A 4631: Requires fashion sellers to carry out environmental due diligence for the portions of their business related to wearing apparel, footwear or fashion bags, including wearing apparel, footwear or fashion bags produced as a private label; establishes a fashion remediation fund.

  
  STATE OF NEW YORK ________________________________________________________________________ 4631 2025-2026 Regular Sessions  IN ASSEMBLY February 4, 2025 ___________ Introduced by M. of A. KELLES, EPSTEIN, SIMON, HEVESI, GONZALEZ-ROJAS, FORREST, WEPRIN, REYES, STECK, SEAWRIGHT, MITAYNES, GALLAGHER, RAGA, SIMONE, SHRESTHA, CUNNINGHAM, BORES, OTIS, LEVENBERG, R. CARROLL, STERN, ROSENTHAL, RAJKUMAR, KIM, ANDERSON, GLICK, LUNSFORD, BARRETT, MAMDANI, DINOWITZ, SANTABARBARA, JACOBSON, TAYLOR, CLARK, PAULIN, BICHOTTE HERMELYN, LAVINE, SLATER, EACHUS, DE LOS SANTOS, CONRAD, CRUZ, BENEDETTO, JACKSON, STIRPE, MEEKS, LUPARDO, McMAHON, LEE, BURDICK, COLTON, ALVAREZ, DAVILA, BENDETT, K. BROWN, BLUMENCRANZ, BEEPHAN -- read once and referred to the Committee on Consumer Affairs and Protection AN ACT to amend the general business law, in relation to requiring fash- ion sellers to be accountable to environmental standards and estab- lishing the interstate fashion environment accountability act; 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 environmental 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 environmental accountability act. 1. Definitions. 6 As used in this section, the following terms shall have the following 7 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 EXPLANATION--Matter in italics (underscored) is new; matter in brackets [ ] is old law to be omitted. LBD01707-02-5 
 A. 4631 2 1 income, in which the income, gain, or loss is recognized, or would be 2 recognized if the transaction were in the United States, under the 3 Internal Revenue Code, as applicable for purposes of this section. 4 Amounts realized on the sale or exchange of property shall not be 5 reduced by the cost of goods sold or the basis of property sold. Gross 6 receipts, even if business income, shall not include the following 7 items: 8 (i) repayment, maturity, or redemption of the principal of a loan, 9 bond, mutual fund, certificate of deposit, or similar marketable instru- 10 ment; 11 (ii) the principal amount received under a repurchase agreement or 12 other transaction properly characterized as a loan; 13 (iii) proceeds from issuance of the taxpayer's own stock or from sale 14 of treasury stock; 15 (iv) damages and other amounts received as the result of litigation; 16 (v) property acquired by an agent on behalf of another; 17 (vi) tax refunds and other tax benefit recoveries; 18 (vii) pension reversions; 19 (viii) contributions to capital, except for sales of securities by 20 securities dealers; 21 (ix) income from discharge of indebtedness; 22 (x) amounts realized from exchanges of inventory that are not recog- 23 nized under the Internal Revenue Code; 24 (xi) amounts received from transactions in intangible assets held in 25 connection with a treasury function of the taxpayer's unitary business 26 and the gross receipts and overall net gains from the maturity, redemp- 27 tion, sale, exchange, or other disposition of those intangible assets; 28 and 29 (xii) amounts received from hedging transactions involving intangible 30 assets. A "hedging transaction" means a transaction related to the 31 taxpayer's trading function involving futures and options transactions 32 for the purpose of hedging price risk of the products or commodities 33 consumed, produced, or sold by the taxpayer. 34 (c) "Fashion seller" shall mean a business entity which sells articles 35 of wearing apparel, footwear, or fashion bags that together exceed one 36 hundred million dollars in annual gross receipts, but shall not include 37 the sale of used wearing apparel, footwear, or fashion bags, nor shall 38 it include multi-brand retailers, except where the apparel, footwear, 39 and fashion bag private labels of those companies together exceed one 40 hundred million dollars in global revenue. 41 (d) "Article of wearing apparel" shall mean any costume or article of 42 clothing worn or intended to be worn by individuals. 43 (e) "Footwear" shall mean any covering worn or intended to be worn on 44 the foot. 45 (f) "Fashion bag" shall mean flexible packaging made of textiles, 46 leather or other animal products, woven material or other similar mate- 47 rials intended for repeated use. 48 (g) "Due diligence" shall mean the comprehensive process companies 49 shall carry out to identify, cease, prevent, mitigate, account for, and 50 remediate actual and potential adverse impacts to the environment in 51 their own operations and in their supply chain, in compliance with, at a 52 minimum, the standards outlined in the most recent Organisation for 53 Economic Co-operation and Development Guidelines for Multinational 54 Enterprises, and the most recent Organisation for Economic Co-operation 55 and Development Due Diligence Guidance for Responsible Supply Chains in 56 the Garment and Footwear Sector. 
