I 112th CONGRESS 1st Session H. R. 2759 IN THE HOUSE OF REPRESENTATIVES August 1, 2011 Mrs. Maloney (for herself, Mr. Smith of New Jersey, Ms. Speier, and Mr. McGovern) introduced the following bill; which was referred to the Committee on Financial Services A BILL To require companies to include in their annual reports to the Securities and Exchange Commission a disclosure describing any measures the company has taken during the year to identify and address conditions of forced labor, slavery, human trafficking, and the worst forms of child labor within the company’s supply chains.

1.

Short title, etc

(a)

Short title

This Act may be cited as the Business Transparency on Trafficking and Slavery Act. (b)

Findings

Congress finds that— (1)in 2010, the Department of Labor identified 128 goods from 70 countries around the world made by forced labor and child labor; (2)the United States is the world’s largest importer, and in the twenty-first century, investors, consumers, and broader civil society increasingly demand information about the human rights impact of products in the United States market; (3)in 2010, California enacted the first State law requiring manufacturers and retail companies to publicly disclose their policies to eradicate slavery, forced labor, and human trafficking within their supply chains; (4)the Smoot-Hawley Tariff Act of 1930, which prohibits importation of goods made with forced labor or convict labor, has a broad exception for goods that cannot be produced in the United States in sufficient quantities to meet the demands of American consumers; (5)courts have also ruled that consumers do not have standing to bring a civil action in United States courts for enforcement of this provision of the Tariff Act, because the legislative intent was to protect American manufacturers from unfairly priced goods, not to protect consumers from tainted goods, consequently, there are fewer than 40 enforcement actions on record in the past 80 years; and (6)other mechanisms related to slavery and trafficking in the stream of commerce suffer from similar problems of limited scope, broad exceptions, and inability to provide information about specific suppliers whose goods are tainted. (c)

Sense of Congress

It is the sense of Congress that— (1)forced labor, slavery, human trafficking and the worst forms of child labor are among the most egregious forms of abuse that humans commit against each other, in the name of commercial profit; (2)the legislative and regulatory framework to prevent goods produced through forced labor, slavery, human trafficking, and the worst forms of child labor from passing into the stream of commerce in the United States is gravely inadequate; and (3)legislation is necessary to provide the information that the public demands, recognizing that businesses can be part of the solution to these problems when they transparently provide information to consumers and investors, and subsequently respond to consumer and investor demands for business reasons, rather than solely reacting to governmental prescriptions on how to conduct their business.

2.

Disclosure to SEC Relating to Slavery Conditions Within Product Supply Chains

Section 13 of the Securities Exchange Act of 1934 (15 U.S.C. 78m), is amended by adding at the end the following new subsection: (r)

Disclosures Relating to Slavery Conditions Within Product Supply Chains

(1)

