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| 2 | 2 | | HOUSE DOCKET, NO. 3083 FILED ON: 1/20/2023 |
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| 3 | 3 | | HOUSE . . . . . . . . . . . . . . . No. 420 |
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| 4 | 4 | | The Commonwealth of Massachusetts |
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| 5 | 5 | | _________________ |
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| 6 | 6 | | PRESENTED BY: |
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| 7 | 7 | | David M. Rogers and Tram T. Nguyen |
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| 8 | 8 | | _________________ |
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| 9 | 9 | | To the Honorable Senate and House of Representatives of the Commonwealth of Massachusetts in General |
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| 10 | 10 | | Court assembled: |
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| 11 | 11 | | The undersigned legislators and/or citizens respectfully petition for the adoption of the accompanying bill: |
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| 12 | 12 | | An Act to establish fashion sustainability and social accountability in the commonwealth. |
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| 13 | 13 | | _______________ |
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| 14 | 14 | | PETITION OF: |
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| 15 | 15 | | NAME:DISTRICT/ADDRESS :DATE ADDED:David M. Rogers24th Middlesex1/20/2023Tram T. Nguyen18th Essex1/20/2023Michelle L. Ciccolo15th Middlesex1/25/2023James K. Hawkins2nd Bristol1/27/2023 1 of 12 |
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| 16 | 16 | | HOUSE DOCKET, NO. 3083 FILED ON: 1/20/2023 |
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| 17 | 17 | | HOUSE . . . . . . . . . . . . . . . No. 420 |
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| 18 | 18 | | By Representatives Rogers of Cambridge and Nguyen of Andover, a petition (accompanied by |
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| 19 | 19 | | bill, House, No. 420) of David M. Rogers, Tram T. Nguyen and others for legislation to establish |
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| 20 | 20 | | fashion sustainability and social accountability. Economic Development and Emerging |
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| 21 | 21 | | Technologies. |
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| 22 | 22 | | The Commonwealth of Massachusetts |
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| 23 | 23 | | _______________ |
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| 24 | 24 | | In the One Hundred and Ninety-Third General Court |
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| 25 | 25 | | (2023-2024) |
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| 26 | 26 | | _______________ |
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| 27 | 27 | | An Act to establish fashion sustainability and social accountability in the commonwealth. |
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| 28 | 28 | | Be it enacted by the Senate and House of Representatives in General Court assembled, and by the authority |
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| 29 | 29 | | of the same, as follows: |
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| 30 | 30 | | 1 SECTION 1. Chapter 93 of the General Laws is hereby amended by adding the following |
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| 31 | 31 | | 2section:- |
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| 32 | 32 | | 3 Section 115. (a) For the purposes of this section the following words shall, unless the |
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| 33 | 33 | | 4context clearly requires otherwise, have the following meanings: |
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| 34 | 34 | | 5 “Gross receipts”, the gross amounts realized, otherwise known as the sum of money and |
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| 35 | 35 | | 6the fair market value of other property or services received, on the sale or exchange of property, |
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| 36 | 36 | | 7the performance of services or the use of property or capital including, rents, royalties, interest |
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| 37 | 37 | | 8and dividends, in a transaction that produces business income, in which the income, gain or loss |
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| 38 | 38 | | 9is recognized or would be recognized if the transaction were in the United States, under the |
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| 39 | 39 | | 10Internal Revenue Code, as applicable for purposes of this section. Amounts realized on the sale 2 of 12 |
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| 40 | 40 | | 11or exchange of property shall not be reduced by the cost of goods sold or the basis of property |
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| 41 | 41 | | 12sold. |
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| 42 | 42 | | 13 “Fashion manufacturer ”, a business entity which lists manufacturing as its principal |
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| 43 | 43 | | 14business activity in the commonwealth, as reported on the entity's state tax return and primarily |
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| 44 | 44 | | 15manufactures articles of wearing apparel or footwear. |
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| 45 | 45 | | 16 “Fashion seller”, a business entity which sells articles of wearing apparel, footwear or |
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| 46 | 46 | | 17fashion bags that together exceed $100,000,000 in annual gross receipts but, shall not include |
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| 47 | 47 | | 18the sale of used wearing apparel, footwear or fashion bags, nor shall it include multi-brand |
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| 48 | 48 | | 19retailers, except where the apparel, footwear and fashion bags private labels of those companies |