 A. 4631 3 1 (h) "Due diligence report" shall mean the document prepared by the 2 company to communicate all relevant information concerning the exist- 3 ence, implementation and outcomes of due diligence in order to comply 4 with the requirements of this section, and to comply with any rules or 5 regulations established pursuant to this section. 6 (i) "Risk-based approach" shall mean commensurate to the likelihood 7 and severity of the harm. The fashion seller shall prioritize the order 8 in which it takes action based on the likelihood and severity of harm. 9 Severity of impacts shall be determined according to their scale or 10 gravity, scope, and irremediable character. 11 (j) "Supply chain tiers" shall mean a four tier system defined as the 12 following: 13 (i) "Tier one" shall mean suppliers who produce finished goods for 14 fashion sellers, including suppliers' subcontractors, who provide the 15 following services, including but not limited to sewing and embroider- 16 ing; 17 (ii) "Tier two" shall mean suppliers to tier one, including subcon- 18 tractors, who provide the following services or goods, including but not 19 limited to knitting, weaving, washing, dyeing, finishing, printing for 20 finished goods, and components and materials for finished goods when 21 they are stand-alone operations and not integrated with tier one. Compo- 22 nents shall mean materials used to build a product, including but not 23 limited to buttons, zippers, rubber soles, down, and fusibles; 24 (iii) "Tier three" shall mean suppliers to tier two suppliers, includ- 25 ing subcontractors, who process raw materials, such as spinning; and 26 (iv) "Tier four" shall mean companies, including subcontractors, that 27 provide raw materials to tier three. 28 (k) "Independently verified" shall mean audited by a verification body 29 accredited by the department of state as described in subdivision five 30 of this section. 31 (l) "Open data principles" shall mean data that can be freely used, 32 reused and redistributed by anyone. Such data shall be findable or easi- 33 ly discoverable on a website or within a database, accessible or avail- 34 able in a machine readable, convenient, modifiable form and published as 35 a whole, complete dataset, interoperable or able to be mixed with 36 different datasets, and reusable or provided under an open license that 37 permits reuse and redistribution, including the intermixing with other 38 datasets. 39 (m) "Employee" shall mean all workers, whether full-time or part-time, 40 permanent or fixed-term, directly contracted or hired indirectly through 41 an agency or other intermediary. 42 2. Due diligence. (a) Every fashion seller shall effectively carry out 43 environmental due diligence for the portions of their business related 44 to wearing apparel, footwear or fashion bags, including wearing apparel, 45 footwear or fashion bags produced as a private label, which shall 46 include: 47 (i) supply chain mapping: 48 (1) companies taking a risk-based approach and implementing good faith 49 efforts to map suppliers across tier one through tier four of 50 production. 51 (2) disclosure of suppliers of the production supply chain including: 52 the name, parent company and product type, filed by the following: 53 (A) Tier one suppliers shall be disclosed within twelve months of the 54 effective date of this section, and shall contain a minimum of eighty- 55 five percent of suppliers by volume. 
