California Transparency in Supply Chains Act of 2010 (SB 657)
The California Transparency in Supply Chains Act of 2010 (SB 657 Download Adobe Reader) went into effect January 1, 2012. This law requires large retailers and manufacturers that do business in the state of California, with gross worldwide sales of over $100 million dollars, to be transparent about the efforts they have undertaken to eradicate Slavery and Human Trafficking in their supply chain.
Human Trafficking is defined as the illegal movement of people, typically for the purposes of forced labor or commercial sexual exploitation. Forced labor is "all work or service which is exacted from any person under the menace of any penalty and for which said person has not offered himself voluntarily" (Forced Labour Convention, 1930). Child Labor is often defined as work that deprives children of their childhood, their potential and their dignity, and that is harmful to physical and mental development (International Labor Organization). Slavery, currently referred to as modern-day slavery, includes debt bondage, serfdom, forced marriage and the delivery of a child for the exploitation of that child (1956 UN supplementary convention).
Lucky Brand has internal policies and procedures to ensure the absence of slavery and human trafficking in our supply chain, including forced labor and child labor. Suppliers sign off on and are required to follow the foundation of our procedures: 1) Lucky Brand Supplier Code of Conduct and 2) Supplier Social Compliance Manual. The Supplier Code of Conduct is based on International Labour Organization (ILO) standards, and seeks to protect the workers who manufacture Lucky Brand products. Lucky Brand suppliers are expected to implement the Lucky Brand Supplier Code of Conduct, using the guidance provided in the Social Compliance Manual, in their facilities and to comply with all relevant and applicable laws and regulations of the country in which workers are employed.
Lucky Brand’s social compliance program also includes verification of our product supply chain by means of announced and unannounced audits of our suppliers’ facilities by independent third-party auditors and Lucky Brand agents. The audits evaluate compliance with Lucky Brand’s policies against human trafficking, forced labor, and working conditions. Should a supplier or sub-contractor fail to meet Lucky Brand’s standards, appropriate and timely corrective action is expected. Failure to do so could result in the cancellation of purchase orders and/or termination of the business relationship.
Please see below for the five pillars of the California Transparency in Supply Chains Act, and Lucky Brand’s commitment to addressing each issue.
(1) Engages in verification of product supply chains to evaluate and address risks of human trafficking and slavery. The disclosure shall specify if the verification was not conducted by a third party.
The Lucky Brand Supplier Code of Conduct is communicated to all product suppliers and prohibits any form of forced labor in our supply chain, including human trafficking, slavery, and child labor. Suppliers sign off on their receipt of and compliance with the Lucky Brand Supplier Code of Conduct. By signing off on the Code of Conduct, the supplier agrees to Lucky making both announced and unannounced audits. The Code resides within the Lucky Brand Supplier Social Compliance Manual, which is the process document that guides factories to implement the Code of Conduct on the work floor.
(2) Conducts audits of suppliers to evaluate supplier compliance with company standards for trafficking and slavery in supply chains. The disclosure shall specify if the verification was not an independent, unannounced audit.
The Lucky Brand Supplier Social Compliance Manual includes details on Lucky’s procedure to audit, identify, and correct violations of our Code. It also explains the screening process for potential suppliers, ensuring Lucky does not embark on business relationships with suppliers that have substandard human rights practices. We conduct or collect audits for all of our finished goods suppliers to ensure compliance with our Code of Conduct. Audits are performed by Lucky Brand agents or from an approved list of reputable third party monitors. As per the Code, suppliers agree to announced and unannounced audits. Because Lucky strives for collaborative compliance relationships with its suppliers, unannounced audits are only scheduled when deemed necessary.
After an audit, suppliers are given guidance on how to create corrective action plans for audit findings. Audits and corrective action plans are reviewed for compliance with the Lucky Code. Audit reports always include detailed sections on child and forced labor, migrant, imported, contract and temporary/seasonal workers, and third party labor brokers and temporary agencies. Lucky requires immediate remediation for non-compliances in slave labor, human trafficking, child labor, building and fire safety.
(3) Requires direct suppliers to certify that materials incorporated into the product comply with the laws regarding slavery and human trafficking of the country or countries in which they are doing business.
Lucky Brand direct suppliers are prohibited from utilizing unauthorized subcontractors for the production of Lucky Brand products or components without prior written approval. Lucky approval may require an audit of the subcontractor prior to work beginning to ensure compliance with our Code of Conduct.
(4) Maintains internal accountability standards and procedures for employees or contractors failing to meet company standards regarding slavery and trafficking.
Lucky Brand’s social compliance program is reviewed annually or more frequently if internal company changes deem it necessary. Lucky’s social compliance program has recently undergone the following revisions due to internal changes:
• In Q4 2014 and Q1 2015, Lucky’s social compliance program was reviewed and the Code of Conduct and Supplier Social Compliance Manual were revised after a divestment from Kate Spade & Company to ensure synergy with new internal processes. At the same time, the former program was reviewed for gaps and strengthened where required.
• In Q4 2015 and Q1 2016, the utilization of a new audit tool was reviewed and implemented, along with procedures to avoid audit duplication (or audit fatigue), enhanced systems to manage corrective action plans, and improved supplier trainings.
Communication with Lucky Global Sourcing about a supplier’s social compliance level is fluid, ongoing, and based on a supplier’s current need. The status of suppliers found with violations related to slave labor, human trafficking, or child labor is seriously discussed and considered between Lucky Social Compliance and Global Sourcing. Other severe changes in a supplier’s compliance will always involve Lucky Social Compliance and Global Sourcing as well as any relevant agents. Lucky Social Compliance and Lucky Global Sourcing have quarterly discussions to review a supplier’s overall progress and compliance level.
Any form of forced labor, including slavery and human trafficking is a zero-tolerance issue for Lucky Brand. If this were found in our supply chain, the supplier would be subject to disciplinary actions including immediate remediation and possible termination of business. Aside from zero-tolerance issues, Lucky strives to form long-term relationships and work with our supplies in an effort of continuous improvement.
(5) Provides company employees and management, who have direct responsibility for supply chain management, training on human trafficking and slavery, particularly with respect to mitigating risks within the supply chains of products.
Because issues in the supply chain can also be identified by Lucky Team members who work closely with suppliers, Lucky Brand requires such members to undergo training on supply chain transparency. The training includes:
• Definition of slavery, human trafficking, debt bondage, forced labor, and child labor,
• Methods to recognize the signs of human trafficking in the supply chain and how to respond appropriately.
Lucky Brand also ensures its agents are appropriately trained in the Lucky Supplier Code of Conduct and Lucky’s expectations of supply chain transparency.