Year of the Rabbit
From policy and legislation, to artificial intelligence, things to watch in 2023
Lunar New Year, Year of the Rabbit, begins Sunday, January 22nd. The rabbit is a symbol of intellect and cautiousness, so here’s what I’m keeping an eye on this year.
Legislation
In an attempt to curb greenwashing and provide some long overdue legally binding regulation in the fashion industry, legislation is on the horizon.
Europe has been leading the way clamping down on truth in marketing and what is provable in sustainability claims.
On the heels of SAC’s Higg debacle, the European Union introduced late last year EU Green Claims Proposals aimed at stamping out greenwashing by establishing a system that requires brands to verify claims, and imposes penalties for non-compliance. These proposals are revisions to the Green Claim Code that is part of the EU Green Deal approved in 2020. As of this writing, the new proposals have not yet been adopted, but are expected to be enacted later this year.
The EU has also been mulling a legal definition for “greenwashing,” much to the chagrin of the financial industry (no surprise there: think of the implications this would have on ESG reporting, so called “green” investing, etc.) This will be an interesting one to watch, as the debate over what defines “sustainability” continues.
Ahead of the EU legislation, the French government stepped in to be the first to require brands “to provide consumers with detailed information about the environmental qualities and characteristics of the products they purchase” through its newly enacted legislation the French Decree 2022-748. This mandatory disclosure will initially apply to companies with revenue above €50m in January 2023, and be phased in for smaller companies during 2024 and 2025. The legislation requires fashion brands to provide consumers at point of sale with detailed information about the environmental qualities and characteristics of the products they purchase, including “information on reparability, recyclability, sustainability, re-use possibilities, recycled material content, use of renewable resources, traceability and the presence of plastic microfibres”. The idea is to empower consumers to make conscious decisions about their purchases, that will in turn help manage waste (both textile and packaging) more effectively.
In the US, the FTC is seeking public comment for potential updates to its Green Guides. The FTC is accepting comments until February 21, 2023. You can file your comment here. The Green Guides serve as guidance to help marketers avoid making environmental claims that mislead consumers. In this way they are similiar to the EU and French policies, however unlike those regulations, the Green Guides themselves are not legally binding legislation. Enforcement is through other “related” enforceable policies surrounding truth in advertising and labeling that has to do with consumer protections.
And then there are the local and federal bills that are aimed at supply chain transparency, emissions, and labor. On the state level, New York Fashion Act comes on the heels of California’s groundbreaking Garment Worker Protection Act or SB62, which eliminated piece rate pay and provided increased wage protections for the state’s garment workers. The New York bill is a broad scope initiative, trying to tackle environmental and social impacts all at once. It was amended in November 2022 to strengthen climate targets and due diligence on labor. It’s expected go to the NY Senate floor this year.
Federally, the FABRIC Act, which aims to protect US garment workers and encourage re-shoring of domestic apparel production, is in committee in the Senate, after being introduced in May of last year.
Toxins
Both the EU and US have been working on restricting and banning further use of PFAS, also known as “forever chemicals”. These are human-made chemicals that do not easily break down, have been shown to accumulate in the environment and in our bodies. They have been used in consumer products (including textiles) and industry since the 1940s. Non-stick cookwear, water repellent clothing, and even cosmetics are some of the products where PFAS have appeared. A growing body of evidence is linking PFAS to harmful health outcomes. While the EU’s proposal is still under review, and US federal bills are stalled, individual US states have taken action. The California and New York laws go into effect in 2025 and 2024, respectively, and seek to reduce or eliminate the use of PFAS in certain apparel products and other textiles. Washington state is also working on legislation to reduce human and environmental exposure to PFAS, including reduction or removal of PFAS in consumer products. And lawsuits against Thinx and Knix only serve to raise the awareness about these chemicals.
Artificial Intelligence
The fashion industry is known to be notoriously slow to adopt new technology. However, in a hyper-digital age, as AI has swept across various industries — disrupting, transforming, and arguably improving operations — fashion brands are adapting in order to compete. AI fundamentally alters fashion, from how brands produce their items to promotion and sales. AI technologies are revolutionizing the fashion industry across the board, including design, production, shipping, marketing, and sales.
However, for all its benefits of operational efficiency, there are two key areas to watch: AI as art generators and the use of AI technologies in sustainability.
In the creative space, brands are using AI-generated art for ads, NFTs, digital fashion, and more. In order to generate the “art”, AI tools are trained from existing images, and the “art” itself is generated with little or no human input. But AI-generated art is facing a myriad of questions with respect to registrability, ownership, copyright, and copyright infringement. Publicly available images used for AI data base training may still be copyrighted, so is this infringement? And without human authorship, is an AI image eligible for copyright protections? This is complicated and uncharted territory that you can read more about here.
With respect to sustainability, AI is being touted as a way for governments, communities, and businesses to perceive, adapt, and respond to climate change. But AI-technologies are not immune nor exempt from systemic risks including algorithmic bias, unequal access, and unequal benefits, thus leading to allocative harms. Most of us are familiar with algorithmic bias in our social media apps: usually the result of interpretation bias. Now imagine a similar bias with respect to AI technologies intended to mitigate negative social, economic, and environmental impacts: this could have disastrous, even deadly, consequences. And unequal access means that small producers likely would not have access because of the “digital divide”. Even with equal access fair outcomes are not guaranteed, due primarily to the current imbalance and concentration of wealth. You can read more in depth about the current risks of AI-technologies for sustainability here.
Labor
In December, the International Accord officially announced its expansion into Pakistan. Modeled on the Bangladesh Accord, signed after the 2013 Rana Plaza factory collapse, the Pakistan Accord aims to cover over 500 factories producing for more than 100 Accord signatory companies in the Sindh and Punjab provinces, from which $20B of Pakistan’s garment and textiles are exported annually. The accord requires western brands and their buyers to agree to a three year term during which they commit to financial investments designed to improve local factory safety. This agreement comes at a critical and challenging time for the Pakistani textile sector that suffered devastating damage and loss during the August floods. The International Accord began accepting signatories January 16.
Industry and Brand Reactions to Proposed External Oversight
It’s interesting to note that while most of the aforementioned regulations have yet to be enacted, the industry seems hardly prepared for what’s surely to be some disruption. Their reactions to the EU and similar proposals is not surprising. It seems brands are most worried about reputation and marketing to consumers, rather than implementing any meaningful action to measurably reduce their harms. It will be insightful to watch what brands do next in anticipation of these laws.
These are a some of the issues, proposed policies, and actions I’ll be following this year. What will you be following?