After the EU’s Regulatory Retreat, Can Fashion Still Lead on Transparency?
A few months ago, the European Commission introduced a sweeping proposal to ease ESG regulations. Known as the Omnibus proposal, the move left many in the fashion industry wondering whether the momentum behind transparency and sustainability was about to stall. Now, with the dust settling, a new consensus is emerging: sustainability might be less of a legal mandate, but it’s more of a strategic imperative than ever.
“The question isn’t whether due diligence is still legally required,” says Lukas Pünder, Co-Founder and CEO of Retraced. “It’s whether brands are willing to remain relevant in a market that’s already moved forward.”
Fewer Rules, not Fewer Expectations
The Omnibus proposal scaled back several flagship regulations: the Corporate Sustainability Reporting Directive (CSRD), the Corporate Sustainability Due Diligence Directive (CSDDD), and even Germany’s own Supply Chain Act (LkSG) were all caught in the policy shift. Reporting burdens were eased, scope narrowed. The message to business? Take a breather.
But many industry voices heard something different. “It feels like a step backward,” says Daniele Seiffert, ESG Legislation & Policy Expert at Retraced. “There was a sense that we were moving toward full value chain accountability. That momentum has now been disrupted.”
Yet, Seiffert cautions against assuming this means brands are off the hook. “Regulators might have eased up, but investors and consumers haven’t.”
From Tick-Box Compliance to Strategic Value
For brands who built teams and systems around the original legislation, the sudden shift has created more confusion than relief. “Some sustainability managers became compliance officers almost overnight,” says Philipp Mayer, Co-Founder and CPO at Retraced. “Now, with the rules changing again, they’re asking: What was all that for?”
Still, Mayer sees a silver lining. “It could be an opportunity to redirect energy. Instead of just focusing on regulatory checklists, brands can invest in transparency as a competitive edge.”
Pünder echoes this. “In the US, we’re already seeing companies treat supply chain visibility as a business asset, not a burden,” he says. “Transparent operations mean better quality, fewer disruptions, lower risk. Especially now, with geopolitical tensions and shifting tariffs, knowing your supply chain inside-out is just smart strategy.”
A New Kind of Pressure
Even if regulators have loosened their grip, market expectations haven’t. Retail giants like Zalando are creating their own transparency standards, and demanding ESG data from every partner in their supply chain.
“SMEs might not be legally required to report,” Seiffert explains. “But if they want to stay in business with the big players, they’ll need to provide data anyway. The pressure just comes from a different direction now.”
This shift from legal compliance to commercial expectation is redefining what it means to be ‘prepared.’ “Brands that understand and document their supply chains today are tomorrow’s preferred partners,” says Pünder. “That’s where the real advantage lies.”
Legislation Isn’t Dead. It’s Evolving.
What’s more, the regulatory landscape isn’t going quiet. While the Omnibus proposal delays or dilutes some rules, others are still advancing. The EU Forced Labour Ban and the Digital Product Passport are still in the pipeline. And they come with teeth.
“These next-wave regulations focus on direct consumer and investor transparency,” says Seiffert. “They’re less about general reporting, and more about specific proof. That raises the bar in a different way.”
Mayer agrees: “Consumer protection is the new vehicle for sustainability legislation. And that’s hard to argue with, even politically.”
It’s not About Mandates. It’s About Relevance.
For all three Retraced experts, one message comes through clearly: the question isn’t whether sustainability is required. It’s whether it’s strategic.
“This isn’t about duty or nice-to-have,” says Pünder. “It’s about relevance. Brands that take ownership of their supply chains now will be the ones with the agility to adapt tomorrow.”
And that doesn’t just mean weathering regulatory storms. It means building resilience, trust, and long-term value.
“We didn’t start Retraced to be a RegTech company,” says Mayer. “We’re not here just to help companies survive compliance audits. We’re here to help them lead real change.”
The Bottom Line
As the Omnibus proposal reshapes the rulebook, the market is quietly rewriting the rules. Regulations might fluctuate, but the forces driving transparency, consumer demand, investor scrutiny, global instability, aren’t going anywhere.
For brands still wondering what to do next, Seiffert offers a clear direction: “Don’t wait for the next law. Prepare for the next expectation.”
