H.R. 2759: New Federal Bill Would Require Companies to Disclose Efforts to Address Human Rights Risks in their Supply Chains

On August 1, Rep. Carolyn Maloney (D-NY) introduced H.R. 2759, the Business Transparency on Trafficking and Slavery Act (.pdf), a bill modeled after the California Transparency in Supply Chains Act.  The bill would require companies to disclose efforts to identify and address the risks of human trafficking, forced labor, slavery, and the worst forms of child labor in their supply chains. 

The requirements of the California statute, which goes into effect on January 1, 2012, have been described in several previous posts.  Similar to the California legislation, the proposed federal legislation would only apply to companies with annual worldwide gross receipts exceeding one hundred million dollars.  Notably, however, the federal legislation is not limited to retailers and manufacturers.  If enacted, the legislation would be applicable to any publicly-traded or private company currently required to submit annual reports to the Securities and Exchange Commission ("SEC"), as long as the company meets the annual gross receipts threshold. 

Specifically, H.R. 2759 would require companies to include, in their annual reports to the SEC, disclosures describing to what extent, if any, they:

  • Maintain policies to identify and eliminate risks of forced labor, slavery, human trafficking, and the worst forms of child labor within their supply chains;
  • Maintain policies prohibiting the use of company products, facilities, or services to obtain or maintain conditions of forced labor, slavery, human trafficking, and the worst forms of child labor;
  • Engage in verification of product supply chains to evaluate and address risks of forced labor, slavery, human trafficking, and the worst forms of child labor;
  • Ensure that audits of suppliers are conducted, including specifications as to whether audits are independent and unannounced;
  • Assess the supply chain management and procurement systems of suppliers to verify whether suppliers have appropriate systems in place to address risks of forced labor, slavery, human trafficking, and the worst forms of child labor within their own supply chains;
  • Require suppliers to certify that materials incorporated into products comply with the laws regarding forced labor, slavery, human trafficking, and the worst forms of child labor in the country or countries in which they are doing business;
  • Maintain internal accountability standards, supply chain management and procurement systems, and procedures for employees or contractors that fail to meet company standards regarding forced labor, slavery, human trafficking, and the worst forms of child labor;
  • Provide training to employees and management on forced labor, slavery, human trafficking, and the worst forms of child labor;
  • Ensure that recruitment practices of all suppliers comply with company standards for eliminating exploitive labor practices that contribute to forced labor, slavery, human trafficking, and the worst forms of child labor; and
  • Ensure that remediation is provided to those who have been identified as victims of forced labor, slavery, human trafficking, and the worst forms of child labor.

The bill is co-sponsored by Rep. Christopher Smith (R-NJ), Rep. Jackie Speier (D-CA), and Rep. Jim McGovern (D-MA).  Rep. Maloney and Rep. Smith are co-chairs of the Congressional Human Trafficking Caucus.

While the ultimate passage of this proposed legislation is uncertain at best, given the current Congressional climate, the introduction of the bill reflects increased attention to the issue of human trafficking by public policy leaders.  Looking ahead, it is likely that legislative and regulatory efforts to eradicate human trafficking and other human rights abuses will involve provisions seeking to engage companies in addressing these concerns.  As noted in a recent article in Ethical Corporation magazine,

[n]ew efforts to combat human trafficking and slave labour have placed growing pressure on larger companies throughout the world to work towards eradicating trafficked and forced labour from their supply chains….Companies worldwide are being increasingly presed to become more transparent about their efforts to eliminate all formes of forced labour.

H.R. 2759 has been referred to the House Committee on Financial Services for further consideration.  We will be tracking the progress of this legislation closely.

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