1.2 New Textile Standards in the EU

Environmental regulations in the fashion industry 

Definition  

Environmental regulations in the fashion industry are international, EU and national policies and regulations that deal with environmental concerns and are meant to lead to a more sustainable fashion industry worldwide.  

  Relevant environmental regulations within the European Union (EU) 

• ·Extended Producer Responsibility on Textiles (ERP) aims to reduce industry waste. The regulations also aim to hold brands accountable for the environmental impact of their items.‍ 
• Corporate Sustainability Due Diligence Directive (CSDD) ensures that environmental and human rights due diligence is enacted across the whole supply chain of businesses.‍ 
• Corporate Sustainability Reporting Directive (CSRD) mandates that businesses of all sizes report their environmental and social activities, which are then subject to audits. ‍ 
• Eco-Design for Sustainable Products Regulation (ESPR) aims to maximise sustainability through a focus upon the areas of resource use, repairs and circularity. This regulation mandates a ‘Product Passport’ being included with items to ensure consumers are able to make informed decisions.  

These actioned and proposed regulations within the EU mean that greenwashing will no longer be an option for fashion businesses. The EU’s holistic strategy will transform the way in which clothing is produced, distributed and disposed; thus paving the way to a circular, and more sustainable fashion industry.  

Intellectual property rights 

Definition 

Intellectual property rights are the rights given to persons over   the creations of their minds. They usually give creators an exclusive right over the use of their creation for a certain period of time. 

Relevant intellectual property in the fashion business: 

Trademark: A trademark is a sign or symbol capable of distinguishing the goods or services of one enterprise from the other. Protecting brands by registering a trademark distinguishes the brand and puts potential imitators away. 

Patent law (utility and design patents): Every innovative aspect can be patented in the fashion industry. The products can be functional or ornamental, protected by Utility patents and a Design Patent law, respectively. Many products in the fashion industry are protected by Design patents, for example, handbags, product packaging and footwear.  

  

Copyrights and design: Generally, copyright is used to protect literacy and artistic works, in the fashion industry, it is used to protect fabric designs, which are composed of the aesthetic and design part of any work, including the shapes, configuration, patterns, ornaments, lines and colours as well as all creatives that are separate from the functional elements. 

  

Geographical indications (GIs) are intellectual property rights used to identify products from a particular region with qualities, reputations, or other qualities that may be directly linked to their place of origin. It safeguards fashionable garments with distinctive textures and fabrics originating from a particular region that have artistic value when made into clothing and accessories. 

Adapted from: https://legamart.com/articles/intellectual-property-in-fashion-cases/ 

Labelling and consumer information 

Definition 

Clothing labels are an important element in fashion design. They are needed not only to comply with various country regulations, but also to serve as a vital piece of information that consumers rely on. Labels communicate to the customer what types of materials have been used in making the garment; how to care for the garment and other special instructions about it; the size of the garment; the name of the manufacturer; the brand. Different manufacturers use their own special type of labels to create their own distinct identity. 

Clothing labels and their role towards a more sustainable industry 

In view of the complex environmental and social issues of the clothing sector, there is a need to introduce concrete tools that will help consumers choose products made with reduced environmental and social impacts throughout their production phases. One tool that provides this is product labelling. In the context of sustainability, we refer to eco- and social labels that are awarded by public and private organisations or by manufactures themselves to popularise and promote products that are socially or environmentally friendlier than the conventional ones. The most known ecological label is the one by ISO classified into three types: 

• Type I : a voluntary, multiple-criteria-based, third-party ecolabel; 
• Type II: self-declared environmental claims developed by the producer without independent third-party certification; 
• Type III: an environmental declaration based on quantified environmental data of a product and verified by a third party. 

Type I ecolabels provide useful basic information for consumers (e.g., Global Organic Textile Standard [GOTS], European Ecolabel, Nordic Swan, and Blue Angel). These labels cover a wide range of criteria, namely raw materials, chemical substances, durability by reference to performance benchmarks. 

