The Transaction and Sourcing Knowledge Act (TASK Act) would require the Securities and Exchange Commission (SEC) to mandate new disclosures by publicly traded companies. Specifically, it would compel reporting on (1) sourcing and due diligence activities related to supply chains for products imported into the United States that are directly linked to forced labor in Xinjiang, China; (2) transactions with companies that are on the Commerce Department’s Entity List or designated by the Treasury Department as Chinese Military-Industrial Complex (CMIC) companies; and (3) for U.S. companies with facilities in China, annual information about whether a Chinese Communist Party (CCP) committee operates within the company and a summary of actions the committee may have participated in. The purpose appears to be to increase transparency around forced-labor risks and China-related corporate governance, with potential implications for compliance costs, investor information, and how companies manage supply chains and operations tied to China.
Key Points
- 1Requires SEC to mandate reporting on sourcing and due diligence for supply chains linked to Xinjiang-forced-labor products imported into the U.S.
- 2Requires reporting of transactions with entities on the Commerce Department’s Entity List or designated by the Treasury as Chinese Military-Industrial Complex (CMIC) companies.
- 3For U.S. companies with facilities in China, mandates annual disclosure about the existence of a Chinese Communist Party committee within the company’s operations and a summary of related actions/decisions.
- 4The reporting would be part of the SEC’s guidance or oversight related to environmental, social, and governance (ESG) matters for publicly traded companies.
- 5The bill sets requirements but does not become law by itself; it would rely on the SEC to implement the specific reporting standards and formats.