Understanding the 2026 EU Supply Chain Act for Textile Manufacturers

The European Union's Corporate Sustainability Due Diligence Directive (CSDDD), commonly called the EU Supply Chain Act, takes effect in 2026. For textile manufacturers exporting to or operating in the EU, this isn't just another regulation. It's a fundamental shift in how you document and report on your supply chain.

EU Supply Chain Act compliance — The EU Supply Chain Act requires comprehensive documentation of human rights and environmental impacts throughout supply chains

The EU Supply Chain Act requires companies to identify, prevent, and remedy human rights and environmental impacts throughout their supply chains. For textile manufacturers, this means comprehensive documentation of suppliers, processes, and impacts.

What the EU Supply Chain Act Actually Requires

The CSDDD applies to:

**Large EU companies**: Companies with 500+ employees and €150M+ net turnover - **High-risk sector companies**: Companies with 250+ employees and €40M+ net turnover in high-risk sectors (including textiles) - **Non-EU companies**: Companies operating in the EU that meet the above thresholds

For textile manufacturers, this means:

If you're exporting to the EU, your EU customers will be required to conduct due diligence on their supply chains—including you. Even if you're not directly subject to the Act, you'll need to provide documentation to your EU customers.

The EU Supply Chain Act requires companies to identify, prevent, and remedy adverse impacts on human rights and the environment. Failure to comply can result in fines up to 5% of global turnover and exclusion from EU public procurement.

The Five Pillars of Due Diligence

The Act requires companies to implement five key due diligence processes:

1. Identify Adverse Impacts

You must identify actual and potential adverse impacts on:

Human Rights: - Forced labor - Child labor - Worker safety and health - Freedom of association - Discrimination - Living wages

Environment: - Pollution and emissions - Biodiversity loss - Water and soil contamination - Climate change impacts - Resource depletion

According to EU guidance, textile manufacturers must assess impacts at every tier of their supply chain, from raw material extraction to final product delivery.

Supply chain mapping and documentation — Supply chain mapping and impact assessments are fundamental requirements of the EU Supply Chain Act

2. Prevent and Mitigate

Once impacts are identified, you must:

Take appropriate measures to prevent potential impacts - Mitigate actual impacts - Integrate due diligence into policies and management systems - Provide training to staff and suppliers - Establish grievance mechanisms

For textile manufacturers, this means:

Supplier codes of conduct - Regular supplier audits - Environmental impact assessments - Worker training programs - Incident management systems - Corrective action processes

3. End or Minimize Impacts

When adverse impacts occur, you must:

End the impact immediately - Minimize the extent of the impact - Provide remediation to affected parties - Document all actions taken

Documentation requirements include:

Incident records with timestamps - Root cause analysis - Corrective actions taken - Validation that actions were effective - Evidence of remediation

The Act requires companies to maintain documentation of due diligence processes for at least five years. This documentation must be accessible for inspections and audits.

4. Establish Grievance Mechanisms

You must establish and maintain:

Accessible grievance mechanisms for workers and communities - Processes for receiving and addressing complaints - Documentation of grievances and responses - Regular review and improvement of mechanisms

5. Monitor and Report

You must:

Monitor the effectiveness of due diligence measures - Report annually on due diligence activities - Make reports publicly available - Update due diligence processes based on findings

Reporting requirements include:

Description of due diligence processes - Identified adverse impacts - Measures taken to prevent and remedy impacts - Effectiveness of measures - Grievances received and addressed

Companies with established compliance documentation systems can generate EU Supply Chain Act reports more efficiently, reducing reporting time by up to 70%.

What This Means for Textile Manufacturers

If You Export to the EU:

Your EU customers will be required to conduct due diligence on their supply chains. They'll ask you for:

Documentation of your due diligence processes - Evidence of human rights and environmental compliance - Supplier information and assessments - Incident records and corrective actions - Audit reports and certifications

If You're Directly Subject to the Act:

You must implement due diligence processes for:

Your own operations - Your direct suppliers - Your indirect suppliers (where relevant) - Your business partners

Compliance documentation systems — Companies with established compliance documentation systems can generate EU Supply Chain Act reports 70% faster

Documentation Requirements

The Act requires comprehensive documentation of:

1. Supply Chain Mapping

All suppliers and business partners - Supply chain tiers - Geographic locations - Products and services provided - Risk assessments

2. Impact Assessments

Human rights impact assessments - Environmental impact assessments - Risk prioritization - Regular updates

3. Due Diligence Processes

Policies and procedures - Training records - Audit schedules and results - Corrective action plans - Monitoring activities

4. Incident Documentation

Adverse impacts identified - Root cause analysis - Corrective actions taken - Validation of effectiveness - Remediation provided

5. Reporting

Annual due diligence reports - Public disclosure - Updates to processes

Incomplete or missing documentation can result in non-compliance findings, fines, and exclusion from EU markets. Documentation must be current, accessible, and auditable.

How to Prepare for 2026

1. Map Your Supply Chain

Identify all suppliers and business partners - Document supply chain tiers - Assess geographic and sector risks - Create a supply chain database

2. Conduct Impact Assessments

Assess human rights risks - Assess environmental risks - Prioritize high-risk areas - Document findings

3. Implement Due Diligence Processes

Develop policies and procedures - Train staff and suppliers - Establish grievance mechanisms - Integrate into management systems

4. Document Everything

Maintain comprehensive documentation - Link incidents to corrective actions - Track effectiveness of measures - Prepare for reporting

5. Prepare for Customer Requests

Anticipate documentation requests from EU customers - Organize documentation for easy access - Be ready to provide evidence of compliance - Respond quickly to requests

Start preparing now. The Act takes effect in 2026, but EU customers will begin requesting documentation in 2025 as they prepare their own compliance.

The Bottom Line

The EU Supply Chain Act represents a fundamental shift in supply chain transparency and accountability. For textile manufacturers, this means comprehensive documentation of human rights and environmental impacts throughout the supply chain.

When you can show clear, time-stamped, linked evidence of due diligence processes, impact assessments, and corrective actions, compliance becomes straightforward. When documentation is missing or incomplete, you risk non-compliance, fines, and exclusion from EU markets.

That's the difference between reactive compliance and continuous readiness. And in today's global textile market, where supply chain transparency is increasingly required, continuous readiness isn't optional. It's essential.

Never lose access to EU markets because you couldn't prove supply chain due diligence. CertiThread creates a clean, time-stamped trail of supply chain documentation, impact assessments, and corrective actions so EU Supply Chain Act compliance is ready when you need it, not when you're scrambling to compile it.