How compliance ready is the fashion industry?

Strict global regulations and enforcement actions have moved from a future concern to an immediate business reality. How large are the gaps between regulatory expectations and the fashion industry's current operational readiness? Supply chain solutions provider TrusTrace surveyed 57 insiders of fashion, apparel and footwear brands from 24 countries and compiled the findings in the report, “The Enforcement Era: Fashion's Compliance Readiness in Numbers”.

One finding is that more than one fifth (21 percent) of fashion brands have already experienced shipment detentions at US borders due to compliance issues such as forced labor prevention and proof of origin rules. This highlights that border enforcement is actively targeting inadequate supply chain transparency, catching many companies unprepared as customs authorities demand deep, verifiable evidentiary trails.

“The hardest part is that there is no single right answer for what a complete document set looks like at each level of the supply chain, which makes it genuinely difficult for suppliers to know how much is enough. Our guidance to them is simple: provide as much as you can to show how the raw material was produced, processed, transported, and paid for to make the final product,” advises Tahagod Mohamed, senior traceability analyst at Brooks Running.

Despite facing multiple simultaneous regulations, the industry suffers from a systemic lack of automated oversight and standardisation. The study reveals that only one fifth (21 percent) of surveyed brands run continuous, automated compliance processes across their supply networks. More than one fourth (26th percent) rely exclusively on third-party audits. Alarmingly, 17 percent of fashion companies still rely on manual tools like spreadsheets and emails to track compliance and audit trails, and 6 percent have no formal compliance process at all.

Upstream visibility is need of the hour

The report identifies upstream visibility as a critical vulnerability. While most brands have achieved reasonable visibility over their Tier 1 assembly and manufacturing partners, transparency drops off drastically further upstream. Tracking products backward through complex subcontractors, yarn mills, fibre producers, and all the way to raw material farms remains a massive industry blind spot.

When asked about the biggest hurdles impeding progress, almost two thirds (60 percent) of respondents pointed to supplier resistance or limited supplier capabilities as the most common barrier. Other compounding issues include fragmented internal data, a lack of organisational buy-in, and stretched internal bandwidth, preventing brands from translating high-priority compliance goals into tangible operational execution.

A distinct cohort of early movers demonstrates that closing the readiness gap is entirely feasible through deliberate operational changes. Leading companies are successfully stress-testing their supply chains with mock border detention drills, implementing rigorous documentation protocols that drastically cut document turnaround times, and utilising incentive structures—such as better payment terms and higher order volumes—to reward compliant suppliers.

Framework to success

Ultimately, the report emphasises that traceability and compliance can no longer be treated as a secondary project or a box-ticking exercise. To survive and thrive in the current regulatory climate, fashion brands must urgently transition to digitised, continuous data-sharing mechanisms, extend verified visibility deep into raw material tiers, and embed compliance directly into their core operational workflows.

Knowing one’s supply chain is a must, as is extending visibility to the raw material stage. Companies also need to connect data across functions and automate compliance monitoring. Lastly, they need to build documentation readiness by structuring supply chain data for enforcement scenarios: CBP documentation requests, CSDDD audits, DPP data submissions. Stress-testing existing processes with real-world simulation exercises is highly recommended.

“The brands most confident in their data aren't guessing. Half of them hold verified data at Tier 3, compared with just over a quarter of everyone else. They built for verified data rather than supplier declarations, and they treat traceability as an operational capability, not a compliance project,” sums up Pauline God, industry and policy expert at TrusTrace.