2022 Sustainability and Social Responsibility Fashion Sector

2022 will continue to bring increased attention to sustainability and social responsibility requirements and practices for the fashion, apparel and beauty industry up and down the supply chain.

Part of this increased attention will undoubtedly come from state and federal lawmakers and government agencies, as new or proposed legislation and regulations are actively considered or are expected to be implemented in the next year. For example, the Environmental Protection Agency, the Food and Drug Administration and various state agencies and legislatures are pursuing or considering measures such as additional restrictions and bans on the use of chemicals, new notification and reporting requirements on the use and import of chemicals, limitations on product disposal options and extended producer responsibility obligations.

Additionally, the Federal Trade Commission (the “FTC”) indicated in the summer of 2021 that the agency would initiate a 2022 review of its Guide for the Use of Environmental Marketing Claims, colloquially known as “Green Guides.” Green Guides is a resource originally created by the FTC in 1992 to help businesses avoid making unfair and misleading environmental advertising claims and to help the public understand and appreciate the claims included in those claims. The Green Guides have not been revised since 2012 and, as currently written, may no longer provide a comprehensive guide for both businesses and consumers, given the current sustainability-focused advertising landscape, especially since the Green Guides currently do not deal with “sustainability,” “organic,” or “natural” environmental claims. While the FTC has not expressly indicated a specific area of ​​concern for the Green Guide’s planned reviews, some suspect that the agency’s reviews will cover sustainability-related claims. organic and natural, as well as climate-related claims, which are top of mind for consumers when making purchasing decisions. Brands should pay attention to Green Guide reviews and understand them as they can significantly affect the types of environmental advertising claims available.

Empire State lawmakers have their own ideas on how to increase the focus on sustainability and social responsibility in the fashion industry. In January 2022, the New York state legislature introduced the Fashion Sustainability and Social Accountability Act (the “Fashion Act”), a bill that attempts to make New York the first US state to “actually hold the biggest fashion brands to explain their role in climate change. ”As currently proposed, the Fashion Act would apply to global apparel and footwear companies with more than $ 100 million in revenue doing business in New York (thus, in other words, most of the fashion multinationals.) The law would require, among other things, qualified brands to map at least 50% of their supply chain and to reveal whether brands have a social and environmental impact in that chain. significant, real or potentially negative, when it comes to issues such as fair wages, energy, greenhouse gas emissions, etc. and then disclosing targets to prevent and improve such impacts. Failure to comply could result in fines of up to 2% of a brand’s annual revenue in excess of $ 450 million. Brands should keep an eye on the Fashion Act, which is currently working its way through New York’s legislative committees with a goal of voting in late spring 2022, and the new local requirements that may come with it.

Despite these planned government actions and the impact they may have, the increased focus on sustainability and social responsibility in the industry can be driven by non-governmental stakeholders, starting, as most initiatives usually do, with consumers and working towards investors, shareholders, and lenders. Now more than ever, there is strong consumer demand for goods that meet certain environmental, social and governance, or “ESG,” criteria. Sustainably sourced materials, organically produced fibers, zero carbon footprint, not tested on animals, no child labor, fair trade, all natural ingredients, plastic-free and environmentally friendly packaging – these are just some examples of expectations of consumers who guide purchases, investments and business decisions. And, as companies undertake to comply with these certifications and practices to meet consumer expectations, this in turn pushes sustainability obligations up and down the supply chain, impacting manufacturers and suppliers of ingredients, components, packaging and labor.

Failure to comply with these sustainability and social responsibility commitments and requirements can have broad ramifications, such as government agency enforcement (for example, enforcement actions initiated by the FTC or the National Advertising Division for submitting misleading and deceptive environmental advertising claims) , lawsuits (for example, for non-compliance with the proposed New York Fashion Act), loss of customers and license rights due to breach of contractual claims, and other negative impacts on the overall reputation of the brand, to name a few. So no matter where you are in the supply chain, it will be challenging but important to have solid programs to keep up with changing regulatory, contractual and market requirements. In addition to monitoring and ensuring compliance with declared sustainability and ESG commitments and existing laws and regulatory requirements, a few other measures companies should consider:

  • Keep abreast of upcoming laws and regulatory requirements and upcoming restrictions and consider and plan how they might affect your business;

  • Ensure robust processes to inventory all chemicals used in products and identify those chemicals to be restricted, phased out or banned in advance of regulations;

  • Inventory the relevant contractual requirements and commitments and keep track of the execution of these obligations;

  • Evaluate supply chain contracts to ensure relevant requirements and commitments are passed on to suppliers;

  • Confirm compliance with the commitments, both internally and within the supply chain; conduct periodic checks on operations and the execution of contracts; request a routine check; and confirm the implementation of corrective measures to address non-conformities.

Companies that monitor and plan ahead, even implementing robust compliance programs, will be best suited to ride the ever-expanding wave of sustainability, build market strength, and ultimately grow and protect brand reputation.

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