The California Legislature just passed a new law, “The California Transparency in Supply Chains Act of 2010,” which will soon impact large manufacturers and retailers doing business in California.

Beginning January 1, 2012, the Act obligates manufacturers and retailers of goods with annual worldwide gross receipts over $100 million to provide consumers with information regarding their efforts to eradicate slavery and human trafficking from their supply chains. The information required to be disclosed must be posted on the retail seller’s or manufacturer’s Internet website, with a clear link to the information from the business’ homepage. The website must disclose, at a minimum, to what extent, if any, the manufacturer or retailer does each of the following:

  1.  Engages in verification of product supply chains to evaluate and address risks of human trafficking and slavery. The disclosure shall specify if the verification was not conducted by a third party.
  2.  Conducts audits of suppliers to evaluate supplier compliance with company standards for trafficking and slavery in supply chains. The disclosure shall specify if the verification was not an independent, unannounced audit.
  3.  Requires 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.  Maintains internal accountability standards and procedures for employees or contractors failing to meet company standards regarding slavery and trafficking.
  5.  Provides company employees and management who have direct responsibility for supply chain management with training on human trafficking and slavery, particularly with respect to mitigating risks within the supply chains of products. (Emphasis added.)

Companies that fail to comply with these requirements will be subject to legal action brought by the California Attorney General for injunctive relief.