Bill Text: NY S07428 | 2021-2022 | General Assembly | Amended
Bill Title: Requires fashion sellers to be accountable to standardized environmental and social due diligence policies; establishes a fashion remediation fund for the purpose of implementing one or more environmental benefit projects or labor remediation projects that directly and verifiably benefit the workers and communities directly impacted, to the extent practicable, at the location the injury has occurred.
Spectrum: Partisan Bill (Democrat 9-0)
Status: (Introduced - Dead) 2022-11-18 - PRINT NUMBER 7428A [S07428 Detail]
Download: New_York-2021-S07428-Amended.html
STATE OF NEW YORK ________________________________________________________________________ 7428--A 2021-2022 Regular Sessions IN SENATE October 8, 2021 ___________ Introduced by Sens. BIAGGI, BRISPORT, HOYLMAN, JACKSON, KAVANAGH, LIU, MAY, RIVERA, SALAZAR -- read twice and ordered printed, and when printed to be committed to the Committee on Rules -- recommitted to the Committee on Consumer Protection in accordance with Senate Rule 6, sec. 8 -- committee discharged, bill amended, ordered reprinted as amended and recommitted to said committee AN ACT to amend the general business law, in relation to requiring fash- ion sellers to be accountable to environmental and social standards; and to amend the state finance law, in relation to establishing a fashion remediation fund The People of the State of New York, represented in Senate and Assem- bly, do enact as follows: 1 Section 1. Short title. This act shall be known and may be cited as 2 the "Fashion sustainability and social accountability act". 3 § 2. The general business law is amended by adding a new section 399- 4 mm to read as follows: 5 § 399-mm. Fashion sustainability and social accountability act. 1. 6 Definitions. As used in this section, the following terms shall have the 7 following meanings: 8 (a) "Doing business in this state" shall mean actively engaging in any 9 transaction for the purpose of financial or pecuniary gain or profit. 10 (b) "Gross receipts" shall mean the gross amounts realized, otherwise 11 known as the sum of money and the fair market value of other property or 12 services received, on the sale or exchange of property, the performance 13 of services, or the use of property or capital, including rents, royal- 14 ties, interest, and dividends, in a transaction that produces business 15 income, in which the income, gain, or loss is recognized, or would be 16 recognized if the transaction were in the United States, under the 17 Internal Revenue Code, as applicable for purposes of this section. 18 Amounts realized on the sale or exchange of property shall not be 19 reduced by the cost of goods sold or the basis of property sold. Gross EXPLANATION--Matter in italics (underscored) is new; matter in brackets [] is old law to be omitted. LBD11977-12-2S. 7428--A 2 1 receipts, even if business income, shall not include the following 2 items: 3 (i) repayment, maturity, or redemption of the principal of a loan, 4 bond, mutual fund, certificate of deposit, or similar marketable instru- 5 ment; 6 (ii) the principal amount received under a repurchase agreement or 7 other transaction properly characterized as a loan; 8 (iii) proceeds from issuance of the taxpayer's own stock or from sale 9 of treasury stock; 10 (iv) damages and other amounts received as the result of litigation; 11 (v) property acquired by an agent on behalf of another; 12 (vi) tax refunds and other tax benefit recoveries; 13 (vii) pension reversions; 14 (viii) contributions to capital, except for sales of securities by 15 securities dealers; 16 (ix) income from discharge of indebtedness; 17 (x) amounts realized from exchanges of inventory that are not recog- 18 nized under the Internal Revenue Code; 19 (xi) amounts received from transactions in intangible assets held in 20 connection with a treasury function of the taxpayer's unitary business 21 and the gross receipts and overall net gains from the maturity, redemp- 22 tion, sale, exchange, or other disposition of those intangible assets; 23 and 24 (xii) amounts received from hedging transactions involving intangible 25 assets. A "hedging transaction" means a transaction related to the 26 taxpayer's trading function involving futures and options transactions 27 for the purpose of hedging price risk of the products or commodities 28 consumed, produced, or sold by the taxpayer. 29 (c) "Fashion seller" shall mean a business entity which sells articles 30 of wearing apparel, footwear, or fashion bags that together exceed one 31 hundred million dollars in annual gross receipts, but shall not include 32 the sale of used wearing apparel, footwear, or fashion bags, nor shall 33 it include multi-brand retailers, except where the apparel, footwear, 34 and fashion bag private labels of those companies together exceed one 35 hundred million dollars in global revenue. 36 (d) "Article of wearing apparel" shall mean any costume or article of 37 clothing worn or intended to be worn by individuals. 