Government legislation is taking aim at fashion.
At Sourcing Journal’s Road to 2030 Sustainability Summit last week, Sandler, Travis & Rosenberg, P.A. managing principal Nicole Bivens Collinson urged attendees to stay abreast of proposed legislation that could regulate how companies source and run their supply chains.
“These are things that you may not have already calculated into the timeframe for what you’re planning to do, and they can totally throw everything off depending on what happens,” she said.
The Fostering Overseas Rule of Law and Environmentally Sound Trade (FOREST) Act, introduced in the Senate in October, includes similar language to Section 307 of the Tariff Act of 1930, which bans the importation of goods made in whole or in part with forced labor. The FOREST Act bans imports that “may have been harvested, grown or produced on land that was illegally deforested” overseas, Collinson said.
The FOREST Act could have implications for cotton and palm oil cultivation. “Farmers might burn down some of the rainforest in Brazil and start planting cotton,” she said. Brands would be responsible for attempting to import goods produced on unlawfully razed land. Similarly, environmental advocates take aim at Indonesian palm oil because farmers slash and burn peatland forests to cultivate plantations. The oil commonly used in food and as cosmetic additive is often used to oil sewing machines, Collinson said.
The bill’s provisions offer technical and financial assistance to “help companies, and countries, to comply with it,” she added, encouraging U.S. companies to do their research and apply for the aid. The issue of deforestation is gaining traction in Washington; on Earth Day in April, President Biden signed an executive order aimed at safeguarding the country’s forests and strengthening global reforestation partnerships.
Meanwhile, the Prevent Outages with Energy Resiliency Options Nationwide (POWER ON) Act, introduced in the House last spring, would change the regulatory framework to decarbonize the power sector, electrify transportation and create a macro grid that transmits energy across state lines. Such a change could impact the timelines American brands set for their sustainability goals, Collinson said. They might have to revise their reduction targets if the bill succeeds.
The Democrats proposed the Carbon Border Adjustment in the Senate last year with bipartisan support. The legislation would create a border tax on carbon-intensive imports from other countries, and incentivize companies to nearshore or onshore production. “There are more and more people in D.C. now starting to talk about it—people that I hadn’t previously heard, from both sides of the aisle,” Collinson said, noting that the legislation could take effect in 2024.
At the state level, the New York Fashion Sustainability and Social Accountability Act would target large fashion companies with global revenues over $100 million for more stringent sustainability requirements. Companies doing business in the Empire State would be required to disclose social and environmental processes and policies, and engage in supply chain mapping and reporting. Similarly, the state of Washington introduced SB 5904 in January, which would require all retailers and manufacturers to disclose environmental and social due diligence policies. These laws will impact all retail businesses in these regions, “irrespective of if you are in a state as a headquarter or… if your goods are sold there,” Collinson said. “This really has a broad scope—it’s going to force disclosures.”
Collinson expects the Biden administration may opt to advance more regulations ahead of the midterm elections this year. “And depending on what happens in November, we could see a plethora of [legislation] starting in 2023,” she said. “So just be ready for something like that.”