Despite their advantages, labels frequently cause confusion and frustration. The main reason for this is the rising number of labelling schemes, which makes it even more difficult for consumers to understand any differences between them, as they use  

significantly different criteria. The situation also facilitates greenwashing. In fact, consumers can only verify the particular label reliability by researching information about the criteria standing behind the label, and by understanding how and by whom their requirements are fulfilled and verified, which implies a lot of awareness and engagement from consumers. 

Apart from voluntary eco- and social labels, there are also mandatory and industry practice labels. They refer to aspects such as fibre composition, care instructions, size information, and country of origin. This information is crucial especially in the context of a circular economy where product durability, life span extension, energy and water conservation during use and maintenance, take-back, and recycling systems are of particular importance. 

Improvement potential, positive changes and future trends 

There is room for improvement for the existing clothing labelling schemes. For mandatory labels, there is a need for better harmonisation of the requirements between countries, and for moving towards extending the labels to include information about the country of origin, chemical substances (restriction on the use of some chemicals), wash/care instructions, environmental performance and material efficiency requirements in terms of durability, recyclability, repairability, reusability, and recyclable content. An extension of advice about resource efficiency measures such as encouraging reuse and sharing would also be helpful. 

In the case of currently voluntary ecological labels, the main challenge is the one already taken by EU, namely Building the Single Market for Green Products (COM/2013/0196 final), by developing a harmonised methodology for the calculation of the environmental footprint of products (PEF) and organisations (OEF) based on Life Cycle Assessment (LCA) methodology. For specific product categories, Product Environmental Footprint Category Rules (PEFCRs) provide detailed technical guidance on the way in which to conduct a PEF study. For textiles, the application of this methodology is currently limited to T-shirts but is planned to be expanded to further categories. This approach offers labelling within a comparative scale, enabling communication of the relative environmental performance of products within the same category, allowing consumers to distinguish between clothing with greater versus smaller environmental impact. 

Adapted from: https://link.springer.com/article/10.1007/s00003-021-01319-z 

Contracts in the fashion industry 

Definition 

Contracts are agreements that ensure the effective functioning of a business. The fashion industry has evolved tremendously lately, it employs many people and contributes significantly to a nation’s economy. That is why it needs numerous Agreements in order to ensure smooth functioning with minimum risk. 

The most important contracts, which play a vital role in administering the fashion business, can be divided into three stages: 

Stage I: Making of the Product 

This is the initial stage. The Agreements that are necessary for the manufacturing of the products are Manufacturing Agreements and Private Label/ White Label Agreements. 

Manufacturing Agreements 

A manufacturing agreement is contracted between two parties, the designer and the manufacturer. Here, the product designer demands the creation of the goods (clothing items, accessories, footwear, bags, etc.) on their behalf from the manufacturer. 

Private Label/ White Label Agreements 

Under Private Label/White Label Agreements the designer sells products manufactured under their brand. The manufacturing companies provide the designers with their product, the company on the other hand markets the product as their own. This method minimises the designing cost, manages time, and lifts off the burden from the designer’s head. 

Stage II: Breaking the Product Out 

This covers the Agreements necessary for the product to reach the market:  

Consignment Agreement 

A Consignment Agreement is a contract between the designer and the retailer where the former consents to the latter to sell the design at their marketplace for a particular period of time. If the goods are not sold by the retailer they are returned to the designer company. 

Showroom/Dealership Agreement 

A Showroom/Dealership Agreement is a contract between the owner of the showroom and the designer. The dealer grants the designer permission to showcase their products at their showroom. The dealer owes the designer the responsibility to not only showcase his/her items but also to introduce the products to its buyers and sell them. 

Stage III: Expanding the Brand 

The third stage is related to fashion brand expansion with the following agreements: Licensing Agreement, and Distribution Agreements. These agreements will safeguard and widen the business of the designer company. 

