[email protected] | www.assentcompliance.com | TEL: 1(866)964.6931 1
Anti-Human Trafficking & Child Labor
What Your Company Needs to Know
[email protected] | www.assentcompliance.com | TEL: 1(866)964.6931 2
James CalderAssent ComplianceDirector, Compliance Programs
[email protected] | www.assentcompliance.com | TEL: 1(866)964.6931 3
About Assent: Your Partner For…
[email protected] | www.assentcompliance.com | TEL: 1(866)964.6931 4
[email protected] | www.assentcompliance.com | TEL: 1(866)964.6931 5
[email protected] | www.assentcompliance.com | TEL: 1(866)964.6931 6
Michael LittenbergRopes & Gray LLPPartner
ROPES & GRAY LLP
Anti-Human Trafficking ─Legislation and LitigationPresented by Michael Littenberg
ROPES & GRAY2
About Michael Littenberg
Contact Information:T +1 212 596 9160F +1 646 728 [email protected]
Michael Littenberg is a partner in the securities & public companies practice group at Ropes & Gray.As part of his practice, for more than 25 years, Michael has been active in advising leading public and private companies on supply chain and corporate social responsibility matters, including relating to, among other areas, anti-human trafficking and conflict minerals and other commodities, and he is widely viewed as the leading practitioner in this emerging area.In the anti-human trafficking area, Michael advises a significant number of companies on compliance with the California Transparency in Supply Chains Act, the UK Modern Slavery Act and the FAR anti-human trafficking regulation. Michael advises clients on, among other things, disclosure and compliance with legal requirements, the construction and implementation of compliance programs, mitigating customer, litigation, NGO and socially responsible investor risk and in their interactions with these constituencies.Michael was previously a partner at Schulte Roth & Zabel.
ROPES & GRAY3
Overview of the FAR Rule
• Prohibits specified human trafficking conduct in connection with federal contracts– Applicable to contractors, subcontractors and their
employees and agents– No de minimis exception
• Requires a compliance plan and certifications if a contract/subcontract involves supplies acquired or services to be performed outside of the U.S. with an estimated value >$500K– Excludes commercially available off-the-shelf (COTS)
items
ROPES & GRAY4
Prohibited Conduct
• Engaging in severe forms of sex trafficking during the contract period• Procuring commercial sex acts• Using forced labor in contract performance• Destroying, denying access, etc. by an employee to identity or immigration
documents• Misleading, fraudulent or illegal recruitment practices• Charging recruitment fees to employees• Under certain circumstances, failing to provide return transportation at end
of employment• Providing housing that does not meet host country standards• If required by law, failing to provide an employment contract or other
required work document
ROPES & GRAY5
Compliance Plan Requirements
• Flexibility in plan design• But, must include specified elements:
– An awareness program– A process for employee reporting, including a hotline– A recruitment and wage plan– If housing is provided, a housing plan– Procedures to:
• Prevent agents and subcontractors at any tier/dollar value from engaging in human trafficking
• Monitor, detect and terminate agents, subcontractors and their employees that engage in prohibited activities
ROPES & GRAY6
Certification Requirements
• Applies if a compliance plan is required• Certification that:
– The contractor has implemented a compliance plan and procedures to prevent, and to monitor, detect and terminate a subcontractor engaging in, prohibited activities
– After conducting due diligence, either:• To the best of the contractor’s knowledge and belief, none of
the contractor, its subcontractors or their respective agents are engaged in any prohibited activities or
• If abuses relating to prohibited activities have been found, the contractor or subcontractor has taken the appropriate actions
• The contractor also is required to obtain certifications from relevant subcontractors
ROPES & GRAY7
Violations; Remedies
• If a violation, requires notice to the contracting officer and agency Inspector General, the agency debarring and suspending official and, if appropriate, law enforcement with jurisdiction
• Remedies:– Removal of employee from the contract or termination of a
subcontractor– Suspension of contract payments pending remediation– Loss of award fees for the non-compliance period– Declining to exercise contract options– Termination for default or cause– Suspension or debarment
ROPES & GRAY8
California Transparency in Supply Chains Act ─ Overview • Requires large retailers and manufacturers doing business in
California to disclose on their websites their efforts to eradicate slavery and human trafficking from their direct supply chains of goods offered for sale
• Requires disclosure regarding the following:– Verification of product supply chains– Supplier audits– Supplier certifications– Internal accountability– Training
The Compliance Focus is Ramping Up!
ROPES & GRAY9
U.K. Modern Slavery Act
• “Commercial organisations” must prepare a slavery and human trafficking statement each year– Applies to entities that supply goods or services and have an annual
turnover of at least £36MM– Effective for fiscal years ending on or after 3/31/16
• Must indicate steps taken during the applicable year to ensure human trafficking is not occurring in the supply chain or business
• Recommended disclosure topics:– Organizational structure, business model and supply chain relationships– Applicable policies– Due diligence and auditing process– Human trafficking risks and steps taken to assess and mitigate risk– Compliance effectiveness and KPIs– Training
ROPES & GRAY10
Other Legislative Initiatives
• Business Supply Chain Transparency on Trafficking and Slavery Act
• EU Directive 2014/95– Disclosure of non-financial and diversity
information by large undertakings
ROPES & GRAY11
Regulatory Action and Pending/ Threatened Litigation• In 2015, the California Dept. of Justice made
inquiries concerning CTSCA compliance• There are several lawsuits pending relating to
slavery and child labor in the supply chain– These suits cite various theories for liability
• Lawsuits alleging violations of the CTSCA have been threatened by pension funds
ROPES & GRAY12
Disclaimer
This information should not be construed as legal advice or a legal opinion on any specific facts or circumstances. This information is not intended to create, and receipt of it does not constitute, a lawyer-client relationship. The contents are intended for general informational purposes only, and you are urged to consult your attorney concerning any particular situation and any specific legal question you may have.
