EU Omnibus and Fashion: Simplified Reporting, But Deeper Risks for Consumer Trust?

In case you missed it, the EU Omnibus Directive (Directive (EU) 2019/2161) — also known as the Enforcement and Modernisation Directive, as part of the European Commission’s “New Deal for Consumers” — rolled out in May 2022. 

It purports to “affect” any fashion business that markets or sells to EU consumers, regardless of where the company is based. But…what exactly are those effects — and what do they spell for managers of fashion brands? 

All great questions — and we’ve got you covered. Read on as we dive into the nitty-gritty of what the EU Omnibus Package means for fashion brands, sustainability reporting, and the potential of using it as a strategic way to build consumer trust.

The Big Picture: What Just Happened in the EU?

Surveying the official language of the directive, we come away with a fairly clear understanding: 

The various points of the EU proposal seek to simplify some aspects of compliance and reporting, while also introducing more stringent obligations — particularly for sectors like fashion, where sustainability claims and online selling practices are under increasing scrutiny.

But the new EU proposal goes beyond compliance — so while conforming to these emerging stipulations are, understandably, going to be top of mind for many ESG and sustainability managers, maintaining a singular focus on this one aspect would be missing the forest for the trees. 

Because, as we’ll see through our breakdown of the EU Omnibus Directive, it’s really about “enhancing consumer protection across the EU by increasing transparency, especially in digital and cross-border contexts.”

Key Changes Brought By the EU Omnibus Directive for Fashion Companies

Translating the legislative language of the proposal into actionable developments, here’s what ESG and sustainability managers in fashion need to be aware of:

Transparency in Discounts

If you advertise a price reduction, you must now clearly state the previous price (the lowest price applied in the past 30 days). This curbs “fake” discounts and aims to ensure fairness in promotional marketing.

Sustainability and Green Claims

Vague or misleading claims like “eco-friendly” or “green” without clear, verifiable backing can be considered unfair commercial practices. Instead, you need robust substantiation for environmental or social impact claims — think certifications, life cycle analyses, or third-party audits.

Personalized Pricing Transparency

If pricing is based on consumer profiling or behavior (e.g., cookies, past purchases), this must be clearly disclosed at the point of sale.

Search Rankings Disclosure

If your site uses filters or sorting tools (e.g., “most sustainable,” “eco bestsellers”), the main criteria determining the ranking must be explained.

Dual Quality Product Rules

If the same product is marketed differently in different countries (e.g., different materials or quality), this could be flagged as misleading unless justified.

A Surprise or a Long-Awaited Shift? The Industry’s Reaction to the Omnibus Proposals

As you can imagine, the changes have ignited a variety of “reactions” from fashion executives facing the Corporate Sustainability Reporting Directive (CSRD) and the Corporate Sustainability Due Diligence Directive (CSDDD) — some see this as a welcome change, and a shift in the right direction that could even introduce some oblique opportunities to transform current supply chain pressures across the EU. 

Mauro Scalia, Director of Sustainable Businesses at Euratex, certainly feels this way: “If EU policymakers want to streamline what information big players can ask of smaller ones, we welcome that.”

As reported in Vogue Business, Scalia highlights the burden that extensive reporting requirements place on small and medium-sized enterprises (SMEs) in the fashion industry and even goes on to say that operationalizing the proposal would aim to alleviate some of the pressures faced by smaller suppliers.

Francesca Rulli, CEO of Process Factory comes at the rollout from a different angle but, like Scalia, sees the benefits of the proposal just waiting to be realized. Rulli observes that the focus on extensive reporting has sometimes overshadowed actual performance improvements: “During the last two years [since the CSRD entered into force] we have seen lots of companies dedicating too many efforts and resources to creating key performance indicators.”

That's why she believes that the Omnibus's proposed simplifications could allow companies to concentrate more on meaningful sustainability actions rather than merely fulfilling reporting requirements.

