Rep. Maloney Introduces Controversial Disclosure Bill to House
Resembling a 2010 bill enacted by California, H.R. 4842, the Business Supply Chain Transparency on Trafficking and Slavery Act of 2014, was recently introduced in the House of Representatives. The proposed bill requires U.S. public companies with $100 million in yearly sales to submit annual reports to the U.S. Securities and Exchange Commission (“SEC”) detailing their efforts to recognize suppliers that use slaves, forced labor or children for producing goods. Rep. Carolyn Maloney, the bill’s sponsor, remarked that the requirement would inform consumers on what measures companies are taking to stop illegal labor practices, and reaffirms such businesses to communicate what efforts they are already taking. Also similar to the California law, Maloney’s bill would require suppliers to be audited independently, but mandates reports to be more detailed and provide information on subcontractors.
In opposition to the bill, U.S. Chamber of Commerce’s Center for Capital Market Competitiveness’ Thomas Quaadman stated that courts have previously ruled such disclosures as violations of the First Amendment. Mirroring the opinions of other business groups, Quaadman also commented that SEC disclosures tend to overstep the free speech provision within the First Amendment, and such requirements on social issues deter the SEC from its main responsibility of overseeing financial markets.
With political issues currently in a stalemate and midterm election campaigns approaching, the bill’s chances of surviving are unknown. However, companies that could be impacted are certain to fight the bill.
Topics: Business Supply Chain, Carolyn Maloney, Center for Capital Market Competitiveness, Disclosures, First Amendment, House of Representatives, Thomas Quaadman, Trafficking and Slavery Act of 2014, U.S. Chamber of Commerce, U.S. Securities and Exchange Commission "SEC"