Koch Industries California Transparency in Supply Chains Act Disclosure
(Cal. Civ. Code § 1714.43)
Koch Industries, Inc. and its affiliates (together, “Koch”) are committed to conducting all business lawfully and with integrity. Koch’s commitment to and expectations for ensuring that our supply chain is maintained in a lawful and socially responsible way includes, among other things, that our suppliers not use forced labor in any of its forms, including human trafficking and slavery, to produce the products they provide to Koch. Koch’s compliance and ethics expectations are set out in the Koch Code of Conduct, in various supplier codes of conduct or compliance standards, and in training and other communications we provide to our own personnel engaged in supply chain activities, our suppliers and other third parties.
An example of such expectations, as found in one of our affiliate’s Code of Conduct for Suppliers, states:
Freely Chosen Employment: Suppliers shall not use forced, bonded, indentured labor or involuntary prison labor. Slavery or trafficking shall not be used. This includes transporting, harboring, recruiting or transferring or receiving vulnerable persons by means of threat, force, coercion, abduction or fraud for the purpose of exploitation. All work will be voluntary and all workers will be free to leave upon reasonable notice.
That same Code of Conduct for Suppliers also addresses risks associated with the use of labor brokers in certain parts of our supply chain:
Suppliers shall ensure that third party agencies providing workers to the Supplier are compliant with the provisions of the Code and the laws of the sending and receiving countries, whichever is more stringent in protecting workers.
§5.1.1. of Molex Code of Conduct for Suppliers
Koch does not have a Koch-wide supplier audit program; however, certain of our affiliates, including the Molex and Georgia-Pacific groups of companies, do conduct supplier audits. Supplier audit practices vary within our companies – for example, those companies that conduct audits may do so either internally or via independent, external auditors. The scope of the supplier audits cover the company’s standards and guidelines (including those regarding forced labor), as well as broader social responsibility and sustainability policies. In the event an audit reveals supplier non-conformance with our standards and guidelines, depending on the circumstances, we would either require that suppliers establish corrective action plans and report on the implementation of such plans or we would terminate the relationship with that supplier.
Direct Supplier Certification
While many of our commercial agreements require supplier compliance with applicable laws and regulations, Koch does not have a direct supplier certification process specifically focused on human trafficking and slavery. Koch companies do require that suppliers comply with our companies’ codes of conduct, and/or third party compliance standards and sustainability guidelines for suppliers, which prohibit any coerced labor.
Non-compliance with our standards regarding human trafficking and slavery – whether by a supplier or an employee – will result in corrective action, up to and including termination of the relationship, depending on the circumstances. Internal auditors and business representatives would work with suppliers, employees and possibly third-party resources to resolve any instances of non-compliance. All Koch companies promote a Code of Conduct identifying numerous avenues for reporting compliance concerns, including on an anonymous basis (where allowed by law). Such concerns are objectively investigated under the guidance and direction of our compliance or legal departments. Koch prohibits retaliation against anyone who, in good faith, raises a concern.
Training on Human Trafficking & Slavery
Although Koch does not have a comprehensive, mandatory training program focusing on human trafficking and slavery, a number of Koch affiliates provide training to those employees who are directly responsible for human resources, procurement and supply chain management on the subjects of human trafficking and slavery, particularly with respect to mitigating risks within the supply chain. Employees receive training on company policies and procedures designed to support a supply chain free of any type of coerced labor and on the methods available for reporting concerns. Koch companies train employees on the employee Code of Conduct, codes of conduct or standards directed towards suppliers, and/or supplier sustainability guidelines, all of which address prohibition of coerced labor. The training is periodically provided through a variety of delivery methods, including live classroom training, small team meetings and computer-based training.
Other than the steps and practices described above, Koch does not have a separate, comprehensive verification process for evaluating and addressing the risks of human trafficking and slavery.
This disclosure applies to the practices of Koch Industries, Inc. and its affiliates (specifically including Koch Companies Public Sector, LLC; Koch Companies Services, LLC; Koch Agriculture Company; Koch Remediation & Environmental Services, LLC; Market Based Management, LLC; and Koch Financial Corporation), except those affiliates that have posted their own disclosure statement. This disclosure does not apply to the practices of companies for which Koch Industries, Inc. may hold a minority stakeholder interest.