And though it's a key moment for EU sustainability laws, the directive still has its detractors, with valid points to consider. Says Giueseppe Cioffo, Corporate Accountability Coordinator at Clean Clothes Canada, “The process leading to this Omnibus so far has made a mockery of EU law-making and democratic principles.” 

Cioffo’s critique of the Omnibus Proposal is that it undermines previous commitments to sustainable and ethical practices in the fashion industry. He views the it as a step back in ensuring corporate accountability and protecting workers' rights, a blow to EU sustainability.

Like him, the CEO of Apparel Impact Institute, Lewis Perkins, is particularly concerned that reducing mandatory reporting could hinder financial institutions' ability to evaluate and support sustainable initiatives within the fashion supply chain — making it paradoxically harder to make EU sustainability a reality. He suggests that comprehensive data is crucial for attracting investment and facilitating the industry's transition towards sustainability.

Overall, legislation, like life, is not a black-and-white exercise — and this proposal is unlikely to be the final say in the future of compliance and reporting. However, the industry reactions make one thing clear: ultimately, we’re all looking for a balance between reducing administrative burdens and maintaining robust sustainability and ethical standards.

Is Limiting Due Diligence to Tier-1 a Risk to Fashion’s Deeper Supply Chains?

In the push for transparency and sustainability, many fashion brands focus their due diligence efforts on Tier 1 suppliers — those they directly contract with for final manufacturing. This is understandable: Tier 1 partners are the most accessible, easiest to audit, and often already subject to social compliance checks. But, as we'll see, stopping there isn't enough — and doing so introduces significant reputational, operational, and legal risk even if its within the scope of the CSRD.

Why Tier-1 Due Diligence Alone Falls Short

Fashion supply chains are notoriously complex. Garments pass through multiple tiers of suppliers before reaching retail, so they’re ordered into “tiers” or stages of production, starting at Tier 4 and progressing downwards to Tier 1. 

Let’s take a look at each and the “risks” they present, which directives like the EU Omnibus intend to prevent by getting fashion brands to reconsider and seal up their supply chain providers and logistics.

Tier 4: Raw Materials Production

• Represents the very beginning of the supply chain — where natural fibers or materials are grown, harvested, or extracted.

• Often associated with the highest human rights risks — including child labor, forced labor, land rights violations, and water overuse. 

• Could also include issues like deforestation (e.g., viscose from endangered forests).

Tier 3: Yarn Spinning

• Facilities that spin raw fiber into yarn, which is then woven or knitted into fabric

• Social and labor conditions at this tier are less visible, yet crucial — particularly when it comes to forced labor, wage theft, or exploitative subcontracting 

Tier 2: Fabric & Material Production

• Includes the suppliers who weave or knit textiles, dye fabrics, or produce trims and linings

• Often where the highest environmental impact occurs — especially in terms of water pollution, chemical runoff, and energy consumption 

• Remains a common blind spot for many brands

Tier 1: Final Manufacturing & Assembly

• The last step before the product reaches the warehouse or store. 

• Suppliers are typically the factories that cut, sew, and assemble finished garments.

• Often the most audited and visible, but labor violations and health & safety issues can still arise here (e.g., the 2013 Rana Plaza collapse).

Tier	Stage	Example	Key Risks & Issues
Tier 1	Final garment assembly	Garment factory in Bangladesh	Labor violations, worker safety
Tier 2	Fabric production & dyeing	Textile mill in China	Chemical use, water pollution
Tier 3	Yarn spinning	Yarn spinner in India	Forced labor, traceability gaps
Tier 4	Raw material sourcing	Cotton farm in Uzbekistan or wool farm in Australia	Human rights, environmental degradation

Now that you know what each stage includes, it’s pretty clear that Tier 1 due diligence can only be a starting and not an endpoint. Limiting due diligence to tier-1 might offer short-term simplicity, but it’s increasingly a long-term liability.

And, as consumer expectations and legal standards rise, transparency from farm to fashion is becoming less a “nice-to-have” and more of a strategic imperative.