Regulations

Not later than 270 days after the date of the enactment of this subsection, the Commission shall promulgate regulations requiring any person required to file reports with the Commission under this section to include annually in such reports, beginning with the person’s first full fiscal year that begins after the date of promulgation of such regulations, a disclosure of any measures such person has taken during the year for which such reporting is required to identify and address conditions of forced labor, slavery, human trafficking, and the worst forms of child labor within such person’s supply chains. Such disclosure shall include the following information under the heading Policies to Address Forced Labor, Slavery, Human Trafficking and the Worst Forms of Child Labor describing to what extent, if any, the person conducts any of the following activities: (A)Maintains a policy to identify and eliminate risks of forced labor, slavery, human trafficking, and the worst forms of child labor within its supply chain. If the person maintains such a policy, the disclosure shall include the text of the policy or a substantive description of the elements of the policy. (B)Maintains a policy prohibiting the use of the person’s corporate products, facilities, or services to obtain or maintain someone under conditions of forced labor, slavery, human trafficking, and the worst forms of child labor. (C)Engages in verification of product supply chains to evaluate and address risks of forced labor, slavery, human trafficking and the worst forms of child labor. The disclosure shall— (i)describe the greatest risks identified within the supply chain, and the measures taken toward eliminating those risks; (ii)specify whether the verification was or was not conducted by a third party; and (iii)specify whether the verification process includes consultations with independent unions, workers’ associations, or workers within workplaces and incorporates the resulting certification or written comments from such independent union, workers’ associations, or workers. (D)Ensures that audits of suppliers are conducted to evaluate supplier compliance with the person’s company standards for eliminating forced labor, slavery, human trafficking, and the worst forms of child labor in supply chains. The disclosure shall specify if the verification was not an independent, unannounced audit. (E)Assesses supply chain management and procurement systems of suppliers in the person’s supply chain, to verify whether said suppliers have in place appropriate systems to identify risks of forced labor, slavery, human trafficking, and the worst forms of child labor within their own supply chain. (F)Requires suppliers in its supply chain to certify that materials incorporated into the product comply with the laws regarding forced labor, slavery, human trafficking, and the worst forms of child labor of the country or countries in which they are doing business. (G)Maintains internal accountability standards, supply chain management and procurement systems, and procedures for employees or contractors failing to meet the person’s company standards regarding forced labor, slavery, human trafficking, and the worst forms of child labor. The report shall describe such standards and systems. (H)Provides the person’s employees and management who have direct responsibility for supply chain management, training on forced labor, slavery, human trafficking and the worst forms of child labor, particularly with respect to mitigating risks within the supply chains of products. (I)Ensures that recruitment practices at all suppliers comply with the person’s company standards for eliminating exploitive labor practices that contribute to forced labor, slavery, human trafficking, and the worst forms of child labor, including by conducting audits of labor recruiters and disclosing the results of such audits. (J)In cases where forced labor, slavery, human trafficking, and the worst forms of child labor have been identified within the supply chain, ensures that remediation is provided to those who have been identified as victims. (2)

Interactive Data Format

The rules issued under paragraph (1) shall require that the information included in the person’s annual report be submitted in electronic form in an interactive data format. (3)

Public Availability of Information

To the extent practicable, the Commission shall make available to the public in a searchable format on a website, a compilation of the information required to be submitted under the rules issued under paragraph (1). (4)

Publication on the company’s website

Any person filing the disclosure required by paragraph (1) shall make available such disclosure on the person’s Internet website with a conspicuous and easily understood link to the relevant information placed on the homepage of the website. The link on the homepage shall be labeled “Policies to Address Forced Labor, Slavery, Human Trafficking and the Worst Forms of Child Labor.” In the event the person does not have an Internet website, the person shall provide the written disclosure within 30 days after receiving a written request for the disclosure from an investor or consumer. (5)

Definitions

For purposes of this subsection— (A)the term “forced labor, slavery, human trafficking and the worst forms of child labor” means child labor in violation of international standards including International Labor Organization Convention No. 182 and acts that would violate the criminal provisions related to slavery and human trafficking under chapter 77 of title 18 if they had been committed within the jurisdiction of the United States; (B)the term person means any publicly-traded or private entity required to submit any annual report to the Commission, and having annual worldwide global receipts in excess of $100,000,000; (C)the term remediation means the activities or systems that a company puts in place to address non-compliance with the standards identified through monitoring or verification, which may apply to individuals adversely affected by the non-compliant conduct or address broader systematic processes; (D)the term supply chain, with respect to a person filing the disclosure required by paragraph (1), means all suppliers of products, component parts of products, and raw materials used by such person in the manufacturing of such person’s products or the provision of such person’s services, whether or not such person has a direct relationship with the supplier; and (E)the term verification means the process by which a company is evaluated to determine compliance with its documented program, including standards on forced labor, slavery, human trafficking, and the worst forms of child labor, including an evaluation of— (i)data gathered through monitoring activities to ensure results are reliable and process is credible; and (ii)the system established to remediate violations to determine if remediation is implemented and effective. .