The Fashion Industry is responsible for a huge, unacknowledged portion of the world's greenhouse gas emissions. The fashion business is said to be the 2nd biggest polluter in the World.
However, the sector has begun to wake up! The Fashion Industry is slowly moving in the direction of sustainability. One of the biggest evidences of the shift in the Fashion Industry is the upcoming New York Fashion Sustainability and Social Accountability Act.
This Act, if passed, would be the first of its kind legislation in the United States to mandate the behaviour of global fashion brands. The Act would force the Fashion Industry to disclose its social and environmental impacts. The Act would demand leading global Fashion Brands to aggressively resolve their Sustainability state.
The New York Fashion Sustainability Act is due to arrive on the New York Senate's floor in 2023! Let's dig into the details of the Act to understand why it's taking the Fashion World by storm.
What is the New York State Fashion Sustainability and Social Accountability Act
The Fashion Act aims to accomplish two goals:
To whom does this Act apply?
The Fashion Act would apply to all global retailers and manufacturers of clothing and footwear who conduct business in New York, and have annual sales of at least $100 million.
Considering the fact that numerous Fashion Conglomerates are headquartered in New York, and almost every major Fashion Brand in the World conducts business in New York City, this Act would apply to the majority of the Fashion Industry.
Even a company without a physical presence in the state conducting profitable transactions in New York, would be subjected to the new Fashion Sustainability Act.
What obligations does the Act enforce?
Supply-chain Mapping: Under this Act, businesses would have to map (i.e., list and track) atleast 50% of their supply chains, from farm to storefront.
The bill does not specify which half of the supply chain is subject to such disclosure, but trusts companies to use “good faith efforts” to focus on “supply chains entities relevant to the prioritized risk”. The companies must then disclose the names of the prioritized suppliers.
Disclosure of Due Diligence: Every year, the company is required to publish a social and environmental sustainability report that details the due diligence procedures, techniques, and actions taken to recognize, avert, decrease, and account for potential environmental and social risks.
Such reports must be prepared in compliance with the rules for multinational corporations and ethical business practices established by the Organization for Economic Cooperation and Development.
Impact disclosure: Businesses are required to disclose their actual and potential adverse effects on the environment and society.
Examples include reporting greenhouse gas emissions, effects on water and chemical management, the volume of production that is replaced with recycled materials, and the monitoring and improvement of working conditions, throughout the supply chain.
Impact reduction goals: Organizations are required to establish and attain annual goals for reducing their environmental impact, particularly their greenhouse gas emissions. These goals must include anticipated timetables and measurable performance standards for improvement.
Public Accessibility: A company's website must make all of the aforementioned disclosures readily available to the general public.
What is the status of the Fashion Act?
Senator Alessandra Biaggi filed the Fashion Act in the New York state senate in October 2021. It was referred to the Consumer Protection Senate Committee in January 2022, and its proponents intend to put it to a vote in the late spring this year.
2023 could very well be the year, the Fashion Sustainability Act finally comes into effect.
What are the Consequences of Not Complying
The Fashion Sustainability Act decrees that if a company doesn't comply with the regulations of the Act, sanctions of up to 2% of its annual revenues over $450 million may be imposed.
The New York Department of Environmental Conservation will be in charge of managing a new community benefit fund, that will hold the funds such collected. The New York Attorney General will also publish a list of the businesses that were found to be in violation, every year.
The capacity to impose the law against non-compliant businesses will lie with both the New York Attorney General and individual citizens. A private right of action is permitted by the Fashion Act. Therefore, citizens of the state can enforce the Attorney General to investigate the company's matters; and against the Attorney General in case of failure to act.
Much has been written about the unscrupulous environmental behaviour of the Fashion Industry. However, the sector has begun to make some significant progress toward the global goal of sustainability.
For instance, consider the various international laws enacted like the Fabric Act, which protects workers from exploitation,the Fashion Workers Law which shields fashion models from harassment, and many other environmentally friendly steps taken internally by Fashion companies.
Several other nations like Australia, United Kingdom, and many EU countries, have imposed laws similar to the Fashion Sustainability Act. Notable examples include the UK’s Modern Slavery Act, which seeks to hold businesses responsible for the employment standards of their suppliers; the Act requires an annual statement confirming whether slavery and human trafficking are absent from the company's operations and supply chain.
The effect of the Fashion Sustainability and Social Accountability Act may not be immediately apparent, but certain actions, such as a public list of businesses that break the law, will reassure consumers that important players in the industry are being held accountable.
Will the Fashion Sustainability and Social Accountability Act pass through the New York Senate floor? Or will it die down in debate and scrutiny? Will a major act that holds heavyweight brands accountable actually come into reality? We are sure to find the answers to these questions in 2023!