17 – California Transparency in Supply Chains Act

Dr. Sandra Morgan and Dave Stachowiak discuss the Transparency in Supply Chains Act that will become law in the State of California on January 1st, 2012. New legislation helps to ensure ethical labor practices and is beginning to help us combat human trafficking.

Key Points

  • Transparency in Supply Chains Act requires companies to disclose their efforts in ensuring that their direct supply chains are free of slavery and human trafficking.
  • Addressing slavery regarding the law of supply and demand through our consumer practices is good, but we need to also address legislation and laws to enforce slave-free supply chains.
  • We must consider the whole supply chain of the products we purchase, not just where it was made, but where the different materials where produced or grown.
  • If the consumer is knowledgeable about what kind of accountability the law is requiring, we can ask better questions to hold companies accountable.
  • Consumers have a responsibility to hold companies accountable, but also to hold ourselves accountable in our purchasing decisions.
  • Boycotting businesses is problematic when we don’t know exactly what products are produced using slave labor, and also because it may cost someone in America their job.
  • Training and capacity building is a key component to the effectiveness of the Transparency in Supply Chain Act.
  • The Act will result in improving the dignity and human rights of workers globally.

Resources

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Transcript

Dave: On our previous episode, we had talked about the solidarity sleep out that the Live2Free organization at Vanguard University (VU) had sponsored and I know that you have an update for us before we jump into today’s topic.

Sandie: Oh my goodness, it was an amazing event because it was so high impact and personally I wanted to see lots of students experience what it’s like to sleep outside because you don’t have a place to go and the weather was very reasonable because we’re here in Southern California (SoCal), so we didn’t expect major hardships, but it was damp. We had Rhonda Sciortino come and share her story, when she was a child and homeless, and we had musicians come, and we made Peanut Butter & Jelly sandwiches. We were kind of extra blessed because somebody brought in hot chocolate for us. We wrote some notes and put together some toiletry bags to distribute to homeless youth and then we settled in for the night. As I crawled into my sleeping bag, I realized that wearing my sweats out on the damp lawn was not a good idea. The water on the lawn went up the bottom of my pants and so the bottom three inches were wet. And now I have the whole night to sleep in wet clothes because I don’t have anything else. I have no other clothes there. And I realized this is the reality way beyond I just don’t have any more clothes for the night but maybe I don’t have any more clothes for tomorrow or the next day or so many other things. I just don’t have an option and I have to deal with it. During the night many of the students who were getting cold because the dampness was literally landing on them, found themselves getting up and trying to find a drier place. So when I got up in the morning I found lots of students up against the walls, in the hallways, on the cement, looking for a dry place and all of a sudden the pictures that you see of homeless people In shopping malls, in the alleyways, and how they’re pushed up against the wall, you begin to understand why they ended up there. Beyond that, the bigger question of why there are 200,000 California 11-17 year olds homeless right here in the U.S.

Dave: And of course the reason were talking about that on this podcast is, of course we had talked about it a few episodes ago, but the bigger reason is because this is one of the contributing factors that unfortunately does lead to young people being part of that supply chain, and forgive the term, but to move into HT and to be targets for people who would perpetrate this crime against them. It’s a very important thing for us to be aware of and to be able to put ourselves in the shoes of a person that may be in that situation so that we can better understand and hopefully do something that will help advocate and be lights to people who are in that situation.

Sandie: Exactly because we sometimes judge those kids and say what are they doing out here. We’re not asking the right questions. And we want to address that when we have our conference in March.

Dave: We’re going to talk more about the conference here in a little bit because we have a conference coming up here in march and I’ll tell you more about the conference toward the end of the show here on some of the ways, one of the reasons that I’ve been involved with the center is I believe strongly in the power of education, and I know you do as well being in the role you’re in at VU, and running the center, and being a professor. If we can open people up to a new way of thinking and provide them with the right tools and resources  to understand and, as we say, study the issues, that we then really empower people to go out into the world and to the be strong advocates of change. There are some changes coming to the state of CA actually. And even if you don’t live in CA, I think this is an important change to know about coming up that laws are starting to change in some of these areas and January 1st CA has a new law coming. And so today we’re going to be looking at this new law that CA is starting January 1st. Sandie, I know you’ve been looking into this and researching this for quite some time could you tell us first what is the new law, and what is it called, and kind of frame what it’s trying to do.