 A. 4631 4 1 (B) Tier two suppliers shall be disclosed within two years of the 2 effective date of this section, and shall contain a minimum of seventy- 3 five percent of suppliers by volume. 4 (C) Tier three suppliers shall be disclosed within four years of the 5 effective date of this section and shall contain a minimum of fifty 6 percent of suppliers by volume or dollar value. 7 (D) Tier four suppliers shall be disclosed within six years of the 8 effective date of this section and shall contain a minimum of fifty 9 percent of suppliers by volume or dollar value. 10 (ii) in carrying out effective due diligence, fashion sellers shall be 11 in compliance with the Organisation for Economic Co-operation and Devel- 12 opment Guidelines for Multinational Enterprises and the Organisation for 13 Economic Co-operation and Development Due Diligence Guidance for Respon- 14 sible Supply Chains in the Garment and Footwear Sector, requiring fash- 15 ion sellers to, at a minimum: 16 (1) embed responsible business conduct into the company's policies and 17 management systems; 18 (2) identify areas of significant risks in the contexts of its own 19 activities and business and supply chain relationships; 20 (3) identify, prioritize, and assess the significant potential and 21 actual adverse impacts of those risks; 22 (4) cease, prevent or mitigate those risks. This shall include, but 23 not be limited to: 24 (A) incentivizing improved supplier performance on environmental 25 impact by embedding responsible purchasing practices in its supply chain 26 relationships and contracts, including but not limited to contract 27 renewals, longer term contracts, price premiums, providing reasonable 28 assistance to suppliers so that they can meet applicable environmental 29 standards including but not limited to meeting the carbon emission 30 reduction targets set out in this act, and developing pricing models 31 that account for the cost investments. 32 (B) establishing quantitative baseline and reduction targets on green- 33 house gas emissions. Greenhouse gas emissions inventory shall be 34 reported annually, starting in two thousand twenty-seven for emissions 35 in the prior fiscal year; include absolute figures; and conform with the 36 rules and regulations made by the department of state in consultation 37 with the department of environmental conservation based on the account- 38 ing and reporting requirements of the most recent Greenhouse Gas Proto- 39 col Corporate Accounting and Reporting Standard, Scope Two Guidance, 40 and, starting in two thousand twenty-eight, the most recent Corporate 41 Value Chain Scope Three accounting and reporting standard promulgated by 42 the World Resources Institute and the World Business Council for 43 Sustainable Development. Greenhouse gas emissions inventory reported in 44 the due diligence report required pursuant to subdivision three of this 45 section shall be independently verified no less than once every two 46 years. Fashion sellers shall not be subject to an administrative penalty 47 under this section for any misstatements with regard to scope three 48 emissions disclosures made with a reasonable basis and disclosed in good 49 faith. Greenhouse gas emission reduction targets must be near-term and 50 long-term, covering scopes one, two and three emissions, and align with 51 the rules and regulations made by the department of state in consulta- 52 tion with the department of environmental conservation based on, at a 53 minimum, Science Based Target initiative's most recent target validation 54 criteria as promulgated by World Resources Institute, CDP, United 55 Nations Global Compact and the World Wildlife Fund. Compliance with the 56 rules and regulations made by the department of state shall not waive 
 A. 4631 5 1 compliance requirements related to greenhouse gas emissions in any other 2 provision of law. For fashion sellers with global revenue over one 3 billion dollars, the absolute contraction approach must be used to 4 calculate scope three emissions. Fashion sellers shall meet targets and 5 report their compliance on an annual basis in their due diligence 6 report, as required pursuant to subdivision three of this section. If 7 found to be out of compliance, fashion sellers shall have eighteen 8 months to remedy their emissions and return to the necessary reduction 9 pathway to deliver on their targets. In non-target years, non-compliance 10 shall mean an increase in absolute emissions in five consecutive years, 11 for companies over a billion dollars in revenue. In target years, non- 12 compliance shall mean not reaching the target; 13 (C) in accordance with internationally recognized methodologies for 14 chemical management and wastewater testing, requiring fashion sellers 15 within two years of the effective date of this section, for all signif- 16 icant tier two dyeing, finishing, printing and garment washing suppli- 17 ers, to: sample and report on wastewater chemical concentrations and 18 water usage; report on chemical inventory; and provide evidence that the 19 supplier is in compliance with local chemical management laws. For 20 significant suppliers that use indirect wastewater management, fashion 21 sellers shall report the chemical concentrations