US has come up with a legislation to ensure the corporate social responsibility of every business, the Supply Chain Transparency Act. What are its feasibilities in the textile and apparel chain?

In2010 September, California Government passed the Supply Chain Transparency Act(SB 657). The act requires companies with a gross more than $100 million to give a declaration regarding what they do to eliminate slavery in their supply chains. In July a legislation was passed requiring companies to divulge their efforts to eliminate slavery in their manufacturing process. Apparel brands would be scrutinized intensely for corporate social responsibility regarding their operations across the supply chain process.

By January 1, 2012, the act will go into effect. Under this act, big manufacturers and retailers doing business in California will have to disclose the efforts taken by them to eliminate slavery and human trafficking from their supply chains. They must also disclose this information on their corporate websites. Apparel and footwear retailers are expected to have a deeper impact. The California Newswire reports Governor Arnold Schwarzenegger saying, " This legislation will increase transparency, allow consumers to make better, more informed choices and motivate businesses to ensure humane practices throughout the supply chain."

Brand and companies that have not received much attention regarding these issues have already faced intense scrutiny. The act is supposed to have a wider reach influencing more than 3,200 companies; worldwide. The act encompasses five major areas, independent and unannounced supplier audits, third party supply chain verification, supplier certification of legal compliance, staff training on forced labor and human trafficking, and internal accountability standards.

As US and specially California, being the tenth biggest economy in the world is connected with almost every country regarding trade activities, the act is likely to create a deeper impact, worldwide. Companies concerned on abiding with the act should focus on the following:

   *   Identify whether the legislation applies to their business:

If the company does business in California, and is identified with a principal business activity code regarding manufacturing or retail trade, the legislation applies therein.

   *   Review the human rights and policies in supply chain:

The company should review its corporate polices, and supplier standards that involve human rights. It should ensure proper procedures are taken to evaluate the risk of forced labor or human trafficking in their manufacturing process.

   *   Review and implement auditing and verification mechanisms:

All policies and procedures must be reviewed and implemented. Later it must also be audited to ensure its promptness. The methods of verification followed in checking compliance with human rights and policies must also be disclosed.

   *   Review its internal accountability mechanisms and training procedures:

The company must ensure that supplier policies and standards are effectively integrated into the supply chain process. The functional areas of the company best positioned to implement these policies, and the right choice of people to execute the policies should be identified. It must also ensure, that adequate training is given to its staff.

   *   Preparing the content of disclosure:

Finally the companies should plan for public disclosures.

With the wake of corporate social responsibility, many companies have already started adopting standards for ensuring quality, environmental, and ethical compliance of products, and their provenance. The Act does not impose any penalty for non-compliance, but allows for an injunction by the California Attorney General to correct the disorder. Though not very severe, the injunction might still affect the company or the retailer's reputation, thereby making them to lose competitiveness in the long run. They may also be exposed to costly litigation after a period of time.

The Supply Chain Transparency Act is a welcome development for eco conscious businesses, and companies. This would be a benchmark for improving human right standards.

References:

1)     Csrandthelaw.com

2)     News.change.org