Benefits of Sourcing from a European Clothing Manufacturer with Relevant Audit Results and Certificates

If you run a European clothing business or have Europe as one of your key markets, you should prepare yourself for legislative changes that will affect the way you choose your supply chain.

Table of contents

• Nearshoring
• SMETA social responsibility audits and their legal necessity
• Corporate Sustainability Due Diligence Act
• GOTS and GRS certificates
• Importance of ISO certificates
• How will supply chain transparency become a legal obligation

Nearshoring

Nearshoring is the practice of moving manufacturing to a nearby country rather than moving it to the cheapest possible manufacturer, wherever on the planet they might be.

The immediate benefit of this model is far more reliable delivery.

A shipment from a nearshoring clothing manufacturer arrives in a matter of days, worst case scenario weeks. An offshore shipment may have delays that last months.

Faster reorders

Imagine selling out your stock faster than expected. Depending on how much you order, with a nearshoring supplier, your reorder gets made in 2-4 and delivered in a few days.

This never happens with overseas manufacturers.

Also, when a supplier is a 2-hour flight away from you, it’s easy to visit them. Building a personal connection with people you work with can be beneficial for everyone involved. You can visit FUSH now by taking a virtual tour of our mass production facility.

Having a nearby manufacturer in your supply chain is just one aspect of running a sustainable business. That manufacturer should also be socially responsible. And there are ways to guarantee it.

SMETA 4-pillar social responsibility audit by Sedex

Sedex is one of the world’s leading ethical trade service providers, working to improve working conditions in global supply chains.

Theirs is the SMETA social responsibility audit – a comprehensive guideline for suppliers that, when followed to a T, brings great benefits to the audited company’s workforce.

When you hire a supplier that has passed either the 2-pillar or the 4-pillar SMETA audit, you are making a socially responsible choice that you can inform your customers about.

We passed the 4-pillar audit. Let’s see what both audits entail.

2-pillar SMETA audit

The two pillars are:

1. Labour standards
2. Health and Safety

They’re supplemented with the following audit elements:

• Management systems
• Entitlement to work
• Subcontracting and homeworking
• Environmental assessment (shortened)

Even with a passed 2-pillar SMETA audit, your potential or current supplier will have gone through a lot of work to align their business to these strict principles. With a 4-pillar SMETA audit, they’re ready to go the extra mile.

4-pillar SMETA audit

In addition to everything from the 2-pillar audit, the full SMETA audit comes with:

1. A comprehensive environmental audit
2. A business ethics audit

Necessary evidence for the environmental audit is:

• Interviews with the management
• Interviews with employees/contractors responsible for handling and treating the waste generated in the company
• Integrated Management System (IMS) policy
• Identification of environmental aspects and impact analyses
• Official assignment of a person responsible for waste handling
• Procedure for waste management
• Procedure for management of environmental impact
• Contract for disposal of non-dangerous waste
• Contract for disposal of textile waste
• Report of compliance with wastewater treatment
• Random interviews with workers

Necessary evidence for the business ethics audit is:

• Business ethics Policy
• Ethical codex
• Codex of subcontractors’ ethical business
• Decision of responsible person for business ethics principles
• Employment rulebook
• Interviews with management and workers

In addition, the auditors will carry out a thorough analysis of the paperwork to determine that no bribery or other suspicious activity is going on at the audited business.

If your business is based in Germany, you might already be obliged to work with a SMETA-audited supplier. Here’s why.

German Due Diligence in the Supply Chain Act (SCDDA)

According to this act, from 2024, enterprises with 1000+ employees that have their central administration, principal place of business, administrative headquarters, and statutory seat of the branch office in Germany are obliged to respect human rights by implementing defined due diligence obligations.

The act includes the supply chain, which means our 170 employees would count in the total of 1000+ people employed by a German company if we become its clothing supplier.

The easiest path to ensuring your supply chain operates in a socially responsible manner is to demand they become Sedex members and go through the 4-pillar SMETA audit.

Or simply by working with FUSH from the get-go.

A very similar act will similarly impact every EU country the SCDDA already has in Germany.

The Corporate Sustainability Due Diligence Act (CSDDD)

On March 15th, the European Council finally approved the Corporate Sustainability Due Diligence Act (CSDDD or CS3D). It will affect EU-based companies, their subsidiaries, and supply chains. It will also affect some non-EU companies that generate revenue in the EU.

This is what the act will do:

It will bring to an end, prevent, mitigate, and account for adverse human rights and environmental actions that companies, their subsidiaries, and supply chains make while running their businesses.

Which enterprises will be affected by it will depend on the number of employees and annual turnover. But what is interesting is that industries notorious for human rights and environmental violations would be affected regardless. The textile industry falls into that category.

Enforceability of this act

Member states will enforce this act through administrative supervision and civil liability (as mentioned already).

The European Network of Supervisory Authorities will carry out administrative supervision.

Following the CSDDD principles, it can impose appropriate penalties, such as fines, if a company doesn’t comply. The Network can also order companies to take corrective actions.

Keep in mind that this extends to the supply chain. So when it comes to the supply chain, the lowest risk for companies affected by the CSDDD lies in choosing a supplier with a valid social responsibility audit like the 4-pillar SMETA.

What’s in it for the workers?

Any company based in the EU or generating revenue in any Member State, their subsidiaries, and supply chains.

When in place, the CS3D would end, prevent, mitigate, and account for adverse human rights and environmental actions by these companies.

There will also be a system in place for victims of these actions to give them access to compensation through civil liability, where companies will be held accountable through proven intent or negligence.

However, it won’t affect all companies doing business in the EU. Criteria according to size and annual turnover would have to be met, though.

