Some companies are suddenly realizing that they haven’t complied with a disclosure law that went into effect a year ago in the state of California. That law, the California Transparency in Supply Chains Act of 2010, requires every company that does business in the State and has over $100 million in annual revenue to disclose their efforts to identify and eradicate human trafficking and slavery in their supply chain. It’s an effort by California to make consumers aware of the role that companies play in addressing this human rights issue … and some companies have let the effort go unnoticed. While there’s no fine for not complying, the Attorney General can force a company to make the disclosure. It hasn’t happened yet, but you don’t want to be the first one.
Complying with the law requires website-based disclosure of company due diligence and remediation processes, as well as a summary of how supply chain management personnel are trained in these areas of human rights. Since it’s a disclosure law only, it’s presumably possible to disclose that your company isn’t doing anything in this area. But, certainly, this isn’t going to be acceptable to most stakeholders. Consumers know that companies can influence behavior in their supply chains … witness the pressure that was put on Apple to do something about working conditions in Foxconn factories. So companies need to have procedures, documentation and training in place now.
We have prepared an Information Brief that summarizes the California law and makes recommendations about complying with the law. Our Information Brief can be found here. We also are working with clients to upgrade their internal processes, documentation and training to make sure that they have human rights-related best practices in their supply chain management.