News

15 June 2022

The US Fashion Sustainability and Social Accountability Act

In January 2022, the Fashion Sustainability and Social Accountability Act, or Fashion Act, was introduced in New York State. This act could prove to be revolutionary for the fashion industry. In fact, it would be the first example of a law in the US that makes companies responsible for their environmental and social impact.

The Problems Behind Fashion

The fashion industry moves trillions of dollars around the world and makes up about 2% of the world's gross domestic product. In the United States alone, the industry employs more than 30 million people through the supply chain, from agriculture to retail.

Unfortunately, the industry faces several problems:

  • pollution
    Fashion contributes up to 4% of the world's greenhouse gas emissions.
    The production processes involve compounds and chemicals that are harmful to waterways, land and even health.
  • labor policies
    Exploitation of minor labor, irregular work, deplorable working conditions, abuse and discrimination are quite common along the supply chain, especially in those developing countries where the big brands have outsourced production.
    One example is the collapse of Rana Plaza in Dhaka, Bangladesh, in 2013. The building housed a clothing factory and the collapse caused the death of more than 1,100 workers.

6_The US Fashion Sustainability and Social Accountability Act

What Does the Fashion Sustainability and Social Accountability Act Recommend?

Here's a brief overview of the main contents of the Fashion Act.

  • Supply chain mapping

The bill asks fashion companies, including fashion manufacturers and retailers, to list and track at least 50% of their supply chain, from farm to store. However, it does not specify which subjects to map. It simply encourages companies to focus on the priority ones.

  • Due diligence disclosure

Companies should publish an annual "social and environmental sustainability report". It should contain environmental and social due diligence policies, processes and activities. The goal is to identify, prevent and address potential environmental and social risks, and share the results.

  • Impact disclosure

Companies should also disclose the negative environmental and social effects of their activities.
For example, they should indicate greenhouse gas emissions and reduction targets, water treatment, the management of chemicals, the use of recycled materials and much more.

  • Impact reduction goals

Obviously, the bill asks companies to set annual goals to reduce their impact. These must be science-based goals.

  • Public availability of data

Companies must make all disclosures publicly available online.

To Which Companies the Fashion Act Applies

The Fashion Sustainability and Social Accountability Act falls on global apparel and footwear companies with over $ 100 million in revenue doing business in New York.

Companies would have one year to comply withthe mapping requirements and 18 months to comply with the disclosure requirements. Those that are still not compliant within 3 months of being notified could be fined up to 2% of their annual revenue (at least $ 2 million).

Why is it Important?

Being a New York state bill, the Fashion Act may seem of little international relevance.

However, fashion companies around the world should pay attention to what's going on. Indeed, if passed, the Fashion Act would have global implications, as there are many fashion companies operating in New York that have revenues in excess of $ 100 million. Many are from abroad and their supply chains span the entire globe.

Moreover, consumers are demanding greater transparency and sustainability to fashion brands.

Therefore, the New York Fashion Act is likely to pave the way for other similar regulations.

The EU, with its Green Deal, has already issued a The New Circular Economy Action Plan on sustainable textile products. Meanwhile, countries including France, Germany, the UK and Australia have adopted laws on human rights and modern slavery.

Times are changing and fashion companies must do their best. Some of them have already integrated circular economy policies or implemented transparency through the blockchain. However, the industry remains "extraordinarily unregulated”.

The Future of the Fashion Act

The Fashion Act, which is still under review, is sponsored by the State Senator Alessandra Biaggi and by the deputy to the State Assembly Dr. Anna Kelles. Numerous groups of environmental and human rights activists, as well as fashion designers, are supporting it.

If approved, it will not only bring benefits to the environment and to workers' rights. Indeed, the greater transparency will make consumers more aware of the impact of their purchasing choices. And this will push fashion companies into an increasingly virtuous circle.