What: EU's revised sustainability directives CSRD, CSDDD, and ESPR mandate comprehensive environmental reporting and due diligence from retailers by 2028, fundamentally transforming business practices and supply chain management.

Why it is important: This regulatory framework represents the EU's most comprehensive attempt to address retail's environmental impact, requiring significant investment in new technologies and processes while reshaping industry standards globally.

The European Union's sustainability regulations are undergoing significant revisions, with the implementation deadline for CSRD extended to 2028 and its scope adjusted to focus on larger businesses. The updated criteria now apply to companies with over 1,000 employees and EUR 50m in turnover if based in the EU, or EUR 450m if not EU-based. These directives demand comprehensive environmental reporting and supply chain due diligence, while the ESPR introduces specific requirements for waste reduction, durability, and product repairability. Digital product passports will become mandatory, tracking products from origin through their lifecycle. The regulations' impact extends beyond EU borders, affecting UK businesses trading with the bloc. While some retailers, like Passenger and Baukjen, are proactively preparing for compliance, others face challenges in securing resources and expertise. The directives also raise concerns about unintended consequences, particularly for smaller suppliers and factories lacking resources for comprehensive reporting and auditing. Despite implementation challenges, these regulations are reshaping the retail landscape, pushing the industry toward greater transparency and sustainability.

IADS Notes: The evolution of EU sustainability regulations marks a critical turning point for retail operations. As noted in February 2025, the extension of CSRD compliance deadlines to 2028 provides crucial adaptation time, though industry experts warn that up to 75% of fashion businesses could disappear within five years due to non-compliance. The industry's initial unpreparedness for these changes has led to collaborative initiatives for standardised reporting. This transformation aligns with shifting consumer preferences, as evidenced by the growing preference for repairs over replacement, suggesting that successful regulatory adaptation could become a key competitive advantage.

CSRD, CSDDD and ESPR: do you know the new letters of sustainability law?