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As progress on climate and ESG regulation in the United States continues to backslide, Europe is continuing to move forward with an expansive package of sustainability reporting and impact mitigation requirements.
But here’s the reality: whether or not you're directly operating in Europe, EU sustainability laws are already shaping the global playing field for US retail companies due to the extensive reach of these laws, including retailers, fashion brands and recommerce platforms.
For US-based companies, particularly those in fashion, beauty, electronics, footwear and recommerce, understanding these regulations now isn’t just a compliance concern — it can act as a competitive advantage and a route to long-term global relevance.
The growing impact of EU sustainability laws on US companies
In recent years, the political pendulum in the United States has swung both backward and forward when it comes to federal climate and ESG ambition.
Now, US momentum on environmental sustainability regulations has shifted into a hostile pullback once again, but businesses haven’t stopped moving. While federal ambition has taken a backseat, many companies have continued progressing behind the scenes. The rise of “greenhushing” reflects a quieter, more strategic approach, where brands continue to make real sustainability strides given the clear long-term business risks associated with climate change, without broadcasting them loudly.
Still, sustainability policy continues to move forward in other jurisdictions across the globe, particularly in Europe where a number of emerging ESG laws will apply to US companies directly.
Whether you sell products into Europe, manufacture for EU-based retailers, or simply want to remain attractive to global investors, it is vital to stay on top of these changes.
Key implications for US retail brands include:
- Being required to directly disclose full value-chain emissions and other impacts under the CSRD’s sustainability reporting requirements.
- Supporting EU business partners in meeting corporate sustainability regulations.
- Tracing your supply chains and disclosing environmental attribute information through digital product passports (DPPs).
- Adhering to green marketing requirements applicable to all products sold in the EU.
- National-level requirements applicable to products sold on the local market.
- Facing pressure to align with evolving ESG expectations to stay eligible for partnerships, financing, and procurement.
In this new reality, staying silent isn’t the same as staying safe. For retail companies seeking to remain competitive on a global stage, understanding and adapting to Europe’s rapidly evolving sustainability regulations isn’t just a smart strategy. It’s a business imperative.
A European sustainability overview
The European Union (EU), as well as national jurisdictions, have established a network of sustainability laws that span environmental disclosure, supply chain accountability and product-level regulation.
Below are some key pillars of the evolving European sustainability policy landscape.
1. Corporate Sustainability Reporting Directive (CSRD)
The Corporate Sustainability Reporting Directive (CSRD) is one of the most far-reaching sustainability reporting regulations in the world—and it doesn’t just apply to companies based in the European Union. Currently, it will extend to many non-EU companies, including US businesses that generate more than €150 million in annual EU revenue and have at least one of the following:
- Have an EU subsidiary that is itself already subject to CSRD reporting, or
- Have an EU branch which itself generates more than EUR 40,000,000 in revenue.
In effect, if your brand operates in, sells into, or is otherwise materially connected to the EU market, there is a risk that the CSRD will directly apply to your US business and require reporting at the ultimate corporate parent level starting in 2029 based on FY2028 impact data.
Applicable reporting requirements under the CSRD, the European Sustainability Reporting Standards (ESRS), are currently under revision in connection with the EU Omnibus Package with finalized revised standards expected by the end of 2025.
While the precise contours of these updated standards are not yet known, it can be expected that companies will be required to make disclosures across the following topics and datapoints:
- Environmental disclosures, including Scope 1, 2, and 3 greenhouse gas emissions (i.e., direct operations, purchased electricity and value chain impacts), pollution, water and marine resources, biodiversity, and resource use;
- Social disclosures, including on own employees and value chain workers, impacted communities, as well as consumers and end users;
- Governance disclosures, including on business conduct.
The CSRD is especially notable in that it:
- Mandates assurance (audit) of reported ESG data
- Requires disclosures on transition plans and anticipated climate risks
- Requires a double materiality perspective, meaning companies must assess both how sustainability issues materially affect the business, and how the business materially affects society and the environment.
For US retail brands, fashion and footwear companies and recommerce platforms, the implications are wide-ranging. Complying with CSRD means rethinking:
- How ESG data is collected, verified, and governed across business units and supply chains
- How sustainability integrates with financial planning and risk management
- How to communicate progress transparently and compliance with the underlying ESRS expectations, without creating legal or reputational risk.
Although the CSRD is fundamentally about reporting, the internal changes required to implement it correctly can act as a catalyst for operational change and improved traceability, thereby laying the groundwork for more far-reaching improvements in sustainability performance.
