Companies angling for state government contracts may soon face intensified scrutiny over forced labor in their international supply chains. This change emphasizes the surging demand for more supply-chain transparency and highlights the increasing challenges faced by companies who must now employ rigorous tracking of their supply chain to avoid potential sanctions.
Recently, Utah passed a new law, aptly recognized as H.B. 404, which impedes the public procurement of products made using forced labor. Florida has proposed a similar measure, known as H.B. 1331, and is awaiting the signature of the governor to make it a law.
There are, however, nuanced differences in legislation between states, with some like Arizona adopting a more sector-specific approach. Under a proposed bill in Arizona, there would be a prohibition on labor practices involving forced labor exclusively for government-purchased electric vehicles or parts used in their production.
The larger movements in Utah and Florida received bipartisan support, underlining the broad consensus on the matter, but some Democratic representatives have voiced concern over the restricted focus of Arizona’s proposed legislation.
Key legal experts, such as Ken Rivlin, co-head of the global environmental, ESG and regulatory practice at Allen & Overy, indicate that this can be seen as part of a larger, accelerating trend towards due diligence within supply chains.
As states begin to drape the iron curtain on global forced labor in government contracts, companies must align themselves with responsible and ethical sourcing practices to stay competitive.
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