2. 2026 Apparel industry regulatory changes

EU regulatory overhaul: a 2026 mandate for apparel’s future

The European Union (EU) apparel and textile industry is confronting an unparalleled wave of mandatory sustainability legislation, with 2026 serving as the pivotal deadline for key compliance mechanisms. These regulations—spearheaded by the Ecodesign for Sustainable Products Regulation (ESPR)—are transforming sustainability from a voluntary consideration into a non-negotiable prerequisite for market access. The shift requires executives to overhaul business models, supply chain visibility, and product design, creating both a significant administrative burden and a new framework for competitive advantage.

The sheer volume of new legislation has prompted a call from the sector for a more coherent industrial strategy. Euratex (the European Apparel and Textile Confederation) and IndustriAll Europe (the trade union) have jointly warned that without immediate, assertive EU action, the bloc risks losing its industrial expertise, thousands of skilled jobs, and its strategic position in the global value chain.

Cornerstone of change: ecodesign for sustainable products regulation (ESPR)

The ESPR, which came into force on July 18, 2024, is the cornerstone of the European Commission's (EC) efforts to establish more environmentally sustainable and circular products. It has the broadest potential impact on the apparel and footwear sector, replacing the previous Ecodesign Directive by expanding its scope to nearly all physical goods.

The regulation sets detailed ecodesign measures for textiles and apparel as one of the first product groups, obligating brands to comply with both performance requirements and information requirements. The aim is to significantly improve a product's characteristics related to environmental sustainability, including durability, repairability, reusability, recyclability, and resource efficiency.

Digital product passport (DPP): a new value driver

A central feature of the ESPR is the Digital Product Passport (DPP), which becomes enforceable in 2026. Every product regulated under the ESPR will require an associated DPP. This "digital twin" is designed to store and communicate a product’s environmental credentials throughout its entire life cycle.

The DPP will provide granular data on material composition, recycled content, carbon footprint, repairability, and supply chain traceability. While a significant investment in data digitisation and infrastructure is required, particularly for SMEs, the mandate is widely viewed as a market access regulation.

Beyond compliance, the DPP is framed as a new framework for value creation. A June report by Bain & Company and eBay suggested that DPPs "could effectively double the lifetime value of fashion products", primarily through enabling more trusted and efficient resale, rental, and repair markets.

Current timelines indicate that a central EU DPP registry is expected to be operational around July 2026, batteries and a few priority categories start first, and mandatory passports for textiles and apparel are expected to phase in from roughly 2027–2030, following a delegated act that is now anticipated for late 2026/early 2027, typically with about 18 months for compliance.

Ban on destruction of unsold goods

Another pivotal element of the ESPR is the ban on the destruction of unsold apparel and footwear, set to take effect mid-2026 for large companies. Crucially, the main rule stipulates that "recycling is seen as destruction" which bans the destruction of unsold goods, particularly apparel and footwear, in the European Union, forcing brands to find alternative, higher-order uses for excess inventory, such as resale, repair, or donation.

The obligation for large companies to report on both the weight and quantity of unsold goods has already started, requiring inclusion in the current or next year's sustainability report at the latest. This mandate compels brands to adopt new strategies for inventory management, directly challenging the overproduction models endemic in fast fashion.

Product parameters and material priorities

Under the ESPR, product design must be significantly improved to reduce environmental impact. Priority product parameters include physical durability, recycled content, recyclability, environmental/carbon footprint, and substances of concern.

While recycled content targets are a high priority for the EC, industry groups like Textile Exchange are advocating for the inclusion of sustainably sourced renewable materials alongside recycled materials in the ESPR delegated act. The rationale is that recycled content alone "will not be enough on its own to reach the sustainability goals of the industry" and that sustainably sourced materials, such as organic cotton, lyocell, modal, flax, and hemp, are necessary to reduce the industry’s overall pressure on raw material consumption.

Transparency and due diligence: CSRD and CSDDD

The twin pillars of mandatory reporting and supply chain accountability, the Corporate Sustainability Reporting Directive (CSRD) and the Corporate Sustainability Due Diligence Directive (CSDDD), are reshaping governance for EU companies and those with a significant presence in the bloc.

CSRD: reporting and double materiality

The CSRD requires companies to disclose information on their environmental, social, and governance (ESG) impact and risks. The directive mandates a "double materiality" approach: companies must report on how sustainability issues affect their business (financial materiality) and how their business impacts society and the environment (impact materiality). Reports must use the European Sustainability Reporting Standards (ESRS) and be verified by an independent third party.

While a recent agreement has allowed for a delay in the entry into force for certain companies, frontrunners like Netherlands-based Schijvens Corporate Fashion have already started reporting. Commercial director Shirley Rijnsdorp-Schijvens noted that the CSRD is fundamentally a "transparency report" and that compliance is manageable, even for SMEs, if a company has insight into its supply chain.

