On January 1, 2012, the California Transparency in Supply Chains Act of 2010 (the Act) went into effect in the State of California and the Act requires certain retailers and manufacturers doing business in California to disclose their efforts to eradicate slavery and human trafficking from their supply chains. The principal purpose of the Act is to educate consumers, so they can make informed decisions and purchase goods from companies that responsibly manage their supply chains. We believe all workers have the right to freely choose employment and Ergobaby has zero tolerance for slavery and human trafficking and we would take immediate action if we had reason to believe that a supplier was engaging in such practices. We continually evaluate ways to improve our supply chain, including measures to reduce the risk of unlawful and unethical practices by suppliers. Some of our efforts are summarized below.

Verification

We are committed to fair labor practices within our supply chain. We engage in regular efforts to identify, assess and manage the risks of human trafficking in the production of our products. When Ergobaby partners with suppliers, we evaluate human trafficking risks based on a variety of factors, including in-person visits to their facilities, the suppliers' geographical location and manufacturing process, a workforce profile and the history of human trafficking and slavery in the sector. Our internal risk-management team leads the verification process using those internally developed procedures.

Audits

Ergobaby implements a risk-based internal audit program for suppliers in our direct supply chain. With our direct suppliers, we reserve the right to conduct audits and inspections of their operations at any reasonable time. Our internal audit team regularly conducts audits of those suppliers to evaluate their compliance with our anti-slavery and human trafficking company standards. Those audits consist of facility tours and individual and group interviews with supervisors and management. In addition, third party audits for social compliance are conducted periodically of our direct suppliers.

Certification

Our direct suppliers are expected and required to comply with laws regarding slavery and human trafficking in the countries in which they are doing business. To ensure that our direct suppliers respect and enforce our company standards, our agreements with those suppliers require them to comply with all applicable laws, regulations and requirements. This compliance includes laws relating to health and safety laws and requires them to operate their facilities in a manner consistent with the highest industry standards. We also reserve the right to request that those suppliers provide documentation to show compliance with their obligations.

Internal Accountability

We have internal accountability standards and procedures for employees and suppliers failing to meet our company standards regarding slavery and trafficking. If we discover employee or supplier compliance problems, we would provide written notice and a specified period to take corrective action. In addition, we maintain the right to investigate and discipline or terminate business relationships with any employee or supplier failing to meet our policies or any legal requirements, including those relating to slavery and human trafficking. Any employee or supplier found to be in noncompliance will be reviewed for compliance action, which may result in termination of the employment or relationship.

Training

Our global supply chain team is tasked with regularly training employees with direct responsibility for supply chain management with respect to mitigating risks within the supply chain of our products, including risks relating to human trafficking and slavery. We are evaluating the establishment of training protocols specific to human trafficking and slavery.