ESG, which stands for environmental, social and governance is a set criterion with a direct impact on a company's image, reputation and ability to receive investment and, therefore, on the future sustainability of the business. By meeting ESG criteria, managing directors make better decisions within the company and investors recognize and reward the company's efforts with capital. Companies must continually evolve as the world around them changes if they are not to be overtaken by new competitors. A clear corporate ESG strategy enables, firstly, managers and executives to make better decisions within the company and, secondly, investors to recognize and reward the company's efforts by providing capital.
Introducing the Fashion Sustainability and Social Accountability Act Shortly named “The Fashion Act” this new legislation from New York could be the revelatory improve supply chain visibility and sustainable practices within the fashion industry worldwide. Considered a groundbreaking maker, the Act has made history in New York this past January by finally holding major brands accountable for their role in climate change. From Armani to Boohoo, from Prada to Ella all multinationals operating outside of fashion capital will be forced to map at least 50 per cent of their supply chains and work on the weakest links related to the environment and human rights. Introduced Friday, the Fashion Sustainability and Social Responsibility Act (or Fashion Act) could be the first time a U.S. state, or any other country, has established broad sustainability regulations for the industry. "As the fashion and business capital of the world, New York State has a moral responsibility to serve as a leader in mitigating the environmental and social impact of the fashion industry," said state Sen. Alessandra Biaggi, who is sponsoring the bill. In a press release, she called it "a groundbreaking piece of legislation that will make New York the world leader" in holding the fashion industry "accountable."
A 2022 report by the World Resources Institute (WRI) found that the industry is responsible for 2 per cent of annual global greenhouse gas emissions. With reports of rivers of chemical pollution and hazardous working conditions, fashion crimes are no secret. How Will New York's Fashion Law Be Enforced? In the process of their manufacture, our garments now take a winding journey around the world. It makes tracing their origins notoriously complicated. Proponents of the new Fashion Act have praised its scope for addressing this problem. The bill requires companies to detail the life cycle of their garments: from the farms where raw materials were sourced to the factories and shipping. They must then identify where they have the greatest adverse impact on the environment and people. This will require brands to examine fair wages, energy use, greenhouse gas emissions, water and chemical management. They also need to make concrete plans to do better - in line with the Paris Agreement targets regarding carbon emissions. What’s more, high fashion houses such as Prada, Gucci, and Armani Fashion must also disclose their production volumes of materials, showing how much cotton or leather they sell, for example, and make them available to consumers online. Otherwise, the companies would be fined up to 2 per cent of their annual revenues, with the money going to environmental justice projects administered by the U.S. Department of Environmental Conservation. They would also be named and shamed by the New York attorney general, providing an incentive to change by hurting their profits on the shop floor.
The concept of a supply chain was essentially unknown 15 years ago. Nowadays, textile companies are facing pressure from all angles: governments, consumers, NGOs, and other stakeholders to disclose information about their supply chains. Thanks to Acts such as this one, companies are becoming highly concerned with the fear of losing face by not meeting these demands. For example, fashion brands are facing more demand for supply chain information regarding workers’ conditions, animal welfare, child labour, and sourcing of sustainable materials. Companies have a duty to their customers to take appropriate measures to prevent the violation of human rights and to identify and address any abuses that may occur. It is therefore essential for companies to adopt correct industry practices in order to live up to this responsibility. Could the New York Fashion Act be the answer to the industry’s plea? Only time will tell. Failure to comply with the state measures will lead to fines of up to 2 per cent of annual revenue. By simply publishing factory names, street addresses and other valuable information, global apparel companies are able to empower workers and advocate for human rights by alerting them to rights violations and other abuses in supplier factories.