Opinion: Europe Is Scaling Back Regulations, But Brands Can’t Afford to

Written by

Daniele Seiffert, ESG Legislation & Policy Expert at Retraced

After months of quiet negotiations, the European Union is reshaping its most significant sustainability policies. CSDDD. CSRD. EUDR. The acronyms are familiar, but the direction is shifting. And even if the legal texts aren’t final yet, it’s already clear what’s happening.

Regulators are reacting to political pressure by reducing scope, delaying enforcement, and rethinking some of their original plans. That has real consequences for companies, especially those working with large supplier networks or facing pressure to disclose what’s happening upstream.

I’ve been tracking these developments closely. Here’s what I think matters most.

CSDDD and CSRD: Smaller Scope, Higher Stakes

Let’s start with the Corporate Sustainability Due Diligence Directive (CSDDD). Under the current proposal, it will only apply to companies with both more than 5,000 employees and over €1.5 billion in turnover inside the EU. For non-EU companies, the financial threshold is the only one that counts.

A so-called "SME Shield" is also part of the package. It limits how and when large companies can request data from small suppliers. Brands will have to prioritize certifications, audit reports, and existing documentation, and only request more data if those don’t meet the bar.

The Corporate Sustainability Reporting Directive (CSRD) is being narrowed even further. With the new thresholds, close to 92 percent of companies are expected to fall out of scope.

For some, this might look like a retreat. But from my point of view, it signals something different. Even as the legal thresholds move, market expectations around supply chain transparency are only getting stronger. Pressure from investors, partners, and civil society won’t disappear just because the Commission adjusted a few numbers.

For brands still in scope, the compliance burden just got more complex. And for those technically out of scope, stakeholder scrutiny will still be there.

EUDR: Postponed, Simplified, Still Unstable

The EU Deforestation Regulation has now been delayed a second time. A new chain of custody model simplifies roles across the supply chain. First operators, the companies placing goods on the EU market, are now solely responsible for submitting due diligence statements. Everyone downstream just needs to keep the reference number and pass it along. SMEs are exempt from the most demanding requirements.

From a regulatory design point of view, this is a clear shift toward risk containment. The EU is responding to logistical bottlenecks and political backlash by narrowing who carries the compliance burden.

But it also raises questions about credibility and consistency. Each postponement weakens the enforcement signal. Businesses are left unsure how seriously to take the regulation and whether to invest in meeting requirements that may shift again. EUDR was intended to be a landmark on forest-related due diligence. What we’re seeing now is a version that’s been significantly diluted.

ESPR and DPP: Slower Timeline, Stronger Alignment

The Ecodesign for Sustainable Products Regulation (ESPR) and the Digital Product Passport (DPP) are still moving forward. Unlike the policies above, these have stayed more consistent, even if they’re taking longer than expected.

We now expect the delegated act for textiles to land in 2026. That means DPP requirements likely start applying around 2028. Some say even later. The regulation will define expectations around durability, recycled content, and fiber composition. One point is already clear: recycled content claims will only be allowed if the material makes up more than 5 percent of a product’s total composition. These policy details are clear signs of where the EU wants the industry to go.

A Few More Policy Signals Worth Watching

Several other updates are worth keeping on your radar:

A review of the EU Textile Labelling Regulation is expected in 2026. It may include new requirements for digital labels and DPP integration.

The "Environmental Omnibus" package could lead to changes across environmental legislation, focusing on circular economy, waste management, and a digital transition that avoids reporting duplication.

The Waste Framework Directive is gaining attention, especially around durability and extended producer responsibility.

None of these are headline news yet. But they point toward a clear trend: more data, more documentation, and more responsibility for what happens before and after a product hits the shelf.

What I Think Comes Next

Regulatory simplification sounds good in theory. In practice, it can create confusion, delays, and uncertainty. But brands still need to act. Because even with narrowed scopes, the work behind compliance, mapping suppliers, verifying data, managing documentation, is not going away. I believe this means that companies will need to treat supply chain transparency as something strategic going forward. As the foundation for how to manage risk and stay ahead. And for that, the time to prepare is now.