Navigating Regulatory Changes: A Practical Guide for Fashion Brands

By Nina Lima

Navigating Regulatory Changes: A Practical Guide for Fashion Brands
Editors
Patricia E. Langan | Sustainable Supply Chain Advisor at World Collective
Taruna Anil | Policy Intern at World Collective



Remember when fashion compliance just meant recycling and creating “conscious collections”? Those days are gone.

Today, brands face a complex web of regulations that touch everything from supply chain ethics to environmental claims, and it's now a crucial part of doing business in fashion.

For small and mid-sized brands, this rapidly evolving rulebook can feel overwhelming. Yet staying aware is not optional. Ignoring compliance can lead to more than fines or reputational damage and can even result in being shut out of key markets.

In the sections below, we break down the most important current and upcoming regulations, especially those in the EU and U.S., and translate them into plain language. The goal is to highlight what small and mid-sized fashion brands need to know and do.

Plus, we’ll discuss how planning ahead can not only help you avoid risks and penalties, but turn these developments into strategic opportunities for a more resilient business. Keep reading.

The Regulations You Need to Know About

Below, we've compiled the essential regulatory changes that emerging brands should monitor, along with their practical implications.

Ecodesign for Sustainable Products Regulation (ESPR): New Design Rules (and Delays) to Plan For

The Ecodesign for Sustainable Products Regulation (ESPR) is a cornerstone of the EU's Green Deal, and it officially entered into force on 18 July 2024. This law will raise the bar on how products including textiles are designed and handled. Two headline requirements are:

  • Digital Product Passports (DPP)

    • The first EU working plan for ESPR, released in April 2025, prioritized textiles and apparel, with specific eco-design requirements for clothing slated for adoption by 2027.

    • Brands and importers selling textile items in the EU, regardless of where they are manufactured, will be required to collect, analyze and report much more detailed information on the product than has been required in the past.

    • This info must be accessible to customers through at least one identifier, e.g. a digital QR code, barcode, NFC tag or RFID tag on each physical item, which link to a "product passport.”

    • The DPP will function as a digital library for each product, containing material data, supply chain information, compliance status, repair, maintenance and recyclability, and environmental impact, although no definitive list has been promulgated by the European Commission yet. It is expected specific requirements will be adopted through delegated acts in late 2025/early 2026, with an 18 month window before they go into effect.

    • Products will need registration in the Commission's DPP registry to enter the EU market.

  • Ban on Destroying Unsold Goods:

    • The ESPR introduces a significant ban on the destruction of unsold consumer products, targeting fashion's waste problem. 

This requirement applies to companies who, whether based in the EU or not, sell consumer products (products primarily intended for end consumers) or make products available for sale on the EU market and who employ more than 50 employees.

Starting 19 July 2026, large companies (more than 250 employees) must report and make public each year the quantity of unsold apparel and footwear they destroy, including the number, weight, and justification.Medium companies (50-249 employees) must comply by 19 July 2030. Micro and small companies are exempt.

 “Unsold” consumer products generally means all products which have not been sold due to: surplus stock, excess inventory and deadstock, and products returned by a consumer on the basis of their right of withdrawal, e.g. product returns or samples.

 By 2027, these businesses will be completely prohibited from destroying usable apparel and footwear except in justified cases. Companies must also take preventive measures to avoid accumulating excess inventory and publicly disclose destruction data on their websites.

This transparency requirement is designed to eventually expand the scope of materials prohibited from destruction, pushing brands toward more responsible inventory management and circular business models.

→ Regulatory Timeline Updates:

  • The EU has adjusted several eco-design measure timelines due to industry pushback:

  • Textile Labeling Regulation revision (meant to add sustainability info on labels) is indefinitely delayed after initially being expected in late 2023.

  • While ESPR is in force, product-specific requirements are being developed gradually, with the first five-year working plan (2025–2030) confirming textiles as a priority.

  • Brands have approximately 1-2 years to prepare before new design requirements are implemented.

Consumer Protection & Green Claims: New Rules on What You Can (and Can’t) Say

Regulators worldwide are cracking down on “greenwashing,” and fashion is under the microscope. In the EU, two major developments are reshaping how brands communicate their eco-credentials:

  • Green Claims Directive (Proposal Withdrawn):

    • The EU had been working on a dedicated Green Claims Directive to strictly regulate environmental marketing (ensuring labels like "eco-friendly" or "carbon neutral" are backed by evidence).

