Traceability and Transparency: What are the Legal Challenges and What Strategies Should Textile and Fashion Industry Stakeholders Adopt?

The textile and fashion industry is facing major challenges in terms of product transparency and traceability. Although these issues affect all economic sectors, it is important to understand why the textile and fashion industry is particularly concerned.

Transparency and Product Traceability Throughout the Value Chain: What Is Involved in Practice? What Is the Legal Approach to This Issue?

1. If there is one sector of activity that reflects the phenomenon of excessive globalization that we have been experiencing since the 2000s, the textile and fashion industry can be taken as an example. A fashion product purchased in France may have traveled tens of thousands of kilometers from the country where the raw material was grown or created, then used to manufacture the fashion product in question, to its distribution. Dozens of intermediaries may have been involved throughout the value chain, with the result that the true origin of the materials and the stages in the manufacture of the product are obscured. Traceability and transparency are, therefore, directly linked to globalization.

Faced with this (not recent) observation, companies have gradually been encouraged to publicly commit to applying the main international texts on environmental protection, human rights, and decent working conditions.

This goes even further. International bodies such as the United Nations, the International Labour Organisation (ILO), and the Organisation for Economic Co-operation and Development (OECD) are now encouraging companies to move from commitment to management through several initiatives: the Global Compact and Sustainable Development Goals for the United Nations and the Guidelines for Multinational Enterprises for the OECD. Companies must not only affirm their values and convictions but also put in place the management tools needed to guarantee respect for rights within their own organization and beyond their "sphere of influence."

2. It is always useful to go back to definitions. For example, "traceability" is the ability to identify the origin of a product and trace it back from production to distribution. "Transparency" is defined as the character of what is visible to all, and its synonyms are comprehensibility, clarity, intelligibility, limpidity, and neatness.

Applied to the textile and fashion sector, traceability and transparency throughout the value chain mean tracing the history of a product from raw material to distribution. It also means communicating about the product in a way that is clear and accessible to everyone.

Furthermore, in this context of globalization, these issues of traceability and transparency go hand in hand with the duty of vigilance. This concept refers to the obligation placed on ordering companies to prevent social, environmental, and governance risks linked to their operations, but which may also extend to the activities of their subsidiaries and commercial partners (subcontractors and suppliers). The duty of care requires companies to establish a compliance program and is the subject of several pieces of legislation around the world, notably in France since 2017, and most recently at the European level.

3. Firstly, in France, the duty of vigilance has been regulated since 2017. Companies exceeding a certain threshold must draw up a due diligence plan to identify the risks and prevent "serious violations of human rights and fundamental freedoms, the health and safety of individuals, and the environment" arising from the activities of the company, its subsidiaries, subcontractors, or suppliers.

For companies, drawing up a compliance plan means mapping, identifying, analyzing, and prioritizing risks. Companies must assess the situation of their subsidiaries, subcontractors, and suppliers, implement appropriate measures to mitigate the risks and prevent serious harm, provide a mechanism for alerting and collecting reports, and finally monitor the measures and assess their effectiveness.

Secondly, at the European Union level, the new Directive (EU) 2024/1760 on the duty of care of companies with regard to sustainability, adopted on 24 May 2024, incorporates most of the measures already in force in France.

An estimated 5,300 companies established in the countries of the European Union are affected by these new obligations.

This subject deserves the attention of all players in the textile and fashion sector, because even if small and medium-sized enterprises are not yet directly affected by the Directive (which will have to be transposed in the Member States), they will all be indirectly affected "in cascade," for example as suppliers and/or subcontractors to large companies.

To be continued.