The SEC’s corporate climate risk disclosure rule
In March 2022, the U.S. Securities and Exchange Commission (SEC) proposed a rule requiring all publicly traded companies to disclose materials emissions made by a company’s suppliers, detailed plans for meeting emissions offset pledges, and reliance on offsets.
While this rule is not currently in effect, it could require emissions data from Tier 1 and Tier 2, 3, 4 or 5 suppliers. This means that not only would retailers need to have accurate supplier information, but emissions information as well.
The Fashion Sustainability and Social Accountability Act
In January 2022, the New York State Senate unveiled an act requiring fashion retailers or manufacturers doing business in the state to conduct “good faith” supply chain mapping and disclose at least 50% of their suppliers across all tiers of production.
As of June 2022, only 21% of fashion firms currently name their suppliers publicly.
The act would also require these businesses to publicly set and track ESG targets, including employee wages, greenhouse gas emissions, and the use of recycled materials.
These proposals represent a growing push for retailers to verify ethical and sustainable labor practices across the board—and a need for them to pick up the pace.
Retailer net-zero emissions goals
Many retailers are chasing ambitious “net-zero” carbon emissions goals through lowering carbon emissions and buying offset credits by 2030, 2040 or 2050.
According to the Science-Based Targets initiative (SBTi), 45 major global retailers have committed to a net-zero target, up from just 13 in 2021.
Other retailers are focused on different sustainability targets, such as reducing greenhouse gas (GHG) emissions by a certain percentage within a set timeframe. Fifty-two retailers have committed to non-net-zero targets as of 2022, up from 40 in 2021.
However, only a small portion of retailers are on track to meet those goals. The rest are looking for tangible ways to make progress in the coming year.
Consumer demand for sustainable sourcing
Consumers are growing wary of “greenwashing,” a term for empty promises or green labels with no action behind them.
They want to know where products are coming from and how they can be reused or recycled to reduce waste.
Research shows that consumers do care about ethical sourcing and would even pay more for it.
In the next year, it’s time for companies to combine innovation, sustainability, and profit goals, starting with supply chain visibility and transparency with consumers.