While fashion laws are ahead in the United States, demand for disclosure of the environmental and social impacts of supply chains is growing internationally. We are backed by several prominent non-profit organizations, as well as prominent industry names such as Stella McCartney.
The proposed New York Fashion Sustainability and Social Accountability Act (Fashion Act) targets clothing and footwear companies that sell products in New York and have global revenues greater than $100 million. Fashion laws require these companies to map their supply chains, disclose their environmental and social impacts, and set targets to improve some of those impacts.of fashion law The bill will be introduced to the New York Legislature in October 2021. A vote on the bill is scheduled for late spring 2022. The bill has been endorsed by several prominent nonprofits and prominent industry names such as Stella McCartney.
Fashion law could be a catalyst for addressing social and environmental impacts of supply chains
Fashion laws, which address specific industries in specific states, are part of a broader push for new laws and regulations that address environmental, social and governance (ESG) issues.Over the past decade, there have been several laws aimed at tracking the social impact of supply chains. Supply Chain Transparency Act In 2010 to combat human trafficking and exploitation in supply chains. There is now a trend to address the entire supply chain by targeting both social and environmental impacts.
While fashion laws are ahead in the United States, demand for disclosure of the environmental and social impacts of supply chains is growing internationally. For example, in June 2021, Germany enacted legislation requiring large companies to identify and address human rights and environmental risks in their direct supply chains. Furthermore, the EU Corporate Sustainability Due Diligence Directive Businesses should identify, prevent, stop or mitigate social and environmental impacts such as child labor, exploitation of workers, pollution and biodiversity loss. There has also been an increase in law enforcement and civil litigation related to his chain of supply. (look U.S. Department of Homeland Security Annual Trafficking in Persons Report When Trends in Federal Human Trafficking Civil Litigation).
The Fashion Act could be one of the first laws in a nationwide effort to implement broader ESG goals into supply chains.
Proposed requirements under fashion law
The Fashion Act requires companies to publish information about their environmental and social impacts on their websites within 12 months of enactment. Violation of fashion laws can result in fines of up to 2% of global earnings. The Fashion Act also includes a civil action provision that allows consumers to seek enforcement.
Disclosure must include (1) supply chain mapping; (2) “Social and Environmental Sustainability Report”. (3) ‘Impact Disclosures’ showing the results of environmental and social risk mitigation measures; (4) targets for mitigating environmental and social risks;
Supply chain mapping must include at least 50% of the company’s supply chain volume from raw materials to final production.
A Social and Environmental Sustainability Report should include environmental and social impacts within the supply chain, such as water and chemical management use, fair wages, and greenhouse gas emissions. prioritization of risks of those impacts; actions taken to mitigate those risks;
Reports must comply with international standards for labor reporting, such as the Greenhouse Gas Protocol’s corporate accounting and reporting standards and the United Nations Guiding Principles on Business and Human Rights.
The Impact Disclosure must include (1) baselines and reduction targets for Scope 3 emissions of energy and greenhouse gases, water, and chemical management; (2) How much material is produced annually and how much of it is made up of recycled material? (3) Workers’ wages and how this compares to local minimum wages and living wages. (4) the company’s approach to incentivizing supplier performance on labor rights; Most impact statements must be independently verified.
Finally, companies must publicly disclose the targets they set for their environmental and social impacts (including greenhouse gas emissions), achieve those targets, and report annually on their compliance with these targets.
of Environment, Society, Governance (ESG) Ballard Spahr’s working groups apply the experience of attorneys across the firm to address clients’ unique ESG issues and objectives. This interdisciplinary approach allows her to help clients navigate her rapidly changing ESG landscape.
- Enhanced disclosure requirements by regulators, proxy advisors and trading platforms on certain ESG metrics.
- Increased litigation and reputational risk to business operations due to company statements, spending and policies.
- Trends in project and entity sales and investments based on environmental and social impacts.
- Evolving fiduciary duties of directors, investment advisors and lenders stemming from ESG initiatives.When
- Develop and evaluate diversity, equity and inclusion goals in the workplace.