No Good Deed Goes Unpunished: Possible Unintended Consequences of Enforcing Supply-Chain Transparency (Part One of Two)

In light of recent laws such as the U.K. Modern Slavery Act and the California Transparency in Supply Chains Act, a responsible supply chain that embodies a company’s corporate social responsibility policies has become a key part of the strategy of many companies. But that strategy is being carried out by responsible sourcing teams and corporate-responsibility professionals while anti-money laundering and anti-corruption programs remain in the custody of legal and compliance personnel. In a guest article series, Fernanda Beraldi, international ethics and compliance director and corporate counsel at Cummins, Inc., and Edwin Broecker, a partner at Quarles & Brady, argue that the coming challenge for companies will be how to integrate these historically divergent functions as they balance disclosure demands, the operational need to continuously improve imperfect and challenging conditions in their supply chains and increasing legal risk for full disclosure and performance. In this first article, they discuss in detail the different legal regimes that affect supply-chain transparency. In the second article, they will discuss how, in light of recent litigation, that transparency can have unintended consequences for companies. See “The New Landscape of Corporate Social Responsibility Regulation and Its Overlap With FCPA Compliance” (Nov. 7, 2012).

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