As the EU moves ahead with sweeping ESG regulations, fashion is preparing for a new era of accountability. While it will bring greater transparency, it also comes with significant operational uncertainty. Executives across the supply chain are grappling with questions around how deeply due-diligence requirements will extend. Meanwhile suppliers, in particular, are bracing for the unintended consequences that often accompany ambitious legislation.
As the industry eyes the promise of harmonized standards and improved sustainability outcomes, upstream partners are sounding the alarm that suppliers and vendors must have a seat at the table to avoid policy that ends up creating roadblocks on the road to practical progress.
Here, Raffay Bin Rauf, Sustainability, HSE and Compliance Senior Manager at Sapphire Finishing Mills, and Jimmy Summers, VP of Environment, Health & Safety and CSO at Elevate Textiles, which comprises premium fabric and thread companies like Cone Denim and A&E, discuss their expectations and concerns related to the incoming EU sustainability legislation — and the ways in which it’s already reshaping the industry.
This article is an exceprt from the HGI Parsing Policies, Progress & Promise on the Road to Sustainability Call on November 17. Watch the full Call here to learn why sustainability progress hinges on long-term commitments, a harmonized approach from retail buyers and their sustainability teams, and the industry developing a business case for social and environmental transformation that doesn’t rely on external factors.
Caletha Crawford: Are there any specific aspects of any of the policies that you consider to be open questions that you need clarification on? Even before we start talking about how the brands might interpret them.
Raffay Bin Rauf: So, currently, CSDDD, that one is the most overarching. [The question is] till what level of due diligence will that cover? Let’s say if my Tier 4 supplier has something reported, will I be held accountable? There are some aspects still that are a bit confusing, and we might need more clarity on the legislation. Let’s say if something happens at the farm level… and in some way it is reported that Sapphire had purchased something from that particular farm, or that particular spinning mill. How much will I be held accountable? How much would that impact me or my customers? That still needs more clarity.
CC: One thing with legislation is always the potential for unintended consequences. Jimmy, as we’re looking at the legislation and looking forward to the positives that it could bring, what are you concerned about in terms of unintended consequences?
Jimmy Summers: My biggest concern is over the data requirements, and verification and validation. It seems overall the trend is a little bit of data is great, a lot of data is wonderful and even better, and the more granular the data, the better it is. We want all the data but that comes at a cost, and that’s very problematic. There is an optimum amount of data that will allow the required and needed data points of the different pieces of legislation to be met, but then [we should] not go beyond that. And I think the tendency is for it to always go beyond that, and for [policies] to be written by people who don’t really know the industry. Too often things get written, especially when you don’t talk to the suppliers, when they have maybe consultants and others at the table, maybe a few brand representatives, but they don’t have folks from mills that actually can [say], ‘You’re requiring this data. That’s going to require every facility, just as an example, to install meters all over the mill, and it’s going to cost hundreds of thousands of dollars.’ Those are the type of things I worry about. That something’s going to get hardwired into the legislation that is a mismatch [to] recreate something or create something totally new, when we already have systems and ways of measuring in place, such as Higg and ZDHC on wastewater. They’re not perfect, but we all have coalesced around that, more or less. But my fear is that the EU legislation will come in and do something totally different, and then we’re going to sit here and struggle for years to try to fit square pegs into round holes. And all of it is just…a waste of time… I think too often perfect ends up being the enemy of good, and that ends up just wasting so much resources, and takes it away from actually making impact.
“The old model was brands decide, and mills do, but now I think we’re realizing that might have gotten us where we are now, but it’s not going to get us to where we need to go.”
—Jimmy Summers, Elevate Textiles
CC: Raffay, you and I have spoken about the idea of data fatigue. So, I feel that maybe you’re very much on the same page as Jimmy, but do you want to speak to that?
RBR: From the last time we talked about data fatigue, it has gotten worse now. Every new day you get a new requirement. Because now everyone is getting onto that sustainability bandwagon, everyone wants data but everyone wants data in a different way. The last time we talked about a year ago, I had two different platforms on which I had to report environmental data. Now I have 4 at this point of time, and still there are discussions going on for more. So, I’m always like, ‘Please harmonize the data,’ because even in Europe, one customer is sitting in Spain, one customer is sitting in, let’s say, Denmark. Both of them have different platforms, have different requirements. We’re like why are you just requiring the same data again and again?
