Bill Overview
Title: Transaction and Sourcing Knowledge Act
Description: This bill requires the Securities and Exchange Commission to mandate the reporting of certain information by publicly traded companies. Specifically, companies must report on the sourcing and due diligence involving products imported into the United States utilizing forced labor from Xinjiang, China; transactions with companies on the Department of Commerce's trade restriction list or designated as Chinese military-industrial complex companies; and for U.S. companies with facilities in China, whether there is a Chinese Communist Party committee in the operations of the company, and a summary of that committee's activity.
Sponsors: Sen. Scott, Rick [R-FL]
Target Audience
Population: Publicly traded company stakeholders
Estimated Size: 50000000
- Publicly traded companies globally will need to comply with the SEC's new reporting requirements, which may require significant changes in their supply chain management, especially if they source products from Xinjiang, China.
- Consumers and investors globally who are concerned with ethical sourcing and human rights issues may experience peace of mind or shifts in company valuations based on reported data.
- Companies engaged in trade with entities on the U.S. trade restriction list will be directly impacted as they need to disclose such transactions, affecting their business operations and possibly their market competitiveness.
- The act focuses on U.S. companies with operations in China, specifically those that have Chinese Communist Party committees in their operational structures, which may need to alter their governance practices.
Reasoning
- The primary impacted group includes publicly traded companies in the U.S., chiefly those engaged in international trade or having a presence in China. These companies will need investment in compliance frameworks to adhere to the TASK Act's reporting requirements, affecting cost structures and necessitating significant changes in the supply chain management. Given the budget constraints, the policy implementation will focus on key industry sectors for maximum impact per dollar spent.
- A noticeable secondary impact falls on investors and consumers in the U.S., as these groups rely on company reports for investment decisions and ethical consumption choices. The transparency mandated by the policy would likely alter perceptions of company integrity depending on their sourcing and compliance with human rights.
- Most U.S. consumers might not perceive immediate changes in the availability of consumer goods but could notice gradual shifts in product sourcing labels or ethical ensured labels, affecting brand loyalty.
- Only certain employees within publicly traded companies, mainly those in compliance, auditing, and supply chain management, will have direct professional impact from this policy.
- A diverse sample of U.S. individuals ensures capturing feedback from various perspectives including those minimally impacted, such as employees outside the target industries and factories, and consumers who are not environmentally or socio-politically driven.
Simulated Interviews
Chief Compliance Officer of a Tech Company (New York, NY)
Age: 45 | Gender: male
Wellbeing Before Policy: 6
Duration of Impact: 2.0 years
Commonness: 4/20
Statement of Opinion:
- This policy will definitely increase our operational costs as we need to establish a more comprehensive auditing system for our suppliers.
- I expect initial complications in adjusting our supply chains, potentially delaying production timelines.
Wellbeing Over Time (With vs Without Policy)
| Year | With Policy | Without Policy |
|---|---|---|
| Year 1 | 5 | 6 |
| Year 2 | 6 | 6 |
| Year 3 | 6 | 6 |
| Year 5 | 7 | 7 |
| Year 10 | 8 | 8 |
| Year 20 | 6 | 6 |
Investor (Los Angeles, CA)
Age: 32 | Gender: female
Wellbeing Before Policy: 7
Duration of Impact: 5.0 years
Commonness: 3/20
Statement of Opinion:
- I'm hopeful that this policy will encourage more companies to be transparent about their operations abroad.
- It could lead to better investment opportunities in firms with ethical practices.
Wellbeing Over Time (With vs Without Policy)
| Year | With Policy | Without Policy |
|---|---|---|
| Year 1 | 8 | 7 |
| Year 2 | 8 | 7 |
| Year 3 | 9 | 7 |
| Year 5 | 9 | 8 |
| Year 10 | 8 | 7 |
| Year 20 | 6 | 6 |
Supply Chain Manager for a clothing retailer (Chicago, IL)
Age: 38 | Gender: female
Wellbeing Before Policy: 5
Duration of Impact: 3.0 years
Commonness: 5/20
Statement of Opinion:
- We have taken steps to address any sourcing issues from risky areas, but the policy will require us to dig even deeper.
- This will likely increase costs around our auditing processes that could impact product pricing.
Wellbeing Over Time (With vs Without Policy)
| Year | With Policy | Without Policy |
|---|---|---|
| Year 1 | 4 | 5 |
| Year 2 | 5 | 5 |
| Year 3 | 6 | 5 |
| Year 5 | 6 | 6 |
| Year 10 | 7 | 6 |
| Year 20 | 6 | 5 |
Factory Worker (Houston, TX)
Age: 50 | Gender: male
Wellbeing Before Policy: 4
Duration of Impact: 1.0 years
Commonness: 7/20
Statement of Opinion:
- I'm worried that my company might face cost input challenges that could lead to job cuts.
- We rely on a stable business environment to maintain operations.
