By Jerri-Lynn Scofield, who has worked as a securities lawyer and a derivatives trader. She is currently writing a book about textile artisans.
New York could become the first place in the world to impose regulations on fashion companies, to force them to grapple with the climate impact of their supply chains.
State Senator Alessandra Biaggi and Assemblywoman Anna R. Kelles on Friday introduced the Fashion Sustainability and Social Accountability Act (aka the Fashion Act), to apply to apparel and footwear companies doing business in New York with more than $100 million in annual revenues. That includes high end companies including LVMH, Prada, Armani, as well as fast-fashion behemoths, Shein and Boohoo, according to The New York Times
Both the state Senate and state Assembly will consider the legislation in coming months, and passage could occur by the end of the current legislative session in June. The Grey Lady reports that the bill is backed by several non-profits, including he New Standard Institute, the Natural Resources Defense Council and the New York City Environmental Justice Alliance, as well as the designer Stella McCartney, a prominent champion of sustainability in fashion.
Fashion is a notoriously dirty industry, and many fashion companies have called for the industry to clean up its act, as I’ve written in Waste Watch: Fashion Stumbles on Sustainability. Some believe the industry itself can successfully address environmental problems, while others believe stricter government regulation is necessary.
What will it take for fashion to actually become sustainable? We’ve been talking about it for years, but the harsh truth is that little has changed. Despite our excitement around recycled fibers, regenerative agriculture, upcycling, resale, and new business models, the industry’s emissions are still rising—fashion contributes an estimated 4 to 8.6% of the world’s greenhouse gases—garment workers are still being exploited, and fast fashion giants are still expanding. Much of that comes down to the fact that fashion itself is stunningly unregulated: It is entirely up to a brand to choose better materials, audit its supply chain, and reduce waste. And if it doesn’t? There are few, if any, ramifications. Gen Z is demanding accountability, but there are no measures in place that actually hold brands accountable.
It’s estimated that by 2050, fashion and related industries might be responsible 25% of the world’s carbon budget . Many industry insiders concede that slashing those numbers will require gretaer government regulation.
New York Initiative
New York’s proposed Fashion Act requires fashion retail sellers and manufacturers to disclose their environmental and social due diligence policies The legislation also establishes a community benefit fund for the purpose of implementing one or more environmental benefit projects that directly and verifiably benefit environmental justice communities.
Per the NYT:
Specifically, it would require such companies to map a minimum of 50 percent of their supply chain, starting with the farms where the raw materials originate through factories and shipping. They would then be required to disclose where in that chain they have the greatest social and environmental impact when it comes to fair wages, energy, greenhouse gas emissions, water and chemical management, and make concrete plans to reduce those numbers (when it comes to carbon emissions, specifically in accordance with the targets set by the Paris Climate Accords).
Finally, it would require companies to disclose their material production volumes to reveal, for example, how much cotton or leather or polyester they sell. All of that information would also have to be made available online.
Companies would be given 12 months to comply with the mapping directive (18 months for their impact disclosures), and if they are found to be in violation of the law, they would be fined up to 2percent of their annual revenues. Those fines would go to a new Community Fund administered by the Department of Environmental Conservation and used for environmental justice projects. The New York attorney general would also publish an annual list of companies found to be noncompliant.
Vogue summarizes the impact the legislation could have thusly:
In short, the law would make it so a brand cannot do business in New York unless it proves it is working with the planet and people in mind. It would also eliminate an element of confusion for the consumer; those of us who want to shop responsibly often can’t discern which brands are taking meaningful action, which ones are exaggerating their efforts, and which ones aren’t doing much of anything at all. We’re told to “buy less, buy better,” but are not provided with the information we need to make informed decisions.
The problem with the current system: companies that do the right thing – e.g., attempt sustainable practices – are effectively penalised:
“Right now, companies are uncompetitive if they do the right thing,” Maxine Bédat, the founder of the New Standard Institute, explained on a call earlier this week. “That is not a framework for success. By making these regulations the floor of doing business, every company will have to comply, and every company will have to do the right thing. Of course, they can go above and beyond that and show leadership in other ways, too.”