       However, in June 2025 the European Commission announced plans to withdraw this proposal before it became law. Why? Largely due to concerns that it would create "overly complex, administratively burdensome, and costly" procedures for businesses.

       A key sticking point was a requirement for companies to get any claim independently verified before making it (so-called ex-ante verification). Industry groups argued this would hinder honest marketing efforts with red tape. In response, the Commission hit pause on the standalone Green Claims law, aligning with a broader push to simplify EU rules for competitiveness in the Omnibus legislation passed in April.

  • Empowering Consumers for Green Transition Directive (ECGT):

    • Despite the Green Claims Directive withdrawal, the EU's Empowering Consumers for the Green Transition Directive (ECGT), passed in early 2024, will apply from 27 Sept 2026.

       This law strengthens consumer protection by tackling misleading environmental claims. It prohibits unsubstantiated claims like "100% sustainable" and bans marketing basic legal compliance as special sustainability features. The directive essentially gives existing EU Unfair Commercial Practices law more power against greenwashing.

       Even without the Green Claims Directive, companies are already facing legal consequences for misleading environmental claims under current fraud and advertising laws. Bottom line: All environmental claims in the EU must be backed by credible evidence.

Deforestation & Supply Chain Transparency: Tracking Materials from Forest to Fashion

If your brand uses materials like leather, viscose (wood-based fibers), natural rubber, or even packaging made of wood or paper, this section is for you.

A major law in the EU, the Deforestation-Free Products Regulation (EUDR), will require companies to ensure these materials are not linked to deforestation or forest degradation.

In practical terms, fashion brands selling in Europe will need to know exactly where certain raw materials come from and prove they weren’t produced on recently deforested land.

This is a big change that makes supply chain transparency not just an ethical choice, but a legal mandate.

Key points about the EU Deforestation-Free Products Regulation (EUDR):

  • Affected materials: The EUDR covers "forest risk" commodities including cattle (leather), wood (viscose/rayon), rubber, and products made from them. Fashion brands must ensure these materials aren't linked to deforestation after 2020.

  • Timeline: Large and medium companies must comply by 30 December 2025, small firms by 30 June 2026. By these dates, products placed on the EU market require due diligence documentation and declarations in the EU database.

  • Compliance requirements: Brands must trace raw materials to their origin, potentially requiring geo-location coordinates or certifications (like FSC). The regulation applies to all products sold in the EU, regardless of manufacturing location.

  • Global impact: The UK is establishing similar regulations under its Environment Act. While the U.S. lacks comprehensive legislation (beyond the Lacey Act for timber), market pressure is driving voluntary supply chain transparency initiatives worldwide.

Waste & Recycling (EU Waste Framework Directive) and the Forced Labor Ban: New Duties in Sourcing and End-of-Life

Two different issues (textile waste and forced labor) are converging on one point for fashion brands: responsibility doesn’t end at the point of sale. Let’s break down what’s changing on both fronts and how it affects small brands’ sourcing and operations:

1. Textile Waste & Extended Producer Responsibility (EPR):

The EU is overhauling its Waste Framework Directive with the European Parliament's September 2025 approval of Extended Producer Responsibility (EPR) for textiles across all member states. Companies selling clothing or footwear in the EU will be required to pay for the collection, sorting, and recycling of those products at end-of-life, shifting the waste management cost from taxpayers to the industry.

Key Points:

  • All producers (including overseas e-commerce sellers) must join EPR schemes and pay fees that fund textile recycling infrastructure

  • Micro-enterprises (less than 10 employees) receive a one-year extension and potential fee reductions, but aren't fully exempt

  • Timeline: Law expected to enter force late 2025, with EPR fees likely starting in 2027-2028 across EU markets

  • Design incentives: Fees will likely be "eco-modulated" based on sustainability features:

    • Lower fees for mono-fiber fabrics, repairable items, and longer-lasting designs

    • Higher fees for low-quality, difficult-to-recycle products

  • Design incentives through eco-modulation: The Extended Producer Responsibility (EPR) directive specifically mentions "eco-modulation" of fees, though it doesn't detail the exact implementation framework:

    • This principle means producers will pay different fees based on their products' environmental impact

    • While specific metrics aren't outlined in the directive, it will likely penalize hard-to-recycle designs and reward sustainable innovations

Timeline comparison (EU vs California) →  Maybe add a paragraph here on California’s version, pointing out where its rollout aligns or conflicts 

California also passed major EPR legislation in (SB707 in September 2024) that shares some features with the EU EPR law, but also differences:

  • EU: EPR schemes must be implemented by all countries who are members of the EU within 30 months of the law entering force. SMEs will be provided an additional year to comply with the law. The EU’s waste framework is guided by a 30% waste reduction goal, and that goal is aimed to be reached by 2030.

