By: Michael Patrick Stuart
March 7, 2023
This year, the global fashion industry faces new legislation that may put an end to its long history of self-reporting and self-regulation, especially with regard to its environmental impact. Companies in the fashion industry regularly advertise their commitment to reducing their impact on the planet by using eco-friendly materials, such as using recycled fabrics and organic materials. However, the promises made by most brands have historically been voluntary and their progress has been self-reported. In order to drive greater sustainability and transparency in the textile and fashion industries, new regulatory proposals have emerged in both the United States and the European Union that will require brands to prioritize emission reduction, garment worker rights, supply chain responsibility, and product circularity.
In January 2022, the New York Fashion Sustainability and Social Accountability Act was presented in the state of New York, and it is currently pending before the New York State Senate Consumer Protection Committee. The proposed bill would make New York the first state in the nation to hold fashion brands accountable for their environmental and social impacts, for it mandates fashion retailers or manufacturers who generate more than $100 million in revenues and do business in the state to disclose their environmental and social supply chain due diligence policies. This includes luxury brands such as LVMH and Kering, fast-fashion companies like H&M and Zara, and sports giants Nike and Puma. Assemblymember Dr. Anna Kelles, one of the sponsors of the bill, stated that “The fashion industry is responsible for a staggering 4 – 8.6% of global greenhouse gas emissions and has been permitted to operate unchecked by regulations that would curb pollution and the use of exploited, forced, and child labor.” If the New York Fashion Act is passed, major fashion brands would be required to reduce their negative impacts on the environment at a pace set by legislators rather than the companies themselves.
Specifically, the proposed bill in New York outlines new compliance requirements and standards for the large fashion, apparel, and footwear companies selling or operating in the state. One requirement involves supply chain mapping, which is “the process of creating a full picture of the companies and organizations within the supply chain at every tier” and serves as a “useful tool to support risk assessment and for prioritizing suppliers and actions within a sustainable sourcing strategy.” Within a year of the bill passing, impacted companies must map at least 75% of their Tier 1 supply chain by volume, and Tier 2 suppliers will need to be mapped within the second year. The Fashion Act also requires retailers and manufacturers to create and publish annual reports on their public websites that detail the due diligence policies, processes, and activities that they have implemented to identify, prevent, mitigate, and account for environmental and social risks. The reports, which would be due within 18 months of the law’s implementation, must also include an explanation of how the company’s action plan aligns with certain global standards, such as the UN Guiding Principles on Business and Human Rights and OECD Guidelines for Multinational Enterprises. Additionally, any funds resulting from the penalties and fines imposed under the act will be placed into a fund supporting environmental justice-related community projects.
Major proposals have also been recently made in the United States on the federal level. The Fashioning Accountability and Building Real Institutional Change (FABRIC) Act is America’s first federal fashion bill and it proposes “major incentives to accelerate domestic apparel manufacturing and new workplace protections to cement the US as the global leader in responsible apparel production.” Although fashion is a $3 trillion global industry, its manufacturing supply chains around the world frequently exhibit exploitation and abuse, including forced labor and extreme poverty pay. The FABRIC Act aims to improve worker protection in apparel production by amending the Fair Labor Standards Act of 1938 to include the creation of a nationwide garment industry registry through the Department of Labor, which will promote transparency and accountability. To incentivize responsible production at the top of the chain, the act imposes requirements that hold fashion brands, retailers, and manufacturing partners jointly accountable for workplace wage violations. The FABRIC Act extends protections to garment workers by setting hourly pay rates in the industry and ending the practice of “piece rates”, where workers are paid per the item they produce rather than the hours they work.
While the new proposals in the United States aim to improve sustainability by directly targeting the major players within the fashion industry, the European Union has recently released broader policy changes that seek to improve Europe’s ecological footprint on the world’s resources across industries. In March 2022, the EU released a plan titled “Strategy for Sustainable Textiles for 2030,” which focuses on “textile circularity and making brands more accountable for waste that they send to landfills.” Within that plan, legislators call for a new Ecodesign for Sustainable Products Regulation (ESPR) that builds on the existing Ecodesign Directive, which currently only covers energy-related products. The new ESPR would establish a framework to set ecodesign requirements for specific product groups like clothing with the goal of greatly enhancing their circularity, energy performance, and other environmental sustainability aspects.
One of the central features of the proposed ESPR is the requirement of Digital Product Passports, which are tools that “track the origin of all materials and components used in the manufacturing process of everyday consumer goods” and “enable more efficient sharing of information across value chains.” A digital product passport could store particular information about a piece of clothing such as the product’s durability and reparability, identify any substances that might prevent the product from being recyclable, or reveal how much recycled yarn was used.
Other initiatives in the EU emphasize corporate sustainability due diligence through joint liability. Last February, the European Commission passed a proposal that requires companies in member states to account for human rights and environmental protections not only in their own operations but also those of any subsidiaries or suppliers in their supply chains. With supply chains in the fashion industry being particularly complex, many brands simply lack the information being requested by the EU in this legislation. However, this requirement will compel numerous companies in the fashion industry to obtain a better understanding of their material sourcing and manufacturing.
The fashion industry is currently at a pivotal moment, as the new regulations proposed in the United States and the European Union could disrupt the industry’s long-standing practices of self-regulation. Despite the varying scope and requirements of disclosure found in these proposals, fashion companies across the world may soon have to embrace these changes and adopt a more responsible approach to protecting the environment and the workers who make our clothes.