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California Transparency in Supply Chains Act Disclosure

California Transparency in Supply Chains Act Disclosure

The California Transparency in Supply Chains Act (the “Act”) requires certain businesses to provide disclosures concerning their efforts to eradicate human trafficking and slavery from their direct supply chain for tangible goods offered for sale. The disclosures are intended to provide consumers the ability to make more informed choices about the products and services they buy and companies they support. This is the California Transparency in Supply Chains Act disclosure by Pinnacle Agriculture Holdings, LLC and its subsidiaries, including Pinnacle Agriculture Distribution, Inc., (“Pinnacle,” “we,” and “our”).

Pinnacle is committed to conducting business ethically and with integrity, treating all people with dignity and respect, and complying with applicable laws and regulations. As we state in our Code of Business Conduct (which is binding on all Pinnacle and Pinnacle-affiliated entity employees, officers, and directors), “we value our reputation for integrity and adherence to the highest ethical standards.” Accordingly, Pinnacle does not tolerate forced, indentured, involuntary, trafficked, slave, or child labor (collectively referred to here as “Coerced Labor”).

We strive to only do business with suppliers who share our expectations as they relate to Coerced Labor. Our principles and commitments are embodied in our Code of Business Conduct (“Code of Conduct”), Code of Business Conduct for Suppliers (“Supplier Code”), and Standard Terms and Conditions. That said, given the nature of this Disclosure it is important to note that (1) we only operate within the United States; and (2) rarely are the importer of record for the products we sell that are manufactured outside of the United States.

VERIFICATION.

Verification Protocols.
We take certain steps to evaluate and address the risks of Coerced Labor in the supply chains of our various products. More specifically:
Initial Expectation-Setting. Because we work within a diverse value chain of suppliers, we recognize that each entity in our supply chain has its own independent duty to comply with applicable laws, rules and regulations. That said, our first step in the verification process is to set clear expectations for our active and direct suppliers (“Suppliers”) through the contracts and related documentation they are expected to review, acknowledge, and comply with. It is our expectation that the standards we set forth in our suite of agreements provide a sound starting point in the process of assessing the risk of human trafficking and slavery in our supply chain.

For example, our Supplier Code “sets forth basic principles for supplier conduct when working with Pinnacle Operating Corporation and its subsidiaries.” The Supplier Code, moreover, in explicit terms requires Suppliers to “conduct business in a way that is not complicit in any human rights abuses, including child labor, slave labor and human trafficking.” Relatedly, it provides that “Suppliers will comply with all applicable laws on work hours and overtime, as well as applicable laws on wages and benefits” and mandates a “safe and healthy workplace.” Finally, the Supplier Code requires Suppliers to comply with “all applicable laws and regulations in the provision of products or services to Pinnacle.” Similarly, our Standard Terms & Conditions require all Suppliers to guarantee that “[a]ll goods and services covered by this Order must be produced or performed in accordance with applicable local, state and federal laws.”

Flow-Through. The Supplier Code directs Suppliers to “apply these or similar principles to the subcontractors and suppliers they work with in providing goods and services to Pinnacle.”

Retained Compliance Advisor. As part of our process, we rely on our outside legal advisor Perkins Coie’s Supply Chain Compliance and Corporate Social Responsibility Practice to counsel us on an as-needed basis on compliance-related issues, including those related to identifying, assessing, and managing the risk of Coerced Labor in our supply chain.

Ongoing Compliance with our Expectations. We reserve the right to require our Suppliers to independently acknowledge or certify their obligations to comply with the standards set forth in our Supplier Code and Standard Terms and Conditions, including those related to Coerced Labor.

Independent Third-Party Auditors. As noted at the outset, we do not operate internationally and are rarely the importer of record for the products we sell. We, therefore, have a limited geographic footprint and do not use independent third-party auditors to audit our supply chain.

Labor Brokers. We do not have operations outside of the United States and, therefore, do not have non-US labor brokers.

