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Complying with California's supply chain slavery law

July 14, 2015: The recently passed Modern Slavery Act, made law by the United Kingdom and likely to impact more than 10,000 companies, represents a significant addition to an increasing trend of legislative driven, corporate transparency.

The act, which became law on March 26 2015, is similar to California's Transparency in Supply Chains Act (TISCA) in that it also requires companies to publically disclose the ways in which they are addressing human trafficking in their businesses.

The UK Home Office, the regulating agency charged with enforcing the Modern Slavery Act, recently issued a call for consultation–asking civil society groups with substantive expertise to provide input on which companies should be subject to this new regulation and to provide guidance and recommendations on policies and procedures those companies should consider adopting. As a resource to promote greater transparency and dialogue around issues of slavery in supply chains, KnowTheChain included the following recommendations in response:

  • Disclose a detailed list of companies that will be required to comply with the law;
  • Encourage all companies, regardless of size, to adopt anti-trafficking policies for employees, contractors, and direct suppliers; conduct due diligence to inform business decisions; and implement an accountability plan for monitoring employees, contractors, and direct business relationships;
  • Clarify that any changes to the compliance threshold will be a reduction and, as a result, would apply to more companies;
  • Establish an ongoing consultation process that engages stakeholders from different sectors of society to review the threshold and provide guidance to the Home Office;
  • Provided a series of voluntary recommendations that companies could adopt to manage their supply chains and business operations in a meaningful and effective way.

In developing this submission, KnowTheChain used its experience with TISCA and incorporated input from other organizations with supply chain and labor expertise.

For regulations like the Modern Slavery Act to be effective, companies must be given clear guidance prior to the law's implementation. KnowTheChain applauds the UK Home Office for proactively engaging stakeholders and seeking expert counsel in advance of the law taking effect. In doing so, the UK Home Office will help reinforce the intent of the act, to meaningfully address human trafficking– compliance statements alone are not enough.

TISCA (SB-657) was signed into law on September 30, 2010 and went into effect on January 01, 2012.

The law requires retailer sellers and manufacturers doing business in California that exceed $100 million in global revenue to publicly disclose the degree, if any, to which they are engaging in verification, auditing, and certification of their direct suppliers; maintaining internal accountability standards; and providing internal training regarding trafficking and slavery in their direct supply chains for tangible goods offered for sale.

Author Kilian Moote is project director, KnowTheChain. The organization was created to educate companies, investors, policymakers and consumers about the existence of slavery in supply chains.

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