  • California: Producers will become responsible for paying fees. The official deadline for CalRecycle to set regulations for Producer Responsibility Organizations (PROs)  is July 1, 2028. The official deadline for PROs to be approved by CalRecycle is July 1, 2030. Fee structure will be determined by then. However, approval could come before either of those dates. 

  • Overall: The EU’s legislation is more ambitious with anticipated fast implementation across all nation states. Though, it is important to consider how already existing EPR schemes in EU countries (such as France’s Refashion PRO) will transition to harmonize with the new EU law. 


Design and material incentives under EU EPR → Answering whether brands pay less if items are made from biodegradable/recyclable materials, or if easier-to-sort designs qualify for lower fees.

Eco-modulated fees will consider the product’s life cycle, durability, and materials used – insinuating a preference towards eco-friendly materials.

What happens to collected textiles? →  add a short sub-section or a couple of sentences on how outcomes differ (e.g., U.S. leaning on resale vs. EU investment in textile-to-textile recycling).

  • EU: The directive uses the terminology “recovery” to encompass re-use, preparation for re-use, recycling, backfilling and use as fuel. The EU model prioritizes collection closest to the end user, and recycling closest to already existing textile recycling infrastructure (meaning the actual recycling process may not take place in all member states). Due to many countries utilizing an EPR scheme already, such as France and Italy, this could be a more seamless process.

  • California: SB707 enables “authorized sorters, collectors, and repair businesses” to register with PROs in order to source materials collected, creating more of an overt market-based strategy in comparison to the EU. A reason for this key difference could be that SB707 is the first textile EPR law in the United States, whereas many member states in the EU already have existing EPR schemes. 

The Waste Framework Directive establishes a harmonized system for all member states. The directive’s broad application has both strengths and weaknesses: on one hand, it would establish a harmonized system that all states could comply with, maximizing impact. Additionally, it would create a baseline framework for eco-modulation in all 27 member states, reducing confusion amongst textile producers and brands on compliance across the entire EU. However, the new directive could interrupt the efficiency of already existing EPR schemes as they transition from their nation’s system to the EU regulations, if implemented too quickly and without support for the already existing EPR infrastructure. 


2. Forced Labor Bans (EU and US):

In a push to uphold human rights in supply chains, both Europe and the United States have introduced strict measures against products made with forced labor. This has huge implications for sourcing, particularly for cotton and other raw materials coming from regions with known labor risks.

Carbon, Reporting & Future Trends: CBAM, CSRD/CSDDD, France’s Eco-Score, and the Green Rollback Debate

Rounding out the regulatory landscape are a set of rules and trends focused on carbon emissions and corporate accountability. These may seem tailored to big corporations at first glance, but they signal where the entire industry is headed and even small brands will feel the effects indirectly.

Let's unpack the key developments:

  • Carbon Border Adjustment Mechanism (CBAM): The EU's CBAM is a carbon tax requiring importers of at least 50 tonnes per year of six carbon-intensive materials (steel, aluminum, cement, iron, hydrogen, fertilizers) to report emissions and, starting 1 January 2026, purchase certificates based on embedded carbon.

     While textiles are not yet included, it could be named in the future. CBAM already affects fashion in two ways: it previews potential future carbon pricing for textile products and already increases costs for materials used in fashion (retail fixtures, accessories).

  • Corporate Sustainability Reporting Directive (CSRD) – Accountability for ESG Reporting: This EU law requires thousands of companies to publish annual ESG reports, starting with large companies and eventually including listed SMEs.

     A recent "omnibus" proposal has delayed Phase 2 and 3 deadlines by two years, but transparency is becoming standard. Even small brands below the threshold may need to provide sustainability data to larger partners.

  • Corporate Sustainability Due Diligence Directive (CSDDD): This proposed EU regulation would require large companies to actively identify and address human rights and environmental risks throughout their supply chains.

