Sunday, January 8, 2012
As governor, Arnold Schwarzenegger signed the California Transparency in Supply Chains Act.
If you happen to be doing some online grocery shopping at Safeway.com, scroll down to the bottom of the home page and there you'll find a link called "Supply Chain Transparency."
Should you be interested in what Safeway is doing to combat forced labor, human trafficking or other egregious practices involving its 5,000-odd suppliers, the link will take you to a page describing how the Pleasanton supermarket chain is complying with the California Transparency in Supply Chains Act.
The what?
Indeed. The law, which went into effect last Sunday, has received little publicity. Although it was enacted in 2010, many California companies either don't know about it or are scratching their heads over how to deal with it.
Basically, the law says this: Any California company with $100 million or more in sales must disclose "on a conspicuous and easily understood link" on its website whether:
-- It is looking into the existence of such practices in its supply chain, and, if so, how.
-- Its suppliers conform to the company's code of conduct on labor practices, especially with regard to slavery and human trafficking - and if so, how compliance is verified.
-- It certifies that the gathering of materials used in the products complies with human trafficking and related laws.
-- It provides training for company managers on mitigating the risk of such practices within the supply chain.
The measure, signed by former Gov. Arnold Schwarzenegger, was put together in part by advocacy groups in California. It was designed to raise awareness of issues such as forced labor and human trafficking and how they might contribute to the products we buy.
Signing the law, known as SB657, Schwarzenegger said it "will increase transparency, allow consumers to make better, more informed choices and motivate businesses to ensure humane practices throughout the supply chain."
Dos and don'ts: According to the International Labor Organization, 12.3 million people are victims of forced labor worldwide.
A 2011 U.S. Department of Labor report identified 130 goods from 71 countries that were produced, in part, by forced or child labor. Apparel, information technology, electronics and food are the chief sectors in which such practices occur.
"It's very important for companies to take note of this, especially companies with intricate global supply chains that reach down to the raw material level," said Patricia Jurewicz, director of the Responsible Sourcing Network, a project of As You Sow, a San Francisco corporate responsibility advocacy group.
Jurewicz was one of the speakers at a roundtable at the Bay Area Council in San Francisco on Friday that focused on the California law. Executives from several Bay Area companies were there, including Hewlett-Packard, McKesson, PG&E, Levi Strauss, Gap and Safeway.
So was Cynthia Jackson, a partner at in the San Francisco office of Baker & McKenzie, which has been advising clients on the new law. Her advice, apart from the need to be aware of it, is for companies to be careful what they claim they are doing in their disclosure statements, perhaps to burnish their brand.
One of the most common mistakes companies make is to "post a website policy without the underlying protocols to support it," she said. Without such support, a company could be legally liable for its failure to act.
In other words, you're not actually obliged to do anything, but don't promise what you can't deliver.
"Corporate social responsibility has moved beyond market fluff to a core function with legal implications," Jackson said.
Given that, companies may be faced with some tough questions, such as: How do you verify and certify that your suppliers are doing what they say they are doing? And how far down the supply chain do you have to go?
"We've got more than 5,000 direct suppliers," said Carl Graziani, Safeway's senior vice president overseeing the company's worldwide suppliers. "But there can be a million more links in the chain."
Many attending the roundtable were expecting more specific guidance on the law from the California attorney general's office, but they may be in for a long wait.
While it has just started a "Human Trafficking in California" website, the AG's office told me Friday afternoon that no guidance was being planned.
"We'll let the statute speak for itself," I was told.
RESOURCES
The law
-- Text of the California Transparency in Supply Chains Act: sfg.ly/AcfUD6.
-- "California requires supply chain disclosures," Baker & McKenzie: sfg.ly/xe3siq.
Company disclosures
-- Safeway: sfg.ly/xI0Boq.
-- Hewlett-Packard: sfg.ly/xFHjo5.
-- Gap: sfg.ly/xt8mmb.
Bay Area advocacy groups
-- Responsible Sourcing Network: www.sourcingnetwork.org.
-- Not for Sale (includes apps): free2work.org.
Blogging: www.sfgate.com/columns/bottomline. Facebook page: sfg.ly/doACKM. Tweeting: @andrewsross. E-mail: bottomline@sfchronicle.com.
This article appeared on page D - 1 of the San Francisco Chronicle
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