of the wastewater 22 treatment facilities report on the percentage of significant suppliers 23 that have chemical remediation plans in place and what the fashion sell- 24 er is doing to remediate. Reports required pursuant to this item shall 25 be independently verified. Three years after the effective date of this 26 section, fashion sellers shall be considered out of compliance if their 27 significant tier two dyeing, finishing, printing and garment suppliers 28 have not made adequate progress in remediation of wastewater pollution 29 concentrations and chemical management. For the purposes of this item, 30 "significant suppliers" shall mean suppliers representing seventy-five 31 percent of fabric by volume; 32 (D) utilizing responsible exit or disengagement strategies; 33 (E) consulting and engaging with impacted and potentially impacted 34 stakeholders and rights holders and their representatives; 35 (5) track implementation and results; 36 (6) provide for or co-operate in remediation in the event of an 37 adverse impact: 38 (A) remedies shall seek to restore the affected locations, places or 39 person or persons, where practicable, to the situation they would have 40 been in had the adverse impact not occurred and shall enable remediation 41 that is proportionate to the significance and scale of the adverse 42 impact; and 43 (B) remedies shall include, depending on the nature and extent of the 44 adverse impact, remediation, restitution or financial or non-financial 45 compensation, including establishing compensation funds for victims or 46 for future outreach and educational programs, punitive sanctions includ- 47 ing the dismissals of staff responsible for wrongdoing, and establishing 48 and undertaking measures to prevent future adverse impacts, which may 49 include, but are not limited to the development of internal protocols, 50 practices and procedures to prevent future adverse impacts. 51 (b) The due diligence requirements pursuant to this subdivision shall 52 not be conditional upon the company being effectively involved in the 53 subsidiary's day-to-day operations or exercising a sufficient degree of 54 control on companies within its supply chain. 
 A. 4631 6 1 3. Reporting. Every fashion seller shall develop and submit to the 2 department of state annually, beginning within eighteen months of the 3 effective date of this section, a due diligence report. 4 (a) Such report, excluding the information required in clause two 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 (b) Such report shall contain annual activities and financial spending 15 to support supply chain due diligence. 16 (c) The department of state shall identify and notify fashion sellers 17 that have failed to file a due diligence report that they have thirty 18 days to file such report before being placed on a public non-compliant 19 list and that they may be referred to the attorney general for investi- 20 gation. 21 (d) The department of state shall review the due diligence reports for 22 completeness. 23 (e) Fashion sellers shall have twelve months from the introduction of 24 any updated guidance documents to integrate such guidance into the next 25 annual due diligence report. 26 (f) The department of state shall establish a standardized due dili- 27 gence report format model and publish such model due diligence report 28 online for use by fashion sellers in compliance with this section. 29 4. Regulations. (a) The department of state shall, in consultation 30 with the department of environmental conservation, promulgate all rules 31 and regulations necessary to implement the provisions of this section 32 within six months from the effective date of this section. 33 (b) The department of state, in consultation with the department of 34 environmental conservation, shall also develop and disseminate educa- 35 tional materials to fashion sellers, including providing alerts on time 36 sensitive issues, emerging issues, and high-risk country situations, and 37 assisting fashion sellers in improving the quality of their due dili- 38 gence processes. 39 (c) The department of state shall develop regulations regarding the 40 information required to be reported by fashion sellers in the due dili- 41 gence report in item (C) of clause four of subparagraph (ii) of para- 42 graph (a) of subdivision two of this section. Such regulations shall be 43 developed in consultation with the department of environmental conserva- 44 tion. 45 (d) The department of state shall develop regulations on reporting 46 requirements that minimize duplication of effort and allows a fashion 47 seller to submit a due diligence report to the department of state that 48 is prepared to meet other national and international reporting require- 49 ments, including any reports required by the federal government, as long 50 as such reports satisfy all of the requirements of subdivision two of 51 this section. 52 5. Verification. (a) The department of state shall, in consultation 53 with the department of environmental conservation, develop a process for 54 accrediting verification bodies authorized to provide verification 55 services for the purposes of this section, including which requirements 56 the entity is authorized to verify. 
