CALIFORNIA TRANSPARENCY IN SUPPLY CHAINS ACT

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The California Transparency in Supply Chains Act (SB 657, Steinberg), was enacted in 2010 and goes into effect January 1, 2012. The intent of this Act is to ensure large retailers and manufacturers provide consumers with information regarding their efforts to eradicate slavery and human trafficking from their supply chains, and to educate consumers on how to purchase goods produced by companies that responsibly manage their supply chains, thereby improving the lives of victims of slavery and human trafficking.

The Act requires manufacturers with annual worldwide receipts exceeding 100 million dollars to disclose at a minimum and to what extent, if any, five specific actions they have taken or are taking to eradicate slavery and human trafficking in their supply chains. Specifically, manufacturers must disclose if they have done or are doing the following:

1. Verify product supply chains to evaluate and address risks of human trafficking and slavery. The disclosure must specify if the verification was not conducted by a third party.

2. Conduct audits of suppliers to evaluate supplier compliance with company standards for trafficking and slavery in supply chains. The disclosure must specify if the verification was not an independent, unannounced audit.

3. Require direct suppliers to certify that materials incorporated into the product comply with the laws regarding slavery and human trafficking of the country or countries in which they are doing business.

4. Maintain internal accountability standards and procedures for employees or contractors failing to meet company standards regarding slavery and trafficking.

5. Provide company employees and management, who have direct responsibility for supply chain management, training on human trafficking and slavery, particularly with respect to mitigating risks within the supply chains of products.

These disclosures are to be posted on the manufacturer’s website. If no website exists, the manufacturer has 30 days to provide a written response to requests for disclosure.

(Note: A manufacturer with less than 100 million dollars in sales that supplies inputs to a larger company with over 100 million in sales will likely be requested by that larger company to disclose the above information.)

The exclusive remedy for violations is an Attorney General action for injunctive relief. Nothing in the act prevents remedies for a violation of any other state or federal law. For example, an action under the Business and Professions Code related to unfair business practices.

The California League of Food Processors is in the process of working with the Attorney General’s Office in drafting a compliance guidance document for our member companies.

Article written by Trudi Hughes, Government Affairs Director

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