By Alan Behr
Alan Behr published a New York Law Journal article on the proposed New York State Legislature’s Fashion Sustainability and Social Accountability Act, a bill that stands to have a major impact on fashion companies operating in New York state as well as show hints of what may arise elsewhere.
The bill, if signed into law in its current form, would add a new §399-mm to the State’s General Business Law to require that any fashion company with more than $100 million in “annual worldwide gross receipts” disclose on its website “its environmental and social due diligence policies, processes and outcomes, including significant real or potential adverse environmental and social impacts and disclosure targets for prevention and improvement.”
The effect is something like an accountability value added tax, passing disclosure and remediation along the supply chain as goods mature from “raw material to final production.” A compliant company would have to address not merely the environmental impact issues implicit in the name of the bill but information on workforce wages of suppliers and the disclosing company’s “approach for incentivizing supplier performance on workers’ rights…”
The penalty for noncompliance would be a fine of up to two percent of annual global revenues of $450 million dollars or more—not mere profits but revenues, and not simply revenues in New York but total worldwide revenues, regardless of profitability. The New York State attorney general would be charged with enforcement, but private citizens could also start lawsuits. Fines paid would go to a new “community benefit fund” administered by the New York State Department of Environmental Conservation and would be used for “environmental benefit projects that directly and verifiably benefit environmental justice communities.
The intentions of the Fashion Sustainability and Social Accountability Act are clearly noble, but it is hard to read the text of the current bill without seeing it as a high-minded legislative scold. Read the full article for some key points.