The California Transparency in Supply Chains Act

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After a decade or more during which private codes to monitor supply chain and workplace standards have proliferated, recent years have seen the re-emergence of state-based initiatives to create more oversight and accountability across global value chains. In January 2012, the California Transparency in Supply Chains Act (Senate Bill 657) (CTSCA) was enacted. The CTSCA requires that retailers and manufacturers doing business in California, with annual worldwide gross receipts of $100 million or more, must explicitly disclose their efforts to eradicate slavery and human trafficking, and protect basic human rights, along their entire supply chain. Companies have moved quickly to update their auditing mechanisms to ensure all supplier factories meet the requirements of the Act. The overall goal of the regulation is to ensure companies operate with a much greater level of caution when selecting suppliers and making sourcing decisions. This Working Paper outlines the dimensions of the Act, its implications for global sourcing and some early responses to it by companies that do business in California.