California Transparency in Supply Chain Act (SB-657)
In 2010, the State of California enacted the California Transparency in Supply Chains Act (‘SB-657’) (‘the Act’), requiring businesses to disclose the efforts they are making, if any, to eradicate human trafficking and slavery from their supply chains. The law went into effect on January 1, 2012.
SB-657 requires retailer sellers and manufacturers doing business in California that exceed $100 million in global revenue to publicly disclose the degree, if any, to which they are engaging in verification, auditing, and certification of their direct suppliers, maintaining internal accountability standards, and providing internal training regarding trafficking and slavery in their direct supply chains for tangible goods offered for sale.
Zero Tolerance on Slavery and Human Trafficking
We operate a ‘zero tolerance’ policy and would never accept slavery and human trafficking in our own or our suppliers’ factories. Slavery and human trafficking are risks in the manufacturing industry, particularly in China. As active participants in this industry, we at PCH are committed to preventing and reducing the risk of these practices in our supply chain.
PCH operates a Supplier Code of Conduct which is monitored through annual audit and through constant PCH engagement with our direct suppliers year-round. Our audit programs were developed using Electronic Industry Citizenship Coalition (‘EICC’) guidance and client & industry standards. All audits check suppliers’ practices for, amongst other criteria, child labor and youth workers, disciplinary practices and forced labor. We disclose the audit qualification process and results of these audit findings and our procedures in our annual PCH Sustainability Report.
The majority of suppliers sign the PCH code which expressly prohibits forced, bonded or indentured labor, child labor or inhumane treatment. The only suppliers who do not sign the PCH code are those who already have equivalent legal agreements in place with our clients.
If a potential supplier is found to conduct any zero tolerance practices, we will not accept them as a supplier. If an existing supplier is found to have engaged in any zero tolerance practices, they automatically fail their audit and, depending on the circumstances, we either terminate the relationship or endeavor to assist them to put a remediation plan in place, granting them a maximum of three months to rectify the situation before they are re-audited.
The PCH Quality team conducts audits of all suppliers that qualify for an audit. Audits are announced and scheduled, so that we can build trust and long-term relationships with our supplier partners. Audits are conducted by at least two PCH auditors who spend at least one day onsite at the suppliers’ location. A meeting is held after the audit with the supplier and PCH Client Quality Manger to explain the findings and any requests for follow up.
Audits set an important baseline in any rigorous labor and human rights program. But we must treat audits as the beginning, and not the end of our engagement with suppliers. It must be acknowledged, however, that despite these measures, it is difficult to verify such practices and there could be incidences of slavery and human trafficking as well as other human rights infringements in some factories in the region in which we operate. In our experience, building out a trusted network of local suppliers and maintaining a PCH presence in those factories is the most successful mode of preventing slavery and human trafficking.
Suppliers who fail to meet our Code of Conduct are in breach of our agreement.
We partner with Little Bird who operate an independent hotline in our own, and in three supplier facilities. This provides a source of feedback and communication with our factory workforce and offers all factory workers an avenue to report any labor or human rights grievances.
All PCH employees are expected to respect labor and human rights in our own and our suppliers’ operations. Should any employee have concerns about our labor or human rights practices, they can approach their direct managers, any member of management and any member of HR to share their concerns.