Fashion’s flagging sustainability ambitions took a fresh hit this week, as the European Union moved to weaken tentpole environmental and human rights regulations.
The EU’s push to deliver on its Green Deal — an ambitious set of policies intended to decarbonise the economy — has been a driving force shaping big fashion companies’ sustainability strategies since it launched in 2019. Associated regulations targeting the industry cover everything from environmental reporting to circular design and greenwashing.
The prospect of tougher oversight, coupled with toothy penalties for noncompliance, has helped keep climate and human rights issues on executive radars despite mounting headwinds. Large brands have invested heavily to map suppliers and gather impact data in anticipation of rules that would require more transparency and make them more accountable for abuses in their supply chains.
But the Green Deal has also come under assault from companies complaining about costly and burdensome red tape that prevents them from competing on a global stage. Policymakers are equally concerned about sluggish economic growth and the risk Europe could fall further behind the US as Trump pushes forward with aggressive deregulation.
This week, EU regulators laid out proposals to rein in key sustainability reporting and due diligence regulation. If approved, the changes would mean only the biggest fashion companies will need to regularly publish information about their environmental and human rights risks. Disclosures will also be much less detailed, easing a compliance burden loathed by businesses, but simultaneously reducing scrutiny. Meanwhile, mandates to toughen up supply-chain due diligence will only apply to direct contractors – typically the factories that deliver finished apparel. Much of the industry’s worst impacts take place deeper in the supply chain, in subcontractors or second tier suppliers, like textile mills and yarn spinners. Fines and liability for noncompliance are expected to be significantly lowered.
“Simplification promised, simplification delivered,” Commission president Ursula von der Leyen said in a statement. “This will make life easier for our businesses while ensuring we stay firmly on course toward our decarbonisation goals. And more simplification is on the way.”
But looked at another way, the new rules are the latest sign that reality is beginning to bite on exuberant sustainability commitments. Consumer appetite for greener, more ethical goods is unreliable at best. Economic challenges, including inflation and increasingly unpredictable trade policies are drawing focus from the long-term threat of climate change. And a backlash against “woke capitalism” led by the US is exerting greater influence over politics. That’s not only affecting regulation, but also driving cuts to foreign aid, threatening nonprofit organisations that play a key role in holding fashion to account in absence of tough regulation.
To be sure, the EU is still pressing ahead with a host of sustainability policies that will affect the way the industry operates. Individual countries and states are also pushing new rules. Lawmakers in California and New York — two of fashion’s biggest global markets — are considering their own bills to introduce sustainability due diligence and reporting rules targeting the sector. Still, their passage is uncertain and the process less advanced than in Europe.
The bloc’s move to weaken regulatory requirements also have wider implications. Strict rules would have put pressure on the industry to do better globally, since they would apply to any large company doing business in the massive European market. Critics say the proposed changes go well beyond simplification to radically water down rules that were meant to usher in game-changing new protections for workers and the environment.
Even with the prospect of tougher regulation in place, fashion was well behind on commitments to curb its contribution to climate change and serious human rights abuses remain a persistent feature in the operating model.
“The workers who make clothes for European brands were counting on the EU to provide credible avenues to remedy the abuse by fashion brands they have to endure every day,” Bangladeshi labour advocate Kalpona Akter said in a statement. “By scrapping enforcement procedures, the EU is telling big companies that violating workers’ rights is an acceptable business model.”
THE NEWS IN BRIEF
FASHION, BUSINESS AND THE ECONOMY
Farfetch reached EBITDA profitability in 2024. The London-based e-tailer’s adjusted earnings before interest, taxes, amortisation and depreciation hit $30 million after a year under Coupang. Farfetch generated $471 million in net revenue in the final quarter of 2024, a 25 percent decline from the same period in 2022.
Shein profit dropped last year, further challenging its IPO. The Financial Times reported the fast-fashion retailer’s profit slumped by almost 40 percent last year and that net income fell to $1 billion. News reported earlier this month that the firm was under pressure to cut its valuation to about $30 billion from a 2023 valuation of $66 billion.
Together Group acquires Digital Studios Imerza and Visualisation One. Imerza is video game developer Epic Games’ official US partner for the creation of digital twins. The goal is to bridge its existing agencies’ cultural know-how with new technological capabilities.
TJX tops analyst estimates and projects rare retail optimism. The company’s revenue of $16.4 billion just topped analysts’ estimates, and earnings per share of $1.23 beat expectations for $1.16 for the quarter ending Feb. 1. TJX forecasts consolidated comparable store sales to be up 2 percent to 3 percent for the full 2026 fiscal year.
Urban Outfitters’ clothing rental platform turns its first annual profit. Nuuly’s net sales in its rental business jumped 56 percent for the quarter ending Jan. 31 to $113 million. Sales for the full fiscal year rose 60 percent, to $378 million, with operating income reaching $13.3 million.
US consumer spending falls in January as monthly inflation rises. Consumer spending, which accounts for more than two-thirds of US economic activity, dropped 0.2 percent last month. Weak spending likely reflected a drag from unseasonably cold temperatures that engulfed large parts of the country.
Trump FTC chair pledges to keep aggressive merger enforcement. The organisation’s chairman Andrew Ferguson vowed to aggressively block illegal mergers, reaffirming the agency’s commitment to challenging deals that violate antitrust laws. He continues the stance taken during the Biden administration.