Sandie: The CA transparency in supply chains act was passed in 2010 and goes into effect January 1st, 2012 and in effect, it will require companies to disclose their efforts, if any to ensure that their direct supply chains are free from slavery and HT. Now this really ups the game when we’re talking about the law of supply and demand and fair trade and buying and fair trade chocolate and slave free products.  It’s a really difficult thing for the average consumer to figure those strategies out. Certificates and websites that help us try to identify fair trade products, slave free products are helpful, but we need just a little bit more. It’s kind of like, when you think about our law enforcement (LE) culture here in the US, we have the coercive use of force so everybody knows, if you break these rules, this is what’s going to happen. We’re all pretty much programmed that way. In fact, when I see a black and white car in the lane next to me, my foot automatically eases off the gas pedal and I’m not even speeding! But I do that. So for us to begin to have laws that reflect our values that we want to have slave free supply chains for everything that comes into our community. This is going to be helpful on the highway of international commerce.

Dave: What does this law do? It sounds cool, but how does that all happen?

Sandie: it’s going to take some time for us to see what it looks like but SB657, in case anybody wants to Google this, is really going to create a framework for transparency and the idea that, I think in a past podcast we talked about just the idea of purchasing a pair of athletic shoes. It’s not simple to say it was made in America so it must be fair trade. It must be slave free. You have to think about, what are all the pieces that are brought to the factory that are included in putting together that pair of athletic shoes.  You’ve got cotton that may have been grown in Uzbekistan where we know they have a big problem with child slavery. You may have metal that is from all kinds of different places and it may not always come from the same supplier. You may have polyester and rubber and all these things so how do you document the supply chain before it got there?  Just because it was put together in the US, doesn’t ensure that it’s going to be slave free. And in fact we have many cases of slave labor that’s actually going on here in America as well and that’s for another podcast to talk about some of those cases. So what I kind of would like to do to get us into the ideas that are the foundation of the supply chain transparency philosophy is to look at the guide that was produced by the Interfaith Center on Corporate Responsibility. It’s a best practice guide called Effective Supply Chain Accountability and we’ll put a link to this on the website, but I want to look at some of these suggestions here because it’s a really helpful thing for us, partly because when we are the consumer, if we’re knowledgeable about the kind of accountability the law is requiring, we can ask better question when you’re filling out the suggestion form at a big dept. store. The idea of asking question and making people accountable is really the basis for this act and it will drive demand for better transparency and we will be able to have a better consumer experience from a social justice perspective.

Dave: I know for me, Sandie, it does make a difference as far as awareness level because I know I shop differently now, especially chocolate and coffee. I’m a lot more aware of that, from some of our conversations, both on this show and offline, of what things to look for and what stores even to frequent and that does make a difference when we know what’s going on so it sounds like this law will help us to do that a little bit more effectively, if I’m hearing you right

Sandie: And I think it gives us some really good tools for being responsible citizens. One of the other ways that people respond to the issues of products that are not slave free is they boycott those products. And that’s problematic on so many different levels because how do you know for sure which products are made with slave labor? How do you know if your boycotting is going to cost your neighbor his job here in the states? So it gets very complicated because everything is connected. Dave, you’re a business man. What does the term globalization mean to you?

Dave: Reality is the first thing that I think of. But it also means a lot of complexity and I think what you just said is really key for me when I think about some of these issues and I think about clients we have and products and services we offer. There’s so many ways to look at situations where business is involved. Just one example off the top of my head is my father worked for McDonalds Corporation for 30+ years. We Know and love that organization very well. That organization was wonderful to my dad and our family over the years.  McDonald’s is an organization that, depending on what lens you look through, you can have very different opinions on it. McDonald’s has taken a lot of heat in the last few years for child obesity. They’ve been the target; they’re the biggest player in the fast food world. Right, we all love the French fries, but they’ve taken some heat for that.  I think to some extent there’s some things that they’ve done that maybe they could have done a little differently and then there’s things that they have taken some unfair criticism for too around that. But a lot of people have a negative view on McDonalds as a result of that. And then on the other side McDonalds does some amazing things and one of them is Ronald McDonald children’s charities and the Ronald McDonald house. For years McDonald’s has been an incredible supporter of that charity that was started by them and takes care of kids and families who are going through treatment and hospitals. If you ever talk to someone who, I actually have a client right now who has a young one that is going through a very difficult time right after birth and there’s been some serious issues with the baby and they’ve been staying at the Ronald McDonald house. It is people who have been in that facility and have been served by Ronald McDonald charities; you could not say anything bad about them. They think that they just walk on water and that was an organization that was willing to help them when they were in a very difficult time. This gets really complicated when you say you decide you want to boycott McDonald’s over something then you are also boycotting all the wonderful things they do in the world too. So when we talk about these large organizations and supply chains it’s really complex. It’s not just as simple as I don’t like this product and I’m going to boycott it. Like you said, Sandie, your neighbor may work for that company and now they’re out of work. Maybe not directly because of your boycott but if enough people do that. Then how does that help out the world?  It’s really a complex web that we all live in today with globalization.