Supplier Hotline Reporting. Our supplier hotline is an integral part of our efforts to evaluate and address the risks of Coerced Labor in the supply chains of our various products. Our Supplier Code provides “Suppliers who believe that a Pinnacle employee or anyone acting on behalf of Pinnacle has engaged in illegal or otherwise improper conduct with respect to their business with the supplier should report the matter to Pinnacle. Suppliers should also report any potential violation of this Code.” The Supplier Code goes on to state that “Reports may be made via email at suppliercodeofconduct@paghllc.com.

SUPPLIER AUDITS

While “verification” is designed to identify, assess, and manage supply chain risks, “auditing” refers to activities a company takes to evaluate ongoing supplier compliance with existing company standards for Coerced Labor in its supply chain (that said, there is, of course, a certain amount of necessary overlap between these two concepts). As noted above, from the outset of our supplier relationships we are very clear that we only want to work with Suppliers who share our compliance commitment and values.

Audit Rights. Our Standard Terms and Conditions require Sellers to agree that Pinnacle has “the right at any reasonable time to audit, at Seller’s expense, Seller’s books, records, receipts, correspondence and accounts insofar as they relate to matters covered by [the Purchase Order].” The Supplier Code, moreover, informs all Suppliers that Pinnacle “reserves the right to investigate any instances of a supplier’s non-compliance with this Code of which it becomes aware.”

Supplier Implementation of Systems and Controls. The Supplier Code provides that “Pinnacle expects suppliers to implement systems and controls to promote compliance with applicable laws and the principles set forth in this Code, including policies, training, monitoring and auditing mechanisms.”

Assessment and Monitoring. According to the Supplier Code, “Suppliers are responsible for monitoring and documenting their compliance with this Code and their efforts to promote compliance within their supply chain. Pinnacle reserves the right to investigate any instances of a supplier’s non-compliance with this Code of which it becomes aware.”

Certification. We reserve the right to ask our Suppliers to certify that the materials incorporated into our products comply with the laws regarding Coerced Labor in the country or countries in which our Suppliers are doing business. That said, and given our limited geographic footprint, we do not currently operate a certification system.

Maintenance of, and Access to, Records. Our Supplier Code requires Suppliers to “keep – and provide to Pinnacle upon request – accurate records of all matters related to the supplier's business with Pinnacle.” Our Standard Terms & Conditions similarly provide that we “have the right at any reasonable time to audit, at Seller’s expense, Seller’s books, records, receipts, correspondence and accounts insofar as they relate to matters covered by this Order and charges made under this Order. Seller agrees to preserve such materials and documents for at least three (3) years after completion of services, repairs or materials hereunder.” Finally, our Code of Business Conduct states that “Pinnacle's business records should be retained or destroyed in accordance with legal requirements, instructions from Pinnacle's General Counsel and Pinnacle’s policies and procedures.” It goes on to specify that “[w]e must not alter, distort, conceal or destroy any document, record, or object for the purpose of impeding or obstructing any investigation conducted by Pinnacle or any government or regulatory agency.”

Our Additional Actions to Encourage Ongoing Supplier Compliance and Accountability.

Anonymous Supplier Reporting. Our Supplier Code states: “Suppliers who believe that a Pinnacle employee or anyone acting on behalf of Pinnacle has engaged in illegal or otherwise improper conduct with respect to their business with the supplier should report the matter to Pinnacle. Suppliers should also report any potential violation of this Code. Reports may be made via email at suppliercodeofconduct@paghllc.com.”

Supplier Remediation. The Supplier Code further requires that “Suppliers who are not in compliance with this Code are expected to implement corrective actions or they may not be considered for future business.”

Compliance Guardian Services. Our Retained Compliance Advisor (discussed above) is available to our Suppliers to answer questions or concerns they may have about our requirements and expectations.

SUPPLIER CERTIFICATION

As discussed above, our Suppliers represent in writing, by executing our supplier agreements, that they are - and on an ongoing basis will continue to be - in compliance with our standards relating to Coerced Labor. We reserve the right to require a separate certification in this regard.

Products and Services Free of Coerced Labor. As outlined above, our Suppliers through our Standard Terms and Conditions and Supplier Code confirm their compliance with the Supply Chain Standards and, thereby, promise to provide Pinnacle with products and services that are free of Coerced Labor.

