News

     

Sylvie Gallage-Alwis and Nikita Yahouedeou discuss France’s initial steps towards regulating fast fashion in ESG Investor

By Sylvie Gallage-Alwis & Nikita Yahouedeou

Partner Sylvie Gallage-Alwis and Associate Nikita Yahouedeou examine a recent bill passed in March 2024 by the French National Assembly that aims to challenge unsustainable business models in the apparel sector.

Sylvie and Nikita’s article was published in ESG Investor, 13 June 2024, and can be found here

Fast fashion has transformed how we buy our clothes, generating more than 1.7 billion dollars in global sales revenues last year. More recently, ultra-fast fashion clothing has emerged, providing greater choice at an even lower cost. Despite the obvious benefits to consumers, the French Parliament wants to limit its environmental and sustainability impact through regulation. A Bill passed in March 2024 by the French National Assembly (Bill no. 2129) is a first step in that direction.

As a relatively new phenomenon, no legal definition exists. Although the English phrase “fast fashion” is commonplace in France, specific French terms are also used, which translate as: short-lived fashion, express fashion, flash fashion, and disposable fashion. Such label diversity makes it difficult to define legally.

It could be argued that a company creates fast fashion when production cycles are shortened to ensure a constant renewal of product lines at low prices. Mass production now dominates, representing seven out of every 10 items of clothing sold in France. But companies producing ultra-fast fashion go further still: even cheaper than their competitors, they offer up to 10,000 new items in real time online – up to 900 times more products than traditional French brands.

Fast fashion was clearly targeted in a report published in February 2024 by the General Inspectorate for the Environment and Sustainable Development (IGEDD). Using the criterion of synthetic fibres in the manufacture of clothing, it accused fast fashion companies of creating pollution through their use of microplastics.

Other attempts to define fast fashion have focused on the number of new product lines, known as “references”, an industry-specific practice. Following discussion in the French National Assembly over Bill no. 2129, the definition of fast fashion was extended to include sales made online.

Included in the Bill’s definition is a calculation of the number of references “displayed on the electronic interface” by e-market suppliers – to be based on thresholds set by Decree by the French Council of State. Notably, the number of unsold items will not be considered in the calculation, provided that these unsold items were not originally owned by the sellers.

French Parliament controls to regulate fast fashion have been tried before – for example, the 2020 “anti-waste” law, which introduced a “repair bonus” for products to promote recycling. Similarly, the 2021 “climate and resilience” law introduced environmental labelling, known as “eco-score”, in several sectors including textiles.

Article L541-9 of the French Environmental Code also provides that producers, importers or exporters placing products on the market must prove that the waste generated by the products can be processed in compliance with legally binding recycling targets. This Article, already in force since 2020, enables the administrative authority to request to the producers, importers or exporters “any useful information on the management practices and on the consequences of their implementation”.

Fast fashion is a controversial, multifaceted issue. The French Parliament has decided to tackle it from an environmental angle, focusing the attention of young people on the impact of their fast fashion choices.

That is why the Bill supported by Anne-Cécile Violland, Chair of the Health Environment Group at the French National Assembly, has been well received by the National Assembly. Its broad aim is to provide consumers with enhanced information on the implications of their purchases and to reduce the environmental impact: “This is not about specifically targeting a brand, but about turning the sector around”, confirms Anne-Cécile Violland.

Approved on 14 March 2024, the French National Assembly unanimously passed the Bill. Designed to reduce the environmental impact of the textile industry, it contains three principal measures:

Duty to inform: information on websites to raise consumer awareness

The Bill directly targets fast fashion stakeholders by providing an obligation for “individuals who engage in the commercial practice…(to) put on display on their online selling platform” information, to be determined later by Decree, aimed at encouraging “sobriety, re-employment, repair, reuse and recycling of products and raising awareness of their environmental impact”.

Focused on current technology (mobile apps, for example), the Bill aims to prevent the creation of waste. Online displays will have to comply with certain standards, such as being visible on the product pages of the relevant companies, or being legible in all formats, and will have to be positioned near the price.

Failure to comply with these obligations could result in an administrative fine of up to €3,000 for an individual and €15,000 for a company, as provided by the French Environmental Code. It should be noted that platforms for the resale of unsold products appear to be unaffected by this provision, but measures have nevertheless been taken to limit their exposure to the public.

Advertising ban

Communication is a key factor behind the success of fast fashion. Many advertisements promote fast fashion brands, targeting multiple audience categories. Companies also use affiliate programmes on social media through influencers to create engagement, delivering constant and almost ‘automatic’ advertising at a lower cost by taking advantage of the online community of affiliated influencers.

Members of the French Parliament are using this Bill in an attempt to stop such methods of communication. Indeed, the Bill’s text goes further by including an advertising ban that extends to social networks, where promotion of these items is at its most lucrative, affecting affiliation programmes as a result.

The Bill provides for the addition of Article L. 229-61-1, which would ban advertising for products, companies or brands using fast fashion. If enacted, it would come into force on 1 January 2025. Should the French Senate agree with this Bill, failure to comply with this new provision will be subject to penalties set out in the French Environmental Code.

In practice, as of January 2025, a fine of up to €20,000 for an individual and €100,000 for a company could be issued for breaches of this ban. DGCCRF agents may also be called in to monitor and punish breaches of the obligation to provide information and advertising.

Introduction of an environmental penalty system for companies in the fast fashion industry

The Bill further suggests introducing a financial contribution (similar to the current environmental penalty in the auto sector), aimed at strengthening the extended producer responsibility (EPR) scheme for textile clothing, household linen and footwear. The environmental penalty would be determined by the life cycle of products, with particular reference to two new criteria for adjusting the contributions paid by producers under the EPR scheme: the products’ environmental and carbon impact.

The penalty would take the form of a financial contribution due one year after the assessment of the company’s score (the eco-score, tested in the textile sector between 2020 and 2022, will come into force by the end of this year).

A graduated increase in the penalty is provided for by the Bill: €5/product from 2025, then an additional €1 per year ultimately reaching €10/product in 2030. Implementation of this tax in France could affect the price of goods, leading to an overall increase in inflation.

The Bill further provides for the introduction of an ethical company bonus which would particularly apply in the textile sector.  To finance this, it provides that contributions paid in respect of the environmental penalty will “mainly be reallocated in the form of bonuses to producers of products that meet eco-design criteria for improved environmental performance”. Products with the greatest environmental impact will therefore not be eligible for eco-design bonuses and may even be subject to penalties that are intended to be a deterrent.

Finally, the Bill suggests making it mandatory for foreign companies selling their products in the French textile sector to appoint an authorised representative who will be responsible for ensuring compliance with the obligations arising from the EPR scheme.

The French Senate will now examine the Bill. If it is definitively approved, fast fashion platforms will have to reduce the number of references they produce and adapt their business models accordingly.

Potentially, it will also put France at the cutting edge of ESG legislation: a pioneering country, ahead of the other Member States and EU authorities on these issues. However, the European Commission does not currently seem inclined to align itself with the French measures unconditionally. It recently challenged the TRIMAN logo as being contrary to the free movement of goods within the EU.

Latest news

All news