2010 California Transparency in Supply Chains Act

In 2010, California passed groundbreaking legislation requiring retail sellers and manufacturers doing business in the state to disclose their efforts to eradicate slavery and human trafficking from their direct supply chains. The California Transparency in Supply Chains Act (SB 657) was designed to provide consumers with information to make informed purchasing decisions regarding the products they buy and companies and brands they support.
 

New Era applauds this effort to raise consumer awareness of labor rights and risks in supply chains as well as of the steps that companies can undertake to address these risks. Our commitment to supply chain social responsibility and transparency is evidenced by our voluntary participation in the Fair Labor Association, a non-profit organization that evaluates and publicly reports on company social compliance programs. Since we joined in 2003, the Fair Labor Association has made available on its website annual public reports containing information on our company’s progress towards implementation of the FLA Code of Conduct.

The New Era Code of Conduct (which is aligned with the FLA Code of Conduct) is based on internationally recognized labor and human rights standards. New Era is committed to upholding this Code of Conduct, including international principles aimed at preventing trafficking<¹ and slavery², and all forms of forced labor. Our efforts include:

• Upfront communication and engagement with our suppliers on our Code of Conduct expectations: Before we place production with any new supplier, the supplier must agree to, in addition to complying with all applicable laws of the country of manufacture, comply with our Code of Conduct (and apply the higher standard in cases of differences or conflicts). At a minimum, the supplier must also agree to: provide new hire and refresher trainings on employees’ rights and responsibilities as they relate to the Code of Conduct; provide confidential reporting channels for employees to report non-compliance with the Code of Conduct; submit to compliance assessments where payroll, working hours, physical inspection and confidential discussions with employees will be conducted to assess compliance; and remediate in a timely manner any findings of non-compliance.


• Risk assessment and independent audits: To evaluate compliance with our Code standards, we conduct unannounced, independent third-party audits conducted by FLA- accredited monitors. These audits include confidential interviews of workers who may be vulnerable for different types of labor risks, including forced labor. Our audit process also assesses the management systems and controls that a factory has to prevent forced labor from taking place, such as in recruitment, hiring, and wage practices.


• Third party verification and stakeholder engagement: In addition to our internal monitoring program, the FLA selects a sampling of our factory base for FLA-commissioned third-party audits, the results of which are made available on the FLA website.
• Accountability mechanisms and positive incentives: Our Manufacturing Agreement contractually binds our suppliers to comply with our Code of Conduct, and our company reserves the right to terminate any supplier found to be in material non-compliance with our Code. We also believe in providing positive incentives to improve Code of Conduct performance. To this end, our Vendor Scorecard, which measures supplier performance against a number of criteria, such as quality, on-time delivery, customer service, innovation, and social compliance, is used as a basis for making sourcing decisions.


• Employee education: At our owned and operated facilities in the US, we conduct regular employee training on the Code of Conduct provisions to ensure awareness of employee rights and responsibilities under the Code. We also conduct targeted training for employees involved in global sourcing on how to identify and mitigate compliance risks in the supply chain, such as forced labor, child labor, harassment or safety violations. In addition, our social compliance staff regularly participates in seminars and stakeholder forums on supply chain responsibility, including the 2011 FLA Stakeholder Forum on Migration and Modern-Day Slavery in Global Supply Chains.
• Supplier education: New Era considers our suppliers as critical partners in preventing labor abuses and achieving higher levels of compliance and social responsibility throughout our supply chain. Our supplier education activities are designed to empower our suppliers with the knowledge, tools, and incentives to continuously improve their social compliance performance. We also promote best-practice sharing among our suppliers through forums aimed at improving management systems to sustain compliance.

¹ "Trafficking in persons" is defined by the United Nations “Palermo Protocol” of 2000 as “the recruitment, transportation, transfer, harboring or receipt of persons, by means of the threat or use of force or other forms of coercion, of abduction, of fraud, of deception, of the abuse of power or of a position of vulnerability or of the giving or receiving of payments or benefits to achieve the consent of a person having control over another person, for the purpose of exploitation. Exploitation shall include, at a minimum, the exploitation of the prostitution of others or other forms of sexual exploitation, forced labor or services, slavery or practices similar to slavery, servitude or the removal of organs."

² According to the United Nations 1926 Slavery Convention, "slavery is the status or condition of a person over whom any or all of the powers attaching to the right of ownership are exercised."