Supply Chain Transparency in Fashion: From Compliance to Competitive Advantage

When the European Union approved its long-anticipated Corporate Sustainability Due Diligence Directive (CSDDD) in early 2024, it sent a clear message to fashion brands everywhere: supply chain transparency is no longer optional — it’s operational.

In the wake of this and similar legislation across the globe — from Germany’s Supply Chain Act to growing U.S. pressure on forced labour disclosures — fashion companies are being asked not just what they produce but how and by whom. And consumers are watching, too.

This heightened scrutiny can feel daunting. But there’s good news: once seen as a burden, transparency today is quickly becoming a competitive advantage. For brands that get it right, showing proof of ethical sourcing and responsible manufacturing isn’t just about risk mitigation — it’s a story worth telling, a driver of consumer trust, and a key lever for long-term value.

What Supply Chain Transparency Requires in Fashion

Achieving true transparency in the fashion supply chain isn’t as simple as collecting certifications or conducting annual audits. It demands a deeper, more dynamic understanding of who is involved at every production level — and how to work with those partners to drive measurable improvements. 

Here’s what it really takes:

Knowing What You’re Working With — Mapping Beyond Tier 1

Many future-focused fashion brands know their Tier 1 suppliers: the factories that stitch the garments and ship the final products. However, real risk often lives further upstream, in Tier 2 and Tier 3: the mills, dye houses, spinners, and farms where environmental degradation or labour violations are harder to spot.

“Fashion businesses need verifiable evidence of ESG-compliant supply chains stretching far beyond Tier 1 suppliers — their closest trading partners.” — Forbes Technology Council, “Fashion Supply Chain Transparency Takes Center Stage”

To go deeper, brands need to:

• Start with high-impact categories: Focus first on materials or regions with known ESG risks, such as cotton from high-risk geographies or wet processing facilities with heavy chemical use.

• Leverage supplier engagement surveys and traceability tools: Tools like Retraced, Higg FEM, TrusTrace, or TextileGenesis help gather data from deeper tiers without relying solely on third-party audits.

• Use a relationship-first approach: Mapping isn’t just technical—it’s relational. Building trust with Tier 1 partners encourages them to share details about their subcontractors and upstream vendors.

Getting to this level of insight requires patience and persistence. But once you’ve identified the actors across your chain, you can start focusing your efforts where they’ll have the most impact.

The Role of Accurate Supply Chain Data in Managing ESG Risk

Transparency isn’t helpful if the data behind it is incomplete, inaccurate, or out of date. ESG risk management depends on reliable supply chain information that can be translated into actionable insights.

Michelle Lee, a risk management expert at Lythouse, agrees: “The integration of ESG into company risk management systems not only minimizes risks but also uncovers new opportunities.” 

So, how do you begin to strengthen your data foundation?

• Standardize your data collection: Align with recognized frameworks like the Sustainable Apparel Coalition’s Higg Index, the ZDHC Roadmap to Zero, or the OECD Due Diligence Guidance for Responsible Supply Chains.

• Centralize data across teams and systems: Too often, supplier data lives in scattered spreadsheets or sits siloed in compliance departments. Use centralized platforms or ESG dashboards that integrate with sourcing and procurement systems. (Hint: the numbers agree. A 2022 report by PwC found that 69% of investors plan to increase their investment commitments in companies that prove they can successfully manage sustainability issues — especially when they directly impact the business’s performance).

• Validate and verify: Third-party audits, digital traceability tools, and real-time data inputs (like water use sensors or emissions tracking) can help verify that what's reported reflects what's actually happening on the ground.

With accurate data, sustainability teams can more proactively identify hotspots — whether a Tier 2 mill with high energy use or a subcontractor with weak labour practices—and intervene before small issues become major crises.

Technology and Trust: Enabling Supplier Collaboration Across Tiers

Technology can’t replace trust — but it can scale it. 

In fact, a 2023 PwC report revealed that 70% of investors recognize technological change as the top factor catalyzing company change across value creation and delivery. Furthermore, the advance of AI promises significant gains regarding scalability and measuring ROI — 31% would aim to increase their investments if the company in question were to plan to deploy AI-driven tech at scale.

Digital platforms are critical in making supply chain collaboration more transparent, secure, and continuous. Tools like Sourcemap, Worldly (formerly Higg), and SAP Business Network can help brands:

• Create a shared source of truth: Instead of suppliers submitting endless paperwork, digital platforms allow for shared profiles, certifications, and performance data that update in real time.

• Enable secure data sharing: Blockchain-based solutions and privacy-compliant platforms can give suppliers more control over how their data is used—easing concerns around confidentiality and misuse.

• Foster two-way communication: Platforms with built-in feedback loops or scorecards let suppliers understand what’s expected, where they stand, and how to improve.

