m high-end ones like Gucci and Burberry, to fast fashion ones like H&M, Zara, Uniqlo, Boohoo, Shein, and Cotton On.  It comes just a few months after the United Nations’ climate change conference in Glasgow, when countries around the world committed to drastically cut their carbon emissions in the coming years.  Sustainability experts say this marks a major shift in the sustainable business sector, from a largely voluntary movement to an increasingly regulated one.  “As ESG continues to gather steam as one of the defining business themes of the decade ahead, it is inevitable that the regulatory environment will become tighter as governments increasingly realise that they must play a bigger role in accelerating the change to meet targets,” Rosanna Iacono, partner and advisor at The Growth Activists, told Inside Retail.  “Up until recently it has been environmentally and socially committed businesses leading the change and committing to becoming a force for good, and governments are still playing catch-up. But that is about to change.” Voluntary movement to regulatory environment Anna Forster, co-founder of The Purpose Agents, noted that several similar laws have been introduced around the world recently. “In the past six months alone, we have seen more countries pass laws aimed at driving responsible business practice and greater supply chain transparency,” Forster told Inside Retail.  “Australia saw a proposed amendment to the Customs Act, which would include an import ban on any goods produced or made using forced labour, and both Germany and Norway passed new laws that will require large companies to conduct supply chain due diligence and aim to prevent and address human rights and environmental issues.”  Forster believes the industry will increasingly see purely climate-focused regulation come into effect, especially in the wake of the COP26.  “Past November, for example, the EU proposed a ground-breaking new legislation requiring products placed on the EU market to be deforestation-free,” she said. What the Fashion Act entails The Fashion Act would require retailers and manufacturers to map a minimum of 50 per cent of their suppliers across the entire supply chain, from the raw material stage, to the final production stage, within 12 months of the law passing.  Businesses would also be required to measure the environmental and social impacts of their supply chain, such as greenhouse gas emissions, and lay out concrete plans to reduce those impacts, within 18 months of the law passing. All of this information would need to be accessible to consumers online or in written form.  Businesses that don’t comply would be fined up to 2 per cent of their annual revenues, with the proceeds going to environmental justice projects. The New York Attorney General would also publish a list of offenders annually. Why brands should start now With the Fashion Act expected to become law later this year, brands have a significant task ahead of them.  “As an ESG transformation advisor to retail businesses, I see many SMEs feeling quite overwhelmed by the challenge ahead of them, but my advice to them is ensure ESG transformation is embedded into their annual strategic plan and subsequent implementation priorities – and also to ensure that the tasks around measuring, reporting and ongoing improvement are shared across the organisation as much as possible,” Iacono said.  “This has a dual benefit – it ensures that the task does not fall on the shoulders of just one or two functional areas, which will ultimately slow down the process, it also ensures you are building cross-functional capability throughout the organisation and developing essential skills of the future.” The key is to start the process as soon as possible, Foster said.  “The sooner brands start collecting as much information and data on their supply chains as they can, the better, as it always takes more time than expected to map the supply chain and associated risks,” she said.  Even brands that won’t be affected by the Fashion Act should step up their sustainability efforts, Iacono advised “Retailers should not sit back and wait for new laws to be passed, but need to get ahead of the curve now and embark on their sustainability transformation initiatives immediately,” she said. “This issue is not going away and the bar for compliance is only going to get higher and higher over the coming decade.”