California Transparency Act (CTSCA)
Applicable to retailers and manufacturers doing business in California and having annual worldwide gross receipts exceeding $100 million. Companies that are part of the supply chains of these businesses will need to respond to ESG disclosure requests coming from their customers in order to comply.
The California Transparency in Supply Chains Act (S.B. 657) aims to eliminate slavery and human trafficking from global supply chains by requiring companies of the specified size and scope to disclose their efforts to eradicate these practices. The Act mandates organizations to disclose their verification, audit, certification, internal accountability, and training procedures. Non-compliance could result in reputational damage and possible legal actions by the Attorney General of California.
Companies within the scope of the California Transparency Act must disclose the following:
- Verification of product supply chains to evaluate and address risks of human trafficking and slavery.
- Audits of suppliers to evaluate supplier compliance with company standards for trafficking and slavery in supply chains. If the verification hasn’t been conducted by a third party, this should be specified in the disclosure.
- Direct suppliers’ certification 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.
- Maintain internal accountability standards and procedures for employees or contractors failing to meet company standards regarding slavery and trafficking.
- Training provided to management employees with direct responsibility for supply chain management on human trafficking and slavery, particularly with respect to mitigating risks within the supply chains of products.
Get an update on challenges and current practices on modern slavery due diligence in supply chains.
See how companies are leveraging EcoVadis to comply: Read more here