Beyond compliance: building the business case for due diligence in apparel supply chains

Further detail about the potential final shape of the Corporate Sustainability Due Diligence Directive (CSDDD) emerged in September with significant changes from its original draft. Most notably, the scope has narrowed dramatically to cover only companies with more than 5,000 employees and €1.5bn in annual turnover – far larger than initially proposed. Implementation timelines have also shifted, with guidelines not expected until 2027 and enforcement beginning in 2029.

Speaking during a recent Innovation Forum webinar, Tom Mason, senior policy and stakeholder engagement manager at the Social and Labor Convergence Program (SLCP) said: "These are quite significant changes. What is promising, though, is that the CSDDD has retained a risk-based approach" covering all tiers of the supply chain.

The directive has also lost EU-wide civil liability provisions, meaning companies will navigate different liability regimes across member states. Perhaps most controversially for climate advocates, mandatory science-based climate targets have been removed from the legislation.

For Anna-Karin Dahlberg, chief sustainability officer at Lindex, the regulatory changes created unexpected challenges. The Scandinavian fashion retailer, part of a group with €1bn annual turnover, had prepared extensively for the directive – only to fall out of scope when thresholds increased.

Participating in the webinar, she said: "Our reaction to the raised threshold and the watering out of the whole framework was not so positive. Being a strategic sustainability team, our role is very much to set long-term direction. Politicians want to make it easier for the private sector – I don't know how much easier they've made it, actually."

Despite the frustration of moving in and out of scope, Lindex is maintaining its due diligence work. "Our story was never about legislation," Anna-Karin explained. "The Lindex brand is very much about inclusion, diversity and women empowerment. For us, it's impossible to carry that brand legacy without having proper human rights due diligence as a foundation."

The company has updated its previous 2025 supplier-focused targets to new 2030 goals with greater emphasis on worker outcomes, including building grievance channels across operations and supply chains.

From the supplier perspective, the challenge isn't understanding what needs to be done – it's managing the administrative burden of proving it repeatedly.

Also on the webinar, Iqra Inam, sustainability manager at Sapphire Textiles Mills in Pakistan, described the mounting pressure: "We are not prepared with a system. The data is so fragmented and it's so exhausting to deal with such mandates of audits every year that this new layer of data requirement is confusing."

Pakistan supplies numerous global brands, each with their own portals and reporting requirements. "We are reporting on the same kind of thing, but through multiple audits and multiple certifications," Iqra explained. "First the word was audit fatigue – now we talk about data fatigue."

She emphasised the need for partnerships rather than transactional relationships: "We need more partners to work with us because ultimately we are together working for the same kind of business. We can learn together, go through these challenges together, and make solutions that could be long-term."

The final webinar panellist, David Reiner, ethical sourcing lead at Zalando, outlined how the Berlin-based online retailer is addressing this fragmentation. Working with the multi-stakeholder initiative, The Industry We Want – led by the Ethical Trading Initiative, Cascale, and Fair Wear – Zalando has helped develop a unified due diligence assessment tool.

"The number one feedback we've been receiving from brands is: can somebody please unify this, can somebody please find a way to bridge the bottleneck?" David said. "Since we're all asking for the same things, is there any way to align that with legislative standards without any traction or effectiveness loss?"

The tool, launching soon as an open-access platform with implementation partner TrusTrace, aims to reduce brand reporting time from several hundred hours annually to under an hour. It aligns closely with OECD guidelines and uses AI to extract relevant information from existing documents, pre-populating surveys and providing next-step recommendations.

"We're not proposing one solution, one way, one service provider," David stressed. "We're really opening up the field – you now have your basic assessment, you now have a linkage to the OECD manual, you know what to do."

Beyond data collection systems, webinar panellists emphasised the importance of grievance mechanisms and worker voice in measuring actual impact.

"Tools can only collect so much," Anna-Karin noted. "Ultimately, if you want to measure the impact of actions being taken, you still have to go back to worker interviews. Did it actually improve your lives? Grievance channels must be the foundation of due diligence."

Inam described positive experiences working with third-party programmes for worker engagement: "No matter how strong leadership you have on factory floors, you still need the right partners because many times people have biases, people have issues with management that they cannot easily open up about."

As regulatory frameworks continue evolving, the consensus among panellists was clear: effective due diligence requires moving beyond checkbox compliance toward collaborative approaches that genuinely address risks and build supplier capacity – creating business value while improving conditions for workers throughout global supply chains.