Licensing  Agreement 

A Licensing Agreement is a contract between the designer company and a second party where the company permits the use of the trademark within a specified territory for a limited period. This process is generally used to increase territorial reach and ensure a constant supply of products without investing a huge amount of funds. 

Distribution Agreements 

A Distribution Agreement is a contract that is used to build trading relations between the distributor and retail outlets. The distributor collects the products from the designer company and trades them with the retail houses. The Distribution Agreements can be Exclusive, Non-Exclusive, Selective and Sole: 

• Exclusive Distribution Agreement:  the manufacturer allows only one distributor to trade the products with the retail outlets. 
• Non-Exclusive Distribution Agreement: the designer company authorises multiple distributors to resell the products to the retail houses. 
• Selective Distribution Agreement: the company permits the distributors to resell to selected retail houses. This agreement is often used by luxury brands. 
• Sole Distribution Agreement: the supplier appoints one distributor as their sole distributor within a geographical area. 

Based  upon: https://fashionlawjournal.com/what-kinds-of-contracts-agreements-are-needed-in-the-fashion-industry/ 

Corporate Social Responsibility (CSR) 

Definition 

CSR, or Corporate Social Responsibility, is a self-acting business model that encloses all practices by companies to uphold sustainable development, with the aim of being socially responsible. By practising Corporate Social Responsibility, companies need to be economically effective, impact society in a positive way, and respect and preserve the environment. 

 Types of corporate social responsibility  

CSR is generally categorised in four ways: 

1. Environmental Corporate Responsibility: This involves a company’s dedication to sustainable operations, minimising environmental impact through practices like reducing carbon footprints and using sustainable resources. 

2. Ethical/Human Rights Social Responsibility: Companies commit to ethical business practices, upholding human rights principles such as fair treatment, equitable trade, and opposition to issues like child labour and discrimination. 

3. Philanthropic Corporate Responsibility: Corporations actively contribute to societal well-being by donating funds from earnings to local community causes through trusts or foundations. 

4. Economic Corporate Responsibility: Financial decisions are guided by a commitment to social good, including investments in alternative energy, support for education, and funding local charities to align with broader societal well-being. 

Adapted from: https://benevity.com/resources/types-of-corporate-social-responsibility  

Labour laws and working conditions 

Definition 

With “Labour laws” we refer to legal rules governing the relationship between employers and employees, covering aspects like wages, working hours, safety, and collective bargaining; with “working conditions” the environment and circumstances in which employees work, encompassing factors such as physical space, safety, hours, compensation, and overall well-being, are identified. 

Labour laws and working conditions in the fashion industry can vary significantly depending on the country and region. However, there are some common issues and concerns that tend to be prevalent in the global fashion industry. 

Low Wages and Unfair Compensation: One major issue in the fashion industry is the prevalence of low wages, particularly for workers in developing countries where many garments are produced. Some workers, including those in sweatshops, may face unfair compensation for long working hours. 

Unsafe Working Conditions: Safety concerns are often raised in the fashion industry, especially in factories where garments are produced. Poorly maintained machinery, inadequate safety measures, and lack of proper training can contribute to accidents and injuries. 

Child Labour:Child labour has been a longstanding issue in the fashion industry. Some companies, knowingly or unknowingly, may use child labour in their supply chains, often in countries with less stringent regulations. 

Exploitation of Workers: Workers in the fashion industry may face exploitation, including long working hours, lack of job security, and limited or no benefits. Many workers are employed on a temporary or contractual basis, which can leave them vulnerable to exploitation. 

Lack of Workers’ Rights: In some cases, workers may face restrictions on their rights to organise or join labour unions, limiting their ability to negotiate for better working conditions and fair wages 

Environmental Impact: While not directly related to labour laws, the environmental impact of the fashion industry is a growing concern. This includes issues such as waste generation, pollution, and the use of harmful chemicals in the production process. 

Initiatives and Improvements: In recent years, there has been an increasing awareness of these issues, leading to initiatives aimed at improving working conditions in the fashion industry. Some companies are adopting ethical and sustainable practices, and certifications like Fair Trade and other ethical standards are becoming more prominent. 

