Editor’s note: This article explores how evolving regulatory expectations, including the Corporate Sustainability Due Diligence Directive (CSDDD) and the EU Deforestation Regulation (EUDR), are reshaping supply chain due diligence. It examines how emerging approaches, particularly those that combine digital traceability with scientific verification, are helping address these changes.
As the European Union advances the implementation of the Corporate Sustainability Due Diligence Directive (CSDDD), the expectations placed on global supply chains are shifting in a fundamental way. Companies are no longer being assessed solely on whether due diligence processes exist, but on whether they can demonstrate that risks are being effectively identified, mitigated, and monitored in practice.
For industries such as textiles and wood products, where supply chains are complex, multi-tiered, and often opaque, this shift presents a significant challenge. Traditional approaches, based primarily on documentation, certifications, and supplier declarations, are increasingly being tested against a higher standard: the ability to provide credible, verifiable evidence.
At the same time, the interaction between CSDDD and the EU Deforestation Regulation (EUDR) is reinforcing a more integrated approach to due diligence. Together, these frameworks point toward a model where documentation alone is no longer sufficient, and where companies must combine multiple forms of evidence to substantiate both environmental and human rights claims.
The Regulatory Nexus: Why CSDDD and EUDR Must Be Integrated
One of the most significant clarifications in the 2026 CSDDD updates is the emphasis on a risk-based approach to due diligence. Companies are expected to focus their efforts where the likelihood and severity of adverse impacts are greatest, particularly in complex, multi-tier supply chains.
For companies dealing in “forest-risk” commodities, such as timber for furniture or cellulose-based fibers (viscose, lyocell, modal) for textiles, the CSDDD does not exist in a vacuum. The EU Deforestation Regulation (EUDR) introduces specific environmental requirements, particularly around geolocation and deforestation-free sourcing, while the CSDDD provides the broader human rights and governance framework.
In practice, this creates a “regulatory nexus” where compliance with one framework increasingly depends on alignment with the other. European Commission guidance has reinforced this relationship, positioning EUDR as the specific environmental “lex specialis” for deforestation, with the CSDDD acting as the overarching human rights and governance framework. As a result, companies must be able to demonstrate not only where materials come from, but also that sourcing practices meet both environmental and human rights expectations.
The 2026 Omnibus reform explicitly encourages the use of integrated due diligence systems to reduce fragmented and/or double reporting (Art. 13a). For textiles and wood sector companies, this points toward the need for a unified technology-enabled approach—one that can consolidate documentation, monitoring, and verification into a coherent and defensible system.
Scientific Verification as the “Golden Thread” in an Evidence Ecosystem
The updated CSDDD framework makes it clear that due diligence, particularly in high-risk regions, cannot rely solely on indirect indicators or supplier representations. Deep-tier assessments increasingly require on-site verification that go beyond documentation, especially where risks such as forced labor or illegal logging are present.
At the same time, it is becoming evident that no single tool, whether audits, certifications, or digital traceability systems, can fully address this challenge on its own. As highlighted in recent industry discussions, fashion and adjacent sectors are not facing a traceability gap alone, but a proof gap: the ability to demonstrate, with credible and verifiable evidence, that what is claimed in the supply chain is materially true.
This is where the concept of an “evidence ecosystem” becomes increasingly relevant. Rather than relying on a single source of truth, companies are beginning to adopt layered approaches that combine:
- Recorded data (e.g., documentation, certifications, digital traceability systems),
- Observed data (e.g., audits, site inspections, satellite monitoring), and
- Measured data (e.g., scientific analysis of the product itself).
Within this framework, scientific verification serves as the “golden thread”, linking physical materials to the claims made about them, and anchoring digital and documentary systems in product-level evidence.
In practical terms, this means:
- In the Wood Sector: Under EUDR, operators are required to provide geolocation coordinates for the specific plot of land where timber was harvested. While this establishes a documented origin, it does not independently confirm it. Scientific techniques such as origin verification using stable isotope and trace element analysis can provide an additional layer of verification by assessing whether the chemical signature of the wood aligns with the declared geography helping to identify potential discrepancies such as material substitution or laundering from protected areas.
- In the Textile Sector: For cotton and other natural fibers, molecular and isotopic methods can be used to assess origin at the raw material level. Where documentation or audit findings indicate sourcing from approved regions, product-level analysis can either reinforce those claims or highlight inconsistencies that warrant further investigation, particularly in regions associated with elevated human rights risks.
Importantly, scientific verification does not replace traditional due diligence tools. Instead, it enhances them, providing an independent, tamper-resistant layer of evidence that can corroborate or challenge what is recorded elsewhere in the system.