     While primarily affecting large companies, smaller suppliers will face trickle-down requirements through their larger clients. Initial compliance is expected around 2028, but the trend is clear: due diligence is becoming a legal duty, not just a CSR choice.

  • France's Pioneering Moves – Eco-Score Labeling: France is implementing mandatory Eco-Score for Textiles by mid-2026, in its “Coût Environnemental” regulation, requiring all clothing made  from textiles and home textile products to display an environmental impact score. Exempt products include leather, shoes, accessories and secondhand textile items.

     This affects all companies selling in France,no matter their size, including international online retailers, who must calculate scores using approved tools and life-cycle data. If successful, this model could be adopted by other countries or the EU as a whole

The broader rollback trend

You might be wondering, with so many rules, is there any pull-back? Indeed, there’s a current debate about over-regulation.

The EU in particular, under pressure from industry and facing economic challenges, has started an agenda to simplify or delay some green initiatives (often called a push for “better regulation” or competitiveness). We saw this with the Green Claims law being withdrawn, and the CSRD timeline extended.

Another example: the revision of the EU textile labeling rules (to add digital labels for sustainability info) was delayed beyond 2025. Some politicians talk about not burdening companies with “too many” sustainability requirements at once.

However, it’s crucial to note that while timelines may shift, the core direction isn’t reversing. In fact, certain member states and regions are forging ahead even if the EU slows down. France’s Eco-Score and anti–ultra-fast-fashion law are cases in point, showing local regulators picking up the slack where needed.

In summary, the “rollbacks” are more about fine-tuning and giving businesses time to adapt, rather than abandoning the sustainability agenda. The EU’s pledge to cut 25% of red tape is resulting in some reasonable adjustments, but fashion brands should not bank on a full reprieve.

The overall trend, toward more accountability, more transparency, and more climate action, remains robust.

Turning Compliance into an Advantage

At first glance, keeping up with regulations may feel like a drain on time and resources, especially for smaller brands with lean teams. But a mindset shift can turn this into a competitive edge. Here's how compliance can dovetail with brand strategy:

  • Build trust and brand value through compliance: Today's shoppers and wholesale partners are increasingly savvy. They recognize greenwashing and reward authenticity. By proactively meeting sustainability standards, you're signaling to customers that your brand walks the talk. Use compliance as a marketing asset by highlighting certified materials in your storytelling.

  • Strategic sourcing and risk reduction: Use upcoming regulations to inform smarter sourcing choices now. Partner with transparent and certified suppliers for long-term relationships. While this might increase costs slightly, it significantly reduces risks of disruptions and prepares you for expansion into stricter markets. Choosing factories already compliant with EU chemical regulations future-proofs your business and can open doors to premium marketplaces and larger partners.

  • Operational efficiency and innovation: Compliance can improve operations in cost-saving ways. Waste regulations might lead to take-back programs that provide materials for upcycled products. Carbon reporting could push you toward energy-efficient methods that lower bills. Think of it as lean, green optimization.

  • Stronger stakeholder relationships: For brands seeking retail partnerships or investment, demonstrating ESG competence is crucial. Large retailers must vet their suppliers, while investors increasingly apply ESG criteria. Small brands already complying with sustainability benchmarks become attractive partners. Conversely, lacking documentation when opportunities arise (like when retailers request carbon footprint data) can cost you deals. Embracing these standards opens growth pathways.

Digital Material Sourcing: Your Compliance Support System

Finally, remember that you're not alone in this journey. Digial fashion ecosystems like World Collective come in as a valuable support system.

By engaging with World Collective, you plug into a network that is already aligned with compliance and sustainability needs. For example, every supplier in our library is vetted not just for basic certifications but for deeper social and environmental credibility.

That means when you source through our Ecosystem, you're sourcing from mills and factories that meet high standards, providing significant relief on the due diligence front.

Need traceability? World Collective's system facilitates end-to-end visibility from initial material sourcing to final product delivery. This integrated traceability is exactly what upcoming laws (like digital product passports and due diligence directives) will require.

In practical terms, we can help turn compliance into an automatic feature of your business. Instead of chasing down documentation from multiple suppliers, the ecosystem provides a streamlined, digitized sourcing process where data is captured along the way.

Moreover, by joining a community of like-minded brands and manufacturers, you gain access to shared knowledge and solutions. Compliance becomes a collaborative effort where everyone benefits from higher standards and trust.t.

Fashion has always been about evolution. This is the next chapter, where style and standards go hand in hand.

 

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