The regulatory environment is undergoing significant changes, and how Higg Index supports CSRD

The sustainable development and regulatory environment of the clothing, footwear, and consumer goods industries are undergoing significant changes, and we are transitioning from a period of voluntary disclosure of impacts to a period of mandatory reporting.In 2025, supply chain related enterprises must comply with the Corporate Sustainability Reporting Directive (CSRD) and release comprehensive data on their Environmental, Social, and Governance (ESG) practices.

In addition, a comprehensive sustainable development report is not only a requirement of the European Union, but also an increasing number of legislation passed around the world. The recent adoption of laws and regulations such as the Climate Enterprise Data Responsibility Act and the Climate Related Financial Risk Disclosure Act in California, when combined, means that your fashion, clothing, and footwear business must implement sustainable development reports on a new scale.

About CSRD

The Corporate Sustainability Reporting Directive (CSRD) is an important legislative development aimed at encouraging responsible corporate behavior. This directive aims to enhance the transparency of business activities by requiring companies to report their environmental, social, and governance (ESG) impacts.

CSRD is a step towards incorporating sustainable practices into the core of business strategy, ensuring that companies are not only accountable for their financial performance, but also for their impact on society and the planet. This directive expands the scope of information that companies must disclose, including details of supply chain management, resource management, and social responsibility policies.

The raw data will be crucial

CSRD will require the company to provide data on its significant impacts, environmentalrisks and opportunities, as well as the progress of improvement plans throughout the entire value chain. As sustainable development reports shift from voluntary compliance to mandatory compliance, it is necessary to provide consistent, comparable, comprehensive, and verifiable primary value chain data to demonstrate the rationality of the set goals and demonstrate the progress made.

How Higg Index supports CSRD compliance work

The Higg Index tool, although not a regulatory compliance tool, can play an important role in helping companies prepare for CSRD.

As an industry-leading assessment and tool, Higg Index helps brand owners, retailers, and manufacturers collect raw data on their global impact, so they can understand their current performance and develop improvement strategies based on comparable, actionable, and verifiable raw data.

In terms of CSRD compliance, Higg Index can help businesses:

☆ Propose many questions needed to understand the dual substance (considering both the impact of ESG issues on businesses and how businesses impact the environment and society);

☆ Develop indicators and goals that align with industry best practices;

☆ Collect and, in some cases, verify the required quantitative and qualitative data to determine, measure, and demonstrate progress in achieving the goal of reducing impact.

From greenhouse gas emissions in layers 1, 2, and 3, to how to manage water resources, chemicals, worker welfare, and impact on local communities, Higg tools will provide you with in-depth information on the key areas reviewed by CSRD. These tools can collect first-hand data from your factory every year, making it an important input for CSRD reports. In addition, data from Higg FEM and Higg FSLM can be validated by third parties, making publicly disclosed data more credible.

In 2024, as the EU Enterprise Sustainability Reporting Directive enters its initial stage, it will have a comprehensive impact on Chinese companies. It is crucial for companies to take early measures to comply with these mandatory disclosure requirements.