The California Transparency in Supply Chains Act of 2010 (SB 657) (the "Act") went into effect on January 1, 2012. The Act requires manufacturers and retailers doing business in the State of California to disclose information regarding their efforts to eradicate slavery and human trafficking from their direct supply chains.
As set forth in our Code of Business Conduct and Ethics (our "Code of Conduct"), we are committed to complying with all applicable laws and regulations and conducting our business affairs at the highest professional standards. To that end, our efforts to address slavery and human trafficking in our supply chain include the following:
- Risk-based Supplier Assessments: We periodically conduct internal reviews of our direct supplier base and assess current and potential suppliers to determine the level of risk associated with each supplier, including with respect to the risk of slavery and human trafficking.
- Written Policies and Procedures: We have adopted written policies that strictly prohibit business practices that are unethical, illegal or that may cause harm to us, our employees, our business partners, our customers or the public, which include the use of slavery or human trafficking in our direct supply chain. These policies include our Code of Conduct and our Supplier Principles (our "Supplier Principles"), which can be located on Exar's website (www.exar.com).
- Supplier Certifications: We have distributed our Supplier Principles to our direct suppliers and have asked them to certify their compliance therewith, including the provisions barring the use of forced labor, slavery or human trafficking.
- Audits: We reserve the right to audit all suppliers for compliance with our Supplier Principles. Currently we do not employ an independent third party to audit and evaluate our suppliers' compliance with our Supplier Principles and instead will conduct audits of any suppliers identified as high risk. In addition, informal audits occur during the normal course of business as our employees, who are trained to identify non-compliance, interact with our suppliers.
- Accountability Standards: If we believe that a supplier is not in compliance with the standards set forth in our Supplier Principles, which includes the elimination of slavery and human trafficking, we will provide such supplier with the opportunity to remedy any potential non-compliance through the implementation of a corrective action plan and we will conduct a subsequent audit. Should the supplier continue to fail to meet our standards, we will seek to remove such supplier from our supply chain. Our Supplier Principles permits the termination of a supplier for even a single violation and likewise our Code of Conduct permits a range of measures, up to and including termination, for our employees involved in any similar misconduct.
- Employee Training: We conduct training for employees whose job functions include procurement that emphasizes the importance of ensuring that our suppliers abide by our Supplier Principles, including its prohibitions on slavery and human trafficking.
We believe our direct suppliers are reputable companies with internal standards requiring compliance with laws such as those prohibiting slavery and human trafficking. However, we will continue to update our policies and procedures as needed to ensure that we have appropriate safeguards against any mistreatment of persons involved in our direct supply chain.