Summary

Apparel and footwear brands, suppliers, and manufacturers are under increasing pressure to transform sourcing and supply chain practices to align with stricter sustainability regulations. Legislators consider this sector a “priority” due to its long and often opaque supply chains, historically poor labour practices and environmental impact in terms of land use, water use, pollution and energy use in coal-powered energy grids.

Often, ESG regulation aligns with broader supplier chain strategies: building robust partnerships or reducing the risks of manufacturing disruptions. However, compliance strategies may place new pressures on sourcing decisions: more rigid contracts, longer commitments, higher administration efforts.

“Sourcing Team, Supply Chain Managers and buyers will need to assess how they evolve their supplier strategies to remain competitive in an evolving landscape.”

What does this mean for brands and suppliers? These regulations demand greater supply chain transparency, responsible sourcing, and accountability for environmental and social impacts. Already, for some legislations, brands need to prove compliance, while manufacturers and suppliers must provide the right data, traceability, and risk assessments to remain competitive.

Key themes for sourcing teams:

Traceability- The first step is to know where the component parts of your products originate. Compliance with supply chain ESG legislation is founded on supply chain transparency and often, traceability.

Supplier Selection- Selecting suppliers that meet both your commercial and sustainability goals. This includes assessing their ESG strategy, location, data capabilities, and supply chain.

Contracts and cooperation- At this early stage of ESG compliance, there is still much to develop, and change only comes with cooperation. Innovative contractual agreements can go a long way toward reducing labour risks, environmental impacts, and, ultimately, compliant business practices.

Supply Chain management is a complex discipline in itself. The following tips should be adopted by any team starting to adopt ESG legislation into their operations:

• Step-by-Step – Supply chain transparency takes time. Prioritise your most material suppliers and product groups and work through tier by tier.
• Due Diligence – How diligent do you need to be on which topics? To avoid getting overwhelmed, start by getting fit with risk identification and effective risk reduction.
• Data Management – The days of BOMs on spreadsheets, Tech packs as .pdf and POs as emails may become fragmented. Start thinking of a harmonised data landscape.

Legislations concerning Supply Chains

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Stop

Approaching human rights risks as a “tick box” exercise. It doesn’t improve supply chains and wont deliver compliance.

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Start

Bringing it all together. Compliance will require sustainability and sourcing teams to work together; Environmental and social topics to become one.

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Continue

Preparing to report on your own supply chain efforts and supply data to your downstream clients for their reporting too.

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Need additional help?

Our policy consultancy service helps business asses their compliance readiness, build compliance processes and data capabilities.

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Each EU country may enforce additional sourcing and supply chain requirements—brands and suppliers need to stay ahead of national variations.

What Should you be doing?

Brands

The days of unchecked supply chains are over. Brands must align sourcing and buying strategies with these new legal requirements—before penalties kick in.

1. Understand the regulations
2. Map your supply chain risks – Identify high-risk suppliers, sourcing locations, and materials that could violate force labour or deforestation legislations.
3. Upskill your suppliers – Invest in bringing your supply chain on your compliance journey. Prepare them for the new obligations, and remember to team up, most other brands doing the same thing!
4. Set up compliance management – Compliance management is being able to prove you have the right procedure in place. Ensure to are aware what this means for your business
5. Improve Data Handling – Work with suppliers to collect and verify sustainability data (e.g., origin tracking, certifications, and impact assessments).

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Manufacturers

As brands face tougher sourcing regulations, manufacturers and suppliers must prove their materials and processes meet EU standards—or risk losing business.

• Material Producers – Ensure your leather and paper packaging sourced outside the EU is traceable, legally sourced, and deforestation-free
• Manufacturers – Strengthen your social & labor compliance programs to align with tighter EU requirements.
• Suppliers – Improve data management systems to track environmental & social impact metrics — brands will demand this data for their reporting.

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Key Dates for Supply Chain Legislation

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