Letters Sent to All Companies That May Be Subject to Disclosure Requirements

  • The California Attorney General’s Office has sent letters to all retailers and manufacturers that may be subject to the disclosure requirements of the Transparency in Supply Chains Act asking them to respond within 30 days and either provide a link to the required disclosures on their website, or demonstrate that they are not subject to the law.
  • The Act applies to any retailer or manufacturer doing business in California that has annual worldwide gross receipts of more than $100 million, and requires that they disclose information regarding their efforts to eradicate slavery and human trafficking from their product supply chains.  (Cal. Civ. Code § 1714.43.) Companies subject to the Act must post “a conspicuous and easily understood” link to the required disclosures on their website homepage. (§ 1714.43(b).)
  • The Act does not require that companies implement any new measures against human trafficking and slavery, and does not provide any penalties for violation. It does allow the Attorney General’s Office to seek a court order requiring compliance. (§ 1714.43(d).)

Resource Guide Provides Guidelines and Examples of Model Disclosures

  • The Attorney General’s Office has published a Resource Guide, available at https://oag.ca.gov/sites/all/files/agweb/pdfs/sb657/resource-guide.pdf, that provides guidelines, best practices, and examples of model disclosures, including the following recommendations.
  • Place a direct link to the disclosures on the company’s homepage.  The Guide recommends putting the link on the first page of a company’s retail and corporate websites, without requiring consumers to click multiple links to access the information. The Guide also recommends placing the link at the top or bottom of the page, using conspicuous text, and a descriptive title such as “California Supply Chains Act.”
  • Disclosures must cover five required topics. The Act does not mandate that a company make any specific statements , except to disclose “to what extent, if any” it engages in activities in the following five categories:

1. Verification.

  • The Act requires disclosing to what extent, if any, a company engages in verification of product supply chains to evaluate and address risks of human trafficking and slavery. The disclosure must specify whether the verification was not conducted by a third party.
  • The Guide recommends describing whether all product lines are verified, or only those in certain countries, and how often the company evaluates its supply chains for risks of slavery or human trafficking. The Guide also recommends identifying whether labor brokers are used, which may increase the risk of slavery and human trafficking.

2. Audits.

  • The Act requires disclosing to what extent, if any, a company conducts audits of suppliers to evaluate their compliance with company standards for trafficking and slavery in supply chains.  The disclosure must specify whether the verification was an independent, unannounced audit.
  • The Guide recommends explaining a company’s auditing procedures to include information on how it selects and prioritizes suppliers for auditing, statistics regarding the number and percentage of suppliers audited, the percentage of announced versus unannounced off-site worker interviews, and the breakdown of audits by each component of the supply chain.

3. Certification.

  • The Act requires disclosing to what extent, if any, the company requires direct suppliers to certify that materials incorporated into the products comply with the laws regarding slavery and human trafficking of the countries in which they are doing business.
  • The Guide recommends providing a general description of the certification requirement and the consequences for violating it. It also recommends disclosing any additional efforts used to encourage direct suppliers to comply with labor and anti-trafficking laws, for example, by requiring them to maintain certain records supporting their certification.

4. Internal Accountability.

  • The Act requires disclosing to what extent, if any, a company maintains internal accountability standards and procedures for employees or contractors failing to meet company standards regarding slavery and trafficking.
  • The Guide recommends describing internal procedures for holding employees and contractors accountable for complying with anti-slavery and human trafficking standards, including who has responsibility for monitoring compliance, the types of penalties for non-compliance, and generally describing any corrective actions previously taken. A company may wish to provide a link to its code of conduct. The Guide also recommends disclosing any mechanisms used help workers understand the company’s fair labor requirements, including procedures for reporting violations, confidentiality and whistleblower protections, and safeguards to ensure objective investigation of complaints.