2. Ecodesign for Sustainable Products Regulation (ESPR) & Digital Product Passports (DPPs)
The Ecodesign for Sustainable Products Regulation (ESPR) is a cornerstone of the EU’s new wave of environmental sustainability regulations aimed at improving the overall environmental performance of products sold in the European Union. The ESPR creates a comprehensive legal framework that will apply to almost all physical consumer goods placed on the EU market, including apparel and footwear.
A central feature of ESPR is the Digital Product Passport (DPP): a digital record that follows each product across its life cycle, making its environmental attributes more transparent to regulators, retailers, recyclers, and, crucially, consumers.
DPPs must contain standardized, machine-readable data on attributes that may include, but are not necessarily limited to:
- Product durability
- Repairability
- Presence of substances of concern
- Energy use and energy efficiency
- Water use and water efficiency
- Resource use and resource efficiency
- Recycled content
- Possibility of remanufacturing
- Recyclability
- Environmental impacts, including carbon footprint and environmental footprint
- Expected generation of waste.
For US consumer products manufacturers and retailers, this means that every product placed on the EU market will need to be backed by granular, verifiable data, collected from across the value chain and structured to meet DPP requirements. That means this isn’t just a labeling exercise; it’s a supply chain data transformation challenge, and one that will impact product design, procurement, marketing, and compliance workflows.
3. Green Claims Directive
While jurisdictions across the world have been increasing scrutiny and enforcement of consumer-facing green claims under existing misleading marketing rules, a complete paradigm shift is currently under negotiation in the European Union.
The proposed Green Claims Directive would put in place new requirements for substantiating, verifying, and disclosing evidence for environmental claims. Key requirements include:
- Every environmental claim made about a product must be supported by an assessment that meets explicit criteria (the Product Environmental Footprint (PEF) method, discussed below, would be one viable method)
- Each claim must then be verified by an independent third-party verifier with a certificate of conformity issued before the claim is made to consumers
- That certificate will then be valid across the EU, providing increased certainty to businesses that today must navigate a fractured and uncertain regulatory environment
- Finally, details of the assessment and the certificate itself must be disclosed and linked alongside the claim, providing consumers and regulators with a reliable way to inspect claim credibility and detect violators instantly
The ultimate scope of the Green Claims Directive is still subject to negotiation by EU legislative institutions, meaning this scope may change (particularly given the simplification focus of the EU currently, as reflected by the Omnibus Package).
Nonetheless, US retailers should begin preparing a strategy for compliance now, as the Green Claims Directive would render virtually all environmental claims currently made about products unlawful. Such claims would need to be removed or supported and pre-validated based on the extensive evidence package above, namely a multi-impact category footprint assessment to demonstrate that no excessive harms are occurring in other impact areas that are not the focus of the claim.
4. Product Environmental Footprint (PEF)
The Product Environmental Footprint (PEF) is a methodology developed by the European Commission to standardize the measurement and communication of the environmental impact of products. It evaluates 16 environmental impact categories — including climate change, water use, and resource depletion — across a product’s entire life cycle, from raw material extraction to disposal.
Although PEF is not a law itself (rather, an official EU-level framework and methodology), it is designed to combat greenwashing by ensuring that environmental claims are science-based and standardized across companies. Unlike self-defined metrics or inconsistent third-party labels, PEF provides a unified framework that allows regulators, consumers, and supply chain partners to assess sustainability performance on equal terms.
For US retailers selling into the EU — particularly those in fashion and other consumer goods — understanding and preparing for PEF is critical. For a PEF footprint to be calculated correctly, it must follow a sector-specific set of category rules tailored to the specific types of products. For apparel and footwear, this methodology was just released this spring, meaning sellers of garments and footwear will be increasingly expected to adhere to this rule set when calculating their product footprints
What’s more, in many sectors, PEF-compliant calculations may be required under the ESPR to be included in the digital product passports that must accompany products on their import into the EU. This makes accurate life cycle assessments (LCAs), transparent data collection, and supplier collaboration essential.
5. National Legislation
In addition to EU-level sustainability requirements, European countries within and outside the EU area are also adopting a diverse set of requirements that may impact third-country retailers that sell into those jurisdictions.
For instance, France’s Loi AGEC (Decree 2022-748) already mandates environmental attribute labeling requirements for specified consumer goods sold in the French market. Likewise, France’s upcoming Loi Climat Environmental Cost product scoring requirements applicable to textiles may require companies to display a multi-impact category footprint score according to a France-specific methodology.
As a further example, new local green marketing guidance continues to be released across Europe and in particular targeting the fashion sector, from joint guidance released by Norway and the Netherlands to similar guidance issued by the United Kingdom. Careful attention to these expectations is required, particularly given the expansive new penalty authority available to UK regulators (up to 10 percent of turnover).
