FROM OUR NOVEMBER ISSUE: THE PROPOSED NEW YORK FASHION ACT

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The fashion industry’s impact on the environment and global labor has been a fraught topic for decades. At last, it’s at a point where many U.S. regulators are taking action. Enter the New York Fashion Sustainability and Social Account-
ability Act (also referred to as the “Fashion Act”), which introduces groundbreaking changes and places greater emphasis on sustainability and ethical labor practices.

Introduced in the New York State Senate in 2021, the Bill would require any fashion company selling in New York with global revenues of $100 million or more to provide a transparent and comprehensive report to the Attorney General on their energy, greenhouse gas emissions, water, plastic, and chemical management.

Such companies are also required to conduct mandatory due diligence to prevent labor abuses. In addition, they should adhere to global standards for ethical business practices and risk eval- uation, as specified by the Organisation for Economic Co-operation and Development (OECD). If adopted, companies who fail to follow these regulations could face fines of up to $15,000 per day, with the proceeds going to environmental justice organizations.

Undoubtedly, this would present a dynamic blend of business prospects and compliance duties for the menswear industry. In preparation, companies should begin to concentrate on incorporating sustainability and transparency into relevant aspects of their business operations. This can start by conducting a comprehensive supply chain audit to identify potential gaps in sustainability and labor practices. These audits would aid in targeting areas where improvements might be needed to meet the Act’s eventual requirements, such as using best practices to ensure fair labor standards throughout the production process and tapping into using sustainable fabrics, like organic cotton or biodegradable textiles. Leaning into circular economy practices as brands Patagonia and Outerknown have, providing clothing repair, resale, or recycling services, is another way for companies to consider enhancing their ability to comply with the Act’s eventual prescriptions.

Admittedly, at this juncture, it’s difficult to speculate what actual compliance will look like in practice, but to make these changes cost-effective, investing in technology will be key. Blockchain technology can be used to monitor and confirm the ethical procurement of goods, while analytics powered by artificial intelligence might be able to optimize supply chains and purchasing behavior to cut down on waste from overproduction. Furthermore, to further promote sustainable practices, 3D designs, and virtual sample technologies could reduce the amount of material used during the product development process. Anticipating the Act’s strict criteria on material sourcing and labor transparency, brands ought to focus on fostering connections with certified suppliers who adhere to ethical and environmental standards. To evaluate adherence to international labor standards—particularly regarding child labor, forced labor, and worker safety—regular third-party audits are crucial.

Finally, creating a robust reporting system will be essential for continuing compliance since it will allow businesses to monitor their advancement and offer the transparency demanded by the Act.

These steps will be painful to many in the industry and certainly raise operating costs. How much and how those increased costs get passed on to consumers is an open question. The Act may push the fashion industry as a whole to put long-term sustainability and responsible operation ahead of immediate profit. In a for-profit world facing a consumptive culture, this will be challenging. But by doing so, it presents an opportunity for companies to play a leading role in shaping a more sustainable and responsible industry.

With research assistance by NYU Law student Upanshi Gada.
Douglas Hand is one of the preeminent fashion lawyers in the country. His industry bona fides include member of the CFDA Fashion Awards Guild, chairman of the board of FIT, professor of fashion law at NYU and Cardozo Schools of Law, and recognized Super Lawyer for the past 10 years. He can be reached at dhand@hballp.com.