Last week, New York lawmakers announced a bill aimed at imposing sustainability reporting requirements on the fashion industry. If passed, the Fashion Sustainability and Social Accountability Act would generally require major fashion retailers to map their supply chains, make various disclosures on their websites, and commit to reducing their environmental impact.
The law would broadly apply to fashion retail sellers and manufacturers with more than $100 million in gross revenue that do business in New York. These companies would have to use good faith efforts to map a minimum of 50% of their suppliers by volume across all tiers of production, from raw material to final production. Based on this exercise, companies would have to disclose certain information on their websites, including:
- A supply chain mapping and disclosure, with information about the company’s suppliers.
- An impact and due diligence disclosure, including a social and environmental sustainability report, with information on due diligence policies and activities conducted to identify, prevent, and mitigate potential adverse impacts, including the findings and outcomes of those activities.
- An impact disclosure on prioritized adverse environmental and social impacts within 18 months after enactment of those policies, including information on greenhouse gas emissions, volume of materials produced, recycling efforts, median wages of workers of prioritized suppliers, and the company’s approach for incentivizing supplier performance on workers’ rights.
- A disclosure about what targets the company has for impact reductions and for tracking due diligence implementation and results, including estimated timelines and benchmarks for improvement.
If enacted, the law would be enforced by the NY Attorney General, and includes a private right of action, authorizing citizens of New York to file civil legal actions to compel compliance with the law. Companies that fail to comply may be fined up to 2% of annual revenues of $450 million or more. The money generated by the penalties would fund projects intended to benefit New York’s environmental justice communities.
Although activists (and even some members of the fashion industry) have expressed support for the bill, there is no doubt that companies will be required to devote a lot of time, money, and effort into compliance, and that they will be required to disclose information (such as supplier lists) that they may otherwise consider to be confidential.
We are monitoring developments in this legislation and will post on major developments here.