Euratex has warned about the impact of new legislation on the fashion industry severely hit by COVID-19. On the March 10, the European Parliament adopted its own-initiative legislative report on due diligence. Euratex welcomed the general aim of the report but pointed out its implementation will penalize the European industry with unintended consequences and excessive burden on SMEs.

Euratex welcomed the broad consensus registered around several important points, such as harmonization of legislation at European level instead of pursuing national approaches, and the principle of proportionality. However, the seriousness of unintended consequences especially in difficult economic times appears still not thoroughly understood.

European harmonization would avoid chaos across Europe on necessary requirements, it would minimize the confusion over the interpretation of responsible business conduct and it may support level playing field. However, fair enforcement and the related operational challenges are not sufficiently considered.

Proportionality is a very crucial principle in the debate on due diligence. The Small and Medium Size Enterprises (SMEs) do not own the capacities of larger companies and they are very much exposed to unintended consequences of legislation, even if its purpose is good. EURATEX appreciates the acknowledgement in the report that SMEs need to have “less extensive and formalized due diligence processes” and further support and information. However, the scope shall be further clarified and spare all SMEs from un-appropriate legal requirements.

However, the implementation of due diligence requirements will also bring negative impacts on the European value chain that, in EURATEX’s experience, on-line support tools can hardly avoid. Policymakers should properly assess the operational aspects in the elaboration of requirements in the upcoming proposals. It is essential to avoid new threats and additional costs, including those from administrative burdens for the industry and, specifically, for SMEs.

Euratex insists the policy proposals to be based on a smart mix of measures, combining incentives and support to responsible practices. The established industry-specific schemes, also referred as safe harbor approach, should be accepted as a tool to recognize compliance with regulation.