This week, a look at how brands should be approaching sustainability legislation amid newly announced regulations. Scroll down to use Glossy+ Comments, giving the Glossy+ community the opportunity to join discussions around industry topics.
For fashion brands, the impact of sustainability legislation in the U.S. and the E.U. is no longer a far-off notion.
On Thursday, the Fabric Act — calling for the end of piece rate labor, better worker rights and nearshoring — was re-introduced in Congress. And, as part of Climate Week in NYC, taking place from September 17-24, a September 19 panel on fashion policy will bring together fashion and climate conversations. Finally, at New York Fashion Week, over 30 designers, including Collina Strada and Tanner Fletcher, focused on sustainability in their collections.
With the legislation updates in the U.S. and E.U., sustainability is no longer a “nice-to-have” but is essential to compliance, with legally binding directives.
“There’s going to be a shift [among brands] toward [focusing on] compliance,” said Katina Boutis, director of sustainability at Everlane. “I already see it happening, especially with some of the European legislation that has been passed. And it’s the same thing for the California climate disclosure legislation. There are pretty robust reporting requirements that are required, whether it’s country by country or overall.”
She added, “With the reporting requirements and the need for assurance around data and metrics — especially for things like quantified carbon measurements, corporate due diligence and upstream value chain transparency — there is going to be an expansion of responsibility for teams of people who are going to be more specialized.”
In short, awareness of and compliance with new regulations in the states and in the E.U. will soon be a greater focus of all brands selling in those regions.
U.S. legislation focuses on carbon emissions and workers’ rights
Among proposed sustainability legislation in the U.S. is the Fabric Act, which was re-introduced into Congress on September 14. It aims to increase onshoring to the U.S. and eliminate bad practices like piece-rate labor. The bill has 200 brand endorsements, including from Everlane and Mara Hoffman, which were both involved in crafting the bill.
“For almost three years, there has been a wild increase in legislation engagement, and week to week, more brands are participating,” said Dana Davis, vp of sustainability, product and business strategy at Mara Hoffman. “I’m interested in seeing the resistance that we’re going to receive from some of the large fast fashion brands.”
“Because we’re involved in shaping the policy, we’re able to say what’s going to be technically challenging for [brands] in the reporting phase or even in the exploration and understanding phase. We can also [weigh in on] what financial investments will be needed in order to make that compliance a reality,” said Boutis. In the U.S., brands are able to lobby and direct the legislation in a bottom-up approach, making for a more achievable outcome.
However, that doesn’t mean that compliance will be easy. “At the moment, nobody will be able to tell you with confidence that they are 100% able to comply with everything,” said Boutis.
On Monday, California also passed the SB 263 bill that would force large companies with revenues over $1 billion who operate in California to disclose their scope 3 emissions by 2027. Scope 3 emissions are those produced in the supply chain and through consumer product use. This comes on top of the existing Fashion Act and the SB 62 bill, around carbon disclosures and Californian worker rights, which is set to affect the fashion industry over the next five years.
“In Albany, you’re just trying to get lawmakers to endorse this bill, to sign on and to agree to it — it’s about education,” said Davis. “There’s a lot of disconnect on the size and impact of the industry. Legislators still think about fashion through this idea of the glitz and glamour, and they don’t really understand that we’re talking about an industry [that operates] all the way down to agriculture.”
The American Apparel & Footwear Association, which is responsible for advising on U.S. policy affecting the industry, is also in talks with the Federal Trade Commission around rules on green marketing claims. Greenwashing directives are already being discussed in the E.U. Under the E.U.’s “Green Claims” proposal draft from April 2023, companies will have 10 days to justify green claims about their products or face “effective, proportionate and dissuasive” penalties.
As a result, some brands will focus on compliance, which may endanger existing sustainability teams and waste time in shifting to new processes. “This needs to be an ‘and’ conversation, not an ‘or’ conversation,” said Kurt Kipka, chief impact officer at the Apparel Impact Institute, an organization that validates environmental impact solutions. It has 44 brand partners, including Uniqlo owners Fast Retailing, Shein, Target and Nike. “We can’t sacrifice meaningful progress for compliance. You would be taking away from the actual progress that can be made by making a shift towards compliance.”
The E.U.’s focus is on greenwashing, digital passports and supply chain responsibility
In Europe, legislative implementations are coming a lot sooner.
The Anti-waste and Circular Economy Law, Decree No. 2022-748, was proposed in April 2022 and went into effect in January 2023. It makes it compulsory for brands and retailers selling in France to provide consumers with more information about the environmental impact of products. Those with a turnover of €50 million ($53 million) or more, or which sell 25,000 units of product in the French market each year, will need to comply straight away. It will apply to smaller companies by 2025.
Everlane, which sells in the E.U., is already tackling compliance with E.U. legislation. “For companies that are trying to be at the forefront of change and progress, everybody’s looking at what’s happening in the European Union right now because of the sweeping legislative action that’s happened there,” said Boutis.
“Any firm that is selling in France has to get themselves ready for regulation anyway, because the French regulations are coming earlier,” said Debbie Shakespeare, who oversees sustainability, compliance and core product line management at label manufacturer Avery Dennison.
France is the leader in applying legislation and harsh penalties for brands making consumer products. It is also spearheading E.U. sustainability and greenwashing legislation, ahead of the wider E.U. mandates. Over the next five years, product passports enabling traceability and extended producer responsibility directives around waste will be hitting large fast fashion brands especially hard.
“It is still early to anticipate any major impact, but there is no doubt that regulation is unavoidable,” said Natasha Tardif, partner at Reed Smith who co-heads its Competition and European Law department. “For businesses that are not used to reporting or that only report little data, in terms of their waste generation, the reporting obligations could incur new costs.”
For both regions, accurate data gathering is key
Brands will soon have no choice but to deliver on data, which has given rise to many new partnerships between brands and data platforms. “We have a lot of discussions around the expectation for data accuracy and the ways that should improve over time,” said Chelsea Murtha, sustainability director at the American Apparel and Footwear Association.
Five months ago, Mara Hoffman launched a pilot with the data platform Retraced to centralize its manufacturer and supply chain data. The platform uses AI to cut down on data processing time. The project has since turned into a long-term partnership.
“We’ve been collecting this data all the way into our supply chain for a really long time,” said Davis. “The challenge isn’t necessarily understanding the supply chain, which is a challenge for bigger brands. It’s just having the bandwidth internally to then take that information and get it into a system.” This will remain a challenge for smaller brands whose sustainability teams constitute a few people.
But it will also affect big brands, especially those not used to detailed disclosure. “There are still data gaps to account for in most big brands,” said Kipka. “It’s really an indication of just how complicated and opaque the supply chain is for the apparel and textile industry, especially when you look at production hotspots.”
For a lot of brands, the issues around compliance and data gathering will come from the least accessible areas of their supply chain. “It’s not cut and sew facilities or the end of the supply chain which necessarily have the most impact or potential for impact,” said Kipka. “It’s going further into the supply chain. In many cases, the brands may not have visibility to that tier of the supply chain.”