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| 49 | 49 | | 20together exceed $100,000,000 in global revenue. |
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| 50 | 50 | | 21 “Wearing apparel”, any costume or article of clothing worn or intended to be worn by |
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| 51 | 51 | | 22individuals. |
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| 52 | 52 | | 23 “Footwear”, any covering worn or intended to be worn on the foot. |
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| 53 | 53 | | 24 “Fashion bag”, any flexible packaging made of textiles, leather or other animal products, |
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| 54 | 54 | | 25woven material or other similar materials intended for repeated use. |
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| 55 | 55 | | 26 “Due diligence ”, the process companies should carry out to identify, prevent, mitigate |
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| 56 | 56 | | 27and account for how they address actual and potential adverse impacts in their own operations, |
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| 57 | 57 | | 28their supply chain and other business relationships, as recommended in the Organization for |
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| 58 | 58 | | 29Economic Cooperation and Development Guidelines for Multinational Enterprises, the |
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| 59 | 59 | | 30Organization for Economic Cooperation and Development Due Diligence Guidance for |
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| 60 | 60 | | 31Responsible Supply Chains in the Garment and Footwear Sector, the Organization for Economic 3 of 12 |
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| 61 | 61 | | 32Cooperation and Development Due Diligence Guidance for Responsible Business Conduct and |
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| 62 | 62 | | 33the United Nations Guiding Principles on Business and Human Rights. |
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| 63 | 63 | | 34 “Due diligence report”, a document prepared by the company to communicate all |
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| 64 | 64 | | 35relevant information concerning the existence, implementation and outcomes of due diligence in |
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| 65 | 65 | | 36order to comply with the requirements of this section and to comply with any rules or regulations |
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| 66 | 66 | | 37established, pursuant to this section. |
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| 67 | 67 | | 38 “Risk-based approach”, commensurate to the likelihood and severity of the harm. The |
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| 68 | 68 | | 39fashion seller shall prioritize the order in which it takes action based on the likelihood and |
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| 69 | 69 | | 40severity of harm. Severity of impacts shall be determined according to their scale or gravity, |
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| 70 | 70 | | 41scope and irremediable character. |
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| 71 | 71 | | 42 “Supply chain tiers”, a 4 tier system defined as the following: |
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| 72 | 72 | | 43 |
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| 73 | 73 | | 44 (i) tier 1: suppliers who produce finished goods for fashion sellers, including suppliers’ |
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| 74 | 74 | | 45subcontractors, who provide the following services including, but not limited to sewing and |
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| 75 | 75 | | 46embroidering; |
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| 76 | 76 | | 47 (ii) tier 2: suppliers to tier 1, including subcontractors, who provide the following |
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| 77 | 77 | | 48services or goods including, but not limited to knitting, weaving, washing, dyeing, finishing, |
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| 78 | 78 | | 49printing for finished goods and components and materials for finished goods when they are |
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| 79 | 79 | | 50stand-alone operations and not integrated with tier 1. Components shall mean materials used to |
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| 80 | 80 | | 51build a product including, but not limited to buttons, zippers, rubber soles, down and fusibles; 4 of 12 |
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| 81 | 81 | | 52 (iii) tier 3: suppliers to tier 2 suppliers, including subcontractors, who process raw |
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| 82 | 82 | | 53materials such as ginning, spinning and suppliers of chemicals; and |
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| 83 | 83 | | 54 (iv) tier 4: companies, including subcontractors that provide raw materials to tier 3. |
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| 84 | 84 | | 55 “Living wage”, the remuneration received for a standard workweek by a worker in a |
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| 85 | 85 | | 56particular place sufficient to afford a decent standard of living for such worker and their family. |
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| 86 | 86 | | 57Elements of a decent standard of living include food, water, housing, education, health care, |
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| 87 | 87 | | 58transportation, clothing and other essential needs including provision for unexpected events. |
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| 88 | 88 | | 59Living wage shall be determined exclusive of overtime wages and by net wages including in- |
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| 89 | 89 | | 60kind and cash benefits and deducting taxes and deductions. |
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| 90 | 90 | | 61 “Open data principles”, data that can be freely used, re-used and redistributed by anyone. |
