The fashion industry is widely acknowledged to be one of the most environmentally unfriendly industries in the world, second to the oil and gas industry. As corporate social responsibility continues to rise in prominence and environmental sustainability becomes a mainstream consideration for consumers, New York state is taking it a step further by introducing legislation that would legally mandate fashion businesses to be environmentally sustainable, should they choose to operate commercially in New York. This is the first state in the USA to explore legalizing such a measure.
What is the Fashion Sustainability and Social Accountability Act?
Commonly referred to as the New York Fashion Act, the bill is making its way through the state’s legislative body and has not yet been enacted. It has been introduced at the state level and, thus, is applicable to New York state. It is aimed at holding the biggest fashion brands in New York accountable for their role in climate change. It has the backing of a coalition of non-profit organizations that are focused on the intersection of fashion and sustainability, as well as green fashion notable, Stella McCartney.
If Passed, Who Would be Governed by the Act?
If passed, the law would apply to apparel and footwear companies that generate more than $100 million in global revenue that are doing business in New York state. Thus, it does not matter if the fashion brand originated out of state or country. As long as they have a commercial presence in New York state and generate more than $100 million in global revenue, they would be subject to this legislation, if it becomes law. Thus, large multinational fashion brands that range from luxury to fast fashion would be targeted.
Who Would not be Governed by the Act?
If your business does not have a commercial presence in New York, then you would not be subject to the law. If you generate less than $100 million in revenue, you would not be subject to the law. And, of course, if the bill is not enacted, no one would be subject to the law
What Would be Required to Comply with the Act?
As currently drafted, the law would require the big fashion players to map out at least 50% of their supply chain, starting with the farms where the materials originate all the way through the product supply chain to factories and shipping. They would be required to disclose in that supply chain where they have the greatest social and environmental impact as it relates to fair wages, energy, greenhouse gas emissions, water and chemical management. Simultaneously, the fashion brand would be required to make concrete plans to reduce those numbers. In addition, the fashion brand would be required to disclose their material production volumes. All of the information would be made available online. In the explanation of the purpose of the act, the sponsoring US senator also advised that the act would ensure that labour, human rights and environmental protections are prioritized. If found to be in violation of the law, the fashion brand could be fined up to 2% of their annual revenues. These penalty funds would then flow through to community funds established in New York state that are dedicated to environmental justice projects. In addition, to the financial penalty, the New York attorney general would keep a public list of those non-compliant fashion brands, which is sure to elicit public shaming in the court of public opinion.
The Take Away
If you are not operating in New York state or generate less than $100 million in global revenue, this will not implicate you. However, it is further indication that if you are not taking your company’s corporate social responsibility seriously, you are missing out on a prominent movement within the fashion industry and consumer behaviour. There are ways to structure your business to ensure that it is appropriately adopting and mandating corporate social responsibility practices through the global supply chain. Froese Law can help you with this.