Here’s something Zachary shared last week on PracticalESG.com:

A bipartisan coalition of lawmakers is looking to crack down on Chinese forced labor by exposing Uyghur forced labor in public company supply chains. A new bill proposed in the House of Representatives will require public companies to provide new SEC disclosures listing the following documentation:

“With respect to an issuer, the documentation described under this paragraph is documentation showing whether the issuer or any affiliate of the issuer, directly or indirectly, contains within its supply or production chain—

(A) goods, wares, articles, or merchandise sourced from or through the XUAR, or mined, produced, or manufactured wholly or in part by forced labor identified by mandate of section 2(d)(2)(B)(iv) of Public Law 117–78, including:

(i) the industries contained on the ‘Illustrative List of Industries in Xinjiang in which Public Reporting has indicated Labor Abuses may be Taking Place’ in Annex 2 of the ‘Xinjiang Supply Chain Business Advisory’ (published July 13, 2021) and any successor list; and

(ii) all products listed within ‘high-priority sectors for enforcement’ by the Forced Labor Enforcement Task Force pursuant to Public Law 117–78; or

(B) goods, wares, articles, or merchandise that are mined, produced, or manufactured by an entity engaged in labor transfers from the XUAR or forced labor.”

The Uyghur Forced Labor Prevention Act (UFLPA) was a major piece of human rights legislation in the U.S. It imposed a rebuttable presumption that certain categories of goods produced in China’s Xinjiang region were produced using forced labor. This presumption made these materials very difficult to import into the U.S.

The new disclosure regime pulls the same categories identified in the UFLPA and extends disclosure obligations to companies with such goods in their supply chains. Notably, this law does not limit disclosures to the supply chains of goods imported into and sold in the U.S. This means that multinationals will be obligated to disclose their forced labor exposure globally, even if those supply chains don’t touch U.S. markets. Additionally, the law will require companies sourcing high-risk products to obtain third-party verification of their disclosures.

Who knows where this will go, but if passed, the SEC would have 180 days from the law’s effective date to implement new rules for Uyghur forced labor disclosures.

– Meredith Ervine