“Modern supplier collaboration solutions bring buyers together with their suppliers in software that consolidates communication and automates the purchase order process.” — Forbes Communications Council, “Supply Chain Visibility: Only Possible With Supplier Collaboration”

Crucially, when brands use technology to support suppliers rather than monitor them, the dynamic shifts from compliance to collaboration. And that’s when real progress happens.

Transparency in Action — Examples from the Fashion Frontline

While most ESG and sustainability professionals well understand the theory of supply chain transparency, it’s the execution that often raises the most challenging questions:

• What does good look like in practice? 

• How are brands navigating the complexities of multi-tier supply chains, regulatory demands, and stakeholder expectations?

• How do they achieve all this while staying true to their values and business goals?

Clear answers are emerging from the field. From small disruptors to established global names, some fashion brands are making measurable progress by embedding transparency into operations, empowering suppliers, and embracing traceability tools.

Here are four powerful examples and the lessons each represents, demonstrating transparency in action.

#1:  Tracking Raw Materials at Product Level

Achieving full transparency in the fashion industry requires tracking raw materials from their origin to the final product. 

Another Tomorrow is a fantastic example of this lesson in action. 

This New York-based sustainable fashion brand utilizes QR code technology to provide transparent supply chain information, allowing customers to trace the journey of their garments from raw material sourcing to production. 

The company focuses on sustainable and ethical development, including raw material traceability to the farm level.

#2: Focusing on Sustainable Sourcing Teams

Following French sneaker brand Veja’s example, brands can learn how to operationalize sustainable sourcing by emphasizing collaboration and involvement throughout their supply chain. 

The brand directly sources organic cotton, natural rubber, and leather from farmers in South America, ensuring fair treatment and sustainable livelihoods for all participants. Veja's partnerships with suppliers promote organic farming without pesticides, providing farmers with financial stability and health benefits. 

Additionally, Veja collaborates with Brazilian recycling cooperatives — “Catadores” — to transform plastic waste into sustainable shoes, offering fair prices and supporting workers' livelihoods.

#3: Embedding Transparency in Daily Operations

Daily operations present another area to embed transformations that ripple across and connect to supply chains. 

As reported by Vogue Business, London-based brand Nobody's Child sought to achieve exactly this when it adopted digital product passports (DPPs). Since 2023, it has initiated pilots and is targeting a full rollout by late 2025. DPPs provide detailed product information via scannable formats, offering insights into sourcing, energy use, and sustainability. 

The implementation calls for around 110 data points per product and significant supplier coordination, but Nobody’s Child instantly experienced valuable insights from the endeavour, and the move strengthened customer trust. 

The brand plans to tactically expand this level of transparency and traceability to Tier 4 (raw material origins), positioning transparency as a strategic advantage rather than just a compliance measure.

#4: Using Brand Visibility to Catalyse Supplier Practices

In early 2025, Vogue Business broke a story about a report by Transparentem, exposing widespread worker exploitation in Taiwan's fashion supply chains, implicating around 40 major brands. 

While some companies denied ties to the implicated suppliers, Patagonia took proactive steps to address the issue. Since 2012, Patagonia has implemented a comprehensive supply chain monitoring program and launched a "No Fees by 2020" roadmap to eliminate worker-paid recruitment fees. This initiative, supported by other major brands like Nike and Adidas, has helped reduce fees and improve supplier practices.

What’s Next: The Shift from “Green Teams” to Cross-Functional Impact

Fashion brands have made great strides in treating transparency as a core ESG responsibility — mapping suppliers beyond Tier 1, capturing verifiable data, and building long-term supplier partnerships through technology. 

But as the regulatory and reputational stakes rise, what’s next isn’t just better tools or deeper traceability: it’s cross-functional ownership.

In leading organizations, supply chain transparency is no longer confined to the sustainability team. Instead, we’re seeing a shift toward integrated accountability across departments:

• Procurement teams are embedding supplier ESG performance into sourcing decisions and long-term contracts, not just auditing after the fact.

• Legal and compliance functions are now directly involved in preparing for incoming due diligence laws like the EU’s CSDDD — ensuring documentation and data flows meet legal thresholds.

• Product and design teams are collaborating with sustainability leads to choose lower-impact materials that are traceable from origin, often using digital product passports (DPPs) as a shared tool.

• IT and data teams are central to building infrastructure that unites disparate ESG, supplier, and product systems, enabling real-time transparency at scale.

This isn’t just a trend — as we’ve seen through a number of examples, it’s now becoming a competitive necessity. According to a 2023 KPMG study, companies with mature ESG data governance and interdepartmental coordination are nearly twice as likely to say they feel prepared for regulatory disclosure requirements and 60% more likely to report strong stakeholder trust scores.

The takeaway? The next frontier of transparency is cultural and operational, not just technological. For fashion brands looking to lead, the path forward is clear: sustainability must be woven into the DNA of the whole organization — not just championed by the “green team” but owned equally by all departments.