Supply Chain Responsibility: California SB 657

Effective January 1, 2012, the California Transparency in Supply Chains Act of 2010 (SB 657) will require large manufacturers and retailers that sell goods in California to make certain disclosures regarding their efforts to address slavery and human trafficking. The Act is intended to ensure that retail manufactures and sellers are thinking about their efforts to eradicate slavery and human trafficking from their supply chains.

Mohawk is committed to observing high ethical standards in the conduct of its business. Our Supplier Code of Conduct (“Code”) demonstrates our commitment to establishing and maintaining relationships with third parties, including suppliers, that are committed to the same high ethical standards, and that are not linked to activities that would be considered abusive or exploitive, including human trafficking and slavery. The Code supports our internal corporate values by providing guidelines intended to ensure that each of our suppliers is committed to maintaining similarly high standards. Among other things, the Code communicates that as a condition of doing business with Mohawk, suppliers are expected to meet Code requirements applicable to human trafficking and slavery.

Mohawk includes terms in purchase agreements and purchase orders requiring suppliers adhere to the Code as well as applicable laws, regulations and standards. The Code also calls for suppliers’ subcontractors to comply with the terms of the Code. The Code is intended to ensure that materials incorporated into Mohawk products comply with laws and requirements in various contexts including social responsibility. In addition, Mohawk conducts assessments of select new and existing suppliers to verify compliance with the Code – which include supplier questionnaires, management meetings and facility audits.. Those audits may be attended by Mohawk staff or third parties. Mohawk does not currently retain a third party verifier, but reserves the right to retain one and requires suppliers to agree to third party verification.

Mohawk maintains internal accountability standards such that should a violation of the Code be discovered, Mohawk will promptly address the issue with the supplier and require the issue be corrected. These controls include unannounced audits to verify correction and compliance, and the potential for termination of the supplier relationship in the event of violations or failure to adequately remedy violations.

Mohawk provides training on its Supplier Code of Conduct to supply chain employees and management and others responsible for implementing the Code on the requirements, management and enforcement of the Code, including how to minimize the potential risk of slavery and human trafficking in the supply chain.