Sandie: That’s why I am so excited about his new transparency law and let me kind of give you an idea about what is going to happen with this. As of January 1st 2012 companies will be required to make the disclosures available through “conspicuous and easily understood link to the required information placed on the business home page.” So here’s the information that must be included. 1) They will verify supply chains to evaluate and address risks of HT and slavery; including if the verification is conducted by a third party. 2) It will conduct unannounced and verified audits of suppliers for trafficking and slavery in supply chains to evaluate compliance with company standards. 3) It will maintain internal accountability standards and procedures for employees or contractors failing to meet company standards regarding slavery and trafficking. 4) to train employees and management with direct responsibility for supply chain management, to mitigate risks within the supply chain of products, and finally certify that materials incorporated into the product comply with the laws regarding HT of the country or countries in which they are doing business.

Dave: That’s a lot of changes, Sandie.

Sandie: It’s amazing.

Dave: I think about organizations like Apple which of course is based in CA here and the amount of disclosure that and organization like Apple will need to do that they haven’t, I don’t know how much they’ve already done specifically, but they have a huge supply chain all over the world and there’s many organizations in CA that do, so this is a big change.

Sandie: It’s huge! We kind of need to begin to think about what we expect we vote at the cash register our attitudes and our opinions count. So while the law does ask them to disclose to be more transparent it’s still going to fall to us to go to those home pages, read what they’re doing and say well is that enough for me? Do I want to support that? Understanding the elements, the key components of what I expect as a consumer with a sense of dignity and advocacy, and responsibility for how I spend my resources and because I understand that it’s the ripple effect, what I do at the cash register impacts people on another continent. So I want to look at just briefly a few of the key components that I expect when I go to their website. I expect to see a human rights policy. I want them to identify how they define slavery and what kind of human rights are valued by that company. Most will probably use the UN declaration of human rights.  I also want to see some evidence of due diligence. I want to know how they’re tracking. How are you going to show me that the chocolate on your shelves isn’t made by children who are slaves on the west coast of Africa? And how am I going to know that if you say well we have slave free chocolate and then I go to your store and I see oh yes in this high shelf that I cannot reach there is a brand with fair trade chocolate but all of the cheap chocolate is eye level and that isn’t slave free. So how am I going to, and I hate to keep harping on the chocolate issue but it is just so simple, that’s why.  Because everything isn’t easy and black and white I’m going to look for some kind of risk assessment tool that you’re using to evaluate human rights. Dave, you mentioned the situation that Apple received a lot of heat for their oversea practices, but other companies buy their components from the same factories so risk assessment, verification and traceability is all part of that aspect of transparency, but I think a real key is training and capacity building. We can have the laws here, but if we don’t train the managers in those factories in those countries then we probably are not going to see the kind of results that we want. We hope that this new law will have a trickledown effect that doesn’t require global legislation, but depends on the very nature of the law of supply and demand. The demand in CA is for slave free products so people who want to sell to any kind of consumer in the state of CA will need to put these kinds of training components into their practices or they just won’t even get to the table. That’s going to take a lot of collaboration. The result, ultimately, will be not just a better consumer experience, guilt-free for me and you, but it’s going to result in improving the dignity and the human rights of people in places that we’ve never been.

Dave: Towards that end you mention some of the things that you’ll be looking for once this law is put into place. I imagine companies are starting to think about that with the January 1st deadline looming. Are there organizations that are doing this voluntarily now? Are there good examples of things that we could already be looking for as far as organizations doing this on their own?

Sandie: Well I think that yes, they are. I was interviewing the Deputy District director of the Dept. of Labor here in OC a few months ago and he immediately, off the top of his head, started naming the executives of big companies who now are the directors of supply chain verification. Big companies, Wal-Mart has someone. That’s their job. It’s an area where the big corporations have seen this coming down the pike and they’re getting ready they’re geared up. They’ve created the kinds of policies internally that will respond to this law. Some of them were already doing these things, others are getting on board. I think what we’re going to begin to see is a good practice model and we’ll look for those who are doing a good job of that. One of them, GAP, has a code of vendor conduct. And they’ve been doing that for a long time. They started that in 1996. Another one that I really love, and I just kind of glanced at some websites in preparation for this podcast, but I went to the Levi Strauss website and I saw one of their pages and it had 3 things to do for care of your new pair of jeans and it had something to do with washing and all those things and number 3: when you’re done, donate to Good Will. Pass them on to someone else. So I think that was a really good example of what we’re going to begin to see. We’re also going to begin to see more transparency on the shelves because cause related marketing is a sign of the times because people are so much more aware of what HT is. On our next podcast we’re going to talk about National HT Awareness Day and that’s going to drive more traffic to these kinds of websites as well. So what does good practice look like? One of the questions that we’ll begin to hear a lot will have to do with how do you do this and what is the best model? Human rights risk assessments are going to be key to that. We’ll be going to people like the International labor organization and we’ll go on our own Dept. of Labor there’s a link on the Dept. of Labor website for the US govt. where they have a list of goods produced by child labor and forced labor. They note the countries and the goods are identified. That list is not as extensive as we are looking for in the future, but it’s going to grow. I’m very confident that it’s going to grow. Another good practice model that’s been cited is Hewlett Packard. It has a risk based, four phase supplier management system that provides a framework for suppliers. That’s really key because if people in those countries don’t know what you expect from them and you come in afterwards and tell them “we can’t have this we can’t have this we can’t have this” it doesn’t give them the chance to have a fair access to our very large market that they desire so that they can increase and improve their own standard of living. So HP has done a great job developing those kinds of expectations and by doing that then they increase their level of influence in other places, not by heavy handed legislation but just by using the law of supply and demand.