38 (e) "Footwear" shall mean any covering worn or intended to be worn on 39 the foot. 40 (f) "Fashion bag" shall mean flexible packaging made of textiles, 41 leather or other animal products, woven material or other similar mate- 42 rials intended for repeated use. 43 (g) "Due diligence" shall mean the comprehensive process companies 44 shall carry out to identify, cease, prevent, mitigate, account for, and 45 remediate actual and potential adverse impacts to human rights and the 46 environment in their own operations and in their supply chain, in 47 compliance with, at a minimum, the standards outlined in the most recent 48 Organisation for Economic Co-operation and Development Guidelines for 49 Multinational Enterprises, and the Organisation for Economic Co-opera- 50 tion and Development Due Diligence Guidance for Responsible Supply 51 Chains in the Garment and Footwear Sector. 52 (h) "Due diligence report" shall mean the document prepared by the 53 company to communicate all relevant information concerning the exist- 54 ence, implementation and outcomes of due diligence in order to comply 55 with the requirements of this section, and to comply with any rules or 56 regulations established pursuant to this section.S. 7428--A 3 1 (i) "Risk-based approach" shall mean commensurate to the likelihood 2 and severity of the harm. The fashion seller shall prioritize the order 3 in which it takes action based on the likelihood and severity of harm. 4 Severity of impacts shall be determined according to their scale or 5 gravity, scope, and irremediable character. 6 (j) "Supply chain tiers" shall mean a four tier system defined as the 7 following: 8 (i) "Tier one" shall mean suppliers who produce finished goods for 9 fashion sellers, including suppliers' subcontractors, who provide the 10 following services, including but not limited to sewing and embroider- 11 ing; 12 (ii) "Tier two" shall mean suppliers to tier one, including subcon- 13 tractors, who provide the following services or goods, including but not 14 limited to knitting, weaving, washing, dyeing, finishing, printing for 15 finished goods, and components and materials for finished goods when 16 they are stand-alone operations and not integrated with tier one. Compo- 17 nents shall mean materials used to build a product, including but not 18 limited to buttons, zippers, rubber soles, down, and fusibles; 19 (iii) "Tier three" shall mean suppliers to tier two suppliers, includ- 20 ing subcontractors, who process raw materials, such as ginning, spin- 21 ning, and suppliers of chemicals; and 22 (iv) "Tier four" shall mean companies, including subcontractors, that 23 provide raw materials to tier three. 24 (k) "Independently verified" shall mean audited by a verification body 25 accredited by the department of state as described in subdivision five 26 of this section. 27 (l) "Living wage" shall mean the remuneration received for a standard 28 workweek by a worker in a particular place sufficient to afford a decent 29 standard of living for such worker and their family. Elements of a 30 decent standard of living include food, water, housing, education, 31 health care, transportation, clothing, and other essential needs includ- 32 ing provision for unexpected events. Living wage shall be determined 33 exclusive of overtime wages and by net wages including in-kind and cash 34 benefits, and deducting taxes and deductions. 35 (m) "Open data principles" shall mean data that can be freely used, 36 reused and redistributed by anyone. Such data shall be findable or easi- 37 ly discoverable on a website or within a database, accessible or avail- 38 able in a machine readable, convenient, modifiable form and published as 39 a whole, complete dataset, interoperable or able to be mixed with 40 different datasets, and reusable or provided under an open license that 41 permits reuse and redistribution, including the intermixing with other 42 datasets. 43 2. Due Diligence. (a) Every fashion seller shall effectively carry out 44 human rights and environmental due diligence for the portions of their 45 business related to wearing apparel, footwear or fashion bags, including 46 wearing apparel, footwear or fashion bags produced as a private label, 47 which shall include: 48 (i) supply chain mapping: 49 (1) companies taking a risk-based approach and implementing good faith 50 efforts to map suppliers across tier one through tier four of 51 production. Tier one suppliers shall be mapped within twelve months of 52 the effective date of this section, and shall contain a minimum of 53 seventy-five percent of suppliers by volume. Tier two suppliers shall be 54 mapped within two years of the effective date of this section, and shall 55 contain a minimum of seventy-five percent of suppliers by volume. Tier 56 three and tier four suppliers shall be mapped within three years of theS. 7428--A 4 1 effective date of this section and shall contain a minimum of fifty 2 percent of suppliers by volume or dollar value. 3 (2) supplier disclosure for all tiers shall include the name, address, 4 parent company, product type and number of workers at each site by coun- 5 try; 6 (3) for tier one suppliers, fashion sellers shall report, at a mini- 7 mum, the following information to the attorney general, which shall be 8 independently verified no less than once every two years: 9 (A) the mean wages of workers, and how this compares with local mini- 10 mum wage and living wages; 11 (B) the percentage of unionized factories; and 12 (C) hours worked weekly by month and the hours and frequency of over- 13 time by firm and country. 