Wednesday, September 01, 2010

California Supply Chain Act, Unfair?

Firms oppose California bill to disclose policing of labor practices
Bill would require large firms to post online what they're doing to ensure that no one in their supply chain violates human rights. Business groups fear it could make them the target of enforcement actions and bad press.

August 13, 2010|By Marc Lifsher, Los Angeles Times

Reporting from Sacramento —

California companies say they won't deal with suppliers who use forced labor to dig out gems for jewelry or sew buttons on clothes. But they won't support legislation that would force them to divulge what they're doing to monitor their suppliers' workforce practices.

A bill by Senate President Pro Tem Darrell Steinberg (D-Sacramento) would require retailers and manufacturers with annual revenue of at least $100 million to post on the Internet what they're doing — or not doing — to ensure that no one in their supply chain violates human rights.

The idea is to give shoppers and investors who want to support companies taking anti-slavery stands an opportunity to spend their money in a socially conscious way, proponents such as British actress Julia Ormond have argued.

Many companies, such as Gap Inc. and Nike Inc., voluntarily police suppliers' labor practices such as mining rare metals in Africa or sewing dresses in East Los Angeles, they said.

But major statewide business groups oppose any state mandate that could make them the target of government enforcement actions and resulting bad press.

"These are the kinds of issues that create great consternation for my companies, which spend a lot of time worrying about their image," said Dorothy Rothrock, a vice president of the California Manufacturers and Technology Assn.

The bill would require companies to reveal publicly whether they hire outside experts to check suppliers' labor practices, whether they conduct independent and unannounced audits of suppliers and whether suppliers certify that raw materials are processed in accordance with local and international labor and safety laws.

There's nothing onerous about the bill, said Steinberg, noting that it would affect only about 3.2% of California businesses. "These requirements seem relatively simple and very doable," he said.

What's more, he said, "it's good business to ensure that workers who make your products are treated with respect and dignity."

The bill, SB 657, passed the state Assembly and is awaiting a final vote in the Senate this month.

"Business has a vital role to play in using their supply chains as the road map to tackling strategically and impactfully the worst forms of poverty on the planet," Ormond testified at a recent legislative hearing. "Consumers need to know their level of engagement so they can make informed choices."

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In case you are unaware, California is in process of considering The California Supply Chain Transparency Act of 2010 (SB 657) and The Slave and Sweat Free Code of Conduct for goods sold to the State of California (SB 1231). The former would require large companies to disclose all efforts to use 3rd parties to check and address the possibility of human trafficking and slavery in their supply chains, in part by independent random audits of the company’s suppliers. The latter bill would lead to prohibition on the Government of California from purchasing items from companies that are believed to used forced forms of labor.

While companies say they agree in principle to not using forced and exploitative forms of labor, they are not okay with the first bill which requires them to publicly state what they are doing to ensure their suppliers are not using such labor. Many companies are very worried about their public image and feel this bill could lead to bad press and increased enforcement on their companies as compared to small companies, which will not be required to report.

The goal is to give concerned consumers a mechanism to learn about what companies are doing and to enable them to make ethical decisions about their purchases.

Despite the companies' concerns, this is a very important step in the fight to get companies to take human rights violations in their supply chains seriously. If you live in California, please contact your Assembly Representative in support of SB657 and SB1231. You can find your representative at http://www.leginfo.ca.gov/yourleg.html. If you do not, please sign this petition supported by the Coalition to Abolish Slavery & Trafficking, which is targeted to Governor Schwarzenegger.

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