The New York Fashion Sustainability and Social Accountability Act (A8352/S7428) is a potential state law that, if passed, requires any fashion retailer or manufacturer doing business in NY state to disclose their environmental and social supply chain due diligence policies, and establishes a community benefit fund with money collected from fines and penalties. The act is currently pending in the New York State Senate Consumer Protection Committee and has not been passed yet.
The bill specifically focuses on large fashion retailers and manufacturers with annual global sales of more than $100 million, requiring them to implement greater transparency and accountability about how and where their clothes are made, and the environmental impacts of their supply chains. Fundamentally, the proposed bill asks the fashion industry an important question: do you really understand your supply chain and its impacts?
In its current version, the bill details the following new compliance requirements and standards for large fashion, apparel, and footwear companies selling or operating in NY:
Specifically, New York Fashion Sustainability & Social Accountability Act reports will need to include:
A fashion, apparel, footwear, and retail company must comply with the New York Fashion Sustainability and Social Accountability Act if that company:
The NY State Attorney General (AG) will have the power to fine companies up to 2 percent of their annual revenues over $450 million if they fail to comply with the new regulations. Organizations will have a three-month grace period to remedy the issues identified by the AG.
Currently, there is no proposed timeline for the bill to take effect. However, sponsors aim to send the act to a vote within the next New York State Senate legislative session, which runs January through June 2023. It is possible the NY Fashion Act will receive a vote and be passed in some form in 2023.
Regardless of where your organization stands in its ESG and sustainability journey, developing a robust understanding of your supply chain can be a complex, challenging, and laborious task. However, it’s an essential step if you want to understand and reduce your Scope 3 carbon emissions, improve the social and environmental sustainability of your supply chain, comply with laws and standards, and ensure your company isn’t participating in forced labor practices.
We’ve put together a detailed explainer on how to calculate supplier and supply chain emissions here, or you can track and automate this process through our award-winning sustainability software.
The NY Fashion Sustainability & Social Accountability Act requires companies to take a "risk-based approach" to supply chain mapping, which can be tracked using collaborative digital supplier scorecards and analytics in Brightest
As the bill states, companies will be responsible for helping to improve supplier performance with respect to workers’ rights. Developing strong relationships, trust-building, and transparency with your suppliers (today) is a key step in managing supply chain risk and engaging with them on ESG issues long-term. Ultimately, an organization’s brand reputation and compliance risk profile will be heavily impacted by their supply chain’s sustainability, transparency, and traceability.
Given public and legislative support for the New York Fashion Sustainability & Social Accountability Act, we assign a high likelihood that some form of the bill will be based in 2023 or 2024. While the current provisions may be amended, there is strong consumer, voter, and political desire to take climate action in New York state and support environmental justice initiatives.
For organizations looking to proactively anticipate and plan for the NY Fashion Sustainability & Social Accountability Act and other ESG compliance obligations, we recommend taking a few steps within the next few months:
Complete or screen your materiality assessment for supply chain issues - Before collecting data or engaging suppliers around specific programs and policies, it’s often beneficial to conduct a supply chain-oriented “Materiality Assessment” analysis to help determine what your sustainability goals, targets, KPIs, and reporting objectives should be. A materiality assessment is a project which determines and ranks the most material themes for your business based on stakeholder interviews and surveys. For example, a healthcare company might focus on healthcare access, affordability, innovation, and the environmental impacts across its supply chain. Pick and rank the right sustainability themes depending on your organization’s mission, makeup, goals, and ESG maturity. Be sure to think through which climate risks and environmental and social themes are most relevant and material to your company's supply chain.
Conduct a supplier sustainability assessment and audit - Starting with your largest, most strategic Tier 1 suppliers, make sure your understand, map, and measure a baseline for their ESG practices, maturity, risk profiles, and disclosure quality. Since suppliers aren't directly accountable to your organization (and may prioritize and measure sustainability differently), a clear, forceful, yet empathetic communications and engagement strategy is necessary if your organization hasn't already taken these steps.
Improve your sustainability and supply chain data systems and process - While this might go without saying, in order to map, measure, and report supply chain ESG KPIs and risks, you need to know what they are - with a high degree of accuracy. Your materiality process can help guide you toward the main sustainability themes you may need to focus on and collect data around. Supplier assessments, audits, engagement practices, and policy adherence should further help clarify where to focus and what priority measurement gaps are.
Many organizations start their supply chain sustainability reporting with relatively simple spreadsheets, surveys, and documents, but things can get complex fast - particularly for larger companies. If you're an organization with a medium-to-large or complex environmental footprint, you likely need dedicated sustainability reporting and data management software, like the kind we design here at Brightest to help organizations stay ESG compliant. Ongoing report archiving, version control, and governance is also important to think about, since you'll be reporting every year.
Further reading - Our free guides to sustainability measurement and ESG reporting provide additional, detailed guidance and insights on how to measure and report your sustainability performance. Or, if you've already mastered the basics, up-level your sustainability reporting and environmental compliance efforts with a dedicated,best-in-class tool.