Compliance with Applicable Laws. The Code of Business Conduct states that all employees and management “must understand the laws (including statutes, ordinances, rules, regulations and other legal requirements) that apply to Pinnacle’s business and our business activities. This includes all applicable federal, state, local and foreign laws.” It goes on to state that, “[a]lthough we are not expected to know the details of all laws, we must recognize when to seek advice from our supervisor or Pinnacle’s General Counsel. We must adhere strictly to both the letter and the spirit of the law.” Similarly, our Standard Terms & Conditions require our Suppliers to verify that “[a]ll goods and services covered by [the purchase order] must be produced or performed in accordance with applicable local, state and federal laws.”

Supply Chains Free of Trafficked and Slave Labor. As noted above, we also retain the right to periodically send communications to our Suppliers reminding them of their ongoing obligation to comply with our Supplier Code and Standard Terms and Conditions, including those terms dealing with Coerced Labor, and instructing them to immediately notify us if and when they have reason to believe they may be in violation of these expectations and requirements.

COMPANY-INTERNAL ACCOUNTABILITY

Internal Accountability Standards & Compliance Monitoring. Our internal accountability standards and expectations for employees, officers and directors are set forth in our Code of Business Conduct. More specifically, our Code of Conduct provides that “we value our reputation for integrity and adherence to the highest ethical standards” and sets forth our broader commitment to conducting business in compliance “with all applicable laws, rules and regulations and all of Pinnacle’s policies and procedures.” Pinnacle, moreover, does not “tolerate harassing actions, comments, inappropriate physical contact, sexual advances or any other conduct that is intimidating or otherwise offensive or hostile” and “will not take unfair advantage of anyone through manipulation, concealment, abuse of privileged information, misrepresentation of material fact, or any other unfair dealing practice.”

Preventative and Corrective Action. In our Code of Business Conduct, we set forth our expectation that all employees “must take appropriate actions upon the discovery of illegal or unethical behavior among our people in the work environment” and require all employees to “cooperate with legal and ethical compliance audits and investigations.” According to the Code of Business Conduct, “[i]f we know or suspect that a violation of law has occurred, we must promptly report it to our supervisor, Pinnacle’s General Counsel or Pinnacle’s Ethics Line.”

Non-compliance can result in corrective action, up to and including termination of the Supplier’s contract, depending on the frequency and severity of identified infraction(s). We may also exercise our right to notify the appropriate authorities of potential violations of applicable laws, rules or regulations.

Company-Internal Hotline Reporting. Our expectations when it comes to prompt reporting known or suspected misconduct are clear. As our Code of Business Conduct instructs, “[o]ur people will report any violation of law or this Code of Business Conduct. . . . [F]ailure to abide by this Code of Business Conduct is considered a serious violation and is justification for disciplinary action up to and including immediate termination.”

In support of our reporting expectations we maintain an ethics line reporting structure at https://www.corporatecompliancepartners.com/Pinnacle_Agriculture/indexssl.php.

Questions, concerns, or reports can also be conveyed:

  • By email: generalcounsel@pinnacleag.com or pinnacleag@answernet.com
  • By letter:
    Pinnacle Agriculture Holdings, LLC
    Attention: General Counsel
    1880 Fall River Drive, Suite 100
    Loveland, CO 80538
  • By telephone: 901-462-2774 or 877-459-9946
Our ethics line, consistent to the expectation set forth in the Code of Business Conduct, allows all who report to remain anonymous. We are committed to investigating and promptly responding to concerns, and we enforce a strict anti-retaliation policy for good faith reporting.

 

TRAINING AND AWARENESS Given our limited geographic footprint (discussed above), we do not currently provide our employees and management who are directly responsibility for supply chain management with training on Coerced Labor that focuses particularly on mitigating risks within our supply chain. That said, all employees, as well as members of management and the board, are expected to have reviewed our Code of Conduct, which sets forth our various standards and expectations when it comes to Coerced Labor.

CONCLUSION We are committed to conducting business in an ethical manner, and we strive to work with Suppliers that share the same values and commitments. Even though we only operate within the United States and rarely are the importer of record for the products we sell, we will continue to monitor and assess our evolving supply chain and evaluate initiatives that may support our and our suppliers’ commitment to supply chains free of Coerced Labor.