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February 12, 2014

KnowTheChain: Mixed Corporate Response to California’s Transparency Law

Since 2008, Humanity United has supported a portfolio of investments and projects focused on forced labor and human trafficking in supply chains. As part of this effort, together with a dozen partner organizations we launched KnowTheChain late last year. Our goal was to use corporate compliance with the California Transparency in Supply Chains Act (SB-657) as a way to engage companies, investors, the media, and others in a dialogue about meaningful solutions to identify and address slavery in multinational supply chains.

Because the official list of companies subject to the law has not been released by the California Attorney General’s office, we had to construct our own dataset of companies that based on our research meet the law’s three criteria: 1. retailer or manufacturer; 2. doing business in California; and 3. annual worldwide gross receipts exceeding $100M. We knew that the quality of companies’ disclosure statements would be varied and, although our dataset was constructed after extensive research, some companies would dispute being subject to the law.

When KnowTheChain was launched, approximately 71 percent of the companies in our dataset publicly disclosed their efforts to address slavery in their supply chains.  While some may consider this a decent success rate, we see it differently.  We understand that eradicating slavery from corporate supply chains means a transition in business norms, and that takes time.  However, we also believe that all companies have the capacity – and the responsibility – to answer the question, “what is your company doing to address slavery in its supply chain?” For companies subject to SB-657, this responsibility is mandated by law.

Three months after the launch of KnowTheChain, the disclosure rate is steadily increasing. But the actual results are more mixed.  In January 2014, KnowTheChain and the Business & Human Rights Resource Centre, an independent non-profit that is seeking to leverage KnowTheChain’s dataset, separately approached the 129 companies on the site that had not yet been identified as having a SB-657 statement, encouraging them to adopt one.  Of all companies contacted, only 44 responded.  We congratulate some of these companies, such as Baker Hughes and Lululemon, for publishing a strong new statement. Others – such as Intuit and NetApp – say they are preparing a statement, and still others indicated that they are not subject to the law.  However, a total of 85 companies, including noteworthy brands such as Guess and Microsemi Corporation, have remained silent.

Humanity United remains committed to this endeavor, to working with businesses, and to supporting efforts to increase transparency and disclosure related to slavery in supply chains.  We encourage other groups to use the KnowTheChain dataset to support companies that are engaged on this issue, to encourage compliance from companies that are not, and to work with companies that might not be subject to the law to voluntarily post a complete statement in keeping with the spirit of the legislation.

We also call on the CA Attorney General’s office to publicly release an enforcement plan, to ensure that this groundbreaking legislation lives up to its potential to prevent slavery in the production of the goods we use.

Working together, we can end slavery in corporate supply chains. Contact to get involved.

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