It's so great that consumers are finally demanding a transparent and sustainable supply chain, but even better is that government is beginning to support this shift as well. The California Transparency and Supply Chain Act sets a great precedence for the role government can play for us all to work together to change the world. As a brand owner, it's easy to feel overwhelmed when navigating this landscape for the first time, so we wanted to give you a rundown of the basics. So here's a breakdown of what it is and how it measures your business.
What exactly is the California Transparency and Supply Chain Act?
In 2010, the Golden State gathered and decided to do their part to end human trafficking through responsible manufacturing. This big step forward with sustainable supply chain regulations requires certain big companies, i.e. everyone from your favorite In-N-Out Burger to General Mills, to keep customers in the know about the steps they’re taking to eradicate slavery and human trafficking. Also, it has a really long name, and no one’s got time for that, so you may also hear it called the SB-657 for those in-the-know.
Am I included?
There are three key factors for whom this law applies to. You must be a large retailer or manufacturer doing business in California, with an annual worldwide gross profit of more than $100 million, and an entity that identifies yourself as a retail seller or manufacturer on your California tax return.
According to the California government, “This Act requires large retailers and manufacturers doing business in California to disclose on their websites their ‘efforts to eradicate slavery and human trafficking from [their] direct supply chain for tangible goods offered for sale.’ The law applies to any company doing business in California that has annual worldwide gross receipts of more than $100 million and that identifies itself as a retail seller or manufacturer on its California tax return.”
Companies subject to the Act must post disclosures on their Internet websites related to five specific areas: verification, audits, certification, internal accountability, and training.
The law went into effect January 1, 2012, and it applies to any company that is in the "retail trade" that has annual worldwide gross receipts in excess of $100 million and annual California sales exceeding $500,000.
What does the SB-657 review?
1 | Verification
Do you even care? This component requires companies to confirm whether the company engages in verification activities to identify, assess and manage the risks of human trafficking in its product supply chain.
2 | Supplier Audits
Audits seem to be happening everywhere these days. The California Transparency Act requires companies to disclose to what extent, if any, the company conducts audits of suppliers to evaluate compliance with company anti-trafficking standards. While this criteria is similar to the first, the main difference is reporting whether the audits are independent and unannounced.
3 | Material Certification
Do the materials going into your boots, bags, or blazers comply with slavery and human trafficking laws? Well, companies have to let consumers know so let’s hope the answer is yes!
4 | Internal Accountability
You need to have set procedures in place in case your company’s sustainable supply chain fails to meet standards dealing with slavery and human trafficking.
5 | Employee Training
It’s time to hit the books. As part of this responsible manufacturing initiative, companies are required to provide employees with training on slavery and human trafficking.
Want to make sure your company practices are in line with the California Transparency and Supply Chain Act? We would love to help you create a sustainable supply chain that works! Reach out to us to start the conversation today.