The California Transparency in Supply Chains Act

The California Transparency in Supply Chains Act (Senate Bill 657) came into effect on 1 January 2012. It requires retailers and manufacturers doing business in California to disclose their efforts to eradicate slavery and human trafficking from their direct supply chains.

Under the Act a company must disclose if it meets all of the following criteria:

1. It does business in California as defined in the California Revenue and Taxation Code.
2. It earns more than $100 million in worldwide gross receipts
3. It files its California taxes as a retailer or manufacturer.

A company eligible under the Act will need to make a disclosure on its website about the following five activities it undertakes, if any, to identify and mitigate slavery and human trafficking risks:

1. Third party verification of risk
2. Independent and unannounced supply chain auditing
3. Certification of compliance from direct suppliers
4. Internal accountability mechanisms
5. Provision of training

To summarise, a company should firstly establish whether it is affected by the law; legal teams can advise here. Secondly, the company should identify the processes it has in place to identify and mitigate human trafficking and slavery risks in its supply chain, and the extent to which it carries out these processes. Lastly, the company should publicly disclose these activities on the company website, with a conspicuous link from the homepage.

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