First, it was just social compliance, then it moved on to chemical management, environmental compliance, now traceability, so different platforms, same amount of data. So, it’s not reducing. Because now, all the brands now need that data, and there are new different service providers coming out every day. And everyone has a different solution, and saying that ‘we’re the best,’ and eventually, for us suppliers, it’s just another new thing.
JS: What we all have to realize is that data is not free. It costs money to generate data. And the more we ask for, and the more granular, the more it costs. In fact, it really increases a lot, especially if you have to buy meters and all that. And duplication of effort costs money. It is such a waste when we’re generating the same data, but have four different platforms, five different platforms, and the platforms don’t talk to each other.
There is an optimum amount of data… And then we’ve got to have systems that talk to each other, and so the North Star for all of us needs to be, we should only be putting data into something once, and then it gets shared because anything more than that is just a tremendous waste of resources.
CC: Are either of you ever involved in those discussions with your brands when they’re thinking about bringing on a new platform? You have experience across platforms; you could probably help them vet their needs. Is that something that happens?
RBR: It does happen. They do ask us. But again, what happens is if I’m a sales person who can sell my platform in a better manner, you being the sustainability head at a brand [might be convinced]. And the people that we’re talking with actually are not the decision makers. We are just talking with the people that are on the second or third tier. The decisions are made at the top, without thinking [about] the actual ground reality. So, they just come out, they say ‘we’re working on this platform that has this benefit, and let’s all the suppliers, like 200, 300 suppliers, all get onto this.’ So, yes, we get a voice, but it is not having much of an impact at the moment.
JS: Now, I’ll just add, yeah, we have been asked what platforms we’re using, and there has been some of that. But I’ll say, on the positive side, something that I’ve seen start to happen recently is some brands who are engaging with suppliers in consulting on their sustainability program overall, and their approaches to maybe a particular area. They’re realizing that we need to be co-creating this, and we need to be talking, and the old model, I think, was brands decide, and mills do, but now I think we’re realizing that might have gotten us where we are now, but it’s not going to get us to where we need to go. This is going to have to be something we co-create so that we don’t have the waste of resources. So I’m seeing some really positive things here just this year, where brands are starting to engage and co-create with suppliers.
“In 2018, we were only 6 people in the entire sustainability compliance safety department. Now we’re about 40 people. And day by day, my resources are burning out.”
—Raffay Bin Rauf, Sapphire Finishing Mills
CC: Raffay, you said you’ve gone from two different platforms to four different platforms just in maybe a year, what does that mean in terms of headcount for your company?
RBR: I’ll give you an example. In 2018, we were only 6 people in the entire sustainability compliance safety department. Now we’re about 40 people. And day by day, my resources are burning out. When we joined the company, we only had to work on 5 platforms. Right now, we’re working on 9 different platforms. The workload is increasing day by day. I only have one option. Either hire more resources, or push back on the brand [to say] why are you doing this?
The cost of manufacturing is going up, now data is required even on a product level. Previously, it was just ‘give me the data of how much water you use on an annual basis.’ But now they’re asking for product-level data. For product-level data, I need to have more sophisticated equipment. I need to have more expert people that can handle that equipment, then handle that data, and then translate it into something that can be showcased. So, in terms of headcount, I mean, just on this spectrum, I would say, five, six times, the headcount has increased. Some are direct people; some are indirect people.
CC: How do you think that the tariff uncertainty and the tariff situation will continue to impact your business? And are you at a point now where you can feel confident in those commitments and feel confident in making the investments that you had set out to at the beginning of the year?
JS: We’re not confident, because the issue with the tariff situation this year has been just the not knowing, and the back and forth, and you can’t make long-term plans, when things are volatile. And I mean, that’s business, there’s always going to be things like that, but this has been particularly very problematic for all of us, because we don’t know for sure what’s going to happen. What we have done is tried to stay very close to our customers and have scenarios and plans in place to if this happens, this is how we’re going to pivot, and then to work the sustainability strategy into that also.
RBR: So, the tariffs have really hit us on the U.S. market side. Because we are 50-50 Europe and U.S., so European market was not that much disturbed. A lot of business orders were pulled out. And still, we have not been able to get long-term forecasts. This has been an issue post-COVID, but because of the tariffs, it has increased even more. Because of the tariffs, long-term commitments have almost died out. And there were some instances with us in which we even had to give discounts on the already placed orders because of the tariff uncertainties. The impacts have reduced now, but still. The word uncertainty is still quite still there.
