New York State Fashion Law Would Put Fashion Industry In The Spotlight | Arent fox

See the Sustainability and Social Responsibility Act (S7428/ A8352)

Overview

These days, it seems like almost every fashion brand has launched a line of “sustainable” clothing or footwear. An increasing number of products are advertised as ‘ecological’ and ‘sustainable’, but the basis for these claims is not always clear. If enacted, the Fashion Act would impose significant new due diligence and reporting obligations on much of the fashion industry and bring greater transparency to the environmental and social impact of fashion production. clothes and shoes.

Key requirements

The legislation would require fashion retailers and manufacturers who do business in New York and whose worldwide revenues exceed $100 million to disclose detailed information about their environmental and social due diligence policies. The main requirements are summarized below:

Supply chain mapping: If passed, the bill would require fashion brands to use a risk-based approach to trace and map fifty percent of their suppliers by volume at all levels of the supply chain, from raw materials to final production, and to obtain and disclose the names of relevant vendors for certain priority risk areas. High-risk suppliers may include suppliers subject to WRO or US Customs and Border Protection findings, or suppliers located in a geographic area where forced labor is prevalent, such as the Xinjiang Autonomous Region (XUAR) of the People’s Republic of China (PRC). Arent Fox Forced Labor Task Force recently issued an alert regarding the passage of the Uyghur Forced Labor Prevention Law that can impact many fashion businesses.

Due Diligence Policies: Companies would also be required to disclose their due diligence policies and the activities they carry out to identify and mitigate their potential negative social and environmental impacts. Among other things, companies would be required to complete a social and environmental sustainability report detailing the steps they have taken to prioritize responsible business conduct; identify areas of significant social or environmental risk in their supply chains; identify priority risk areas and; measures taken to prevent or mitigate these risks. Disclosure of information related to these policies is also required under the California Transparency in Supply Chains Act. Retailers who have strong policies and disclosures in place under this law may already be on their way to complying with it.

Priority disclosure of negative impacts: Companies would have eighteen months to disclose the annual volume of materials they produce and how much of that production has been replaced by recycled materials. In addition, companies should establish verifiable baselines and reduction targets for energy and greenhouse gas emissions, water and chemicals management. The bill would also require companies to disclose the median wage of workers at high-risk suppliers and compare the wage with the local minimum wage.

Impact reduction targets: Finally, the bill would require companies to disclose the targets they have adopted for impact reductions and for monitoring the implementation of due diligence. The bill establishes specific criteria for climate change targets, namely that they must be absolute targets, align with science-based targets for the apparel and footwear sector promulgated by the World Resources Institute and include all production fields. Companies would be required to meet targets and report compliance on an annual basis.

Enforcement

The New York Attorney General would be responsible for enforcing the law and has the authority to seek monetary penalties, injunctions or other equitable relief. The Attorney General would also be required to publish an annual list of companies that do not comply with the law. Companies notified of non-compliance would have 3 months to comply before being subject to fines of up to 2% of their annual revenue. The bill also provides a private right of action for consumers.

What this means for fashion companies

The Fashion Act is part of a broader trend towards increased scrutiny of the fashion industry, including tackling perceived environmental, social and ethical concerns and improving the transparency and accountability of the supply chain. This bill, along with the Uyghur Forced Labor Prevention Law and similar initiatives, imposes obligations on major clothing and footwear brands to proactively monitor their supply chains, including mapping the supply chain, review of worker conditions (including identification of forced labour), assess the environmental impact of operations and take action to remediate any identified risk areas.

The Fashion Act was introduced in the New York legislature in January and a vote is expected in late spring 2022.

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