Dave: we’ve talked about before, Sandie how business has a great potential to change the world substantially in positive ways that non-profits and smaller organizations like ours wouldn’t have a chance to do as quickly and substantially in a short period of time as business does really have the ability to do that. Money talks and supply chains talk and consumers talk so if you can effect change there, then we can influence a lot of these changes to happen. Sometimes people when we talk about boycotts, their boycotts are always business is bad and most of work for businesses; I work for a couple businesses. It’s really looking at it with a different framework of how businesses can be partners in solving this issue and there’s so many people that want to do that.

Sandie: You make a really good point when you mention non-profit. Non-profits have jumped in on the fair trade issue with both feet but I was at an awareness event recently and there was a non-profit that had a table full of fair trade products to purchase and they were all rather small sizes and very pricey because they had to tag on the expenses of running their non-profit. So they weren’t viable in the marketplace. Standing next to me was a mom with 4 kids. And she says to me, “Can’t you do something so that I can have this at the supermarket? I can’t afford to feed my children these kinds of pricey designer fair trade products. Well what’s going to happen because of this transparency act, is the social responsibility is going to get to the marketplace. It’s going to run in a business fashion that is profitable because that’s how business works.  And they’re going to compete with everyday products so that this becomes part of your household budget. It won’t be something special that you have to go to another event to get.

Dave: Sandie, it leads to what we’re trying to do which is to create the education, the understanding, and the opportunities to really move forward this conversation and to raise awareness, not because we like talking about all these tough issues necessarily but because we want to do something about it. And speaking of doing something about it, we are going to have a great opportunity coming up in early 2012 for the listeners of this podcast to do something about getting involved at your level of education and awareness and what you know about these issues and I think this is a good opportunity for us to mention the conference that the GCWJ is sponsoring. It is going to be coming up on March 2nd and 3rd. We’ve mentioned those dates before on the podcast. Now we have the focused topic on what this conference is going to be about. The title of the conference that has just been announced is “standing together, to end the exploitation of girls.” It’s an important topic for HT. The center is going to be hosting this conference. This is really a strategic plan to proclaim dignity, train advocates, and educate communities to respond to commercial sexual exploitation of girls and young women. The conference is going to bring together leaders from the frontlines we’ve talked about a lot in this podcast, Sandie, in communities across the country to learn about the experience and expertise of actually some judges, we’ll have Las Vegas Juvenile Justice William Voy and also OC Juvenile Justice, Douglas Hatchimonji. And of course LE, doctors, nurses, social workers, educators, community leaders. We’re going to have a huge conference this year and in fact it’s going to be our biggest conference ever. and it’s actually very inexpensive compared to most conferences you would go today and a half conferences to attend. the entire conference so this is a really great opportunity and wants to educate yourself far beyond the what we’ve been doing here on the podcast to learn a lot to do in a fairly inexpensive way it’s going to be an early march in SoCal 15min from Disneyland and all those fun places the beach and you can be doing something great for the world and also enjoying your time here

Sandie: the healthy community and when we look at community health and sexual in our own communities impacts a healthy community this means that anybody that is working as a teacher, a health care provider., someone tried to make a list of people who should come to this conference and then somebody said we need youth pastors we need juvenile justice people to come to this conference and what I ultimately who care about the kids

Sandie: Go to gcwj.vanguard.edu to register. you can also email us at gcwj@vanguard.edu and if you have questions you can call us at 714.556.3610 x2242

Dave: And normally we have all that information up on the front of the show if you do have questions or comments for us for what we’ve talked about today with the law if you want to send Sandie on a research trip, she’s always happy to do that.  or again the number is and that’s going to do it for us today, Sandie. Thanks so much for your time and I look forward to talking with you here again in a couple of weeks.

Sandie: Thank you,

Dave: Bye-bye.

Sandie Morgan

Sandie Morgan, PhD, RN is recognized globally for her expertise in combatting human trafficking and working to end violence against women. As Director of Vanguard University’s Global Center for Women & Justice (GCWJ), she oversees the Women’s Studies Minor as well as teaching Family Violence and Human Trafficking.

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