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| 91 | 91 | | 62Such data shall be findable or easily discoverable on a website or within a database, accessible or |
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| 92 | 92 | | 63available in a machine readable, convenient, modifiable form and published as a whole, complete |
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| 93 | 93 | | 64dataset, interoperable or able to be mixed with different data sets and reusable or provided under |
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| 94 | 94 | | 65an open license that permits re-use and redistribution including, the intermixing with other |
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| 95 | 95 | | 66datasets. |
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| 96 | 96 | | 67 (b) Gross receipts, even if business income, shall not include the following items : (i) |
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| 97 | 97 | | 68repayment, maturity or redemption of the principal of a loan, bond, mutual fund, certificate of |
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| 98 | 98 | | 69deposit or similar marketable instrument; (ii) the principal amount received under a repurchase |
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| 99 | 99 | | 70agreement or other transaction properly characterized as a loan; (iii) proceeds from issuance of |
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| 100 | 100 | | 71the taxpayer's own stock or from sale of treasury stock; (iv) damages and other amounts received |
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| 101 | 101 | | 72as the result of litigation; (v) property acquired by an agent on behalf of another; (vi) tax refunds |
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| 102 | 102 | | 73and other tax benefit recoveries; (vii) pension reversions; (viii) contributions to capital, except 5 of 12 |
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| 103 | 103 | | 74for sales of securities by securities dealers; (ix) income from discharge of indebtedness; (x) |
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| 104 | 104 | | 75amounts realized from exchanges of inventory that are not recognized under the Internal |
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| 105 | 105 | | 76Revenue Code; (xi) amounts received from transactions in intangible assets held in connection |
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| 106 | 106 | | 77with a treasury function of the taxpayer's unitary business and the gross receipts and overall net |
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| 107 | 107 | | 78gains from the maturity, redemption, sale, exchange or other disposition of those intangible |
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| 108 | 108 | | 79assets; and (xii) amounts received from hedging transactions involving intangible assets. For the |
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| 109 | 109 | | 80purpose of this section, a hedging transaction shall mean a transaction related to the taxpayer's |
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| 110 | 110 | | 81trading function involving futures and options transactions for the purpose of hedging price risk |
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| 111 | 111 | | 82of the products or commodities consumed, produced or sold by the taxpayer. |
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| 112 | 112 | | 83 (c) Every fashion seller and fashion manufacturer shall effectively carry out human rights |
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| 113 | 113 | | 84and environmental due diligence for the portions of their business related to wearing apparel or |
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| 114 | 114 | | 85footwear, including wearing apparel or footwear produced as a private label, which shall include: |
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| 115 | 115 | | 86 (1) Supply chain mapping and disclosure: |
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| 116 | 116 | | 87 (i) companies taking a risk-based approach and implementing good faith efforts to map |
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| 117 | 117 | | 88suppliers across tier 1 through tier 4 of production. Tier 1 suppliers shall be mapped within 12 |
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| 118 | 118 | | 89months of the effective date of this section and shall contain a minimum of 75 per cent of |
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| 119 | 119 | | 90suppliers by volume. Tier 2 suppliers shall be mapped within 2 years of the effective date of this |
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| 120 | 120 | | 91section and shall contain a minimum of 75 per cent of suppliers by volume. Tier 3 and tier 4 |
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| 121 | 121 | | 92suppliers shall be mapped within 3 years of the effective date of this section and shall contain a |
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| 122 | 122 | | 93minimum of 50 per cent of suppliers by volume or dollar value; |
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| 123 | 123 | | 94 (ii) supplier disclosure for all tiers shall include: the name, address, parent company, |
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| 124 | 124 | | 95product type and number of workers at each site by country; and 6 of 12 |
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| 125 | 125 | | 96 (iii) for tier 1 suppliers, fashion sellers shall report, at a minimum, the following |
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| 126 | 126 | | 97information to the attorney general which shall be independently verified no less than once every |
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| 127 | 127 | | 982 years: (1) the mean wages of workers and how this compares with local minimum wage and |
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| 128 | 128 | | 99living wages; (2) the percentage of unionized factories; and (3) hours worked weekly by month |
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| 129 | 129 | | 100and the hours and frequency of overtime by firm and country. |
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| 130 | 130 | | 101 (2) Due diligence report: |
