Long arm of Californian law reaches UK

5 January 2012

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5 January 2012 | Helen Gilbert

UK companies are being urged to put in place stringent checks to ensure they don’t fall foul of a Californian law that forces companies to disclose the steps they take to protect against slavery and human trafficking throughout their supply chain.

Major firms including Apple and Gap are among the 3,200 major companies trading or based in California that will be affected by the law (Senate Bill 657, the California Transparency in Supply Chains Act of 2010), which came into force on 1 January.

Retailers and manufacturers with more than US $100 million (£64 million) in global sales will be required to disclose their efforts to eradicate slavery and human trafficking from their direct supply chains for tangible goods offered for sale.

They will also be expected to carry out independent supplier audits and direct suppliers will be required to certify that materials incorporated into the product comply with the relevant laws of the country or countries in which they are doing business.

Jayne Hussey, partner in the commercial contracts team at Pinsent Masons, said the legislation would filter down the supply chain so UK businesses supplying California-based firms should be on their guard.

“This law goes much wider than the retail clothing supply chain… and affects a much wider range of manufacturers,” she said. “What’s interesting about this law is that it captures relatively few businesses but impacts an awful lot – anybody supplying into the business. You’ve got to look down your supply chain and make sure you are not doing anything in contravention of this.

“While there’s been lots of fuss and emphasis on not using child labour and forced labour, there hasn’t been any historical focus here on human trafficking.It begs the question how far a manufacturer is expected to go in verifying at what point is somebody going to have satisfied this law?”

Elsewhere, data published today by risk analysis firm Maplecroft revealed that reported child labour breaches had risen by 10 per cent over the past year.

Rasmiya Kazimova, Maplecroft human rights analyst, suggested firms make the elimination of forced labour a contractual obligation of business partners and suppliers. “[They] should effectively communicate the policy and associated guidance and procedures to personnel and other interested parties, including business partners, suppliers and other stakeholders where appropriate, as well as provide training around this policy,” she said.

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