Trump says tariffs on Mexico and Canada are “going forward” next month. Canada and Mexico have implemented new border measures in an effort to stave off the tariffs. Trump indicated he was pushing forward with a plan for so-called reciprocal tariffs, which he has said would peg US levies on other countries.
Mexico analysing more measures to crack down on low-cost shipments. The country slapped tariffs on so-called “de minimis” purchases largely coming from China and is considering further trade measures.
Warby Parker to open Target shop-in-shops. Warby Parker plans to open five shop-in-shops in Target in the second half of 2025, the eyewear maker’s first foray into multi-brand retail in its 15-year history. The company reported an 18 percent year-over-year revenue bump to $191 million in the final quarter of 2024.
Consumers “under attack” are pulling back, Wrangler maker says. Kontoor said that tariffs on Mexican products this year, if enacted in March, would erode operating profit by about $50 million before taking into account any actions taken to offset the impact. The company could transfer production elsewhere, raise prices or take “other proactive mitigating cost actions.”
Michael Strahan to start his own custom men’s tailoring operation. The Michael Strahan Design Lab plans to deliver made-to-order suits within two weeks at flat prices, such as $399 for a two-piece set. The new line of custom suits will be available through its own online shop.
Revolve to open its first Los Angeles store. The brick-and-mortar hold-out is laying down real roots with a permanent store set to open in the fall in an 8,000 square foot space in The Grove shopping centre. The move comes after it hosted a pop-up in the same mall this past winter.
THE BUSINESS OF BEAUTY
Walgreens Boots Alliance to be split three ways following buyout. Private equity firm Sycamore Partners will separate its US and UK retail pharmacies and its healthcare business if a privatisation bid is successful, the Financial Times reports. Media reports have also pointed to issues with financing for a buyout and discussion with Sycamore briefly falling out.
Rabanne owner Puig expects slower sales growth in 2025. The company expects its revenues to grow between 6 percent and 8 percent this year. The company’s full-year net profit reached €531 million ($552.82 million), a 14 percent rise from 2023.
Hims & Hers’ 458 percent rally tested as FDA undercuts obesity sales. The telehealth company’s meteoric rise has hit a roadblock after FDA regulations challenged its weight-loss drug business. The company has said its personalisation strategy will enable it to continue selling the products.
Uoma Beauty founder sues the brand’s new owners. The suit alleges that the December 2023 purchase of the brand’s assets was an unauthorised sale, and seeks damages for “unjust enrichment.” In the complaint, Sharon Chuter alleges that the company, which was sold to satisfy a $6.2 million loan, had been valued as high as $50 million in 2022.
Il Makiage owner reports double-digit revenue growth. The company reported record revenues of $647 million (up 27 percent year-on-year) with an adjusted EBITA of $150 million (up 40 percent) in 2024. Oddity also reported double-digit growth for SpoiledChild and Il Makiage, the latter of which exceeded revenue of $500 million in 2024.
Merit Beauty launches at Sephora UK. Two years after expanding into the country via its direct-to-consumer website, the makeup label Merit announced its entrance into Sephora UK. The brand informed The Business of Beauty that it exceeded its $100 million goal in revenue for 2024 and is profitable.
Nivea maker Beiersdorf expects skin care growth to slow. The German company expects organic sales to grow between 4 percent and 6 percent in 2025, down from a 6.5 percent rise to €9.9 billion ($10.37 billion) it reported for the previous year. The company had forecast organic sales growth of between 6 percent to 8 percent in 2024.
Bath & Body Works forecasts tepid annual results on tariffs. Bath & Body Works forecast fiscal 2025 net sales growth of to 1 percent to 3 percent, largely below analysts’ estimates for a 2.8 percent rise. Its third-quarter sales fell 4.3 percent to $2.79 billion from a year ago.
Palm Angels’ Francesco Ragazzi launches fragrance line. An initial collection of seven fragrances, all priced from $280-$320, will be available exclusively at the upscale L.A beauty retailer Violet Grey from March 3rd, before a wider rollout begins on March 24. Ragazzi’s plan is to tap into luxury codes outside of beauty to help position the brand as a lifestyle offering.
PEOPLE
Lucie and Luke Meier exit Jil Sander. The Meiers staged their final show for Jil Sander on Wednesday after eight years as the label’s creative directors. The Meiers and the OTB-owned label “have mutually decided that this collection would be the last of their collaboration,” according to a brief statement.
Glamour UK names new head of editorial content. Kemi Alemoru will join the publication on March 3 and will report to Glamour’s global editorial director Samantha Barry. In this role, Alemoru will be responsible for the publication’s editorial and social content.
Unilever chief Schumacher will hand over to CFO in surprise exit. Hein Schumacher is stepping down after less than two years in charge of the consumer goods business. Schumacher will step down on March 1, and leave the company at the end of May.
St. John Knits shakes up leadership. Following chief executive Andy Lew’s promotion to executive president of parent company Lanvin Group, St. John Knits has named new chief commercial, merchandising and operating officers. Mandy West has been named chief commercial officer. Lauren Parrish will join as chief merchandising officer.
Compiled by Yola Mzizi.
