Over the past five years, a number of signals indicate that significant regulatory change may be coming to the fashion industry in Western Europe and the United States. In the U.S., fashion brands have existed in a stable relatively low regulatory environment for decades. Many laws and regulations intended to champion the safety of the consumer have been enforced with an undercurrent of caveat emptor – or in other words, that buyers are responsible for checking the quality and suitability of goods before a purchase is made. Examples of this can be found in various labelling laws and marketing regulations, which require fashion brands to disclose fiber content and country of origin, and prohibit false advertising.
The U.S. government has carefully balanced the need for regulation with competition and a desire for free-market capitalism. As a result, laws address specific issues not the system as a whole, which means that most laws do not address the macro-level generational imbalances that have developed in the apparel industry over the last 50 years, including environmental and social justice-related issues. For instance, while the federal government has passed domestic labor laws, the Clean Water Act, and the Clean Air Act, all of which have implications for fashion manufacturing, many fashion brands’ manufacturing and production takes place overseas in countries where no equivalent environmental or labor protections exist, and where manufacturing goods at the lowest prices possible is the most significant factor to consider.
Beyond this, the workings of modern brands have become so sophisticated that it is not uncommon for companies to send textiles or unfinished goods to different countries for an additional step in the manufacturing process with the sole aim of avoiding unfavorable quotas and tariffs. As the Wall Street Journal reported last year, when the Trump administration increased tariffs on goods from China with the idea that it would promote manufacturing in the U.S., manufacturers simply opted to send products elsewhere for a last small step to change the country of origin before shipping to the U.S.
Even within the borders of the U.S., federal wage and hour laws are often rendered ineffective when manufacturers subcontract the little remaining cut and sew work to companies that take advantage of undocumented immigrant labor pools. Numerous examples have been documented in California involving popular budget and fast fashion brands where retailers avoid liability by arguing that they cannot be responsible for what they – as the retailer and not the manufacturer – cannot control.
And not an isolated practice, the many loopholes that exist in the U.S. have been utilized by fashion brands in other western first-world countries, as well.
What are the signals?
As with many fundamental changes throughout U.S. history, consumers have provided early warning signals – and in many cases, the impetus for change – to brands. In the past five years, alone, brands have witnessed the rise of Gen-Z, a powerful, young consumer group that already makes up approximately 20 percent of the U.S. population, and 32 percent of the world’s population. When combined with Millennials, these two groups make up well over half of the world’s population, and while they generations differ from one another in many ways, both Millennial and Gen-Z cohorts are diverse, well-educated, and active in connection with an array of issues, particularly those in the environmental and social justice spheres. They use digital platforms to gather, advocate, and activate around these issues, and have called for transparency, environmental responsibility and social accountability from brands and governments in the U.S. and around the world.
Signals are also coming in the form of new government initiatives that are underway in Europe, and to a lesser degree in the U.S., which indicate that fashion’s regulatory environment is, indeed, shifting.
The pandemic has not only ruptured the apparel industry’s supply chain, it also laid bare the global environmental and social issues that the industry has long ignored. Specific events, such as the collapse of Bangladeshi garment factory building Rana Plaza in 2013, have sparked backlash – and demand for change – from the public. Yet, there have been few – if any – major movements toward accountability on a systemic level. The voluntary Bangladesh Accord, for instance, brought about a certain level of response from western fashion brands producing in Bangladesh, but it expired on May 31, 2021, and while it was subject to a 3-month extension, it has not been renewed since. All the while, problems with working conditions and quality inspections, and the enforcement of safety and fair pay measures have endured (even when the Accord was in effect) due to a lack of support from local government and an unwillingness of fashion brands to use their leverage to change the existing systems.
Progress does appear to be afoot elsewhere, which could ultimately have an effect on the industry as a whole, as the EU is poised to make some significant changes later this year as it prepares to implement new reporting and corporate governance directives in furtherance of the Sustainable Corporate Governance initiative. The proposed changes require directors and executives of brands operating within the EU to shift from the more limited short-term financial outcomes and measures to long-term outcomes and measure that include the environment, human rights, and social impacts along their supply chains. The resolution – which was adopted by the European Parliament in March 2021 – also contemplates expanding the definition of stakeholders to include employers, environmental organizations, and organizations along the company’s supply chain. Significantly, the new model includes liability for organizations and directors for noncompliance.
As part of a more extensive climate bill, France recently passed a law requiring a “carbon label” to be included on garments and textiles to help inform consumers about the impact of their purchases. This law follows closely on the heels of an “anti-waste” law passed last year by the French government that prohibits the destruction of excess inventory and samples, among other things.
Meanwhile, in Germany, the “green button” label law passed in June, thereby, requiring companies to meet a minimum of 26 social and environmental standards – including supply chain reporting and responsibility points – in order to use the label. While there are some areas, such as farming and processing of textiles, that are not covered by the German law, a number of textile and apparel companies are proceeding through the testing process under the law.
And finally, in the U.S., the California Garment Worker’s Act, commonly known as SB62, is moving through the committee process, with support from fashion brands like Reformation, Saitex, Eileen Fisher, and Mara Hoffman, among others. Aimed at improving working conditions in America’s largest garment center, the act eliminates the piece-rate wage system that has been long-employed by the global apparel manufacturing industry and that has been heavily criticized by garment workers and advocacy groups as providing easy avenues for wage theft.
With the publication of the United Nations latest climate report indicating that climate change is accelerating at a rapid pace and that human actors are the cause, fashion brands need to move sustainability considerations to the forefront. Increased regulation is likely, as climate change becomes a more immediate and existential consideration. Sustainability considerations should include human and environmental impacts. These factors require a long-term horizon and a new set of metrics beyond speed-to-market and the financial bottom line, and new measures of success are possible with the rise of Benefit or B corporations, for example, which have been adopted by 37 states in the U.S. with legislation pending in 4 more states.
The fashion industry thrives on change and newness, and while quick and expansive change is required, the creativity and innovation that is born of necessity has been met by brands and designers time and time again in the past. And the growing majority of young consumers and our planet will tolerate no less.
Melissa Gamble is an Assistant Professor in the Fashion Studies Department at Columbia College Chicago, where she teaches Trendspotting, Law for Creatives: Fashion, and Professional Practice.