As regulatory expectations evolve, compliance frameworks are moving toward convergence, where documentation, digital systems, and scientific testing are expected to work together. In this context, companies that can integrate these elements into a coherent evidence ecosystem will be better positioned not only to meet regulatory requirements, but to defend their sourcing claims under scrutiny.
Also Read: The Fabric War Just Flipped: Cotton vs Polyester
IoT & Real-Time Monitoring: The “Remote Auditor”
The 2026 regulations allow for longer intervals between comprehensive assessments (up to five years in low-risk scenarios), provided there is no “significant change” in a company’s risk profile. In practice, this creates a new expectation: companies must be able to demonstrate ongoing visibility into their supply chains between formal audits.
This is where continuous monitoring tools, including IoT sensors and remote sensing technologies such as satellite imagery, are beginning to play a more defined role. Rather than replacing in-person verification, these tools extend due diligence beyond periodic checkpoints, providing additional signals that can help identify emerging risks in near real time.
Within an evidence ecosystem, this type of observed data complements both recorded and measured data:
- It provides context to what documentation suggests should be happening,
- It offers early indicators of deviations or anomalies, and
- It can help trigger targeted follow-up actions where risk signals change.
In the context of forest-risk commodities, satellite monitoring can be used to detect changes in land use, such as unexpected canopy loss, within declared sourcing regions. While not definitive on its own, this type of signal can prompt further investigation, including site visits or product-level verification.
For textile supply chains, environmental monitoring at the facility level, such as wastewater discharge or chemical usage indicators, can provide additional visibility into operational practices between scheduled audits. Sudden deviations from expected patterns may indicate a need for closer review, particularly in higher-risk geographies.
Importantly, these technologies are most effective when used as part of a broader system. On their own, they generate signals not conclusions. But when combined with documentation, audits, and scientific analysis, they help create a more dynamic and responsive due diligence model.
As regulatory expectations shift toward continuous risk assessment rather than static compliance, the ability to integrate and interpret these different data streams will become increasingly important. Companies that can move from periodic verification to ongoing, evidence-based monitoring will be better positioned to demonstrate that risks are not only identified but actively managed over time.
Navigating the Value Chain Cap: Digital Product Passports and Product-Level Evidence
A notable feature of the 2026 CSDDD Omnibus reform is the introduction of the Value Chain Information Cap, designed to prevent disproportionate information requests particularly for small and medium-sized enterprises (SMEs) operating in upstream tiers of the supply chain.
While this provision helps address legitimate concerns around administrative burden and data sensitivity, it also introduces a practical challenge: how can companies fulfill their due diligence obligations if access to supplier-level information is limited?
This tension reinforces a broader shift already underway from entity-level disclosure toward product-level evidence.
Digital Product Passports (DPPs), alongside approaches such as digital twins, are emerging as one mechanism to help bridge this gap. Rather than relying solely on the transfer of documents between supply chain actors, DPPs enable the association of relevant data directly with the product itself. This can include information related to origin, composition, processing, and compliance attributes.
Within an evidence ecosystem, DPPs function as a carrier of recorded data but their value increases significantly when linked to other forms of evidence:
- Observed data, such as audit outcomes or monitoring inputs, and
- Measured data, such as scientific verification tied to the material itself.
In this model, upstream suppliers are not required to disclose all underlying business-sensitive information. Instead, they contribute to a system where claims are supported by verifiable, product-linked data points. This helps balance transparency with confidentiality, an important consideration highlighted in the Omnibus reforms.
For textiles and wood products, this approach is particularly relevant. Supply chains are often fragmented, multi-tiered, and commercially sensitive. By anchoring due diligence at the product level, supported by a combination of documentation, monitoring, and testing, companies can meet regulatory expectations while reducing friction across supplier relationships.
Ultimately, the Value Chain Information Cap does not reduce the need for due diligence, it changes how it is operationalized. Companies will need to move beyond document collection toward systems that can link claims to evidence in a structured, scalable way.
In this context, Digital Product Passports, when integrated into a broader evidence ecosystem, help shift compliance from documentation to defensible, product-level evidence.
By leveraging Digital Product Passports (DPPs), companies can enable upstream suppliers in textile and wood value chains to contribute product-level, verifiable data without requiring full disclosure of commercially sensitive information. Rather than relying on the exchange of underlying contracts or internal records, suppliers can provide digital records linked to the product, potentially supported by independent verification methods such as scientific origin testing. This approach helps fulfill CSDDD due diligence expectations while preserving supplier confidentiality, reflecting the balance between transparency and proportionality emphasized in the 2026 reforms.
