California Transparency Act
P&G Information Regarding California Transparency in Supply Chains Act of 2010
P&G's policy is to operate within the spirit and letter of the law and to maintain high ethical standards wherever we conduct business. P&G does not condone or tolerate efforts or activities to achieve results through illegal or unethical dealings anywhere in the world.
P&G's suppliers know that the Company is concerned not only with results, but also with how those results are achieved. We expect all of our suppliers to conduct their business with the same high standards. We will actively seek business relationships with suppliers who share our values and promote the application of these high standards among those with whom they do business.
The State of California Transparency in Supply Chains Act of 2010 (the Act) requires that manufacturers and retailers disclose their efforts to eradicate slavery and human trafficking from the supply chain. The following describes P&G‘s efforts (the numbered topics are taken directly from the Act):
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.
Every two years we evaluate our suppliers and identify high-risk suppliers on a number of parameters including known risks and country location. Forced and child labor is included in the known-risk category, and we use the U.S. Department of Labor's Bureau of International Labor Affairs (ILAB) "List of Goods and Countries" as an aid in the evaluations.
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.
P&G requires that high-risk suppliers are audited by an independent, third-party auditor at least every two years. These audits are announced beforehand, and the auditors utilize the Sedex Members Ethical Trade Audit (SMETA) Best Practice Guidelines and audit report format.
One area that the auditor assesses is whether "employment is freely chosen," i.e., there is no forced, bonded, or involuntary prison labor, and workers are not required to lodge "deposits" or their identity papers with their employer and are free to leave their employer after reasonable notice.
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.
P&G's Standard Global Purchasing Contract (PDF) requires that suppliers be in full compliance with all applicable governmental, legal, regulatory, and professional requirements, specifically including P&G's prohibition on employing children, prison labor, indentured labor, bonded labor, and using corporal punishment or other forms of mental and physical coercion as a form of discipline.
P&G is beginning to utilize several third-party certification standards, e.g., Roundtable on Sustainable Palm Oil (RSPO) and Forest Stewardship Council (FSC), that provide third-party certification that raw materials we purchase are produced without the use of forced labor.
4. Maintains internal accountability standards and procedures for employees or contractors failing to meet company standards regarding slavery and trafficking.
P&G's Worldwide Business Conduct Manual (PDF) (WBCM) explains the global standards to be followed in our daily business activities as well as our legal and ethical responsibilities. The WBCM applies to all employees and members of the Board of Directors, regardless of location, seniority level, business unit, function, or region. P&G also expects suppliers and other business partners to comply with the relevant aspects of our WBCM. The relevant aspect of the WBCM states:
We do not use child or forced labor in any of our global operations or facilities. None of us should tolerate any form of unacceptable treatment of workers in our operations or facilities. This means, among other things, that we do not permit exploitation of children, physical punishment or abuse, or involuntary servitude. We fully respect all applicable laws establishing a minimum age for employment, in order to support the effective abolition of child labor worldwide. Workers under the age of 18 shall not perform hazardous work.
Employees understand that they must know and follow our WBCM, as well as the policies and procedures that apply to their job. Employees are expected to report known or suspected violations. Finally, failure to follow the law, the WBCM, or Company policies will subject employees to disciplinary action, up to and including termination.
P&G's Sustainability Guidelines for Suppliers (the Guidelines) is our expected code of conduct for all suppliers. The Guidelines state: P&G does not use child or forced labor in any of our global operations or facilities, and we expect suppliers or contractors with whom we do business to uphold the same standards. More specifically, we will not conduct business with suppliers employing child, prison, indentured or bonded labor, or using corporal punishment or other forms of mental and physical coercion as a form of discipline.
The Guidelines also state, "Should a pattern of violation of these principles become known to the Company and not be corrected, we will discontinue the business relationship."
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.
In addition to the child and forced labor prohibitions aspect that are covered in the WBCM, P&G Purchasing employees, including management, receive additional training on slavery and human trafficking. The training covers:
- The definition of human trafficking and forced labor
- Why it is important to the Company
- The steps the Company takes to prohibit forced labor
- Steps employees can take to combat forced labor
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