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| 131 | 131 | | 102 (i) Fashion sellers must be in compliance with the Organization for Economic Co- |
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| 132 | 132 | | 103operation and Development Guidelines for Multinational Enterprises; the Organization for |
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| 133 | 133 | | 104Economic Co-operation and Development Due Diligence Guidance for Responsible Supply |
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| 134 | 134 | | 105Chains in the Garment and Footwear Sector; the Organization for Economic Cooperation and |
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| 135 | 135 | | 106Development Due Diligence Guidance for Responsible Business Conduct and the United |
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| 136 | 136 | | 107Nations Guiding Principles on Business and Human Rights: and |
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| 137 | 137 | | 108 (ii) Fashion seller shall include in the due diligence report: (1) a link on the |
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| 138 | 138 | | 109fashion seller’s or fashion manufacturer's website to relevant policies on responsible business |
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| 139 | 139 | | 110conduct; (2) information on measures taken to embed responsible business conduct into policies |
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| 140 | 140 | | 111and management systems; (3) the fashion seller’s or fashion manufacturer’s identified areas of |
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| 141 | 141 | | 112significant risks in the contexts of its own activities and business relationships such as supply |
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| 142 | 142 | | 113chains; (4) the significant adverse impacts on risks identified, prioritized and assessed in the |
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| 143 | 143 | | 114context of its own activities and business relationships such as supply chains; (5) the |
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| 144 | 144 | | 115prioritization criteria; (6) the actions taken to prevent or mitigate those risks, such as corrective |
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| 145 | 145 | | 116action plans, to be cited where available, including estimated timelines, targets and benchmarks 7 of 12 |
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| 146 | 146 | | 117for improvement and their outcomes; (7) measures to track implementation and results; and (8) |
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| 147 | 147 | | 118the fashion seller's or fashion manufacturer's provision of or co-operation in any remediation . |
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| 148 | 148 | | 119 (d) Reporting. Every fashion seller shall develop and submit to the attorney general |
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| 149 | 149 | | 120annually, beginning within 24 months of the effective date of this section, a due diligence report. |
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| 150 | 150 | | 121Such report, excluding the information required in clause (ii) of paragraph (2) of subsection (c), |
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| 151 | 151 | | 122shall also be made publicly available on the fashion seller’s website in a machine readable and |
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| 152 | 152 | | 123reusable format, published in line with open data principles through a clear and easily |
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| 153 | 153 | | 124discoverable link to the required information. In the event the fashion seller does not have an |
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| 154 | 154 | | 125internet website, the company shall provide a written disclosure to any person who has requested |
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| 155 | 155 | | 126information within 30 days of receiving a request. Such report shall also include the fashion |
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| 156 | 156 | | 127seller’s annual volume of material produced, including breakdown by material type. |
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| 157 | 157 | | 128 |
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| 158 | 158 | | 129 (e) Verification. The attorney general shall develop a process for accrediting verification |
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| 159 | 159 | | 130bodies authorized to provide verification services. The verification process shall include: |
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| 160 | 160 | | 131 (1) The process for accrediting verification bodies including: (i) demonstrating |
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| 161 | 161 | | 132qualifications of verification staff, including their education, experience, and professional |
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| 162 | 162 | | 133licenses; (ii) any judicial proceedings, enforcement actions or administrative actions filed against |
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| 163 | 163 | | 134the verification body; and (iii) policies and mechanisms in place to prevent conflicts of interest |
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| 164 | 164 | | 135and to identify and resolve potential conflict of interest situations if they arise. |
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| 165 | 165 | | 136 (2) Verification bodies shall not be authorized to provide services to a company where a |
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| 166 | 166 | | 137conflict of interest exists. A conflict of interest shall include: (i) the verification body and |
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| 167 | 167 | | 138reporting entity sharing any management staff or board of directors membership or any of the 8 of 12 |
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| 168 | 168 | | 139senior management staff of the reporting entity having been employed by the verification body, |
