Growing expectations around ethical sourcing and responsible operations are reshaping how organizations manage compliance and governance. One regulation that continues to influence supply chain accountability is the California Transparency in Supply Chains Act. Introduced to address serious human rights concerns this law requires greater openness from companies that sell goods in California.
The purpose of the regulation is simple but far reaching. Businesses must clearly communicate what they are doing to prevent slavery and human trafficking within their supply chains. This transparency helps promote responsible business conduct and allows consumers to make informed purchasing decisions.
This guide explains what the California Transparency in Supply Chains Act covers why it matters more today than ever before and how organizations can take practical steps toward compliance.
What the California Transparency in Supply Chains Act covers
The California Transparency in Supply Chains Act focuses on eliminating slavery and human trafficking from the direct supply chains of physical goods sold in the state. By mandating public disclosures the law encourages accountability and supports ethical consumer choices.
The Act applies to large retailers and manufacturers that operate in California and meet specific criteria. An organization falls under the scope of the law if it identifies itself as a retailer or manufacturer in tax filings meets the legal definition of doing business in California and reports annual global revenue above one hundred million dollars.
Why this regulation continues to gain importance
Supply chain transparency is no longer a regional concern. Governments around the world are introducing stricter requirements related to forced labor human trafficking and broader human rights risks. California’s approach reflects a global movement toward stronger oversight and clearer reporting obligations.
International regulations are placing increasing pressure on companies to demonstrate effective due diligence and responsible sourcing practices across their operations. At the same time consumers and investors are paying closer attention to how products are made and where they come from. Media exposure and public awareness have amplified the reputational risks of unclear or unethical supply chains.
Organizations are now expected to take an active role in identifying labor risks and addressing them early. Keeping pace with regulatory trends helps businesses reduce exposure to legal risk while building trust with customers partners and stakeholders.
Core requirements of the California Transparency in Supply Chains Act
The Act centers on disclosure rather than prescriptive actions. Companies must publicly explain how they address human trafficking and slavery risks across three main areas.
The first area involves supplier verification practices. Businesses must outline how they assess suppliers for potential risks including whether suppliers maintain policies and procedures designed to prevent forced labor. This also includes explaining if and how audits are conducted to evaluate supplier compliance.
The second area focuses on supplier certifications and audits. Companies are expected to disclose whether suppliers provide formal confirmation that their operations comply with anti slavery and anti trafficking standards. Any audits used to support these certifications should also be described along with how non compliance is addressed.
The third area relates to internal accountability and training. Organizations must explain the standards they apply internally to ensure compliance as well as the training programs used to educate employees about identifying and responding to supply chain risks.
Together these disclosures demonstrate due diligence and reinforce transparency as a core compliance principle.
Six practical steps to support compliance
Meeting the requirements of the California Transparency in Supply Chains Act involves thoughtful planning and ongoing effort. The following steps provide a structured approach.
Start by mapping the supply chain. Use existing supplier data and work closely with procurement teams to identify direct and indirect suppliers. Consolidate this information into a single view that shows how goods materials and payments move across the network.
Next prepare clear and accurate disclosures. Public statements should explain the actions taken to address forced labor risks including verification methods audits certifications and supplier engagement efforts.
Regular supplier audits are also essential. Audits help uncover potential issues early and confirm whether suppliers are meeting ethical standards. Findings should be reviewed carefully and used to drive corrective actions where needed.
Develop a consistent supplier certification process. Define clear criteria that suppliers must meet and determine how compliance will be evaluated. This may involve questionnaires site visits or independent assessments followed by periodic reviews.
Internal accountability is equally important. Establish policies that outline expectations consequences and reporting channels related to human trafficking and forced labor concerns.
Finally invest in employee training. Teams involved in sourcing procurement and supplier management should understand the warning signs of labor abuse and know how to escalate concerns appropriately.
Using technology to support supply chain transparency
Digital tools can play a significant role in simplifying compliance efforts. Technology platforms help organizations collect manage and report supply chain data in a consistent way while improving visibility into supplier risks.
By proactively identifying and addressing forced labor and human trafficking risks companies can reduce legal exposure and protect their reputation. Ethical supply chain practices also strengthen supplier relationships through clearer expectations and open communication.
Organizations that prioritize transparency often stand out in competitive markets. Consumers increasingly favor businesses that demonstrate responsible sourcing and accountability.
Governance risk and compliance solutions from providers such as Dess Digital can support these goals by offering training resources risk monitoring and third party oversight tools. When used effectively technology enables continuous improvement and helps organizations maintain alignment with evolving supply chain transparency requirements.
