Experts have described the Fashion Sustainability and Social Accountability Act, currently pending in the New York State Senate, as a potential “watershed regulation” for the fashion industry.
If passed, the Fashion Act would become the United States’ most comprehensive framework for holding fashion companies accountable for labor exploitation and pollution in their supply chains, according to an opinion piece by fashion studies professor Melissa Gamble in The Regulatory Review.
The Fashion Act explained
New York’s proposed Fashion Act aims to increase transparency and compliance among major fashion retailers and manufacturers that do business within the State. Specifically, it would affect companies generating an annual global revenue of over USD 100 million, which includes household brands such as Nike, Adidas, Zara, H&M, Gap, and many more.
The Fashion Act would require companies to map 50 percent of their supply chains by volume across all tiers of production. If the bill becomes law, companies would have to make a good faith effort to map suppliers and associated supply chains—indicating legislators’ recognition of the subcontracting tactic frequently used to avoid compliance.
Companies would have to post to their websites within 12 months of enactment, a variety of disclosures, including environmental due diligence policies, processes, and outcomes. Companies would also need to include reports on their social and environmental sustainability initiatives, including relevant information from external sources and concrete activities to combat companies’ adverse impacts.
To track the effectiveness of companies’ efforts, “impact disclosure on prioritized adverse environmental and social impacts” would be required to be posted within 18 months after enactment of the original policies and procedures.
Lack of compliance with the Act would entail penalties enforceable by the New York Attorney General, including fines of up to 2% of annual revenues amounting to $450 million or more. Funds collected from these fines would be channelled into environmental justice initiatives.
Supply chain slavery in the fashion industry
The Fashion Act has emerged within a climate of increasing scrutiny against major fashion corporations for their complicity in the proliferation of modern slavery conditions in supply chains and the escalation of environmental havoc worldwide.
As Gamble explains, the U.S.’s fashion industry’s unprecedented rise occurred in the 1980s and 1990s, when companies moved production offshore. By shifting sourcing and manufacturing to low-regulation settings, garment and footwear brands have been able to lower prices and increase profits. Many have also evaded labor laws by adopting a wage system that pays workers per piece produced and by subcontracting to reduce their own accountability.
These methods lead to supply chains in which modern slavery thrives, where people are subjected to exploitative and unsafe working conditions and their communities are affected by the toxic pollutants stemming from the industry.