Wellbeing Over Time (With vs Without Policy)
| Year | With Policy | Without Policy |
|---|---|---|
| Year 1 | 4 | 4 |
| Year 2 | 5 | 4 |
| Year 3 | 5 | 5 |
| Year 5 | 4 | 5 |
| Year 10 | 5 | 5 |
| Year 20 | 5 | 5 |
College Student (Seattle, WA)
Age: 25 | Gender: female
Wellbeing Before Policy: 6
Duration of Impact: 1.0 years
Commonness: 4/20
Statement of Opinion:
- The TASK Act seems like it would create more stable and ethical bases for international business operations.
- It could narrow potential career opportunities if companies cut back international trade departments.
Wellbeing Over Time (With vs Without Policy)
| Year | With Policy | Without Policy |
|---|---|---|
| Year 1 | 6 | 6 |
| Year 2 | 6 | 7 |
| Year 3 | 7 | 7 |
| Year 5 | 7 | 8 |
| Year 10 | 7 | 7 |
| Year 20 | 6 | 7 |
Retail Store Manager (Dallas, TX)
Age: 42 | Gender: female
Wellbeing Before Policy: 6
Duration of Impact: 2.0 years
Commonness: 6/20
Statement of Opinion:
- I know customers care about ethical sourcing, so this policy will benefit our store's reputation.
- If products become scarce due to changes in sourcing, sales might decrease temporarily.
Wellbeing Over Time (With vs Without Policy)
| Year | With Policy | Without Policy |
|---|---|---|
| Year 1 | 6 | 6 |
| Year 2 | 7 | 6 |
| Year 3 | 7 | 6 |
| Year 5 | 8 | 7 |
| Year 10 | 7 | 7 |
| Year 20 | 6 | 6 |
Retired Financial Advisor (Miami, FL)
Age: 60 | Gender: male
Wellbeing Before Policy: 7
Duration of Impact: 1.0 years
Commonness: 5/20
Statement of Opinion:
- This law may facilitate improved governance and transparency, driving sustainable investment options.
- I doubt it affects my immediate financial outlook, but it certainly aligns with long-term views on ethical investing.
Wellbeing Over Time (With vs Without Policy)
| Year | With Policy | Without Policy |
|---|---|---|
| Year 1 | 7 | 7 |
| Year 2 | 7 | 7 |
| Year 3 | 8 | 7 |
| Year 5 | 8 | 7 |
| Year 10 | 8 | 8 |
| Year 20 | 7 | 7 |
Software Engineer (San Francisco, CA)
Age: 28 | Gender: male
Wellbeing Before Policy: 8
Duration of Impact: 2.0 years
Commonness: 3/20
Statement of Opinion:
- Implementation of this policy could mean more work for me as our clients demand solutions for their compliance needs.
- On the positive side, it might result in job security and interesting projects.
Wellbeing Over Time (With vs Without Policy)
| Year | With Policy | Without Policy |
|---|---|---|
| Year 1 | 8 | 8 |
| Year 2 | 8 | 8 |
| Year 3 | 8 | 8 |
| Year 5 | 8 | 8 |
| Year 10 | 9 | 9 |
| Year 20 | 8 | 8 |
Nonprofit Director (Atlanta, GA)
Age: 55 | Gender: female
Wellbeing Before Policy: 9
Duration of Impact: 10.0 years
Commonness: 2/20
Statement of Opinion:
- This is a significant step towards global accountability and transparency.
- I see it as validating our advocacy efforts, setting a precedent for future policies.
Wellbeing Over Time (With vs Without Policy)
| Year | With Policy | Without Policy |
|---|---|---|
| Year 1 | 9 | 9 |
| Year 2 | 9 | 9 |
| Year 3 | 9 | 9 |
| Year 5 | 9 | 9 |
| Year 10 | 10 | 9 |
| Year 20 | 8 | 8 |
Retired Factory Worker (Boston, MA)
Age: 67 | Gender: male
Wellbeing Before Policy: 5
Duration of Impact: 0.0 years
Commonness: 8/20
Statement of Opinion:
- I'm usually skeptical about how effective these policies are in practice, but it's a welcome change to see action being taken.
- I'm not sure how much this will affect my life directly.
Wellbeing Over Time (With vs Without Policy)
| Year | With Policy | Without Policy |
|---|---|---|
| Year 1 | 5 | 5 |
| Year 2 | 5 | 5 |
| Year 3 | 5 | 5 |
| Year 5 | 5 | 5 |
| Year 10 | 6 | 5 |
| Year 20 | 5 | 5 |
Cost Estimates
Year 1: $300000000 (Low: $200000000, High: $400000000)
Year 2: $280000000 (Low: $180000000, High: $380000000)
Year 3: $260000000 (Low: $160000000, High: $360000000)
Year 5: $240000000 (Low: $150000000, High: $350000000)
Year 10: $220000000 (Low: $140000000, High: $340000000)
Year 100: $200000000 (Low: $130000000, High: $320000000)
Key Considerations
- The policy could strain U.S.-China relations due to its focus on Chinese operations and forced labor issues.
- Short-term costs will be higher due to the initial setup and adjustment period for companies adapting to the new requirements.
- Long-term benefits such as improved ethical oversight and reduced exploitation risks could enhance consumer trust.
- The requirement could lead to supply chain revisions for U.S. companies if alternative sourcing is necessitated.