Supply chain transparency is no longer a CR buzzword, but increasingly, a legal mandate. In the past year, legislation has been enacted to address everything from conflict minerals, to human trafficking and slavery, to bribery. BSR's managing director of Europe, the Middle East and Africa, Peder Michael Pruzan-Jorgensen, notes in his recent Guardian article, “Throughout these regulations and initiatives are two threads: disclosure and due diligence, both of which require increased knowledge about the supply chain and the origin of products and services.”
It’s important to know the ins-and-outs of each piece of recent legislation because regulation from across the globe can affect business operations at home. In fact, while the new California Transparency in Supply Chain Act is state legislation, according to Doug Cahn and Marsha Dickson on CSRlive, “The act applies to nearly every major brand of consumer products sold in the United States."
Pruzan-Jorgensen's Guardian post listed a summary of U.S. and U.K. statutes focused around transparent supply chains. Here’s a round-up of legislation that companies need to be aware of:
• US Dodd-Frank Act: Along with financial reform, the Act also includes conflict mineral regulation requiring companies to determine and report whether their products contain conflict minerals from areas like the Democratic Republic of the Congo. The SEC has yet to submit final regulation on this section, but companies should expect to adapt soon. It is also anticipated the EU will soon follow suit with similar regulation.
• RoHS2: The EU Restriction of Hazardous Substances Directive (RoHS) has been extended to prohibit the use of certain elements and chemicals in any product with an electronic function.
• California Transparency in Supply Chains Act: Requires manufacturers and retailers to disclose on their corporate websites what they are doing to eradicate slavery and human trafficking in supply chains.
• UK Bribery Act: Makes companies liable for failing to prevent bribes taking place on behalf of the company in the U.K. or abroad.
The bottom line is that whether or not your company is directly affected by current regulation, new policies may be on the horizon. And they are not to be taken lightly – violating the UK Bribery Act, for example, may result in up to 10 years in jail. Don’t wait for new regulation to hit your industry before you begin making strides towards a transparent and ethical supply chain. Be ahead of the curve and use it as a source of differentiation now.