The future of sustainable EU-compliant supply chain management - everything you need to know

1. New EU directives: how supply chain management is changing
2. Transparency through data
3. Strengthening sustainability through stable supplier relationships
4. Cooperation as the key to sustainable supply chain management
5. Seizing opportunities: How sustainability becomes economic success
6. Learnings on EU-compliant supply chain management for manufacturers

• CSRD (Corporate Sustainability Reporting Directive)
  Since January 2024, companies in the EU have been obliged to disclose their sustainability performance in the areas of environmental, social and governance (ESG) and thus take responsibility for their social and ecological impact. The first CSRD reports are due in 2025.
• CSDDD (Corporate Sustainability Due Diligence Directive)
  Companies with more than 1,000 employees and a turnover of 450 million euros in the EU have been fully responsible for their entire supply chains since June 2024. Not only must their own manufacturing processes be sustainable, but all suppliers and subcontractors must also demonstrably contribute to ensuring that the business model meets the Paris climate targets.
  All EU member states must transpose this duty of care into national law within two years of its adoption and hold companies liable under civil law. The legislation will be gradually extended to the entire industry and will also affect small companies by 2027.

Brands such as Patagonia and Vaude feel vindicated by the new legislation. Clear rules have long been needed to force the entire textile industry to take more responsibility, says Nick Allen, Director of Transparency at Patagonia. The sad fact is that, with up to 1.7 billion tons of CO₂ emissions per year, they cause more than the aviation and shipping industries combined.

In order to specifically reduce CO₂ emissions, companies need to shed light on their dark supply chains. This is only possible with accurate data collection, says Chiara Mingozzi from the Federation of the European Sporting Goods Industry (FESI): "Reporting is becoming the most important requirement. You have to ask yourself: What data do I need?"

Patagonia has been working hard for eight years to make the entire supply chain transparent by collecting, analyzing and evaluating data. "The outdoor industry has already come a long way," says Allen. However, according to Philipp Mayer, founder of the supply chain compliance platform Retraced, less than 40 percent of all textile companies know what their supply chain looks like after Tier 1. And less than 20 percent have insight into the processes downstream of Tier 2. The key to greater transparency is data, data and more data, says Mayer.

In addition to Retraced, other good partners also provide assistance with data collection. Amer Sports has been relying on the support of Carbon Trust's experts for years. With the help of detailed supply chain analyses, they sound out the greatest impacts, conduct risk management taking into account the climate crisis and make the opportunities of sustainable business visible - and ultimately an attractive business case.

Bettina Roth, Head of Quality Management & CSR Supply Chain at VAUDE, underlines the need for standardized solutions for data collection:

"Better technical solutions will come, now that the laws are in place," says David Ekelund from Icebug. Transparency has always been at the top of the agenda for his company. Following the analysis, the energy supply along the entire supply chain was converted to solar energy together with the production facilities - the most important measure for his company to become climate-positive. The partnerships that have emerged from this are fundamental to his sustainable company, reports Ekelund.

Patagonia is also proud of its stable relationships with its suppliers: according to Matt Dwyer (Product Impact & Innovation), Patagonia's top 20 suppliers are the same as they were ten years ago. "It's not enough to rely on data reports from suppliers. You have to build stable relationships along the entire supply chain," says his colleague Nick Allen. This is the only way to convince everyone to share detailed information and see sustainability as a business advantage.

"In order to have more influence, we need to cooperate," says Julie Gretton from Gore-Tex. Here, too, the company has set itself the goal of eliminating fossil fuels along the entire supply chain and has teamed up with Patagonia to achieve this - an open source tool has been developed as part of the joint Sustainable Apparel Coalition initiative: The Higg Index enables companies to share supply chain transparency tools and data and measure the social impact of products.

Other NGOs and associations also help with networking and exchange. The bluesign textile label, for example, allows better conclusions to be drawn thanks to the large pool of data from all partners. CCO Barbara Oswald illustrated the benefits of regular and automated data collection in order to maintain and expand the sustainability standard: Bluesign is continuously working on the comprehensive database, in which the resource consumption can also be viewed for every listed material of its partners - for the entire industry.

Third parties are particularly important for this exchange of knowledge within the industry, as European antitrust law and national regulations to prevent anti-competitive behavior regulate discussions about supply chain law between companies. External moderation is needed to avoid taking any legal risks in the process of clarifying supply chain due diligence obligations - for example from the European Federation of the Sporting Goods Industry (FESI) or the WFSGI at a global level.

The economic success of companies such as Patagonia, VAUDE and Co. proves the point: sustainability along the entire supply chain pays off. No industry has done a better job of committing to meeting climate targets than the outdoor and sporting goods industry. Those who understand the new EU regulations as guidelines for improvement and implement them innovatively can strengthen their brand image, forge new partnerships and achieve more stable business in the long term. The tools and ideas are there and the pioneers are ready to share them.

• Implement EU directives: Transparency and sustainability along the supply chain will be mandatory from 2024.
• Use data: Precise data collection and evaluation are key to compliance.
• Strengthen partnerships: Close, long-term relationships with suppliers promote trust and cooperation.
• Use standardized tools: Tools such as the Higg Index facilitate transparency and sustainability management.
• Adapt best practices: Learn from trailblazers like Patagonia and VAUDE to implement successful strategies.
• Recognize opportunities: Understand sustainability not only as a duty, but also as a business case and image factor.
• Seek cooperation: Exchange with initiatives, NGOs and third parties helps to meet legal requirements.
• Plan for the long term: Sustainable business practices increase stability and competitiveness.