Criteria for the applicability of the act

The act will affect all large EU LLCs, split into two groups.

Group 1: Companies with 500+ employees and net EUR 150+ turnover worldwide.

Group 2: Companies in high-impact sectors of 250+ employees and net EUR 40+ million turnover worldwide. High-impact sectors are textiles, agriculture, and the extraction of minerals.

The same rule applies to non-EU companies as long as they meet the turnover threshold generated in the EU.

This is the most abridged version we could write about these two acts. However, neither tackles the lack of transparency in the supply chain. That’s what the Digital Product Passport (DPP) initiative is for.

The importance of transparency in your supply chain

Transparency will soon become a legal obligation for all businesses selling in the EU.

The Digital Product Passport (DPP) initiative comes to power in 2030 and by then, you’ll have to disclose all information regarding your brand’s social and ecological footprint. Which implies making the supply chain information public.

Since it’s a comprehensive process, better get accustomed to it as soon as possible.

How does the Digital Product Passport (DPP) work?

By scanning the QR code on a t-shirt or other piece of clothing, your customers will have access to different environmental and ethical aspects connected to the manufacturing of your product. And it is you who will have to supply that information.

This means no more keeping the supply chain in the dark and no dealing with suppliers that break ecological and human rights laws.

Additionally, the DPP will provide information like durability, reparability and more. All this is part of another initiative called the EU Strategy for Sustainable and Circular Textiles.

Objectives of the EU Strategy for Sustainable and Circular Textiles

• All textile products placed on the EU market to be durable, repairable and recyclable, to a great extent made of recycled fibres, free of hazardous substances, produced in respect of social rights and the environment
• Fast fashion to be phased out
• Reuse and repair services to be widely available
• Restrict export of textile waste
• Incentivise circular business models, including reuse and repair sectors

All of this and more will be fully enforceable in the EU, come 2030.

The EU legislative bodies aren’t the only ones that have noticed the negative social and environmental aspects of the textile industry. The customers have done that too. And they’re privy to certification schemes that are a guarantee of a more ecological product.

Let’s see which ones are those.

Certificates that matter to customers

Your customers want to know that their clothing comes from a factory that respects human rights as well as the environment. SMETA audit answers the questions of human rights. What about the environment?

One of the main ecological concerns of the customers of clothing brands is the origin of fabrics. They want to wear truly organic cotton or genuinely recycled polyester. Thankfully, some certificates are well-recognised by ecologically conscious shoppers – the Global Organic Textile Standard (GOTS) and the Global Recycled Standard (GRS).

GOTS – the organic cotton certificate

As an environmental fabric, organic cotton needs less water and less pesticides than conventional cotton.

For your customers to be sure they’re wearing organic cotton clothing, they need to see the (GOTS) logo somewhere on your apparel (hang tag, inside label). GOTS is the strictest label out there – to be labelled organic, your collection should consist of at least 95% organic fibres.

And for that logo to appear on your collections, you need to hire a certified organic cotton clothing supplier.

There are two ways to find a GOTS clothing manufacturer:

1. Visit the Global Organic Textile Standard database of certified manufacturers
2. Ask your supplier to send you their GOTS scope certificate

You can also do both. Either way, you’re sure your organic cotton collections will come with GOTS labelling on them.

What if you need recycled polyester instead of organic cotton? In that case, you need a different certificate.

Recycled polyester certificate

Running a sportswear brand? Got fitness-focused customers? You’ll meet their needs for recycled polyester clothes with a GRS clothing manufacturers. GRS-labelled clothing consists of at least 50% recycled content.

Finding such a manufacturer is almost the same as looking for a GOTS-certified one.

The only difference is that you’ll be looking through the Textile Exchange database of certified suppliers. Again, you can always ask for the GRS scope certificate.

GOTS and GRS audits

Both audits are as stringent and comprehensive as the SMETA social responsibility audit. They both use the International Labour Organization (ILO) Core Labour Standards for the social responsibility assessment.

As far as proving the organic and/or recycled origin of a finished product, these two certification schemes are additionally strict. For an organic cotton piece of clothing to hold the GOTS label, the entire supply chain from farmer to trader will have to be certified.

The same applies to recycled polyester. For both certificates, each company would have to keep the cleanest paperwork regarding raw materials entering the production of recycled/organic products and they’d have to match with the situation in the warehouse. This way, there’s no wiggle room to smuggle a virgin polyester/conventional cotton batch of yarn/fabrics into recycled/organic production.

Companies that tried to play the system have been stripped of their certificates and banned from reapplication for a substantial time. Not only that – they’ve been shown in the database as companies under penalty. This means that both GOTS and Textile Exchange take their certificates extremely seriously.

These two certificates and the SMETA audit are the most important proof of your supplier’s ethical and ecological conduct. There’s also a certificate that shows your supplier’s devotion towards consistent quality work.

ISO 9001:2015 – the quality assurance certificate

Created by the International Organization for Standards (ISO), this certificate is proof that its holder company has a functioning Quality Management System (QMS) in place. This means that all processes in the company are part of a connected and supervised system aimed at achieving consistent quality.

In addition to this ISO certificate, we hold the environmental and health & safety ISO certificates – 14001:2015 and 45001:2018 as seen below.

Conclusion

Thanks for taking the time to learn about the importance of working with European clothing suppliers with relevant audit results and certificates.

Now take advantage of that knowledge and set yourself apart from the competition ahead of time by running a sustainable business before it becomes a legal obligation.

Hire FUSH as your supplier and take advantage of our GOTS and GRS certificates, positive SMETA 4-pillar social responsibility audit results, as well as our ISO certificates. And if that’s not enough, you’ll be happy to learn that we’re a solar-powered clothing supplier.