Wednesday, May 18, 2022

FASHION SUSTAINABILITY AND SOCIAL ACCOUNTABILITY ACT: WHAT IS IT?

The Fashion Act will have a significant impact on the entire fashion industry as a whole and its operators. Companies will be required to track and monitor their supply chains to ensure that environmental and ethical standards are maintained.

The fashion industry is about to go through a major transformation. The Fashion Sustainability and Social Accountability Act, often known as the Fashion Act, is crucial to its future. The New York State Legislative Commission is considering this document, which, if passed and put into law, will have global implications, also in Italy.

This law would make it mandatory for fashion companies to track and explain their environmental impact, taking into account the entire production chain. It's a metric for calculating the environmental and social effect of supply chains in order to make them more transparent. Despite the challenges, this transformation will allow us to achieve tangible progress in terms of sustainability.

Francesca Rulli talks about this as an expert in sustainability, CEO of the service company Process Factory and creator of 4sustainability, a system and brand that measures and certifies the sustainability of the fashion & luxury supply chains.


What does the entry into force of the Fashion Act entail?

“The Fashion Act will mandate that fashion companies record at least at 50 percent of their supply chain, identifying the impact of greenhouse gas emissions, water consumption, and chemical use. Furthermore, enterprises must commit to setting specific goals for lowering energy consumption and emissions, as well as communicating the quantity and type of raw materials they get from suppliers and the percentage of recycled materials.

However, from an ethical and social standpoint, employees' working conditions and remuneration must be disclosed, guaranteeing that they are at least adequate to the living wage. If these sustainable and ethical needs are not satisfied, a fine of up to 2% of yearly earnings may be imposed.

Regardless of whether it is enacted by the State of New York, this legislation will apply to any fashion firms with a global turnover of more than $ 100 million, have a headquarters in New York City, or conduct business there. In a nutshell, all fashion labels, from high-end to fast fashion”.


What are the reactions of the operators in this sector?

“Both well-known multinational brands, which may have to record a complete series of data they don't yet know as early as next year, and supply chain companies that interact with them and will have to satisfy those requests, are already taking steps to understand how to move forward.

Furthermore, this rule will intersect with the European regulation on “due diligence”, or the need of firms to monitor environmental, social, and governance issues. The Fashion Act is unique in that it holds firms accountable not just for what they do in person, but also for everything that occurs along their value chain.

Tracing the environmental and social impact entails identifying how profit is earned and the market behaviour of industry players."


What will the concrete consequences be?

“Italy is a leading country in terms of sustainability rules and, we pay close attention to the problem, but more training and a shift in mindset are required. Attention to sustainability is growing, and m any brands have already asked their suppliers for guarantees on environmental impact, chemical use, and good working conditions, among other things.

In most situations, the brand's limit is that it only interacts with direct suppliers, although what will be demanded is complete traceability of the supply chain, which means knowing and being able to guarantee even subcontractors further upstream in the manufacturing chain.

The brand will have to record all the connections in the value chain, assess its influence, and link it to the impact of specific products out on the market. Suppliers, for their part, must be able to provide the brands with the information they require.

Italy is directly involved because it is a manufacturing country. Many districts, including Prato, Biella, and Como, have already begun to track chemical use, CO2 emissions, water use, and other indicators, but there is still much work to be done”.


Are there any tools in place to keep track of all the necessary information?

“There are tools to keep track of this information, as well as several certifications that companies may use to demonstrate their commitment to sustainability. However, there is still one more step to take, which is to systematize, exchange, and convey all of these pieces transparently.

For this purpose, 4sustainability has created an ad hoc digital platform for companies that join it. It's a technology that intends to engage the entire supply chain: suppliers will be required to measure environmental and social data qualitatively and quantitatively, as well as update performance indicators. This information can be examined by the brand or other downstream links in the chain, resulting in transparent sharing”.