The shift from traditional audit models toward an evidence ecosystem approach can be summarized in Table 1.0 as follows:
Table 1.0: From Traditional Audits to an Evidence Ecosystem Approach
| CSDDD/EUDR Requirement | Conventional In-Person Audit Model | Evidence-Ecosystem Approach |
| Origin Verification | Document-based (supplier declarations; vulnerable to error and/or manipulation). | Product level verification (e.g. isotope, trace elemental and/or DNA analysis linked to the material itself). |
| Deforestation Proof | Self-declaration or certificate based | Geolocation data combined with remote sensing and product-level verification |
| Continuous Monitoring | Periodic audits (e.g. every 12–24 months). | Ongoing monitoring using remote sensing, facility-level data, and risk-triggered follow-up |
| Risk Detection | Reactive (issues identified during audits or reviews) | Proactive (signals from monitoring and testing trigger targeted investigation) |
| Supplier Data Sharing SME Protections | Extensive documentation requests; potential disclosure of sensitive information | Product-linked data (e.g., DPPs) supported by verifiable evidence, reducing need for full disclosure |
| Evidence Type | Primarily recorded data (documents, certifications) | Combination of recorded, observed, and measured data (evidence ecosystem) |
Conclusion: From Compliance to Defensible Proof
The 2026 Omnibus amendments are a clear signal from Brussels: the EU values substance over form. The “scoping exercise” introduced in the latest reform rewards companies that can intelligently identify where their risks actually lie and prove they are managing them. Regulatory expectations in the European Union are evolving from procedural compliance toward demonstrable outcomes. It is no longer sufficient for companies to show that due diligence processes exist, they must be able to substantiate that those processes are effective in identifying and addressing real-world risks.
For the textiles and wood industries, the combination of CSDDD and EUDR represents a “high-stakes” regulatory environment where sourcing claims, whether related to origin, sustainability, or human rights, are increasingly subject to scrutiny. In this context, gaps between what is documented and what can be proven are becoming more visible, and more consequential.
Specifically, due diligence frameworks are converging toward models that integrate multiple forms of evidence, bringing together documentation, monitoring, and product-level verification into a more complete and defensible system. Companies that continue to rely solely on recorded data may find themselves exposed, while those that adopt an evidence ecosystem approach will be better positioned to respond to regulatory, commercial, and reputational pressures.
As the 2028 transposition deadline approaches, the question facing companies is not simply whether they have visibility into their supply chains, but whether they can stand behind their claims with confidence.
References & Further Reading
- Directive (EU) 2026/470 (Omnibus I): Articles 8 & 13a regarding the risk-based approach and harmonization of due diligence.
- Regulation (EU) 2023/1115 (EUDR): Interplay between geolocation requirements and the CSDDD environmental mandate.
- European Commission Guidance (2025): “The Role of Forensic Science in Supply Chain Traceability for Forest-Risk Commodities.”
- OECD Due Diligence Guidance: For Responsible Supply Chains in the Garment and Footwear Sector (Updated 2026).
- Hertzman Global Intelligence (2026). Fashion Has a Proof Problem: Why Evidence Ecosystems Matter in Risk Mitigation.
About the Authors
- Kelly Thompson is Founder of Matri and serves as EMEA Business Advisor to GenuTrace, where she focuses on supporting more transparent, traceable, and accountable supply chains.
A certified expert in CSRD and ESG fundamentals—and recipient of the 2019 Humentum Operations Excellence Award—she brings over 15 years of experience advancing human rights and strengthening supply chain and operational systems across global industries. Her work centers on bridging strategy with practical implementation, helping organizations translate evolving regulatory expectations into effective, evidence-based approaches.
Kelly’s experience spans public-private partnerships, humanitarian operations, and ESG advisory. She has supported initiatives to improve labor conditions in garment and seafood supply chains, as well as programs delivering healthcare services to workers. She has also led large-scale operational efforts, including managing procurement, distribution, and logistics for refugee populations along the Thailand–Myanmar border.
- MeiLin Wan is CEO and Founder of GenuTrace, where she focuses on advancing scientific verification and evidence-based approaches to supply chain traceability, particularly in the textiles sector.
With a background spanning global sourcing, supply chain risk management, and material verification, she brings a practical perspective to the challenges companies face in meeting evolving regulatory and commercial expectations. Her work focuses on exploring and advancing approaches that integrate digital traceability, on-site verification, and scientific methods such as isotopic and molecular analysis.
MeiLin is a frequent contributor to industry discussions on traceability, forced labor risk mitigation, and regulatory compliance, with a focus on bridging the gap between policy requirements and real-world implementation across complex, multi-tier supply chains.