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| 169 | 169 | | 140or vice versa; (ii) any employee of the verification body or any employee of a related entity or a |
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| 170 | 170 | | 141subcontractor who is a member of the verification team having provided the reporting entity with |
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| 171 | 171 | | 142services related to the areas of verification or any services designated by the attorney general; |
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| 172 | 172 | | 143(iii) any staff member of the verification body providing any type of non-monetary incentive to a |
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| 173 | 173 | | 144reporting entity to secure a verification services contract; and (iv) any additional criteria |
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| 174 | 174 | | 145provided by the attorney general. |
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| 175 | 175 | | 146 (3) Verification bodies that have been accredited by the office of the attorney general |
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| 176 | 176 | | 147shall notify the office within 30 days if they no longer meet the verification requirements set |
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| 177 | 177 | | 148forth in this section. |
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| 178 | 178 | | 149 |
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| 179 | 179 | | 150 (f) Enforcement. The requirements imposed on fashion sellers by this section shall be |
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| 180 | 180 | | 151monitored, investigated and enforced by the attorney general or an administrator designated by |
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| 181 | 181 | | 152the attorney general to bring civil proceedings for an injunction, monetary damages or civil |
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| 182 | 182 | | 153performance of a statutory duty. Fashion sellers shall be deemed non-compliant with this section |
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| 183 | 183 | | 154if they fail to conduct effective due diligence or fail to file a due diligence report pursuant to this |
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| 184 | 184 | | 155section. |
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| 185 | 185 | | 156 The attorney general or the attorney general’s designated administrator as applicable shall |
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| 186 | 186 | | 157annually publish and make publicly available a report regarding compliance with this section |
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| 187 | 187 | | 158including, listing the fashion sellers who are out of compliance with this section. |
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| 188 | 188 | | 159 Fashion sellers found to be out of compliance with this section after the attorney general |
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| 189 | 189 | | 160or the attorney general's designated administrator as applicable has provided notice of 9 of 12 |
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| 190 | 190 | | 161noncompliance and after a 3 month period to meet obligations under this section has lapsed, may |
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| 191 | 191 | | 162be fined up to 2 per cent of annual revenues. Such fines shall be deposited in the Fashion |
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| 192 | 192 | | 163Sustainability and Social Accountability Fund established in section 2BBBBBB of chapter 29. |
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| 193 | 193 | | 164 Any person may report a violation of this section to the attorney general's office. |
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| 194 | 194 | | 165 (g) Liability. Any fashion seller shall be held jointly and severally liable for the payment |
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| 195 | 195 | | 166of wages of the employees of its tier 1 suppliers. For the purposes of this section, wages shall be |
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| 196 | 196 | | 167inclusive of all monies owed in accordance with the law of the country of manufacture including, |
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| 197 | 197 | | 168wages, overtime wages, paid leave, incentives, bonuses, severance and any other form of |
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| 198 | 198 | | 169payment or compensation. For the purposes of this section, employee shall include all workers, |
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| 199 | 199 | | 170whether full-time or part-time, permanent or fixed-term, directly contracted or hired indirectly |
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| 200 | 200 | | 171through an agency or other intermediary. Fashion sellers shall be liable for payment of lost |
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| 201 | 201 | | 172wages and an additional equal amount as liquidated damages. |
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| 202 | 202 | | 173 (h) Regulations. The attorney general shall promulgate all rules and regulations necessary |
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| 203 | 203 | | 174to implement the provisions of this section. The attorney general shall also develop and |
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| 204 | 204 | | 175disseminate educational materials to fashion sellers including, providing alerts on time sensitive |
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| 205 | 205 | | 176issues, emerging issues and high-risk country situations while assisting fashion sellers in |
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| 206 | 206 | | 177improving the quality of their due diligence processes. |
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| 207 | 207 | | 178 SECTION 2. Chapter 29 of the General Laws is hereby amended by inserting after |
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| 208 | 208 | | 179section 2AAAAAA the following section:- |
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| 209 | 209 | | 180 Section 2BBBBBB. (a) There shall be established and set up on the books of the |
