group), the wider regulatory landscape is far more multi-dimensional. For fashion businesses wishing to sell into, or do business within, a diverse spectrum of key markets, compliance with legislation is not just a matter of quantifying environmental variables, but modelling and managing extended-lifecycle impact and accountability, social and humanitarian initiatives, greenwashing regulations and more.
The regulatory net is not just tightening around fashion – it is also becoming more finely woven, from a wider range of threads, over time.
Taking account of that reality of complexity and urgency, a growing number of brands are also realising that complying with the relevant legislations for them requires more knowledge, visibility, and more robust data than they have historically had at their disposal – and these therefore need to be built out as new, and increasingly urgent, initiatives.
But, given the multi-tiered, globally-distributed, generally opaque nature of fashion supply chains, those organisations are often starting from a point of deep uncertainty as to the true composition of their supply chains. And existing enterprise technology ecosystems, built around the principle of passing the baton of product design, development, sampling, sourcing, and distribution back and forth between different parties and different systems, are perhaps the wrong foundation on which to build an effective chain of custody and a verifiable, data-backed approach to traceability.
This is where the relationship between visibility and risk is forged. Each transformational step in the journey from raw fibre to finished product where visibility breaks down represents a risk to the brand’s ability to comply with legislation that requires end-to-end accountability.
While we have already established that those risks can be felt on the bottom line, the likelihood of potential risk exposure translating into direct negative impact is also scaling upwards, with a 300% increase in shipments withheld by the US Customs and Border Patrol under the UFLPA in the second half of 2024. And in the context of the heightened attention being applied to imports and exports in light of trade disputes and tariff impositions, this border scrutiny could be set to rise even further in 2025.
For fashion brands sourcing overseas and importing into one or more consumption markets where regulations either apply today or will apply in the near future, then, compliance is a different and more vital conversation to the wider, longer-term question of how to accomplish complete traceability. There is, today, a window of opportunity for those companies to put systems, solutions, and processes in place to reduce their exposure to risk and comply with the relevant legislation.
As Amit Gautam, Founder & CEO of TextileGenesis puts it:
“In light of the accelerating pace of legislative changes in the fashion industry, regulatory compliance has transformed from a mere obligation into a pressing priority. As a result, brands must recognise that non-compliance not only jeopardises their operations but also threatens their reputation and bottom line. The reality is that more than 30 significant legislations are poised for adoption across key markets, underscoring the urgent need for brands to build robust systems that ensure accountability and transparency. With fines and the withholding of shipments becoming increasingly common, the stakes have never been higher. To thrive in this complex landscape, brands must invest in comprehensive risk management strategies that leverage real-time data and automation to identify and mitigate compliance risks effectively. As I often emphasise, “In the race for sustainability and compliance, those who embrace transparency and accountability will not just survive; they will lead the way into a responsible future.””
Done correctly, this kind of risk-based compliance, accountability, and transparency will incorporate many of the same building blocks and more comprehensive transparency, as well as contributing to the strategic and cultural steps needed to institutionalise best practices and build more risk-proof workflows. But in the here and now, identifying and heading off the risks of non-compliance is its own mission-critical project – one that both TextileGenesis and The Interline believe should be built as a progressive, three-pronged process.
The first of these prongs is risk identification and mitigation that’s anchored directly into the regulations we’re already familiar with – and the environmental and social issues that were the catalysts for their creation. The starting point for this is open-source documentation and databases published by government and non-government bodies, including the UFLPA from the US CBP, a library of certification bans from the Global Organic Textile Standard (GOTS), fibre-specific guidelines from the International Cotton Association (ICA), and reference lists of “banned entities” from organisations like Textile Exchange.
Each of these open source datasets is publicly available to use, and compliance strategies that use them as the foundation stand the best possible chance of complying with the letter and the spirit of legislation. Without effective systems and applications that incorporate them though, these documents remain static lists that must be pored over manually at the point of every purchase order so that, from the brand’s point of view, the most likely risks can be identified before production begins.