 A. 4631 7 1 (b) Such process shall at a minimum consider: 2 (i) the demonstrated qualifications of verification staff, including 3 their education, experience, and professional licenses. Verification 4 bodies must employ and retain at least five total full-time staff with 5 expertise in the requirements they seek to verify under this section; 6 (ii) any judicial proceedings, enforcement actions, or administrative 7 actions filed against the body within the previous five years; and 8 (iii) the policies and mechanisms in place to prevent conflicts of 9 interest and to identify and resolve potential conflict of interest 10 situations if they arise. The department shall require applicants to 11 submit the following information, at a minimum: 12 (1) identification of services provided by the verification body, the 13 industries that the body serves, and the locations where those services 14 are provided; 15 (2) a detailed organizational chart that includes the verification 16 body, its management structure, and any related entities; and 17 (3) the verification body's internal conflict of interest policy that 18 identifies activities and limits to monetary or non-monetary gifts that 19 apply to all employees and procedures to monitor conflicts of interest. 20 (c) Verification bodies shall not be authorized to provide services to 21 a company where a conflict of interest exists. A conflict of interest 22 shall include: 23 (i) where the verification body and reporting entity share any manage- 24 ment staff or board of directors membership, or any of the senior 25 management staff of the reporting entity have been employed by the 26 verification body, or vice versa, within the previous five years; 27 (ii) any employee of the verification body, or any employee of a 28 related entity, or a subcontractor who is a member of the verification 29 team has provided the reporting entity with services related to the 30 areas of verification, or any services designated by the department of 31 state, within the previous five years; 32 (iii) any staff member of the verification body provides any type of 33 non-monetary incentive to a reporting entity to secure a verification 34 services contract; and 35 (iv) any additional criteria provided by the department of state. 36 (d) Verification bodies that have been accredited by the department of 37 state shall notify the department within thirty days if they no longer 38 meet the verification requirements set forth by this section. 39 6. Monitoring and enforcement. (a) The requirements imposed on fashion 40 sellers by this section shall be monitored, investigated, and enforced 41 by the attorney general or an administrator designated by the attorney 42 general to bring civil proceedings for an injunction, or fines for mone- 43 tary damages as described in this section, or civil performance of a 44 statutory duty. Fashion sellers shall be deemed non-compliant with this 45 section if they fail to conduct effective due diligence pursuant to 46 subdivision two of this section or fail to file a due diligence report 47 pursuant to subdivision three of this section. 48 (b) The department of state shall identify and notify fashion sellers 49 that have failed to file a complete due diligence report in accordance 50 with the rules and regulations promulgated by the department of state in 51 consultation with the department of environmental conservation. If such 52 fashion sellers fail to file a complete report, after a period of three 53 months, the department of state shall refer fashion sellers to the 54 attorney general for enforcement for failure to file a complete report. 55 (c) The department of environmental conservation shall review and 56 certify effective due diligence for environmental matters in the due 
 A. 4631 8 1 diligence report and identify fashion sellers for referral to the attor- 2 ney general for any failures. 3 (d) The department of state shall compile and maintain a list of non- 4 compliant fashion sellers on the department's website. The department of 5 state shall refer to the attorney general for investigation any fashion 6 seller who fails to file a due diligence report or fails to conduct 7 effective due diligence, once any grace period lapses and the fashion 8 seller remains in non-compliance. 