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| 210 | 210 | | 181commonwealth a separate fund to be known as the Fashion Sustainability and Social |
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| 211 | 211 | | 182Accountability Fund for the purpose of requiring fashion sellers to be accountable to 10 of 12 |
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| 212 | 212 | | 183environmental and social standards. The attorney general shall administer the fund to assist in |
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| 213 | 213 | | 184verification and enforcement of human rights and environmental due diligence by fashion sellers |
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| 214 | 214 | | 185pursuant to section 115 of chapter 93. There shall be credited to the fund: |
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| 215 | 215 | | 186 |
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| 216 | 216 | | 187 (i) revenue from appropriations and other money authorized by the general court and |
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| 217 | 217 | | 188specifically designated to be credited to the fund; |
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| 218 | 218 | | 189 (ii) funds from public and private sources such as gifts, grants and donations to further |
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| 219 | 219 | | 190fashion sustainability and social accountability; |
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| 220 | 220 | | 191 (iii) funds of all moneys deposited pursuant to subsection (g) section 115 of chapter 93; |
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| 221 | 221 | | 192and |
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| 222 | 222 | | 193 (iv) interest earned on money in the fund. |
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| 223 | 223 | | 194 Amounts credited to the fund shall not be subject to further appropriation and any money |
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| 224 | 224 | | 195remaining in the fund at the end of a fiscal year shall not revert to the General Fund. |
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| 225 | 225 | | 196 (b) Amounts credited to the fund may be expended, without further appropriation, by the |
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| 226 | 226 | | 197attorney general for purposes related to the instruction of fashion sellers on human rights and |
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| 227 | 227 | | 198environmental due diligence, including, but not limited to: |
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| 228 | 228 | | 199 (i) development of curricular educational materials to fashion sellers pursuant to |
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| 229 | 229 | | 200subsection (e) of section 115 of chapter 93; and 11 of 12 |
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| 230 | 230 | | 201 (ii) professional development training, including the provision of trainings, seminars, |
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| 231 | 231 | | 202conferences and materials for fashion sellers to use in the teaching proper due diligence pursuant |
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| 232 | 232 | | 203to subsection (e) of section 115 of chapter 93. |
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| 233 | 233 | | 204 (c) Amounts received from private sources shall be approved by the attorney general and |
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| 234 | 234 | | 205subject to review before being deposited in the fund to ensure that pledged funds are not |
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| 235 | 235 | | 206accompanied by conditions, explicit or implicit, on the implementation of human rights and |
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| 236 | 236 | | 207environmental due diligence that may be detrimental to the neutral and rigorous teaching of |
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| 237 | 237 | | 208environmental and social standards or unduly influence the direction of environmental and |
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| 238 | 238 | | 209human rights policy. The review shall be made publicly available on the attorney general’s |
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| 239 | 239 | | 210website. |
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| 240 | 240 | | 211 (e) Annually, not later than October 1, the attorney general shall report to the clerks of the |
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| 241 | 241 | | 212senate and house of representatives, the joint committee on judiciary and the house and senate |
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| 242 | 242 | | 213committees on ways and means on the fund’s activities. The report shall include, but not be |
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| 243 | 243 | | 214limited to: |
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| 244 | 244 | | 215 (i) the source and amount of funds received; |
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| 245 | 245 | | 216 (ii) the expenditures made from the fund and the purposes of such expenditures; |
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| 246 | 246 | | 217 (iii) any funds provided to institutions and other stakeholder organizations; |
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| 247 | 247 | | 218 (iv) anticipated revenue and expenditure projections for the next fiscal year; and |
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| 248 | 248 | | 219 (v) the number of fashion sellers that have used the fund to implement a new program or |
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| 249 | 249 | | 220enhance or maintain current programming. The report shall be publicly available on the attorney |
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| 250 | 250 | | 221general’s website. 12 of 12 |
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| 251 | 251 | | 222 SECTION 3. This act shall take effect 6 months upon passage. |
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