Visibility on supply chain: the real challenge

By:Edmond Research and Development | 07/05/2024

Since the tragic collapse of the Rana Plaza garment factory in Bangladesh in 2013, which resulted in 1,134 deaths and approximately 2,500 injuries, the fashion industry has faced escalating demands for complete traceability in its supply chains. This involves precise knowledge of the origins and production methods of every garment component.

The incident, marking the deadliest accidental structural failure in recent history, sparked a significant push for transparency. Rescuers at the site had to sift through debris for clothing labels to determine which brands were involved, illustrating a strong need for accountability.

In response, there has been an intensified call for brands and their suppliers to be transparent about their manufacturing processes and environmental impacts. This demand is tracked by the Fashion Transparency Index which, in its latest report, noted that the industry's move towards transparency is progressing slowly, with an average disclosure score of just 24%, a mere 1% increase from the previous year.

The Index highlights that while nearly half of the major brands now disclose their first-tier manufacturers, half still reveal nothing about their supply chains.

For a better explanation, the textile industry's supply chain is detailed in four tiers—from the extraction of raw materials (Tier 4) to the final product assembly (Tier 1). Notably, Tiers 3 and 4, although significant, contribute to 39% of the industry’s greenhouse gas emissions, whereas Tier 2 of material production, involving substantial chemical and water use, accounts for 52%.

Furthermore, only 29% of major brands have a Science Based Targets Initiative-verified decarbonization goal covering their operations, and only 34% of brands publish their carbon footprint at the processing level and 22% at the raw material level.

Other concerning findings include that 85% of major brands do not share their annual production volumes, only a quarter disclose their efforts to minimize microfiber impacts, and a mere 11% publish their supplier wastewater test results.

Regulatory Push for Sustainable Practices

The drive for greater transparency and traceability is also propelled by new regulations. In March 2022, the European Commission introduced the EU strategy for sustainable and circular textiles, part of the European Green Deal aiming for EU climate neutrality by 2050.

This strategy includes a set of proposals to establish sustainable product norms within the EU. Notably, the proposed Regulation on Ecodesign for Sustainable Products mandates that products be designed to be more durable, reusable, upgradable, and efficient in terms of energy and resources, ultimately determining up to 80% of a product's environmental lifecycle impact.

And now it is official

The European Union is still making progress on the sustainability front. The European Parliament in fact gave the green light, a few days ago, to three new regulations that play a key role in the transition towards a circular economy, including the directive on the 'repair of goods', the regulation on packaging and, central to the textile-fashion sector, the ecodesign regulation. The regulatory framework was definitively approved with 455 votes in favour, 99 against and 54 abstentions.

The new rules on eco-design, in particular, will affect a wide range of products ranging from textiles to electronics and aimed at promoting their longevity, repairability, upgradeability and, finally, recyclability. Crucial for the fashion sector, then, is the ban on the destruction of unsold items such as clothes, accessories and footwear, and the obligation to find alternative solutions such as resale, donation or recycling. Furthermore, the digital passport has been introduced for products relating to the sectors involved and which will map materials, production and disposal methods.

The agreement on the topic was reached at the end of last year and was drawn up to replace the directive in force since 2009 and broadens its scope of action. The ban on the destruction of unsold items will not affect small and micro businesses, while medium-sized businesses will benefit from a six-year exemption. As regards the sanctions envisaged, the agreement establishes the criteria but the national authorities will determine and apply them.

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