Navigating CSR regulation in the EU: Key issues and insights from Germany and Italy

Key elements of CSR regulation in the EU

Corporate Social Responsibility regulations in the EU cover a wide range of issues, each targeting critical environmental and social challenges. Key areas of focus include:

• Hazardous substances
• End-of-life management of products and packaging, including Extended Producer Responsibility (EPR)
• Social and environmental due diligence
• Consumer communication and transparency
• Sustainability reporting
• Ecodesign principles

Understanding these issues is essential for companies to navigate the complex regulatory environment and align with emerging sustainability trends. In the following sections, we explore each of these topics, highlighting their significance and providing illustrative examples.

Hazardous Substances and Product Safety in the EU

The EU has implemented several pieces of legislation to tackle dangerous substances and ensure product safety to protect consumers and encouraging innovation in safer and more sustainable alternatives.

REACH Regulation: ensuring chemical safety

The Registration, Evaluation, Authorisation and Restriction of Chemicals (REACH) regulation sets out procedures for the registration and testing of chemical substances used in the EU. REACH includes a ban on PFHxA (Perfluorohexanoic acid) in consumer textiles from  October 2024.

An EU-wide project to ban all PFAS, led by Germany, the Netherlands, Sweden, Denmark, and Norway, is currently under review by the European Chemicals Agency (ECHA). Product categories to be covered are under review.

General Product Safety Regulation

The new EU General Product Safety Regulation, which comes into force on 13 December, 2024, introduces stricter safety requirements for marketers. For example, economic operators will be required to make supply chain traceability information available to market surveillance authorities on request. This includes identifying the economic operators who have supplied them with a product or its components, as well as those to whom they have supplied the product.

National Initiatives: France’s proposed PFAS ban

France has proposed a phased ban on per- and polyfluoroalkyl substances (PFAS). Starting in 2026, the ban will apply to cosmetics, waxes, clothing, footwear, and their waterproofing agents, with exemptions for protective equipmennt such as military or firefighter clothing. By 2030, the ban will extend to all textiles, including furniture, with specific exemptions for technical textiles used in industrial applications which will be defined by decree.

Extended Producer Responsibility (EPR) across EU Member States

Extended Producer Responsibility (EPR) is a policy approach that makes producers responsible for the entire life cycle of their products, including post-consumer waste management. Most of the time producers join a Producer Responsibility Organisation (PRO) that manages the collection, recycling and disposal of products on their behalf. Initially applied to packaging, EPR schemes have been extended in several countries to include other product types such as textiles.

EPR systems are well established in many European countries and are mandatory for packaging under the EU Waste Framework Directive.

In 2008, France was the first country to introduce EPR for textiles: producers have to declare quantities and pay a fee to the eco-organization Refashion which can be lowered according to environmental performance criteria. Other European countries, such as the Netherlands and Sweden, have also introduced such systems, and similar initiatives are underway in Italy and Spain.

The European Union is actively working on a project to harmonize EPR schemes across Member States. This initiative, included in the Proposal for the revision of the Waste Framework Directive, aims to standardize requirements and reduce administrative burdens for producers operating in multiple countries. This Directive will introduce mandatory extended producer responsability at European level for the Textile, Linen and Footwear sectors between 2026 and 2030.

Social and Environmental Due Diligence: Legal frameworks and key examples

The origins of modern due diligence requirements can be traced back to the tragic collapse of the Rana Plaza factory in Bangladesh in 2013 which drew global attention to the unsafe working conditions and human rights abuses prevalent in many supply chains. In response, countries and organizations began developing frameworks to ensure greater accountability and protection for workers and the environment.

In 2017, France introduced the Duty of Vigilance Law, which requires large companies to establish and implement a vigilance plan. This plan must identify and mitigate risks of serious violations of human rights and fundamental freedoms, as well as threats to the health, safety, and environment in relationn to their operations and supply chains.

The French legislation has inspired similar initiatives around the world. Germany, for instance, enacted the Lieferkettensorgfaltspflichtengesetz (Supply Chain Due Diligence Act, or LKSG), which imposes due diligence obligations on companies to identify and address human rights and environmental risks in their supply chains. At the European level, the Corporate Sustainability Due Diligence Directive (CSDDD) was adopted in 2024 and will be effective from 2027. It aims at establishing a unified framework for due diligence across all member states.

For more in-depth look at social and environmental due diligence, refer to our dedicated article on this topic.

Consumer communication: Tackling greenwashing and enhancing transparency

Transparency in consumer communication has become a critical focus of CSR regulation. Misleading or vague environmental claims, often referred to as greenwashing, are increasingly being scrutinized and subject to legal action under consumer protection laws in many countries.

