The European textile and apparel (T&A) sector underwent a fundamental realignment this week as EU member states granted final approval to the ‘Omnibus I’ simplification package. This legislative intervention significantly narrows the reach of the Corporate Sustainability Due Diligence Directive (CSDDD), raising the participation threshold to companies with over 5,000 employees and €1.5 billion in annual revenue. This adjustment effectively exempts nearly 90 per cent of previously targeted firms, providing a substantial reprieve for medium-sized garment manufacturers who had voiced concerns over the administrative burden of monitoring multi-tier global supply chains.
Shifting focus to tier-1 transparency
Under the revised framework, the mandate for deep-tier visibility has been moderated. Large apparel brands are now primarily accountable for their Tier-1 suppliers, with deeper investigations into fabric mills or raw material sources required only when ‘credible evidence’ of environmental or human rights risks is presented. Crucially, the final agreement eliminated the requirement for mandatory climate transition plans, a move intended to bolster the competitiveness of European fashion houses against non-EU rivals. However, this regulatory ease is countered by the Ecodesign for Sustainable Products Regulation (ESPR), which, as of February 2026, officially bans the destruction of unsold apparel, forcing brands to adopt circular inventory models.
Commercial resilience and ethical benchmarking
Despite the scaled-back legal requirements, market leaders like H&M and Patagonia are maintaining rigorous internal standards to meet heightened consumer expectations for ‘Material Honesty.’ While the CSDDD enforcement deadline is now deferred to July 2029, the industry is rapidly adopting Digital Product Passports (DPP). These digital tools are becoming the de facto commercial standard for entering the EU market, regardless of a company's size. For global suppliers in hubs like Vietnam and India, the focus has shifted from mere legal compliance to using verified sustainability as a premium differentiator in an increasingly crowded global market.
Driving EU circular economy goals
The European textile sector is a primary driver of the EU's circular economy goals, focusing on high-value, durable, and traceable products. This strategy aims to curb the environmental impact of ‘fast fashion’ while promoting European technological leadership in textile recycling and digital traceability systems.
By 2027, the industry anticipates a 4.5 per cent CAGR driven by the mandatory rollout of Digital Product Passports and a shift toward bio-based fibers. Following a period of consolidation, the financial outlook remains optimistic as brands replace high-volume waste with higher-margin, repairable, and sustainably sourced collections.