Transparency and Accountability: Consumers and advocacy groups are increasingly demanding transparency in the fashion supply chain. This has led some companies to disclose information about their sourcing practices and working conditions, promoting accountability. 

It’s important for consumers to be aware of the ethical and labour practices of the brands they support. Government regulations, international labour standards, and consumer activism all play roles in shaping the working conditions within the fashion industry. Efforts toward promoting fair labour practices and sustainable production continue to evolve as awareness grows. 

International trade laws 

Definition   

In general, international trade law encompasses the appropriate rules and customs that must be used when engaging in trade with foreign countries. Today, international trade law consists of a body of international legislation, mainly composed of international treaties and acts of international intergovernmental organisations. A new area of international trade law that has developed only recently involves the international trade of intellectual property. 

Loosely based upon: https://www.justia.com/international-law/international-trade-law/ 

Connection Between Trade Policies and Fashion 

Trade policies have far-reaching consequences for the fashion sector. Tariffs and customs duties wield significant influence, impacting production costs, sourcing decisions, and ultimately, consumer prices. Trade agreements, including free trade agreements, play a pivotal role in shaping market access and supply chain efficiency. Sustainability and ethical sourcing are increasingly intertwined with trade policies, as they can incentivize eco-friendly practices and compliance with environmental and labour regulations. 

Tariffs 

Tariffs are fees on international import or export trade, based on product value or weight. The fashion industry faces sourcing challenges due to significant tariffs, leading brands to explore regions with lower tariff rates. This shift in sourcing decisions impacts several key aspects of the supply chain such as relocation of production, shift in economic patterns and supply chain restructuring. 

Taxes and Duties 

Taxes like VAT, customs duties, and excise taxes notably shape the cost structure of fashion products in international trade. 

Fashion brands grapple with various taxes alongside tariffs: 

• Value-Added Taxes (VAT): This consumption tax, varying across countries, adds complexity for fashion brands. Changes in VAT directly impact retail prices, influencing consumer habits. 
• Customs Duties: Levied on imports based on value, quantity, or weight, customs duties demand close attention. They significantly affect the appeal of fashion products in the global market. 
• Excise Taxes: Targeting specific goods like luxury items, excise taxes aim to limit consumption. Producers must consider these taxes when pricing, potentially narrowing the market for certain products. 

Trade Agreements: 

FTAs and regional trade pacts can either enhance or obstruct the fashion supply chain. By eliminating or reducing tariffs and trade barriers, agreements such as NAFTA or CPTPP make it simpler for fashion companies to conduct cross-border operations. Shifts in trade policies or withdrawals from agreements can significantly disrupt existing supply chains and influence sourcing choices. 

• FTAs work towards reducing or eliminating tariffs and trade barriers among member countries. This simplifies cross-border operations for fashion companies leading to cost savings, delivery times and improved market access. 
• Trade agreements also impact a brand’s sourcing strategy. Brands may strategically source materials and production from countries that are part of trade agreements to optimise cost efficiency and expand market reach. 

Shift Toward Sustainable Fashion 

The move towards sustainable fashion is not only shaped by economic factors but also influenced by trade policies. These policies can either promote or impede sustainability efforts through: 

Sourcing Decisions: Knowledge of tariffs and trade agreements guides fashion brands in material sourcing and production locations. 

Regulatory Compliance: Trade policies may include environmental standards, labour rights, and fair-trade practices. 

Trade and sustainability:The fashion sector faces a precarious predicament as it navigates financial stability and ethical standards. How trade policies address these challenges determines the outcome. 

Impact on Sustainable Sourcing: Trade policies significantly impact the supply and pricing of essential commodities. For example, trade agreements promoting environmentally friendly sourcing can prompt fashion companies to adopt environmentally conscious strategies. 