“Criminal laws proscribe bribery of foreign public officials in all countries. Many also proscribe bribery of business partners. To ensure respect for such laws, companies have set up compliance departments, in essence performing due diligence. Yet, an expert opinion commissioned by Transparency Germany has confirmed that these laws do not reach beyond the first tier of the supply chain.” — Transparency International – Why We Need Mandatory Due Diligence in Supply Chains

In other words, limiting oversight to just the final tier can miss critical risks deeper down. Let’s examine a few real-world examples which became the results of these gaps and violations.

Hidden Labor Violations in Tiers 2 through 4

In 2020, Boohoo was linked to labor abuses in its UK Tier 1 factories. But further investigations revealed that many Tier 2 subcontractors were operating illegally, underpaying workers, and violating safety laws — entirely outside the scope of initial audits.

The result says something key about consumer trust and its agency (which we can’t take for granted): Boohoo’s share price dropped 20%, and multiple retailers — including ASOS and Zalando — temporarily dropped the brand. If you think EU consumers aren’t voting with their wallets, think again. 

Environmental Impacts Lurking in Tier 2 or 3

Dyeing, tanning, and finishing processes (often Tier 2 or 3) account for a significant portion of fashion’s chemical and water pollution. Greenpeace’s Detox My Fashion campaign revealed that major fashion brands with "clean" Tier 1 factories were sourcing from textile mills in China and Southeast Asia that dumped untreated dyes into local waterways.

Cotton Sourcing & Human Rights Issues Tucked Away in Tier 4 — Far From Tier 1

Tier 4 suppliers — such as raw cotton producers — are linked to serious human rights issues, including forced labor. The Xinjiang cotton controversy is a prime example of this reality, showing that global brands like H&M and Nike had limited visibility over the origin of their cotton. Unsurprisingly, the revelations sparked consumer boycotts and political backlash in China and the West.

So: are these issues a matter of negligence, a lack of oversight, or a cry for regulatory enforcement?

The answer is “a, all of the above,” and, at the same time, more complex. While fashion brands may well be internally shifting their cultures and practices to align better with scope of the CSRD, there are real obstacles to deeper supply chain transparency that are worth calling out:

• Lack of visibility: Many brands don’t know who their Tier 2 or 3 suppliers are.

• Data fragmentation: Information is often siloed or not digitized.

• Low leverage: Smaller brands may struggle to influence suppliers they don’t contract with directly.

But new traceability platforms and blockchain-based tracking tools are helping close that gap, enabling brands to map and monitor upstream actors more effectively.

The Regulatory Shift: Due Diligence is “The New Normal”

We’re entering a new era where due diligence is legal obligation. And the hope (and intent) is that these evolving regulatory expectations and ESG laws across the EU and beyond are making it clear will operationalize a production culture where responsibility doesn't stop at the final assembly stage.

The upcoming EU Corporate Sustainability Due Diligence Directive (CSDDD) is a strong example of this. As one of the most comprehensive frameworks yet, it requires companies to identify, prevent, and mitigate environmental and human rights harms throughout their entire supply chain — not just the parts they have direct control over. 

This means brands will need visibility not only into their garment manufacturers, but also their textile mills, raw material providers, and logistics partners. Failing to comply could lead to serious consequences, including fines of up to 5% of global turnover.

Similarly, Germany’s Supply Chain Due Diligence Act (LkSG)–which will be replaced by CSDDD eventually–requires large companies to monitor both direct and indirect suppliers and actively investigate risks in the deeper tiers of their supply chains. Even if a brand doesn’t work directly with a tier-2 supplier, they’re still expected to know what’s going on — and take action if there’s a potential violation. 

Kim van der Weerd wisely calls this behavior out as taking a “it was them, not me” finger-pointing approach to responsibility. Under these regulator shifts, it’s simply not going to fly.