Will executives and designers balk at these requirements after decades of little government oversight? A few might. But Bédat described the bill as inherently pro-business in that it levels the playing field. Stella McCartney is the first designer to endorse the act, and many of her peers have spoken about the need for better regulation and incentives. “We expect the industry will get on board with this because they’ve spoken about how much they care about sustainability,” Bédat says. “It’s really going to make things clear whether the industry is all talk, or if it’s really ready for action.”
Due to New York City’s central position in the global fashion universe, the impact of New York’s Fashion Act will extend well beyond the state’s borders:
While the bill is being introduced in New York state, New York City’s significant market size will effectively require brands around the world to comply. Bédat compared the rollout to the fuel efficiency standards California passed a few years ago, which spurred a chain reaction for automakers around the world and boosted the opportunities for electric car companies like Tesla. “It’s a really apt parallel, because like fashion, Tesla is sexy and of the future,” Bédat adds. “We need to make sure we’re making clothing for the future and business models of the future—not just talking about it.”
Similarly, it was last March when McCartney pointed out the United Kingdom’s 2030 ban on fossil fuel vehicles, arguing that it will accelerate the nation’s switch to electric cars and green energy. The fashion equivalent, McCartney posits, would be introducing tax incentives that encourage brands to use faux leather; at present, those materials are often met with a higher import tax than animal leather. “There need to be policy changes. It isn’t just about the physical product, it’s about working hand-in-hand with people who can safeguard this for the future,” she said.
Legislation can take years, but Bédat is hopeful the bill will be passed by the end of the 2022 legislative session in June. Today kicks off the campaign. Over the next six months, we’ll be watching to see which brands and industry players throw their support behind it. “We talk about innovation all the time in fashion,” she says, “but this is the kind of regulatory innovation that could advance the work that needs to be done and the collaboration that needs to happen.”
The New York Times reposts that other countries have nibbled around the edges of regulating fashion according to sustainability principles, but New York is the first jurisdiction to push forward with concrete measure to tackle supply chain climate concerns. According to the NYT:
While similar legislation regarding due diligence is being debated in the European Union, and while Germany, France, Britain and Australia have laws requiring due diligence when it comes to human rights and slavery, there is no general legislation in any country governing the greater social and environmental actions of the fashion industry and mandating change.
In 2010, California passed the Transparency in Supply Chains Act, which addresses modern slavery, in 2019 banned sales of new fur products, and last year passed the Garment Worker Protection Act, but the New York act focuses on the manufacturing end of the business, broadly defined.
“Fashion is one of the least regulated industries,” said Maxine Bédat, the founder of the New Standard Institute. In part that is because its sprawling supply chain can include multiple countries and continents. As a result, efforts at sustainability vary widely. Imposing government regulation would regularize the reporting and “make sure there isn’t a competitive disadvantage to doing the right thing,” Ms. Bédat said.
Stella McCartney is not alone in supporting sustainability, and companies including Ralph Lauren, Kering, LVMH and Capri Holdings, for example, are among the companies that have already pledge to implement the Science-Based Targets Initiative, which is intended to lower company carbon emissions, according to the NYT.
Yet the same source report ssome companies oppose the idea of regulation per se:
“Often there is a knee-jerk reaction by businesses against the idea of regulation,” Ms. Bédat said, noting that numerous stakeholders were consulted in drafting the Fashion Act, including retail brands and manufacturers such as Ferrara, which is based in the garment district and has endorsed the bill. But, she continued, “even the auto industry, which initially rebelled against fuel efficiency standards, has now embraced them.”
The act’s supporters hope, per the NYT:
The Fashion Act, Ms. Bédat said, “is an effort to meet industry where they are, recognize the good faith efforts they are already making and come up with a common standard, but do so with some teeth.”
Though she said she expected “that some companies impacted by this legislation won’t initially support these new standards,” she added: “This diverse and active coalition makes me confident we can pass this legislation in both chambers later this legislative session.”
I’ll be watching the progress of this measure through the New York legislature closely. Perhaps New York will succeed in setting a new fashion trend.