Labour and Ethical Considerations: Lower labour costs in certain nations make them appealing as manufacturing sites for cost-sensitive fashion industry players. However, well-crafted trade agreements can encourage ethical sourcing and production practices by incorporating provisions for fair labour standards. 

Circular Fashion: In a circular fashion, waste reduction is achieved by recycling and upcycling. Used clothing, textiles, and recyclables experience border crossings influenced by trade policies. Either supporting or hindering the circular economy, government regulations impact imports and exports. 

Managing the Balance of Trade Policy and Economic Growth 

While trade policies can pose challenges to the fashion industry’s sustainability efforts, they also present opportunities for positive change, since using trade policies, governments can motivate environmentally responsible actions. 

Fashion companies may be compelled to divulge information about their supply chain practices, including environmental and labour assessments, so more transparency would be required and guaranteed. Moreover, a collective effort between these entities can foster environmentally conscious trade practices in the fashion industry. 

Finally using trade policies to encourage consumer understanding of the interrelated issues of fashion choices’ social and environmental effects. 

Adapted from: https://fashionlawjournal.com/tariffs-taxes-and-textiles-understanding-the-impact-of-trade-policies-on-global-fashion-supply-chains/  

Best practices related to New Textile Standards in the EU 

Name:	Hohenstein, new standardized test method for detecting and classifying the environmental effects of textiles during washing
Link:	Textiles Mikroplastik – Hohenstein DIN SPEC 4872 to assess impact of textile microfibers – Hohenstein Hohenstein.US/microfibers
Industry sector:	New Textile Standards in the EU
Location:	Germany
Description:	Testing service provider Hohenstein has worked with partners to create a new standardized test method for detecting and classifying the environmental effects of textiles during washing. DIN SPEC 4872 combines analysis of fiber release, biodegradability and ecotoxicity. The test method according to DIN SPEC 4872 shows how many fibers are released during textile laundering, how well these fibers degrade in wastewater and how harmful the fiber residues are to the environment. Washing textiles releases microfibers into the wash water, which cannot be sufficiently retained by wastewater treatment plants. Synthetic fibers pose the greatest risk to the environment because of their longevity and inability to biodegrade.
Impact in numbers:	What is the measured impact of this practice? (provide information if possible, if not please delete this row)
Environmental benefits:	Reducing the amount of microplastics in the waterstream (from washing)
Technological & innovative benefits:	The new standard enables textile producers and suppliers to test, evaluate and compare products for fiber release during washing and environmental impact.
Other remarks:	Juliane Alberts sees this systematic evaluation as an opportunity for the textile industry to take the initiative on environmental impact: “Our reliable data can be used as a basis for more targeted product development. This is a way to actively and consciously control further environmental pollution.”

Name:	MUD Jeans
Link:	www.mudjeans.nl
Industry sector:	Design for reducing and reusing waste, Circular business models, New textile standards in the EU
Location:	Amsterdam
Description:	Focuses on a small supply chain with 5 main partners and adheres to circular design philosophy involving reuse, sharing, repairing, remanufacturing, and recycling. Each pair of MUD Jeans is recycled into a new MUD Jean – they are the first circular denim producer. This approach helps extend the life of products and minimizes waste, contributing to a more sustainable fashion ecosystem​​.
Impact in numbers:	48.7 million liters of water saved in 2022 avoided 251 thousand kilos of CO2 emissions in 2022 saved 18,363 pairs of jeans from landfill in 2022 72% less water used in a pair of jeans  41% less CO2 used in producing  a pair of jeans  92% less waste
Environmental benefits:	Reduction of waste in production, use of sustainable materials like GOTS Certified Organic Cotton and GRS Certified Recycled Cotton.
Social & economic benefits:	Adherence to SDGs, ensuring fair, safe, and healthy working conditions.
Technological & innovative benefits:	Emphasis on circularity, sustainable material use, and ethical production standards.
Other remarks:	Adheres to Sustainable Development Goals and maintains a transparent supply chain, indicating compliance with evolving EU textile standards​​.