14 (ii) in carrying out effective due diligence, fashion sellers shall be 15 in compliance with the Organisation for Economic Co-operation and Devel- 16 opment Guidelines for Multinational Enterprises and the Organisation for 17 Economic Co-operation and Development Due Diligence Guidance for Respon- 18 sible Supply Chains in the Garment and Footwear Sector, requiring fash- 19 ion sellers to, at a minimum: 20 (1) embed responsible business conduct into the company's policies and 21 management systems; 22 (2) identify areas of significant risks in the contexts of its own 23 activities and business and supply chain relationships; 24 (3) identify, prioritize, and assess the significant potential and 25 actual adverse impacts of those risks; 26 (4) cease, prevent or mitigate those risks. This shall include, but 27 not be limited to: 28 (A) Incentivizing improved supplier performance on workers' rights and 29 environmental impact by embedding responsible purchasing practices in 30 its supply chain relationships and contracts, including but not limited 31 to contract renewals, longer term contracts, price premiums, providing 32 reasonable assistance to suppliers so that they can meet applicable 33 human rights and environmental standards including but not limited to 34 meeting the carbon emission reduction targets set out in this section, 35 and developing pricing models that account for the cost of wages, bene- 36 fits, and investments in suitable work, specifically as reflected in 37 freight on board prices together with traditional pricing consider- 38 ations, such as quantities being purchased, cost of materials, and skill 39 requirements. Wages, benefits, and investments shall, at a minimum, be 40 in line with the requirements set out in local labor laws, including 41 minimum wage laws; 42 (B) Utilizing responsible exit or disengagement strategies; 43 (C) Consulting and engaging with impacted and potentially impacted 44 stakeholders and rights holders and their representatives; 45 (D) Establishing quantitative baseline and reduction targets on green- 46 house gas emissions. Greenhouse gas emissions inventory shall be 47 reported annually, include absolute figures and conform with the 48 accounting and reporting requirements of the most recent Greenhouse Gas 49 Protocol Corporate Accounting and Reporting Standard, Scope Two Guid- 50 ance, and the most recent Corporate Value Chain Scope Three accounting 51 and reporting standard promulgated by the World Resources Institute and 52 the World Business Council for Sustainable Development. Greenhouse gas 53 emissions inventory reported in the due diligence report described in 54 subdivision three of this section shall be independently verified no 55 less than once every two years. Within four years of the effective date 56 of this section, primary data shall be used to capture tier two and tierS. 7428--A 5 1 three inventory of the most significant suppliers contributing to green- 2 house gas emissions. Significant suppliers shall mean suppliers repres- 3 enting seventy-five percent of fabric by volume in tier two and fifty 4 percent of fabric by volume in tier three. Greenhouse gas emission 5 reduction targets must be near-term and long-term, covering scopes one, 6 two and three emissions, and align with, at a minimum, Science Based 7 Targets initiative's most recent target validation criteria as promul- 8 gated by World Resources Institute, CDP, United Nations Global Compact 9 and the World Wildlife Fund. For fashion sellers with global revenue 10 over one billion dollars, the Absolute Contraction Approach must be used 11 to calculate scope three emissions. Fashion sellers shall meet targets 12 and report their compliance on an annual basis in their due diligence 13 report, as described in subdivision three of this section. If found to 14 be out of compliance, fashion sellers shall have eighteen months to 15 remedy their emissions and return to the necessary reduction pathway to 16 deliver on their targets. In non-target years, non-compliance shall mean 17 an increase in absolute emissions in three consecutive years, for compa- 18 nies over a billion dollars in revenue. In target years, non-compliance 19 shall mean not reaching the target. 20 (E) In compliance with, at a minimum, the Zero Discharge of Hazardous 21 Chemicals Program's most recent wastewater guidelines, fashion sellers 22 shall be required, for all significant tier two dyeing, finishing and 23 garment washing suppliers, to sample and report on wastewater chemical 24 concentrations and water usage, within two years of the effective date 25 of this section. Such reports shall be independently verified. Fashion 26 sellers shall also provide corrective action plans for their wastewater 27 treatment within thirty months of the effective date of this section. 28 After three years of the effective date of this section, fashion sellers 29 shall be considered out of compliance if their significant tier two 30 dyeing, finishing and garment suppliers have not made adequate progress 31 in remediation of wastewater pollution concentrations. Significant 32 suppliers shall mean suppliers representing seventy-five percent of 33 fabric by volume; 34 (5) track implementation and results; 35 (6) provide for or co-operate in remediation in the event of an 36 adverse impact: 37 (A) remedies shall seek to restore the affected person or persons, 38 where practicable, to the situation they would have been in had the 39 adverse impact not occurred and shall enable remediation that is propor- 40 tionate to the significance and scale of the adverse impact; 41 (B) remedies shall include, depending on the nature and extent of the 42 adverse impact, apologies, restitution or rehabilitation including rein- 43 statement of dismissed workers, recognition of the trade union for the 44 purpose of collective bargaining, financial or non-financial compen- 45 sation including establishing compensation funds for victims, or for 46 future outreach and educational programs, punitive sanctions including 47 the dismissals of staff responsible for wrongdoing, and taking measures 48 to prevent future adverse impacts; and 49 (C) in relation to human rights impacts, fashion sellers shall consult 50 and engage with impacted rights holders and their representatives when 51 determining the remedy. 