Investors Welcome Federal Bill Calling for Corporate Disclosures on Trafficking and Slavery Risks

This week, Congresswoman Carolyn Maloney (D-NY) and Congressman Chris Smith (R-NJ) introduced the Business Supply Chain Transparency on Trafficking and Slavery Act of 2014 (H.R. 4842). This important bill calls on corporations to uphold their commitment to end human trafficking and modern-day slavery by requiring them to disclose the policies and management systems they have in place to better identify and eradicate these violations within their global supply chains.

H.R. 4842 builds on the California Transparency in Supply Chain Act, which took effect on January 1, 2012 and applies to manufacturers and retailers doing business in the state. If enacted, H.R. 4842 would apply to all publicly traded or private entities in every sector and, consequently, would have broad international impact.

The Interfaith Center on Corporate Responsibility, a coalition of 300 investors with assets under management of more than $100 billion, Calvert Investments and Christian Brothers Investment Services, today issued a statement citing the importance of this bill to investors. The bill requires public disclosures around auditing, including labor recruiters, and verification procedures, risk assessments, training, remediation plans and accountability mechanisms that address trafficking and slavery risks. The disclosures would provide investors with the information necessary to adequately evaluate risks within their portfolios. Investors believe these risks are material and that corporations have a responsibility to disclose their efforts to counter them as underscored by the UN Guiding Principles on Business and Human Rights.

Given the complexity of global supply chains and the multitude of contractors, recruiters, and suppliers used throughout a production process, companies without comprehensive anti-trafficking and slavery protocols are exposed to a host of financial, regulatory, legislative, legal and reputational risks with the potential to adversely impact shareholder value. Proactively addressing these risks can guard against the negative publicity, business interruptions, potential lawsuits, public protests, and reputational damage that may result from undetected human rights violations.

The intractability and pervasiveness of trafficking and slavery require legislation that moves beyond voluntary disclosures and creates the same set of expectations for all companies. Let’s strongly urge members of Congress to support this bill that, we believe, will help companies meaningfully contribute to the eradication of modern-day slavery within their supply chains.

David M. Schilling, senior program director, Interfaith Center on Corporate Responsibility. dschilling@iccr.org