Is Europe Trading Long-Term Responsibility for Short-Term Relief?
The urgency of the climate crisis continues to intensify, yet in the heart of Europe, we are witnessing an unsettling series of sustainability U-turns. The momentum for mandatory corporate environmental and social accountability, once seemingly unstoppable, has hit a political wall.
But what exactly does this latest shift mean for the fashion industry, and crucially, for your business?
The core change comes via the EU’s "Omnibus Simplification Package," which has significantly narrowed the scope of two cornerstone directives: the Corporate Sustainability Reporting Directive (CSRD) and the Corporate Sustainability Due Diligence Directive (CSDDD).
In a move politically agreed upon in October 2025, far fewer businesses will now be legally obliged to report their environmental and social impact. The employee threshold for the CSRD is set to rise from 250 to 1,000 employees, while the CSDDD threshold is proposed to be raised even higher, to 5,000 employees.
Who is impacted? The regulatory burden for high-level reporting and due diligence is now concentrated almost entirely on the largest, multinational fashion giants. While this allows breathing room for many mid-sized firms, it also creates the risk of a two-speed industry where smaller players might momentarily relax their vigilance on supply chain practices.
New Regulations That Still Apply to Smaller Businesses
However, mistaking this “narrowing” as a total release from obligation would be a serious misjudgement. The "Simplification Package" did not affect other major, textile-specific legislation, and these rules absolutely still apply to all businesses in the supply chain, regardless of size, if you are selling into the EU market.
Two key directives remain un-narrowed and mandatory:
Ecodesign for Sustainable Products Regulation (ESPR): Now in force, this sets binding product requirements to ensure garments are more durable, repairable, reusable, and recyclable. Crucially, it introduces the Digital Product Passport (DPP), a QR code with key sustainability data that all companies must manage for product data compliance.
Extended Producer Responsibility (EPR): Adopted in September 2025, this requires producers - including importers and smaller fashion brands - to cover the cost of collecting, sorting, and recycling their textile products placed on the EU market. This new fee will directly impact your Cost of Goods Sold (COGS) and will be determined by your product's circularity and sustainability performance.
The message is clear: while the initial paperwork requirements for some reporting have been scaled back, the fundamental product and financial obligations for circularity have not.
The world is not waiting for a regulatory mandate to fix its environmental problems. The true competitive advantage lies not in avoiding compliance, but in adopting sustainability as your default business model. We urge you to embrace ESPR and EPR as opportunities to future-proof your product design, manage inventory intelligently, and build a truly circular fashion business. The time for 'fast fashion' is over; let's fix it, together.