These national regulations signal a broader trend: environmental product data is becoming a baseline expectation, not an optional extra.
Together, these European laws and standards form a sprawling and complex web of sustainability requirements that are increasingly affecting global commerce, including retail companies based within the United States.
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Why retail and fashion are first in line
The EU has specifically prioritized retail sectors in this new wave of sustainability legislation, such as apparel and footwear, due to their significant but under-addressed environmental impacts, most of which primarily occur outside the jurisdiction of the EU. These industries are major contributors to emissions, resource use and waste, making them critical leverage points for Europe’s broader climate and circular economy ambitions, but requiring due diligence, reporting and import-based regulations since the EU lacks direct legal control over the supply chain actors themselves that are directly generating the emissions.
Additionally, many European and global retailers are accountable to consumer and investor expectations, and for that reason are:
- Transitioning to next-gen eco-materials and lower-impact alternatives (e.g., recycled synthetics, biodegradable packaging)
- Re-engineering and increasing traceability in their supply chains to lower Scope 3 emissions
- Designing for circularity with repairability, reuse and recyclability in mind.
For the reasons outlined in this insight, US brands are not immune to these emerging expectations. Aligning now means gaining a strategic edge as EU sustainability regulations increasingly shape global expectations.
Recap: 5 strategic reasons for US brands to act now
For US retail brands and companies, the choice to proactively engage with European sustainability legislation isn’t just about ticking regulatory boxes — it’s about future-proofing your business. As the global sustainability landscape shifts, aligning early opens doors to efficiency, innovation and long-term competitiveness. Here’s why acting now delivers more than compliance.
1. Position yourself ahead of ESG regulations
By voluntarily aligning with corporate sustainability regulations now, your company avoids future disruption and demonstrates leadership. Use frameworks like the CSRD’s upcoming revised ESRS standards and the ISSB IFRS Sustainability standards to inform your path.
2. Make ESG work for the business
Aligning with EU sustainability policies can improve operational efficiency, supply chain transparency, and risk mitigation, not just compliance. Sustainability regulations in business are also economic levers.
3. Lead with innovation, not obligation
The ESPR will push companies to redesign products with sustainability at the core. This is your chance to embed sustainability not as a cost, but as a design and differentiation driver.
4. Maintain global relevance
In global B2B and B2C markets, sustainability regulations are shaping the terms of trade. Aligning with European standards helps protect access to European buyers and consumers and positions you well for compliance elsewhere.
5. Quietly build brand credibility
You don’t need to be loud. With greenhushing on the rise, strong internal alignment with sustainability regulations ensures you’re prepared to communicate when the time is right.
These aren’t just legal obligations, they’re strategic opportunities. Forward-thinking brands are using EU sustainability policies as a springboard for smarter design, stronger supplier relationships and quieter but more credible leadership.
By moving early, US companies can stay ahead of the curve and be ready for whatever comes next.
Practical next steps for US retail businesses
Looking to maintain momentum and avoid regulatory whiplash? Start here:
- Run a materiality assessment aligned with EU expectations
- Identify key EU regulations impacting your product category (e.g. apparel, beauty, electronics) and assess applicability with your legal and compliance teams
- Map data requirements for ESPR, CSRD and PEF compliance
- Build internal capacity with systems for collecting data, conducting product LCAs and managing traceability.
Find an all-in-one impact partner
Navigating the evolving landscape of EU sustainability policies requires more than fragmented tools or siloed support. To stay ahead, US companies can engage a sustainability consulting partner with deep expertise in both US and European sustainability regulations, reporting standards and product-level compliance.
Calculation platforms like Vaayu offer an all-in-one solution — combining integrated data collection on product, packaging, logistics and more for automated emissions tracking, Scope 3 and supply chain traceability, CSRD-aligned GHG reporting and Digital Product Passport (DPP) readiness with analytics and strategic guidance.
By centralizing your impact efforts, you save time, reduce risk and unlock the insights needed to meet both regulatory requirements and business goals, efficiently and at scale.
Stay ahead of the legislative curve
Follow platforms like Vaayu on LinkedIn and sign up for monthly Legislation Update emails. Embedding impact regulations as a part of your social feeds and directly to your inbox provides live updates on emerging sustainability regulations and keeps your company ready to act at the time of developments.
Need help navigating CSRD, ESPR, or sustainability reporting requirements? Vaayu helps US brands track emerging legislation, build reporting systems and reduce impact at scale. Book a free discussion with our sustainability experts today.
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