In France, greenwashing has been explicitly classified as a misleading commercial practice and the law prohibits certain claims. In addition, textile products and their packaging must now include a product sheet detailing their environmental qualities and characteristics. At European level, efforts are underway to explicitly regulate environmental claims through the Empowering Consumers Directive and the Green Claims Directive Proposal. For further insights, refer to our dedicated article on greenwashing regulations.

The European Commission is also working on a digital product passport initiative which is included in the ESPR. This passport, which is expected to come into force by 2026-2027, will require mandatory disclosure of key environmental information, increasing transparency and enabling consumers to make more informed choices.

Sustainability Reporting: Transition from NFRD to CSRD

The Corporate Sustainability Reporting Directive (CSRD) has replaced the Non-Financial Reporting Directive (NFRD), marking a significant step forward in sustainability disclosure requirements for companies operating in the EU. The CSRD introduces reporting standards and the concept of double-materiality, broadens the scope of companies covered and requires assurance of the reported data.

It will apply uniformly across all EU member states, creating a level playing field for companies operating in the single market and providing stakeholders with more reliable and comparable sustainability information.

For a detailed breakdown of the CSRD and its implications, check out our dedicated article on this topic.

Eco-Design: Legal incentives and frameworks across Europe

Eco-design is the integration of environmental considerations into product design to ensure minimal environmental impact throughout the product’s entire life cycle. This approach prioritizes resource efficiency, durability, and recyclability.

In France, the AGEC law (Anti-Waste for a Circular Economy) introduces an obligation for producers to implement an eco-design plan and deliver it to Refashion. The Climate and Resilience law requires the implementation of an environmental impact score on textile articles, according to a methodology and graphic charter defined by public authorities. The associated decree is currently in its final consultation phase for use from 2025.

At the European level, the eco-design regulation ESPR specifies that eco-design requirements for each sector must be set by future delegated acts, to be published in the coming years, with priority given to the textile sector.

Eco-design principles are further reinforced by eco-modulation within EPR schemes, for instance in France. This system combines eco-design with financial incentives, by reducing or increasing producer fees according to criteria on products, defined by each Producer Responsibility Organisation.

The emphasis on eco-design is in line with Europe’s broader strategy, included in the Green Deal, to reduce environmental impact and promote innovation in sustainable product development.

Focus on National CSR Laws and regulations in Germany

Germany has implemented significant national legislation related to corporate social responsibility (CSR). These include a well-established and operational EPR system for packaging, and a ground-breaking Supply Chain Due Diligence Act (Lieferkettensorgfaltspflichtengesetz or LKSG).

We will now take a closer look at these measures to provide a clearer understanding of Germany's approach to corporate social responsibility.

Extended Producer Responsibility for Packaging in Germany: The VerpackG Act

Germany’s Packaging Act, known as the Verpackungsgesetz (VerpackG), has been a cornerstone of its extended producer responsibility (EPR) system since its implementation in 2019. The legislation requires companies to take financial and operational responsibility for the end-of-life management of their products.

In order to comply with the VerpackG Act, businesses must follow these three steps:

1. Register with the Zentrale Stelle Verpackungsregister (Central Packaging Register Office, or ZSVR): Producers must register with the LUCID Packaging Register to obtain an EPR registration number.
2. Join a dual system recycling scheme: Producers must enter into a licensing agreement with an authorized recycling system to handle the collection and recycling of their packaging waste.
3. Report packaging data and pay recycling fees: Businesses must report the quantities of packaging they distribute in Germany and pay fees to support the recycling programme.

From July 1, 2022, online marketplaces and platforms must ensure that their business partners comply with the EPR obligations. This includes checking:

• EPR registration numbers from their partners.
• Proof of system participation in the system, such as a certificate or invoice from a licensed recycling system provider.

Fashion brands distributing their products in Germany through third party platforms must therefore ensure they can provide both of these proofs of compliance.

Note that the Verpackungsgesetz defines the producer as the first entity to place packaging filled with goods on the German market. This can include:

• Manufacturers, retailers selling private-label brands, and importers of packaged goods.
• E-commerce companies that use shipping packaging for deliveries.
• Companies offering service packaging at the point of sale (e.g., bakery bags or coffee cups).

This broad definition ensures that all entities contributing to packaging waste are accountable under the law.

Germany’s Supply Chain Act (LKSG): Comprehensive Due Diligence Requirements

Germany’s Supply Chain Due Diligence Act, known as the Lieferkettensorgfaltspflichtengesetz (LKSG), represents a major step forward in promoting corporate accountability for human rights and environmental protection. Effective since 2023, the law imposes strict due diligence obligations on companies with at least 1,000 employees in Germany.

The LKSG requires companies to take responsibility for their supply chains, extending beyond their immediate operations to cover all stages of production. Key obligations include:

• Risk management system: Companies must establish a system to identify, prevent, and mitigate risks of human rights abuses and environmental damage throughout their supply chain.
• Complaint mechanisms: Enterprises must establish accessible and effective channels for individuals to report concerns about potential violations.
• Regular reporting: Organizations must publish detailed reports on their compliance with the law, ensuring transparency and accountability.

