Risk Management Becoming More Complex
January 18, 2012 - SCMR Editorial
The California Transparency in Supply Chains Act of 2010 went into effect just 18 days ago, and industry analysts say that the state is leading the way toward nation-wide adaptation.
Supply chain managers who fail to prepare for such a development do so at their peril, experts add.
“This law requires certain manufacturers and retailers doing business in California to publicly disclose the steps they have taken to eradicate slavery and human trafficking from their supply chains,” said Alexandra Wrage, president of TRACE International, a non-profit membership association that pools resources to provide anti-bribery compliance.
“Broader legislation at the federal level, H.R. 2759, has also been introduced that would require similar disclosures in Securities and Exchange Commission filings,” Wrage said.
TRACE has been telling supply chain managers that governments are enforcing onerous penalties for violations of international human rights standards.
“We see this trend very clearly with respect to the United States Foreign Corrupt Practices Act (FCPA) and similar laws criminalizing bribes to government officials,” said Wrage.
As with the FCPA, the California law is aimed at cutting off the supply side of the equation, recognizing that “businesses are inadvertently promoting and sanctioning (slavery and human trafficking) through the purchase of goods and products that have been tainted in the supply chain.”
Wrage also noted that the “whistleblower” provisions of the Dodd-Frank Wall Street Reform and Consumer Protection Act were implemented last year. Under these provisions, cash rewards of between 10 percent and 30 percent of ultimate fines are paid to whistleblowers who step forward with original information about bribery schemes.
“The implications and impact of such legislation is going to resonate throughout international supply chains,” she said.
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