New York Assemblywoman Dr. Anna R. Kelles and New York State Senator Alessandra Biaggi introduced the Fashion Sustainability and Social Accountability Act (“the Act”) on January 7th, 2022.
The proposed legislation, which currently remains in committee, would require footwear and apparel manufacturers, who have sales of at least $100 million a year and do business in New York, to map a minimum of 50% of their supply chain. This means companies would be required to gather information about their suppliers and their suppliers’ suppliers from the collection of raw materials to the manufacturing and distribution of products. The Act would require companies that fall within the proposed statute, like H&M and Nike, to identify their most significant social and environmental impacts related to unfair wages, energy consumption, greenhouse gas emission, and water and chemical management. The companies would also be required to disclose the volume of materials—such as leather or cotton—that they sell. Separately, the Act would require each company to draft and implement a proposal to reduce their most socially and environmentally damaging practices. The Act would require their plans to include compliance with the Paris Climate Agreement regarding carbon emissions. The data and reporting these companies are to provide would be made publicly available online.
While the Act is sure to be met with pushback and revision as it advances through the New York state legislative process, its current form offers interesting and innovative strategies for leveraging large corporations into more transparent and environmentally conscious business practices.
The Act targets large corporations who can afford to undertake the substantial costs associated with reporting copious information across their operations. It also allows smaller businesses in the fashion industry to innovate and compete efficiently without these additional operational costs. By imposing costs on big corporations related to their larger infrastructure, the Act may have the added benefit of providing smaller fashion companies with a comparative advantage in New York, a key fashion market for small, potentially disruptive players in the fashion industry.
The Act furthers transparency for inadequate working conditions. It requires large apparel and footwear companies to report and highlight their operations providing deficient pay or unacceptable conditions, potentially leading to improved conditions for workers due to—or in fear of potential—public outrage. In addition, it requires the businesses that fall within the statute to contemplate and effectuate their plans for a more sustainable future.
While concerns about the potential economic impact of this piece of legislation are important to consider, New York City’s primacy in the fashion industry and public support for environmental initiatives will likely disincentivize companies from leaving the state. Large fashion corporations might be tempted to stop doing business in New York. Still, these financial interests are likely outweighed by the prominence of the New York fashion market combined with the current cultural focus on climate change. American consumers are interested in investing in and supportingcompanies committed to sustainability and mitigating their environmental impact. This is demonstrated in the present context by the reluctance of potentially affected brands to speak out against the Act. Whether, in practice, corporations can avoid these disclosures without public backlash remains to be seen.
The Fashion Sustainability and Social Accountability Act is an exciting piece of proposed state legislation that, if successful in its aims, could provide a blueprint for regulation at both the state and federal levels of other industries with large supply chains and lasting environmental impacts.