The difficulty with this manual approach is how time-consuming it would be, how frequently it would need to be manually performed, and the inevitable erosion of accountability and accuracy that would follow. These lists would also need to be compared against accurate data either provided directly by upstream partners, or by inspection bodies and intermediaries. And as the incidence of over-claiming in preferred materials shows us (roughly ten times the amount of organic cashmere that is actually produced each season is being claimed by suppliers, for instance) reliability at the point of original data entry is difficult to guarantee.
Instead, systematising this surfacing of data from open-source repositories, and automating the process of auditing new purchase orders against it promises to sidestep all of these challenges of attempting to marshal the same ever-changing data manually. This is the approach that TextileGenesis have taken with the first layer of their new Risk & Compliance Management module, which is architected on top of the same widely-adopted systems and data sources as the company’s other tools and capabilities, and which brings up-to-the-minute, officially-sourced risk information into a single environment with other supply chain mapping, discovery, and traceability tools.
That same foundation also underpins the second prong: providing models that allow brands to work backwards from both already-identified legislation and disclosure requirements and their own sustainability targets to arrive at a list of regions they have sourced in that may be considered sensitive.
This is a key consideration for any brand evaluating its near-term ability to comply with legislation by working outwards from its own existing sourcing relationships and sustainability targets and commitments, rather than beginning with libraries of potentially problematic partners. As a case in point, the prevailing understanding of the UFLPA is that it applies to products whose journeys have, at some point, travelling through a particular region in China, but the reality is that the majority of the $90 million US in shipments blocked upon entry to the United States were withheld because they had come from Vietnam.
For fashion brands, the choice of where to source fibres, fabrics, trims, and manufacturing capacity is driven as much by the commitments they have made to customers, employees, and – increasingly – regulators and other oversight bodies as it is by cost. And on that basis, the true definition of risk will be informed by that combination of different factors.
This is why TextileGenesis has approached brand-specific risk management and compliance in a logical way. Companies can personalise their risk profiles at a regional level, so that any supply chain activity that touches that region is automatically flagged as a risk. Or they can add greater granularity and assign risk to specific locales or even to particular companies and their potential subcontractors.
This approach also takes into account the multi-faceted nature of sourcing different product categories and the variety of different reasons – from price to specialised skills – that a particular region or supplier might form part of a brand’s upstream network. With this extra dimensionality, Brands are able to select a province or region, choose a material type, and then filter by what TextileGenesis dubs “transformation area,” so that risk can be identified when a specific combination of treatment, material, and region, for example, is part of the purchase order – but not when those variables occur in different combinations.
These risk recipes are also unique and locked to each individual Brand that uses the TextileGenesis platform. No partners are notified when they appear as part of a risk notification, and no other TextileGenesis users (Brands or other Supply Chain Organizations) are pushed the same combination of factors that trigger the risk flag.
This personalisation is also a fundamental part of the third prong of risk and compliance management – one that builds on the principles of the previous two and ladders up to a proactive model of surfacing and managing risk. This is where TextileGenesis has begun to employ artificial intelligence, making an AI-powered risk assessment tool available that captures complex variables from across the majority of the 14,000 Supply Chain roles that are registered on the platform.
For brands, the ability to run this kind of risk modelling continuously, based on both open-source frameworks and their own broad and granular risk profiles, already represents a step forward. But AI also gains the ability to take an even wider range of variables into account, including corruption, fraud and bribery, pollution, health and safety, wage protection and fair wages, working conditions, and much more. And as the regulatory landscape continues to evolve, this approach to proactive, personalised, always-on risk assessment could become essential to ensuring compliance.
Crucially, two of these prongs are being provided by TextileGenesis at no additional cost to its userbase of more than 120 brands, with the reasoning that unifying risk management and compliance with the broader accretion of individual components of traceability offers the best route to bringing compliance dashboards, insights, and actions into the same system used to map supply chains, monitor the journey of fibres through them, and calculate the impact of individual products.
And as vital as compliance is here and now, it is only the tip of the iceberg compared to the wider feature set of the TextileGenesis platform, which has already traced more than 2 Billion sustainable garments to date.
As we progress further into 2025, and the regulatory agenda continues to evolve, The Interline and TextileGenesis will be documenting the next practical steps the fashion industry can take towards tackling compliance, traceability, and transparency at scale – and framing those efforts as part of a wider industry push towards deep transformation that transcends any specific legislation.
Read the article on The Interline here.