California's Fashion Environmental Accountability Act (AB 405)

Marissa Miller

Senior Consultant

Pianpian Wang

Associate Director

Table of Contents

• What Does AB 405 Propose?
• Risks of Non-Compliance
• The Motivations Behind AB 405
• What's the Next Step?
• Contact Us

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California is introducing a new bill that will impact the fashion industry, encouraging increased accountability in reducing Green House Gas (GHG) emissions and greater supply chain transparency.   

The bill, the Fashion Environmental Accountability Act of 2025 (AB 405), was introduced by Assembly member Dawn Addis on February 4, 2025, and is currently under consideration in the 2025-2026 legislative session. 

Similar Legislation

New York is also re-introducing a similar bill this legislative session to target similar fashion sellers, requiring them 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; it also establishes a fashion remediation fund.

AB 405 would apply to businesses selling fashion goods in California with annual gross receipts exceeding $100 million (referred to as “fashion sellers”). The bill excludes fashion sellers that sell used fashion goods and does not include multi-brand retailers, unless the total annual gross receipts of all of the private labels under the retailer exceed $100 million.  

What Does AB 405 Propose?   

First, in-scope companies must establish a quantitative GHG emissions baseline, as well as both short-term and long-term reduction targets, aligning with the Science Based Targets initiative. Companies with over $1 billion in global revenue must use the absolute contraction approach for calculating Scope 3 emissions, and their GHG emission inventory shall be independently verified once every two years. 

Second, companies will also need to disclose supply chain details in phases from 2027 to 2032, taking steps towards greater supply chain transparency by carrying out effective environmental due diligence. Companies shall prepare an Environmental Due Diligence Report to communicate all relevant information concerning the existence, implementation, and outcomes of the due diligence. 

The bill proposes the following schedule for companies to disclose information on their supply chain, including names, addresses, parent companies and product types:  

• By January 1, 2027, Tier 1 suppliers must be disclosed (covering at least 80% by volume).  
• By January 1, 2028, Tier 2 suppliers must be disclosed (75% by volume).  
• By January 1, 2030, Tier 3 suppliers must be disclosed (50% by volume or dollar value).  
• By January 1, 2032, Tier 4 suppliers must be disclosed (50% by volume or dollar value).  

Third, companies would have to have insight into their supplier’s chemical and wastewater testing.  By 2028, companies would need to require Tier 2 suppliers (dyeing, finishing, printing, garment washing) to report wastewater chemical concentrations and water usage, including verification from a 3rd party.  

AB 405 also requires both the GHG emission inventory and the chemical and wastewater testing content to be included in the annual Environmental Due Diligence Report.

The Potential Risks of Non-Compliance

The Department of Toxic Substances Control (the Department) will oversee chemical and wastewater compliance, while the State Air Resources Board will regulate greenhouse gas emissions.  

Under AB 405, if a company fails to file a complete Environmental Due Diligence Report, the Department will grant a 30-day grace period for submission. If the fashion seller does not file a complete report within three months of the due date, penalties will be imposed. These penalties include listing the fashion seller on a publicly available noncompliance list and/or a civil penalty of up to 2 percent of its annual revenues. Civil penalties collected pursuant to this section shall be deposited in the Fashion Environmental Remediation Fund. 

If a company fails to meet its GHG reduction targets, it has 18 months to get back on track. Companies with over $1 billion in revenue will be in violation if their absolute emissions increase for five consecutive years. Enforcement follows existing regulations, but companies won’t face penalties for Scope 3 emission misstatements if made in good faith.  

The Motivations Behind AB 405

The fashion industry is linked with impacts on the environment that are less than fashionable, or favorable. California’s proposed AB 405 addresses significant environmental challenges posed by the fashion industry, including:  

1. High Greenhouse Gas Emissions: The fashion sector contributes approximately 10% of global carbon emissions, surpassing the emissions from international aviation and maritime shipping combined.    
2. Excessive Water Consumption: Textile production is responsible for about 20% of global water usage, straining California’s already limited water resources.    
3. Textile Waste Accumulation: In the United States, 85% of discarded textiles end up in landfills, generating methane and releasing hazardous chemicals into the environment.    
4. Chemical Pollution: The use of harmful chemicals in textile manufacturing can contaminate water sources, posing health risks to both ecosystems and communities.    

By proposing AB 405, California aims to mitigate these environmental impacts through increased transparency, accountability, and sustainable practices within the fashion industry.    

California’s Fashion Environmental Accountability Act (AB 405) also aligns with the state’s broader push for corporate climate responsibility, echoing the goals of SB 253, the Climate Corporate Data Accountability Act, and SB 707, California’s Responsible Textile Recovery Act. Similar to SB 253, which requires large companies to disclose their Scope 1, 2, and 3 emissions, AB 405 enforces strict emissions reporting and due diligence for fashion sellers. Additionally, it complements SB 707, which establishes an Extended Producer Responsibility (EPR) framework for textiles, ensuring that manufacturers take responsibility for the greater life cycle management of products. AB 405 reinforces California’s commitment to holding industries accountable for their environmental impact and advancing towards a circular economy in fashion.

What’s the Next Step?

In recent years, California and other states have focused on the environmental aspects of the fashion industry, using climate disclosure as an entry point. While AB 405 is pending review, companies may need to proactively assess their climate strategies to ensure alignment with legal requirements and streamline their internal processes to enforce these requirements. Notably, multiple bills recently passed or introduced in California require companies to maintain an accountable GHG emission inventory. If companies are not already working on emissions baselines & reduction targets,they may need to consider adding this item to the agenda.  

For companies navigating these new regulatory requirements, tools like the Higg Facility Environmental Module (Higg FEM) could potentially provide a structured approach to chemical management and wastewater monitoring, supporting Tier 2 supplier reporting under AB 405. Additionally, Anthesis has established methodologies to integrate carbon emissions reported through Higg into Scope 3 footprints, ensuring alignment with Science-Based Targets initiative (SBTi) standards. As members of Cascale, Anthesis supports companies in advancing sustainability efforts and implementing tailored processes for emissions tracking, supply chain transparency, and regulatory compliance.