Cott’s Disclosure under the California Transparency in Supply Chains Act of 2010
Effective January 1, 2012, the California Transparency in Supply Chains Act of 2010 (the “Act”) requires retailers and manufacturers doing business in California, like Cott Corporation, to disclose efforts to eradicate slavery and human trafficking from its direct supply chain. The following is disclosure under the Act for Cott Corporation and its subsidiaries (collectively, “Cott”):
1. Risk Assessment/Verification. Cott’s relationships with its suppliers have been, and will continue to be, based on lawful, efficient and fair practices. As a responsible corporate citizen, Cott seeks to ensure that quality and safety standards are maintained throughout its supply chain and Cott continuously seeks ways to ensure that the highest standards of conduct are upheld by its employees, business partners and suppliers. As a condition of doing business with a supplier, Cott will consider whether the supplier has a written policy barring the use of forced labor, slavery or human trafficking or has otherwise certified to Cott that it will not engage in any such conduct. In addition, in December 2011, Cott issued a letter alerting suppliers to the Act and seeking verification of compliance with the Act and their efforts to eradicate slavery and human trafficking in the countries in which those suppliers do business. However, while Cott’s supply chain is linked globally, Cott believes that the countries in which its suppliers are predominantly located and the vast majority of ingredients and packaging for its products are not such that would present significant risk of slavery and human trafficking. This belief is based in part on information contained in the Trafficking in Persons Report 2011 published by the U.S. Department of State and the U.S. Department of Labor’s List of Goods Produced by Child Labor or Forced Labor issued on September 30, 2011. Based upon this low risk, Cott has not employed a third party for verification.
2. Auditing. Cott does not believe this risk in its supply chain is significant and therefore has not audited its suppliers for compliance. However, Cott employees or third party contractors conduct periodic site visits to Cott’s suppliers as part of its ongoing due diligence relating to quality and regulatory compliance. If at any time Cott believes that any of its suppliers pose a greater risk, it will consider stronger measures such as auditing or third party verification.
3. Supplier Agreement. Cott expects its suppliers to comply with all state, federal, and/or international standards and applicable laws and regulations regarding forced labor and child labor. In December 2011, Cott issued a letter alerting suppliers to the Act and seeking confirmation of their compliance with the Act and their efforts to eradicate slavery and human trafficking in the countries in which those suppliers do business.
In its terms and conditions on purchase orders, Cott will also be adding language asking its suppliers to represent and warrant that they do not and will not knowingly engage in any forced labor, slavery or human trafficking. If Cott believes that a supplier is not in compliance with the Act and Cott’s expectations of its suppliers, Cott will provide the supplier with the opportunity to remedy the noncompliance. If the supplier fails to remedy the noncompliance, Cott intends to cease doing business with such supplier or any other supplier that knowingly continues to be in noncompliance with the Act or fails to meet Cott’s expectations of its suppliers.
4. Internal Accountability. Every employee of Cott is required to acknowledge and adhere to the standards for ethical business behavior set forth in Cott’s Code of Business Conduct and Ethics (the “Code of Conduct”), for which each employee is required to complete training and confirm his or her understanding and compliance. The Code of Conduct requires that all of Cott’s business activities be conducted in compliance with all applicable laws and regulations in all the countries in which Cott does business. To the extent there are no specific legal principles established, the expectation is to “do the right thing” and to conduct all business in a manner so as to uphold Cott’s high ethical standards. Cott makes adherence to the Code of Conduct mandatory in its relationships with suppliers and views it as a requirement of ongoing employment for its employees and those working on Cott’s behalf.
Cott maintains a copy of the Code of Conduct on its Corporate Governance page of its website at http://cott.com/en/for-investors/governance.
5. Procurement Training. Cott is undertaking to familiarize its buyers with identifying slavery and human trafficking issues and mitigating such risks, among others, within its supply chain of products. As noted above, one of many questions procurement personnel are to consider when selecting a supplier relates to slavery and human trafficking.