[email protected] | www.assentcompliance.com | TEL: 1(866)964.6931 7
Kate DunbarAssent ComplianceSubject Matter Expert, Human Trafficking
[email protected] | www.assentcompliance.com | TEL: 1(866)964.6931 8
Part 1: The Role of NGO’s in Preventing Human Rights Violations in Supply Chains
[email protected] | www.assentcompliance.com | TEL: 1(866)964.6931 9
[email protected] | www.assentcompliance.com | TEL: 1(866)964.6931 10
[email protected] | www.assentcompliance.com | TEL: 1(866)964.6931 11
[email protected] | www.assentcompliance.com | TEL: 1(866)964.6931 12
[email protected] | www.assentcompliance.com | TEL: 1(866)964.6931 13
Reputational Damage
[email protected] | www.assentcompliance.com | TEL: 1(866)964.6931 14
“Many of these multinationals say they have a zero tolerance policy for child labor. But this promise is not
worth the paper it is written when the companies are not investigating their suppliers."
- Mark DummettAI business & human rights researcher
[email protected] | www.assentcompliance.com | TEL: 1(866)964.6931 15
Amnesty hopes their report will result in the following outcomes:
Businesses take steps to prevent human rights violations in
supply chains
Governments enact laws obligating companies to
check and disclose sources of materials and suppliers
[email protected] | www.assentcompliance.com | TEL: 1(866)964.6931 16
Part 2: Due Diligence
[email protected] | www.assentcompliance.com | TEL: 1(866)964.6931 17
“[a process in place] to identify, prevent, mitigate and account for how they (companies) address their impacts on
human rights.”- UN Guiding Principles
“an on-going, proactive and reactive process through which companies can ensure that they respect human rights and
do not contribute to conflict.”- OECD
[email protected] | www.assentcompliance.com | TEL: 1(866)964.6931 18
Identifying and assessing risks in the supply chain
Mitigating and responding to risk
Engaging with suppliers and building capacity
Carrying out independent targeted third-party audits at identified points in the supply chain
Public disclosure
Step 1:Step 2:Step 3:Step 4:Step 5:
[email protected] | www.assentcompliance.com | TEL: 1(866)964.6931 19
[email protected] | www.assentcompliance.com | TEL: 1(866)964.6931 20
[email protected] | www.assentcompliance.com | TEL: 1(866)964.6931 21
[email protected] | www.assentcompliance.com | TEL: 1(866)964.6931 22
[email protected] | www.assentcompliance.com | TEL: 1(866)964.6931 23
[email protected] | www.assentcompliance.com | TEL: 1(866)964.6931 24
A key challenge that emerges from all of the above steps is that of complex information management:
“One of our big challenges is complex information management… Even if I have all the information about locations and products, how
do I manage that volume of data? It changes every day, and any data solution has to be live and responsive.”
- Quaintaince James, Australian retailer David Jones & member of the Australian Attorney-General’s
Department Supply Chains Working Group
Source: http://www.cips.org/en/supply-management/news/2016/january/australian-retailer-david-jones-targets-slavery-free-supply-chain/
[email protected] | www.assentcompliance.com | TEL: 1(866)964.6931 25
= Good for Business, Good for Everyone
From defensive to strategic: Demonstrating due diligence and best practice in responding to human rights violations in supply chains is good for business, it is strategic and gives a company a competitive edge. Example: Nike
One step at a time:Start with first 2 Tiers of your supply chain, then move upwards. This is a long term process and commitment.
Good for everyone:In the long run ethical sourcing and supply chain transparency means is better for business, better for people, and better for global economic development.
[email protected] | www.assentcompliance.com | TEL: 1(866)964.6931 26
BSR Migrant Worker Management Toolkit: http://www.bsr.org/reports/BSR_Migrant_Worker_Management_Toolkit.pdf
ILO Combating Forced Labor Handbook:http://www.ilo.org/wcmsp5/groups/public/---ed_norm/---declaration/documents/publication/wcms_101171.pdf
OECD Guidelines: http://www.oecd.org/corporate/mne/48004323.pdf
UN Guiding Principles: http://www.ohchr.org/Documents/Publications/GuidingPrinciplesBusinessHR_EN.pdf
[email protected] | www.assentcompliance.com | TEL: 1(866)964.6931 27
Any Questions?
[email protected] | www.assentcompliance.com | TEL: 1(866)964.6931 28
KPMG & Thermo Fisher Discuss Conflict Mineral ComplianceWednesday, February 10th, 1PM EST