Corporate Sustainability Reporting Directive (CSRD) – What It Means for Textile Brands

A New Era of Accountability in Fashion

The European Union’s Corporate Sustainability Reporting Directive (CSRD) is transforming the way companies communicate about their environmental and social impact. For textile and fashion brands, it marks a shift from voluntary sustainability storytelling to mandatory, data-driven transparency.

The CSRD requires companies to disclose detailed information about how sustainability risks and opportunities affect their business. This includes their impact on people, the environment, and the economy — across the entire value chain.

For textile brands, which often manage complex global supply networks, this directive is both a challenge and an opportunity to demonstrate leadership through credible, measurable sustainability reporting.

What Is the Corporate Sustainability Reporting Directive (CSRD)?

The CSRD is an EU directive that significantly expands the scope and depth of sustainability reporting. It replaces the earlier Non-Financial Reporting Directive (NFRD) and aligns sustainability disclosures with the same rigor as financial reporting.

The CSRD applies to:

• All large EU companies (meeting two of the following: >250 employees, >€40 million turnover, >€20 million balance sheet total)
• All listed companies, including SMEs on regulated EU markets
• Non-EU companies with significant operations in Europe

From 2025 onwards, thousands of textile and apparel brands operating in the EU will have to publish standardized sustainability reports in accordance with the European Sustainability Reporting Standards (ESRS).

What the CSRD Requires from Textile Brands

Under the new rules, brands must:

1. Report sustainability data that meets ESRS requirements.
2. Disclose double materiality, meaning both how sustainability impacts the company and how the company impacts the environment and society.
3. Provide audited, verifiable data — sustainability claims can no longer rely on estimates or unverified metrics.
4. Integrate sustainability into annual reports with the same level of accountability as financial data.

For textile brands, this means quantifying and documenting impacts across the entire cotton-to-consumer value chain — from raw material sourcing to production, distribution, and product end-of-life.

Why CSRD Is Especially Relevant for the Textile Sector

Textile and apparel production is among the most resource-intensive industries in the world. Brands face increasing scrutiny regarding:

• Water and energy consumption
• Greenhouse gas emissions
• Chemical and waste management
• Labor and social conditions in supply chains

The CSRD makes these factors reportable obligations. Brands can no longer rely on general statements like “sustainably sourced” or “ethically made.” They must provide quantified data on their supply chain performance and the standards they use to manage it.

How the Regenerative Cotton Standard® (RCS) Supports CSRD Compliance

Implementing recognized standards such as the Regenerative Cotton Standard® (RCS) can help textile companies fulfill several key CSRD requirements.

1. Verified Environmental Data

RCS measures concrete outcomes such as:

• Soil health and biodiversity improvements
  
• Water and nutrient efficiency
  
• Carbon sequestration potential

These metrics can be integrated into a brand’s ESRS-aligned environmental reporting, offering verified data rather than self-reported estimates.

2. Traceability and Transparency

The RCS uses the Hard Identity Preserved (HIP) Chain of Custody model to provide uninterrupted traceability from farm to finished product. This data supports CSRD requirements on value chain due diligence and transparent sourcing.

3. Social and Governance Reporting

RCS goes beyond environmental metrics by including indicators on farmer livelihoods, fair working conditions, and animal welfare. These feed directly into the “S” and “G” dimensions of CSRD (Social and Governance).

The Business Impact of CSRD

For brands, CSRD compliance is not only about avoiding penalties. It can create strategic advantages:

• Improved investor confidence: Standardized reporting increases comparability and trust.
  
• Stronger partnerships: Retailers and suppliers increasingly require CSRD-ready data.
  
• Risk mitigation: Transparent, verified data reduces the risk of regulatory non-compliance and reputational damage.
  
• Market differentiation: Brands that report early and accurately can position themselves as sustainability leaders.

Challenges for Textile Brands

Adapting to CSRD can be complex, especially for companies without established data systems. Key challenges include:

• Collecting reliable sustainability data across multiple supply tiers
  
• Integrating non-financial data into financial reporting systems
  
• Training teams to understand ESRS frameworks
  
• Ensuring third-party verification

Partnering with initiatives like RCS simplifies these steps by providing ready-made reporting data and verified documentation.

Practical Steps to Prepare for CSRD

1. Map your value chain – Identify data gaps and high-risk suppliers.
   
2. Adopt credible standards – Use frameworks such as RCS for regenerative cotton sourcing.
   
3. Implement traceability systems – Ensure data flow from farm to factory.
   
4. Train reporting teams – Build internal expertise in ESRS topics and double materiality.
   
5. Integrate sustainability data into annual reports – Ensure consistency between sustainability and financial disclosures.

Summary: What CSRD Means for Textile Brands

CSRD Requirement	What Brands Must Do	How RCS Helps
Verified Data	Provide measurable, audited environmental data	Supplies verified indicators on soil, carbon, biodiversity
Value Chain Transparency	Document supplier practices and trace material origins	HIP Chain of Custody ensures full traceability
Social Reporting	Disclose fair labor and community impact	Includes farmer livelihood metrics
Double Materiality	Assess impacts on and by the business	RCS data supports both perspectives
Regulatory Compliance	Follow ESRS reporting structure	Provides ready-to-use framework for cotton sourcing

Conclusion: Turning Regulation into Opportunity

The Corporate Sustainability Reporting Directive will reshape how textile and apparel brands operate and communicate. Far from being just another compliance burden, it offers an opportunity to build trust, attract investors, and create long-term resilience.

By aligning with robust, verifiable frameworks like the Regenerative Cotton Standard®, brands can not only meet CSRD requirements but also strengthen their overall sustainability strategy — from cotton field to final product.