“Due diligence is at the heart of the sustainable fashion agenda, and, increasingly, a legal requirement. Theoretically, I’m all for it. In an industry with a history of greeting injustices and scandals with cries of ‘it was them, not me!’ — it’s a particularly welcome antidote.” — Kim van der Weerd, Former Garment Factory Manager & Sustainability Advocate, Sustainable Fashion: An Alternative Interpretation of Due Diligence

EU regulators aren’t just asking for reports anymore — they want real accountability, from farm to finished product. For fashion brands, this means shifting from reactive auditing to proactive risk mapping and long-term supplier engagement across all tiers. Forward-thinking, future-focused fashion brands are staying ahead of competitors with the following best practices:

• Supply chain mapping: Going beyond Tier 1 (even if it's partial at first).

• Risk-based prioritization: Focusing on high-risk regions or materials (e.g., cotton, leather, dyes).

• Collaborative audits: Joining multi-stakeholder initiatives (e.g., SAC, Fair Wear, ACT) that have access to deeper-tier data.

• Technology adoption: Using tools for traceability and real-time data capture across tiers.

Trust as a Strategic Differentiator: Brands Building Loyalty Through Voluntary Transparency

Voluntary transparency involves proactively sharing information about sourcing, production processes, and sustainability efforts, even when not legally required. Brands that embrace this approach can differentiate themselves in a crowded market and foster deeper connections with consumers who value ethical practices. And we’re going to look at two such examples, along with a discussion of why their move worked as successfully as it did and what you can do to implement similar initiatives.

Chloé

The luxury brand is implementing digital IDs for its products, providing customers with detailed information about materials, sourcing, and care instructions. This initiative enhances supply chain transparency and supports circularity by facilitating resale and recycling efforts.

Why it works

• Clear ESG data can attract investment by demonstrating a brand's dedication to sustainability and risk management.

Implementation strategy

• Focus on consumer communication: Utilize digital platforms, product labels, and marketing materials to share sustainability information with customers.

Amendi

Swedish denim brand Amendi emphasizes traceability by providing "fabrication facts" tags on its products, detailing materials, certifications, and cost components. Amendi's localized supply chain approach reduces carbon footprints and ensures greater control over production processes.

Why it works

• Openly sharing sustainability practices can build credibility and trust among consumers who prioritize ethical consumption.

• Transparent brands can stand out in a competitive market by showcasing their commitment to responsible practices.

Implementation strategy

• Get strategic with supply chain mapping: Identify and document all tiers of the supply chain to understand sourcing and production processes.

• Collaboration is key: Collaborate with suppliers, NGOs, and industry groups to align on transparency goals and practices.

Final Thoughts: Developing a Strategic Response and Remaining Resilient in a Changing EU Policy Landscape

As the EU regulatory environment continues to shift — from the Omnibus Package to the European Sustainability Reporting Standards (ESRS) Revision — one thing is clear: For ESG and sustainability managers in the fashion industry, this evolving policy landscape presents both a challenge and an opportunity.

The recent ESRS revision no doubt streamlines reporting obligations, particularly for SMEs, and may ease some administrative burdens. But it also signals a more strategic pivot: companies are being trusted to identify what’s material to their impact and communicate it clearly. In practice, this means your sustainability story isn’t being written for you — you get to shape it, and more importantly, you get to own it.

To stay resilient, forward-thinking brands will need to double down on materiality assessments, risk-based due diligence, and voluntary transparency. These tools are not just compliance mechanisms — they’re brand assets. 

So, start where your impact is most significant — whether that’s in raw material sourcing, factory conditions, or climate-related disclosures — and build from there. Tap into partnerships, lean on expert networks, and invest in traceability tools that make progress visible and verifiable.

Above all, stay connected to the “why.” EU consumers, investors, regulators, and employees alike are watching not just for metrics, but for meaning. How is your brand contributing to a fairer, cleaner, more resilient fashion system?

This new regulatory normal might feel uncertain at times, but it’s also an open invitation to lead. And those who navigate it thoughtfully won’t just meet compliance — they’ll build trust, loyalty, and long-term value.