9 (e) Fashion sellers found to have failed to conduct effective due 10 diligence pursuant to subdivision two of this section or failed to file 11 a complete due diligence report pursuant to subdivision three of this 12 section, after the attorney general, or the attorney general's desig- 13 nated administrator, as applicable, has provided notice of non-compli- 14 ance, and after a three-month period to meet obligations under this 15 section has lapsed, may be assessed a civil penalty not to exceed 16 fifteen thousand dollars per violation per day. Such fines shall be 17 deposited in the community benefit fund established by section ninety- 18 seven-ccc of the state finance law. 19 (f) The attorney general, or the attorney general's designated admin- 20 istrator shall use a risk-based approach in enforcement and shall 21 publish enforcement guidelines. 22 (g) Any person may report a violation of this section to the attorney 23 general's office. 24 § 3. The state finance law is amended by adding a new section 97-ccc 25 to read as follows: 26 § 97-ccc. Fashion remediation fund. 1. There is hereby established in 27 the joint custody of the comptroller, the commissioner of taxation and 28 finance, and the commissioner of environmental conservation a special 29 fund to be known as the fashion remediation fund. 30 2. Such fund shall consist of all moneys deposited pursuant to para- 31 graph (c) of subdivision six of section three hundred ninety-nine-mm of 32 the general business law. 33 3. The moneys in the fund shall be expended by the comptroller for the 34 purpose of implementing one or more environmental benefit projects or 35 environmental remediation projects that directly and verifiably benefit 36 the workers and communities directly impacted, to the extent practica- 37 ble, at the location the injury has occurred. 38 4. On or before the first day of February each year, the comptroller 39 shall certify to the temporary president of the senate, and the speaker 40 of the assembly, the amount of money deposited by source in the fund 41 during the preceding calendar year, as well as all disbursements from 42 the fund during the preceding calendar year. 43 5. Moneys shall be payable from the fund on the audit and warrant of 44 the comptroller on vouchers certified and approved by the commissioner 45 of environmental conservation as applicable. 46 § 4. The attorney general shall certify to the governor that the 47 office of the attorney general is prepared to execute the duties 48 assigned in subdivision 6 of section 399-mm of the general business law 49 within one year following the effective date of this act. If, after the 50 expiration of one year, the attorney general requires more time to 51 certify that the office of the attorney general is prepared to execute 52 such duties, the attorney general may, for good cause shown, apply to 53 the governor for an extension of time. The governor may grant or deny an 54 extension of up to one year according to their discretion. 55 § 5. Severability. If any word, phrase, clause, sentence, paragraph, 56 section, or part of this act shall be adjudged by any court of competent 
 A. 4631 9 1 jurisdiction to be invalid, such judgment shall not affect, impair, or 2 invalidate the remainder thereof, but shall be confined in its operation 3 to the word, phrase, clause, sentence, paragraph, section, or part ther- 4 eof directly involved in the controversy in which such judgment shall 5 have been rendered. 6 § 6. The department of state, in consultation with the department of 7 environmental conservation, shall promulgate rules and regulations 8 necessary for the implementation of this act within one hundred eighty 9 days of the effective date of this act. 10 § 7. This act shall take effect immediately; provided, however, that 11 sections one through three of this act shall take effect one year after 12 they shall have become a law; provided further, however, that subdivi- 13 sion 6 of section 399-mm of the general business law as added by section 14 two of this act shall take effect one year after the attorney general 15 certifies that the office of the attorney general is prepared to execute 16 the duties assigned in such subdivision. The attorney general shall 17 notify the legislative bill drafting commission upon the occurrence of 18 such certification in order that the commission may maintain an accurate 19 and timely effective data base of the official text of the laws of the 20 state of New York in furtherance of effectuating the provisions of 21 section 44 of the legislative law and section 70-b of the public offi- 22 cers law.