The Transparency in Supply Chains bill, SB 5541, was heard in the Senate Labor and Commerce on Monday. This bill has a noble intent of addressing the global need to prevent forced labor by requiring retailers and manufacturers to disclose key aspects of their business practices on their websites. These include product supply verification, supplier audit, direct supplier certification, internal accountability standards, and internal training.
WR testified with an “other” position because the issue of forced labor in supply chains was addressed when Congress passed the Uyghurs Forced Labor Prevention Act (UFLPA) in December 2021. In addition, other technical issues in this bill would inadvertently harm small businesses.
SB 5541 mirrors the CA Transparency in Supply Chain Act (Act). However, it lowers the threshold of covered businesses with over $75 million in annual global sales. This may require medium-sized retailers doing business in Washington to be subject to the act’s requirement should this bill become law. In addition, the bill would adversely affect small suppliers because they would have to certify that all of their materials are free of forced labor. Some small businesses, such as a local baker who supplies baked goods to grocers, would have no means to certify as required by this proposal.
The good news is that retailers have been working proactively to build a meaningful supply chain verification and certification infrastructure at the national and international levels to comply with the complex requirements of the UFLPA. Both federal enforcement and retailers are currently deep in the weeds of trying to verify their supply chains don’t involve forced labor, leaving product shipments stuck at ports.
WR’s national partners have shared with us that no technological tools are available to meaningfully and accurately verify supply chains are free from forced labor. The pathway forward for genuine supply chain verification and certification will likely take several years to develop.
While WR appreciates the intent of this bill, a unified national policy standard would be more effective at tackling the global forced labor issue than state-by-state piecemeal legislation.