The LKSG imposes severe financial penalties for non-compliance, with fines of up to €8 million or 2% of annual global turnover.

Italy: Spotlight on national CSR laws and regulations

Italy has introduced several measures to improve corporate social responsibility (CSR), particularly in the areas of packaging waste management and environmental claims.

In the following sections, we will explore Italy’s approach to CSR, focusing on its packaging EPR system and labelling requirements, the proposed EPR for textiles, and its legislative efforts to regulate environmental claims.

Extended producer responsibility and environmental labelling requirements for packaging

In Italy, the concept of Extended Producer Responsibility (EPR) for packaging has been in place since 2006. The Italian National Packaging Consortium (Consorzio Nazionale Imballaggi, called CONAI) is the main body responsible for implementing and monitoring the EPR regulations.

Producers must register with CONAI, report annually on the quantity of packaging placed on the Italian market, and pay an environmental contribution based on the total quantity, weight, and type of packaging material used.

Since 2023, there are also environmental labeling requirements for packaging in Italy consisting of:

• An alphanumeric code in accordance with Decision 97/129/EC, indicating the material composition of the packaging.
• Disposal instructions in Italian, provided only for packaging intended for the final consumer.

In addition to these mandatory elements, there are also optional features available for producers, such as suggestions for efficient separate waste collection. Further details can be found in the guidance provided by EPR Italian organization CONAI on its website, or the guidelines from the Italian government. Here is an example of how a label can look like:

A future extended Producer Responsibility for textiles in Italy

Italy is at the forefront of implementing the European Circular Economy Action Plan in the textile sector. In December 2022, followed by an updated draft decree in June 2023, Italy presented a proposal to establish an Extended Producer Responsibility (EPR) scheme for textiles.

The proposal remains on hold pending updates to the European Waste Framework Directive, which will establish a harmonized EPR system across Europe.

In the meantime, Italy has already implemented a significant step ahead in the EU timeline: the obligation to separately collect textile waste has been in force since the beginning of 2024, anticipating the EU requirement, which is set to take effect by 2025.

For further details and specific guidance, interested parties can consult the dedicated FAQs section: ERP Italia Tessile FAQs.

Restrictions on environmental claims in Italy: Consumer code and marketing communications

In Italy, environmental claims in marketing are subject to strict rules designed to prevent misleading or unsubstantiated claims. These rules are set out in both the Italian Consumer Code (Codice del Consumo) and the **Code of Marketing Communication (**Codice di Autodisciplina della Comunicazione Commerciale), with the goal of ensuring transparency and protecting consumers from misleading environmental claims.

In Measure 28060 of 20 December 2019, based on the Consumer Code, the Competition and Market Authority (AGCM) stated that claims should reflect the actual environmental benefits of a product and must be communicated in a timely, unambiguous manner. In particular, the AGCM has clarified that:

• Environmental claims must be scientifically verifiable and convey information that is adequately documented and limited to specific, verifiable aspects of the product.
• Claims should reflect significant environmental benefits compared to similar products on the market.

The AGCM has also warned against the use of vague or generalized terms such as "sustainable", "biodegradable", or "compostable” which are often vague or misleading.

A notable example of this regulation in practice is a recent investigation launched by the Italian Competition Authority against Shein for potential misleading advertising in relation to environmental claims, highlighting the enforcement of these rules in the fashion and retail sectors.

In addition, since the late 1980s, Italy's Istituto di Autodisciplina Pubblicitaria (IAP) has been active in monitoring advertising practices, particularly those involving environmental claims. Article 12 of the Code of Marketing Communication states that:

• Advertising that claims or suggests environmental benefits must be based on truthful, relevant, and scientifically verifiable evidence.
• Clear communication is required to ensure that the specific aspect of the product or activity to which the environmental benefit applies is easily understood by consumers.

Conclusion: The growing need for traceability in response to growing regulatory requirements

Across Europe, the CSR and environmental regulatory landscape is evolving rapidly with each country introducing its own set of rules to ensure sustainability and corporate responsibility, leading to greater transparency and accountability throughout the supply chain. This trend is expected to continue as the EU pushes for more harmonized legislation.

For companies in the fashion industry, these increasing regulatory demands emphasize one key aspect: traceability. To comply with new requirements, businesses must be able to track and report on every step of their supply chain—from raw materials to finished products and their packaging.

Without a robust traceability process, companies risk penalties, loss of credibility, and failure to meet the expectations of both regulators and consumers.

As regulatory requirements continue to grow across Europe, it is vital for fashion brands to adopt effective traceability practices now. By doing so, they can keep up with the pace of new regulatory challenges, build consumer confidence, and contribute to a more sustainable future.