California Transparency in Supply Chains Act of 2010

The California Transparency in Supply Chains Act of 2010 (SB 657) requires certain companies manufacturing or selling products in the State of California to disclose their efforts (if any) to eradicate forced labor and human trafficking from their direct supply chains for goods they offer for sale.

Forced labor and human trafficking can take many forms, including child labor. The Kroger Co. and its affiliated companies doing business in California, including Ralphs Grocery Company, Food 4 Less, Foods Co. and Quik Stop (collectively, “Kroger”), have a zero-tolerance policy for both forced labor and child labor used in the manufacture of all products that they sell.

I. Certification

In order to work with Kroger, vendors and their contractors in the U.S. and other countries are expected to operate in a manner that respects the rights of people and to abide by Kroger’s Code of Conduct. This Code of Conduct requires that vendors and their contractors who provide products to Kroger not engage in any labor practices that violate the laws and regulations of the country where the products are manufactured or assembled and not engage in any unsanitary or unsafe labor conditions. This Code of Conduct, which follows the U.S. Department of Labor regulations and the Fair Labor Standards Act, provides, among other things, that Kroger’s suppliers and its contractors may not use or support child, indentured, involuntary, or prison labor in the manufacture of the products sold to Kroger.

The Kroger Code of Conduct is an integral part of the Kroger Standard Vendor Agreement, Kroger Purchase Orders, Import Letters of Credit, and Kroger’s form Services and Consulting Agreements.

II. Verification and Audit

Vendors and their contractors must maintain written records evidencing compliance with the provisions of the Code of Conduct and must make those records available to Kroger upon request.

Kroger directly imports general merchandise for sale under its private labels; Kroger requires 100% of all foreign plants that supply these Kroger private label products and its suppliers of foreign farmed or caught seafood to certify compliance with Kroger’s Code of Conduct. This may include providing Kroger with a copy of a third party audit, which may be announced or unannounced, evidencing compliance with the Code of Conduct, including its child and forced labor prohibitions.

The Company is a member of various trade associations that audit their members for social responsibility matters. Fred Meyer and Littman Jewelers, affiliates of The Kroger Co., are certified members of the Responsible Jewelry Council (RJC). Fred Meyer Jewelers was the first U.S.-based retailer to achieve this distinction. The RJC is a non-profit organization recognized as a world leader in protecting consumer confidence in the jewelry industry. It verifies that members operate with responsible ethical, human rights, social and environmental practices.

III. Training

Category Managers in the General Merchandise department receive annual training on the Code of Conduct, which includes updates and discussions of child labor laws and their importance in sourcing goods.

IV. Enforcement

Any employee who fails to abide by the forced and child labor provisions of Kroger’s Code of Conduct will be subject to disciplinary action, which may include termination. Kroger may terminate its relationship with a vendor found to be using child or forced labor to produce products that it sells (or attempts to sell) to Kroger. That vendor will also be subject to damages resulting from breach of its agreement with Kroger.