52 (b) The due diligence requirements pursuant to this subdivision shall 53 not be conditional upon the company being effectively involved in the 54 subsidiary's day-to-day operations or exercising a sufficient degree of 55 control on companies within its supply chain.S. 7428--A 6 1 3. Reporting. Every fashion seller shall develop and submit to the 2 office of the attorney general annually, beginning within eighteen 3 months of the effective date of this section, a due diligence report. 4 Such report, excluding the information required in clause three of 5 subparagraph (i) of paragraph (a) of subdivision two of this section, 6 shall also be made publicly available on the fashion seller's website in 7 a machine readable and reusable format, published in line with open data 8 principles through a clear and easily discoverable link to the required 9 information. In the event the fashion seller does not have an internet 10 website, the company shall provide a written disclosure to any person 11 who has requested information within thirty days of receiving a request. 12 Such report shall also include the fashion seller's annual volume of 13 material produced, including breakdown by material type. 14 4. Regulations. The department of state shall, in consultation with 15 the department of environmental conservation and department of labor, 16 promulgate all rules and regulations necessary to implement the 17 provisions of this section within six months from the effective date of 18 this section. The department of state, in consultation with the depart- 19 ment of environmental conservation and department of labor, shall also 20 develop and disseminate educational materials to fashion sellers, 21 including providing alerts on time sensitive issues, emerging issues, 22 and high-risk country situations, and assisting fashion sellers in 23 improving the quality of their due diligence processes. 24 5. Verification. (a) The department of state shall, in consultation 25 with the department of environmental conservation and department of 26 labor, develop a process for accrediting verification bodies authorized 27 to provide verification services for the purposes of this section, 28 including which requirements the entity is authorized to verify. 29 (b) Such process shall at a minimum consider: 30 (i) the demonstrated qualifications of verification staff, including 31 their education, experience, and professional licenses. Verification 32 bodies must employ and retain at least five total full-time staff with 33 expertise in the requirements they seek to verify under this section; 34 (ii) any judicial proceedings, enforcement actions, or administrative 35 actions filed against the body within the previous five years; and 36 (iii) the policies and mechanisms in place to prevent conflicts of 37 interest and to identify and resolve potential conflict of interest 38 situations if they arise. The department shall require applicants to 39 submit the following information, at a minimum: 40 (1) identification of services provided by the verification body, the 41 industries that the body serves, and the locations where those services 42 are provided; 43 (2) a detailed organizational chart that includes the verification 44 body, its management structure, and any related entities; and 45 (3) the verification body's internal conflict of interest policy that 46 identifies activities and limits to monetary or non-monetary gifts that 47 apply to all employees and procedures to monitor conflicts of interest. 48 (c) Verification bodies shall not be authorized to provide services to 49 a company where a conflict of interest exists. A conflict of interest 50 shall include: 51 (i) where the verification body and reporting entity share any manage- 52 ment staff or board of directors membership, or any of the senior 53 management staff of the reporting entity have been employed by the 54 verification body, or vice versa, within the previous five years; 55 (ii) any employee of the verification body, or any employee of a 56 related entity, or a subcontractor who is a member of the verificationS. 7428--A 7 1 team has provided the reporting entity with services related to the 2 areas of verification, or any services designated by the department of 3 state, within the previous five years; 4 (iii) any staff member of the verification body provides any type of 5 non-monetary incentive to a reporting entity to secure a verification 6 services contract; and 7 (iv) any additional criteria provided by the department of state. 8 (d) Verification bodies that have been accredited by the department of 9 state shall notify the department within thirty days if they no longer 10 meet the verification requirements set forth by this section. 