We're Not There Yet on Social and Environmental Compliance

How is fashion doing on social and environmental compliance, now that we've had a few years of regulation? Compared to six years ago, I'd say we made a lot of progress. Companies now have dedicated people doing this work seriously. But we're not there yet; not by a long shot. 

A lot of that progress started because companies had to. That's just how it goes. You get forced into something by a new law, and if it's done right, it becomes part of the business (albeit forcefully). I've seen that change happen and it's a good start. So let's go through what's happening right now, because I know it's easy to lose track. 

So What's Actually in Force? 

Human rights due diligence in Europe didn't start with the EU but with national laws, in France and Norway first, and then Germany's LkSG. The EU's Corporate Sustainability Due Diligence Directive, CSDDD, took all three and built on top. 

After the Omnibus changes, CSDDD kicks in for EU companies above 5,000 employees and €1.5 billion turnover, and non-EU companies above €1.5 billion in EU turnover. Member states have until July 2028 to put it into national law. First application follows a year after that, in July 2029. 

This gets mixed up often: CSDDD is a directive, and that's different from a regulation. A directive gives you a goal, and every country writes its own version to get there (what we call national transposition). A regulation, like the EUFLR (EU Forced Labour Regulation), just applies, the same way, everywhere, directly. Directives buy you flexibility. They also buy you years of different countries doing it slightly differently (and taking their time), before everyone lines up. Often, the EU even needs to formally notify countries to act before time runs out.  

Take LkSG: the reporting obligation has effectively been scrapped retroactively, back to January 2023 (BAFA stopped checking reports since late 2025). The actual due diligence duties are still there, for companies with 1,000 or more employees in Germany. But fines only apply now to serious breaches. And, in practice, you can't be sanctioned anymore for environmental violations, with enforcement narrowed to serious human-rights breaches. 

There's talk in Berlin about lining up LkSG's thresholds with CSDDD's. If that happens, and this is just my read, not something decided yet, something like 95 percent of German companies would fall out of scope. 

Not Every Forced Labor Law Works the Same Way 

Then you've got the EU Forced Labour Regulation. It came into force in December 2024, and it starts applying from 14 December 2027. People mix it up with forced labor rules outside the EU, but they work in pretty much opposite directions. 

Some of those other rules ask for a huge pile of documents, spread across every step of the supply chain. They treat goods from a flagged region as presumed forced labor, unless you prove otherwise. That's a horizontal approach, wide but shallow. 

The EU regulation goes the other way. Less variety of paperwork, but it goes deep, potentially all the way back to raw material, way past tier one. And here the authority has to prove the violation. It's not on the company to prove its innocence. 

There's no annual report you file. It works through investigation. Something comes up, evidence surfaces, and then you get 30 to 60 working days to hand over what's asked. If it ends in a ban, you get 30 working days to withdraw the goods, dispose of them, or replace them. 

The Commission put out its implementation guidelines on 26 June this year, based on the OECD's six-step approach. Member states still have to set their own penalties by December this year. Long story short: when the clock starts, you can only hand over what you already have.

The Paperwork Can Say Compliant… 

CSDDD got weakened through the Omnibus process. LkSG went from an actual reporting duty to something close to nothing. And every time that happens, some companies draw a logical if problematic conclusion: If a rule gets watered down once it's actually due, the next one probably will too. So why bother getting ahead of it? 

I don't think the answer is fewer regulations. I think it's better regulations, ones that don't get diluted the moment they're supposed to become mandatory. 

And there's still a bigger gap underneath all of this. CSDDD, for further tiers, mostly runs on what a company can show it knew, or should have known. In practice that almost never goes past tier one. Which means that most brands still can't see deep enough into their supply chain to where real harm happens. 

A realistic example: An audit sees three workers in a room with a fan, ticks the box and moves on. It doesn't see that same room sitting at 50 degrees for ten hours. The paperwork can say compliant, but are these humane working conditions? 

The Problem Is Not the Data 

Companies aren't short on data anymore. If anything, they've got too much of it. It's not even about availability. The problem really is specification. What do you really need and for what purpose? What do you do with what you already have? 

A supplier working with ten different brands gets asked for close to the same evidence, ten separate times. Every regulation still starts its own questionnaire from zero. What's missing is one way to ask for them. 

The Forced Labour Regulation expects evidence that runs product-level, which means tracing back to raw material. That's basically the same supply chain mapping that Digital Product Passports already need. If you're building one, you shouldn't be starting from scratch on the other. 

What This Means, If You Ask Me 

For brands, the law is asking for more precision and not more paperwork. Start collecting data for every new rule from scratch, and you'll keep doing the same work twice. 

For the people making the clothes, the visibility that would protect them is still years away in most supply chains. Getting there depends on regulation that survives implementation instead of getting diluted when it's inconvenient.  

Daniele Seiffert is Retraced's ESG & Policy Expert, working on regulatory strategy across human rights and environmental due diligence.