How New State And EU Regulations Will Reshape Fashion Supply Chains

Europe’s Parallel Pressure

In recent years, the EU has been aggressively working on various regulatory reforms spanning consumer protection, climate change policies, and international trade deals. Under CEAP, the EU established significant goals. These goals are enforced under ESPR and include such regulations as Digital Product Passports (DPPs) and anti-destroy laws.

Of all the measures, DPPs have the most forward-looking implications for brands operating on a global scale. Timelines for enforcement vary depending on product categories, but fashion categories are one of the earliest to be impacted. Starting from late 2028 to early 2029, textile products will require a DPP, a consumer-facing scannable label that provides data on materials, manufacturing provenance, recyclability, and information on repairability.

These rules apply regardless of brand size and volume. Large scale brands will have to contend with making sense of convoluted supply chains to compile clear and accurate data across large product portfolios at the SKU level. SMEs will need to build out technical capabilities and infrastructure to comply. Although the compliance burden will require different adjustments depending on the scale of the business, the deadlines remain the same.

The regulations and goals under CEAP represent the most comprehensive attempt by any major economy to regulate the environmental footprint of consumption. The stakes are significant as the EU apparel market alone is projected to reach $497.9 billion retail revenue in 2025. The EU is the world’s largest importer of apparel. For many major US brands, Europe is not a secondary market. For example, in fiscal 2025 PVH continued to report more revenue from EMEA than any other region. This has been the case since 2020. The potential makes the European market impossible to ignore, particularly given that these regulations are at least structured in a unified framework as opposed to the policies emerging in the US.

The Fragmenting US Landscape

The EU and US were once aligned under the Paris Agreement framework. In 2019, the US formally withdrew from the Paris Agreement under the Trump administration. Although it rejoined in 2021 under Biden, once back in office, the Trump administration withdrew again in 2025. Despite the US’s repeated withdrawal, the Paris Agreement has expanded globally with only the US, Yemen, Libya, and Iran as the exceptions.

The withdrawal on a global scale was also compounded by rollbacks at a national level. The Environmental Protection Agency (EPA) has had broad rollbacks across clean air policies and chemical limitations. The Interior Department removed restrictions on drilling operations at national monuments, public lands, and the Arctic National Wildlife Refuge. Protections for wetlands and endangered species have been weakened. Various agencies have been defunded, restructured, or redirected. Each of these signals a deliberate de-prioritization of environmental oversight at the federal level.

The Next Prop65

Proposition 65, also known as Prop65, signed into law in California in 1986 and later reformed in 2018, reshaped manufacturing and product labeling practices across retail. The California market is impossible to ignore. Given the size and fact almost every major retailer operates in the state, most manufacturers either reformulated products to comply or labeled goods accordingly. For context, California is the fifth-largest economy in the world. Its size and buying power make legislation like Prop65 the de facto national standard.

Now, another set of industry shockwaves is coming from the same epicenter. The Responsible Textile Recovery Act (RTRA), also known as SB 707, is that law. Enacted in 2024, RTRA requires textile producers selling into California to fund the collection, sorting and recycling of post-consumer textile waste through a state-appointed organization called a Producer Responsibility Organization (PRO).

If history is a guide, brands will not opt out of the California market, nor will they adopt state-specific product strategies. Whichever framework is the most strict and comprehensive, which is likely California, will guide the standardization of new practices nationally. As with Prop65, many states will adopt the same policies, compliance costs will be spread across the national supply chain and will either be partially absorbed or passed on to consumers. The scale of that cost and who will bear them within the supply chain is one of the major uncertainties upsetting those faced with execution.

It’s Not Easy Being Green

The rollout of SB 707 has been marked by structural disputes, legal challenges, and an unresolved cost framework. Brands are being tasked to adhere to firm timelines and strict requirements with many unknowns. Faced with these uncertainties, some organizations are pushing back.

On February 27, 2026, the California Department of Resources Recycling and Recovery (CalRecycle), selected Landbell USA as the PRO for establishing RTRA. Landbell USA is part of a larger organization, Landbell Group, which operates PROs globally. It was one of three organizations that bid for this appointment. The other two, Circular Textile Alliance (CTA) and Textile Renewal Alliance (TRA) were established with textile industry executives and organizations. The TRA in particular was established as a partnership between the California Retailers Association, the American Apparel & Footwear Association and the National Retail Federation.

A month after Landbell USA’s appointment, AAFA filed a formal petition seeking the decision to be vacated. Four key concerns are outlined in the petition, including the lack of industry representation and that the organization be producer-led. Most critical for both consumers and brands is the lack of statutory criteria around financial controls to keep costs from escalating. The hearing to consider a preliminary injunction is set for August 7, 2026.

The uncertainty of the cost structure and who sets the standards have significant implications for the industry. In advance of the implementation of the recycling program, the selected PRO will conduct a state-wide assessment to determine producer fees which will fund the program. The fees will be based on an eco-modulated framework, meaning that they will be adjusted based on product characteristics and general recyclability. Products that are more difficult to recycle, such as blends, will have greater fees while those composed of mono-materials will be rewarded. Design and product development decisions that will determine a brand’s fee exposure are being made now. Reformulating to easily recyclable mono-material constructions will require many to adjust their development cycles ahead of 2030 fee implementation. The actual costs and fees facing brands, however, are completely unknown, and will be dictated by the PRO.

Despite this, producers are required to sign up by the July 1, 2026, deadline which comes with a $1,000 flat registration fee. The deadline remains fixed regardless of the results of the injunction hearing. Those that don’t register risk being barred from selling into California. Civil penalties begin later and can range between $10,000-$50,000 per day.

Whatever the costs will be, the money to pay them will need to come from somewhere. The fees and costs of compliance are only a portion of the expenses brands face. With Prop65, one of the larger cost centers is not compliance itself but litigation expenses. 2025 was a record year for the number of Prop65 settlements which totaled over $86 million in defendant costs, nearly 90% of which went to plaintiff lawyer fees. Unlike Prop65, SB 707 does not include a private right of action which allows these types of claims, however the civil penalties which are assessed by CalRecycle have the potential to outpace this scale.

Hindsight Is 2028

With supply chain disruptions, trade wars, and a global pandemic having already reshaped the industry, the added weight of regulatory compliance has brands feeling like they’re being kicked while already down. This legislation is arriving not because consumers demanded it, but because the attempt at collective pushes for ESG failed to manifest.

The failure of Everlane, a brand built on radical transparency and sustainability, is the clearest indicator of this. In May 2026 Everlane was acquired by ultra-fast-fashion giant Shein, the antithesis of everything the brand stood for. The brand was acquired for approximately $100 million, with $90 million in debt.

Given the lack of consumer commitment to ESG, many questions remain unknown. Will customers scan a DPP to make a more conscious purchase decision? Will they drop off products at the end of their life to be recycled by a PRO?

While brands wait for these questions to be answered, the immediate priority is registration. Although the full cost structure and enforcement won’t be in place until 2028, the groundwork needs to be laid now. Brands should register with Landbell USA immediately and monitor the results of the August 7 injunction hearing. For those operating in the EU, DPP compliance requires supply chain data infrastructure that could take 12 to 18 months to build. Reformulating fiber composition to minimize risks also comes with lengthy development cycles. The regulatory clock is indifferent to market conditions, litigation timelines, and consumer enthusiasm.