The New York Fashion Sustainability and Social Accountability Act - Last Updated: December 10, 2022

What's the NY Fashion Sustainability & Social Accountability Act?

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?

What Does the NY Fashion Sustainability & Social Accountability Act Change?

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:

  • Supply chain mapping and transparency - Within 12 months of the bill passing, impacted companies will need to map at least 75% of their Tier 1 supply chain by volume. Special importance must be given to suppliers who constitute greater environmental and social risks - with their names disclosed. Tier 2 suppliers will need to be mapped in year two years from the law's effective date. Supplier disclosure for all tiers shall include the name, address, parent company, product type and number of workers at each site by country
  • Yearly environmental and social sustainability reporting - Retailers and manufacturers will be required to publish annual due diligence reports on their public website detailing policies, processes, and activities they have implemented to identify, prevent, mitigate, and account for environmental and social risks. Reports will also need to include how a company’s action plan aligns with certain global standards (i.e. UN Guiding Principles on Business and Human Rights, OECD Guidelines for Multinational Enterprises, among others). Reports are due within 18 months of the law's implementation, as currently drafted
  • Impact disclosures - Once the bill goes into effect, eligible organizations will have 18 months (1.5 years) to produce an impact disclosure with the following information: (1) quantitative baseline and reductions targets on energy and GHG emissions, (2) annual volume of materials produced, including breakdown by material type, (3) median wages of workers of prioritized (audited) suppliers and how this compares with local living wages, (4) a plan for incentivizing supplier performance with respect to workers' rights
  • Community Benefit Fund - Money collected from any compliance penalties and fines under the act will be placed into a fund for the benefit of environmental justice-related community projects

Specifically, New York Fashion Sustainability & Social Accountability Act reports will need to include:

  • Website links to relevant policies on responsible business conduct
  • Information on measures taken to embed responsible business conduct into company policies and management systems
  • Identified areas of ESG risk in the company’s global supply chain
  • Criteria for how supply chain ESG risks are being prioritized
  • Actions taken to prevent or mitigate supply chain ESG risks (citing corrective action plans, where available)
  • Measures to track sustainability implementation and results
  • The company’s remediation efforts, if any
  • Quantitative baselines and reduction targets on energy and greenhouse gas emissions
  • Annual volumes of materials produced, including breakdown by material type
  • Median wages of workers of prioritized suppliers and how this compares with local minimum wages and living wages
  • Supplier disclosure for all supply chain tiers including the name, address, parent company, product type and number of workers at each site by country
  • All significant Tier 2 dyeing, finishing and garment washing suppliers will need to contribute and provide samples to a report on wastewater chemical concentrations and water usage within two years of the effective date. These reports must be independently verified. If any major wastewater issues or non-compliance cases are discovered, fashion sellers must also provide corrective action plans for their wastewater treatment within thirty months of the effective date of the law
  • The company’s approach for incentivizing supplier performance with respect to workers’ rights
  • Estimated timelines and benchmarks for environmental impact reduction and improvement in areas like climate change and biodiversity loss

Who Does the NY Fashion Sustainability & Social Accountability Act Impact?

A fashion, apparel, footwear, and retail company must comply with the New York Fashion Sustainability and Social Accountability Act if that company:

  • Has >$100 million in annual global sales
  • "Does business" in the state of New York - Based on the entity's NY state business tax return

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.

When Does the NY Fashion Sustainability & Social Accountability Act Take Effect?

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.

How Should Brands and Retailers Plan to Stay Compliant with the NY Fashion Act?

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.

NY Fashion Sustainability Act Supply Chain Risk Mapping

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.

The Future of the NY Fashion Sustainability & Social Accountability Act

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.