11 6. Enforcement. (a) The requirements imposed on fashion sellers by 12 this section shall be monitored, investigated, and enforced by the 13 attorney general or an administrator designated by the attorney general 14 to bring civil proceedings for an injunction, monetary damages, or civil 15 performance of a statutory duty. Fashion sellers shall be deemed non- 16 compliant with this section if they fail to conduct effective due dili- 17 gence pursuant to subdivision two of this section or fail to file a due 18 diligence report pursuant to subdivision three of this section. 19 (b) The attorney general, or the attorney general's designated admin- 20 istrator as applicable, shall annually publish and make publicly avail- 21 able a report regarding compliance with this section, listing the fash- 22 ion sellers who are known to be out of compliance with this section and 23 including an up-to-date report on the attorney general's monitoring of 24 such compliance. 25 (c) Fashion sellers found to be out of compliance with this section 26 after the attorney general, or the attorney general's designated admin- 27 istrator as applicable, has provided notice of non-compliance, and after 28 a three-month period to meet obligations under this section has lapsed, 29 may be fined up to two percent of annual revenues. Such fines shall be 30 deposited in the community benefit fund established by section ninety- 31 seven-ccc of the state finance law. 32 (d) The attorney general, or the attorney general's designated admin- 33 istrator shall use a risk-based approach in enforcement and shall 34 publish enforcement guidelines. 35 (e) Any person may report a violation of this section to the attorney 36 general's office. 37 (f) Any fashion seller shall be held jointly and severally liable for 38 the payment of wages of the employees of its tier one suppliers. For the 39 purposes of this section, wages shall be inclusive of all moneys owed in 40 accordance with the law of the country of manufacture, including wages, 41 overtime wages, paid leave, incentives, bonuses, severance and any other 42 form of payment or compensation. For the purposes of this section, 43 employee shall include all workers, whether full-time or part-time, 44 permanent or fixed-term, directly contracted or hired indirectly through 45 an agency or other intermediary. Fashion sellers shall be liable for 46 payment of lost wages and an additional equal amount as liquidated 47 damages. 48 § 3. The state finance law is amended by adding a new section 97-ccc 49 to read as follows: 50 § 97-ccc. Fashion remediation fund. 1. There is hereby established in 51 the joint custody of the comptroller, the commissioner of taxation and 52 finance, the commissioner of environmental conservation, and the commis- 53 sioner of labor a special fund to be known as the fashion remediation 54 fund.S. 7428--A 8 1 2. Such fund shall consist of all moneys deposited pursuant to para- 2 graph (c) of subdivision six of section three hundred ninety-nine-mm of 3 the general business law. 4 3. The moneys in the fund shall be expended by the comptroller in 5 consultation with the department of environmental conservation, the 6 department of labor and relevant stakeholders for the purpose of imple- 7 menting one or more environmental benefit projects or labor remediation 8 projects that directly and verifiably benefit the workers and communi- 9 ties directly impacted, to the extent practicable, at the location the 10 injury has occurred. 11 4. On or before the first day of February each year, the comptroller 12 shall certify to the temporary president of the senate, and the speaker 13 of the assembly, the amount of money deposited by source in the fund 14 during the preceding calendar year, as well as all disbursements from 15 the fund during the preceding calendar year. 16 5. Moneys shall be payable from the fund on the audit and warrant of 17 the comptroller on vouchers certified and approved by the commissioner 18 of environmental conservation and the commissioner of labor, as applica- 19 ble. 20 § 4. The attorney general shall certify to the governor that the 21 office of the attorney general is prepared to execute the duties 22 assigned in subdivision 6 of section 399-mm of the general business law 23 within one year following the effective date of this act. If, after the 24 expiration of one year, the attorney general requires more time to 25 certify that the office of the attorney general is prepared to execute 26 such duties, the attorney general may, for good cause shown, apply to 27 the governor for an extension of time. The governor may grant or deny an 28 extension of up to one year according to their discretion. 29 § 5. This act shall take effect immediately; provided, however, subdi- 30 vision 6 of section 399-mm of the general business law as added by 31 section two of this act shall take effect one year after the attorney 32 general certifies that the office of the attorney general is prepared to 33 execute the duties assigned in such subdivision. The attorney general 34 shall notify the legislative bill drafting commission upon the occur- 35 rence of such certification in order that the commission may maintain an 36 accurate and timely effective data base of the official text of the laws 37 of the state of New York in furtherance of effectuating the provisions 38 of section 44 of the legislative law and section 70-b of the public 39 officers law.
