Due Diligence in Fashion: What Brands Cannot Afford to Ignore

Due diligence in fashion is entering a transformative phase. What was once largely voluntary and reputation-driven is now becoming a regulatory requirement across major markets. With frameworks such as the EU Corporate Sustainability Due Diligence Directive (CSDDD), the EU Deforestation Regulation (EUDR), the Uyghur Forced Labor Prevention Act (UFLPA), and enhanced ESG disclosure under CSRD, brands are expected to demonstrate credible, risk-based action across their supply chains.

Fairly Made recently hosted a virtual side session at the OECD Forum on Due Diligence in the Garment and Footwear Sector, together with Forest Trends and Another Tomorrow. The session highlighted how Supply Chain Intelligence supports responsible sourcing and proactive risk management. Insights from the discussion underscored the importance of anticipating risks, keeping supply chains controlled, and generating meaningful impact across the fashion industry.

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Why Due Diligence in Fashion Is More Important Than Ever

Implementing effective supply chain due diligence in fashion is not straightforward. Across the industry, one challenge consistently emerges: supplier traceability alone is no longer enough. Brands must move from mapping their supply chains to understanding and prioritizing the risks embedded within them.

At its core, due diligence is a structured and ongoing process. Responsible companies need to:

• Identify supplier-related environmental and social risks
• Assess their severity and likelihood
• Prioritize actions
• Implement preventive or corrective measures
• Monitor progress and report transparently

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The 4 Core Challenges of Due Diligence

Through collaboration with fashion brands, four recurring challenges are evident:

1. Fragmented Information – Data is scattered across suppliers, regions, audit systems, certification bodies, and research reports.
2. Data Not Homogeneous – Information comes in different formats, standards, and quality levels, making comparisons and prioritization difficult.
3. Not in Real Time – Supply chain conditions change quickly, but many systems rely on outdated snapshots of supplier data.
4. Hard to Build an Action Plan – Even when risks are identified, limited internal resources make it difficult to structure follow-up actions effectively.

The gap between traceability and actionable insight is where responsible due diligence generates the most impact.

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Systemic Risks Often Sit Far Upstream

Research from organizations like Forest Trends shows that the most significant risks in fashion often lie beyond Tier 1 and Tier 2 suppliers. Deforestation linked to leather, cellulosic fibers, rubber, and cotton, as well as land-use change and social displacement, frequently occur at the raw material level. These systemic risks are shaped by governance gaps rather than individual factory practices.

Challenges in capturing these exposures include:

• Risk varies within the same country or commodity
• NGO research may not directly translate into corporate decision-making tools
• Tier 1 certifications often fail to cover upstream land-use impacts

Public exposure of these risks can lead to consequences ranging from shipment detentions under UFLPA to reputational damage.

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Another Tomorrow: Anticipating Risks with Supply Chain Intelligence

Another Tomorrow illustrates how a brand can use Supply Chain Intelligence (SCI), developed in collaboration with Fairly Made, to maintain a controlled, responsible supply chain, even before risks occur.

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The brand requested support in assessing potential supply chain risks, with Fairly Made acting as a trusted third party to ensure protection and guidance. Data came from multiple sources, but limited internal resources meant the brand needed SCI to structure and centralize this information.

Key priorities included:

• Carefully selecting suppliers, working with skilled artisans to ensure high-quality products
• Strategic planning for scalable operations
• Increased focus on Europe due to EU regulations and many European suppliers
• Strong attention to social sustainability alongside environmental concerns

SCI was particularly suited for reporting purposes and added value by connecting sustainability data across topics and sources.

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How Supply Chain Intelligence Changed the Process

SCI enabled the brand to anticipate risks and keep the supply chain under control. For example:

• Checking potential risks before choosing fabrics for new seasonal collections
• Assessing forced labor exposure in upstream supply chains, such as sourcing organic cotton
• Connecting different data sources to centralize and enrich information
• Shifting from generic awareness to targeted anticipation and supplier engagement
• Saving time while maintaining robust oversight
• Structuring information for compliance with regulations like UFLPA

SCI allowed the brand to engage suppliers earlier, prioritize actions based on potential exposure, and align internal teams effectively.

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The Value of NGO Research in Corporate Decision-Making

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NGO research plays a critical role in identifying systemic risks such as deforestation, land-use change, and forced labor. However, its real value emerges when this research is integrated into corporate decision-making systems.

When combined with Supply Chain Intelligence, NGO insights move from awareness to action. Brands can address risks that extend beyond individual supply chains, avoid the creation of “compliance islands,” and contribute to broader sector-level change. Collaboration also creates feedback loops, allowing NGOs to refine research based on how companies use data in real sourcing and due diligence decisions.

This integration is essential for achieving scale and lasting impact.

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Regulation as a Lever for Responsible Practices

New regulations are accelerating the adoption of responsible due diligence practices. Companies increasingly view compliance as:

• A driver for structured investment in traceability and Supply Chain Intelligence systems
• A mechanism to protect market access
• A way to level the playing field by eliminating non-compliant actors

Due diligence is both a compliance necessity and a strategic advantage, enabling brands to create measurable impact across their operations.

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Key Lessons for Brands

1. Intelligence Enables Prioritization – Identify supply chain risks, including forced labor and deforestation, and support preventive and mitigation measures.
2. Collaboration Across Stakeholders Is Essential – Working with NGOs, industry peers, and trusted third parties strengthens responsible practices and broadens impact.
3. Due Diligence Is an Ongoing Practice, Not a One-Time Exercise – Continuous monitoring, assessment, and action ensure supply chains remain responsible and resilient.

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The Future of Due Diligence in Fashion

The landscape is shifting from static audits to dynamic, proactive management. Transparency lays the foundation, but Supply Chain Intelligence turns that transparency into responsible, actionable decisions. Brands that anticipate risks, engage suppliers early, and integrate cross-industry intelligence will be best prepared for evolving regulations and systemic challenges.

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