CSDDD: supply chain accountability

The CSDDD requires large EU companies and those with a substantial EU market presence to conduct ongoing due diligence across their entire value chains. The focus is on preventing and mitigating adverse human rights and environmental impacts, specifically forced labour, pollution, and climate change. Furthermore, companies must create transition plans aligned with EU sustainability goals. Due diligence (CSDDD) forms the necessary basis for the reporting required by the CSRD.

Waste, claims, and footprints: WFD, GCD, and PEF

Three other key regulations will significantly impact operational and consumer-facing practices:

Waste Framework Directive (WFD): The July 2023 revision of the WFD specifically targets textile waste, making Extended Producer Responsibility (EPR) mandatory in each EU member state as of April 2028. This means producers must pay a fee for each product sold to finance the development of collecting, sorting, and recycling infrastructure.

Green Claims Directive (GCD): The proposed GCD is designed to combat greenwashing by setting technical and procedural requirements for how companies must substantiate and verify all environmental claims they make. This is expected to prohibit vague terms like ‘sustainable’ and ‘eco-friendly’ and require claims to be specific, measurable, and independently verified.

Product Environmental Footprint (PEF): The PEF quantifies a product’s environmental impact across its entire life cycle, providing a standardised, transparent method for comparability. The sector-specific guidance, PEFCR A&F for apparel and footwear, is currently voluntary but its legal application is "quite uncertain" and may become mandatory if the GCD is adopted.

Industry resistance: ‘No trajectory’ for industrial reality

Despite the sector's general agreement with the environmental goals of the Green Deal, European industry bodies are sounding the alarm over the speed and complexity of implementation. Euratex and IndustriAll Europe, representing an industry of 192,000 companies and one point three million employees generating 167 billion euros annually, argue that Brussels is driving a transition "without a trajectory" or an industrial roadmap.

The core fear is a growing competitive asymmetry. While European producers are facing massive compliance costs, ultra-fast fashion models driven by non-European platforms like Shein and Temu are perceived to be largely exempt from these constraints. The industrial partners noted that multiplying regulations without an equivalent investment policy risks "industrial destruction", particularly when the average price of a megawatt-hour for the textile industry remains two point five times higher than in Asia.

The joint statement outlines six priorities for an urgent industrial strategy:

1. Restoring a level playing field against ultra-fast fashion models.
2. Stimulating demand for sustainable and ethical products.
3. Ensuring affordable access to energy for companies, particularly SMEs.
4. Guaranteeing product transparency through pragmatic DPP implementation tailored to SME capabilities.
5. Investing heavily in skills by integrating sustainability and digitalisation into vocational education.
6. Coordinating national and regional policies to ensure the transition is ‘just’.

NON EU regulatory shifts

Major regulatory shifts outside the EU are emerging in North America, particularly at the US state level, and in the UK and Asia, all of which will significantly impact the apparel industry. These changes create a complex, global compliance environment, often mirroring the EU's focus on due diligence and Extended Producer Responsibility (EPR).

US state-level acceleration

In the US, highly impactful legislation is being pioneered at the state level, creating a rigorous and disparate set of requirements for global brands.

Mandatory due diligence and disclosure

The proposed New York Fashion Act would require apparel and footwear companies with annual global revenue over 100 million dollars operating in the state to map and disclose at least 50% of their supply chain, from raw materials onward.

It mandates annual social and environmental sustainability reports, verifiable reduction targets for greenhouse gas (GHG) emissions aligned with the Paris Climate Agreement, and carries potential penalties of up to two percent of a company's annual global revenue for non-compliance.

Extended producer responsibility (EPR)

Some US states are moving toward EPR for textiles, shifting end-of-life management costs and logistics to brands. Legislation in California (SB707) and New York (S4746) requires brands to participate in mandatory take-back programs. In New York, brands selling textiles might have to join a state-approved Producer Responsibility Organization (PRO) by July 1, 2026 to manage disposal.

UK and Australia

Both the UK Modern Slavery Act (MSA) and the Australia Modern Slavery Act (MSA) require companies to report on their efforts to combat modern slavery in their supply chains, although the Australian version is currently criticized for lacking financial penalties.

Both countries also require businesses to make climate-related financial disclosures.

Asia

While some major sourcing countries like Indonesia have national industrial plans for the textile sector, regulatory change is primarily driven by market pressure from the EU and US.

Conclusion: from compliance to competitive advantage

The mandate for radical transparency and accountability is irreversible. The 2026 deadline for the DPP and the ban on unsold goods marks a fundamental point of inflection for the apparel industry.

For forward-looking executives, compliance must be reframed as a revenue opportunity. Investing in digital traceability, such as DNA tagging technology, and circular design is the essential groundwork. As Eco Age CEO John Higginson notes, the biggest shift is the move from mere narrative to independently verified evidence. Brands that are investing today in digital infrastructure, supply chain mapping, and circular business models will be positioned as the "tomorrow's leaders in data-driven, sustainable fashion". By embracing the regulatory push, companies can achieve a critical competitive advantage, turning a compliance burden into enduring value.

This 2026 Outlook is based on more that 25 articles, interviews and reports published on FashionUnited. It was written with the help of AI

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