Supply Chain Transparency

The California Transparency in Supply Chains Act of 2010 (SB 657) requires manufacturers that do business in California to disclose their efforts to eradicate slavery and human trafficking from their supply chains.

California Resources Corporation and its subsidiaries and joint ventures (collectively, “CRC”) operate exclusively in California. All of our workers, properties, facilities and investments are located in California and all of our production of oil, natural gas, natural gas liquids and electricity comes from California. Working exclusively in California means that all of our operations are subject to California’s world-leading safety, labor, human rights and environmental standards. In particular, our operations are governed by comprehensive laws, regulations and company policies that recognize and value the diversity of our workforce, require fair labor standards and protect against forced or compulsory labor, child labor, discrimination and harassment. Although we don’t believe that CRC is a manufacturer as defined in the Act, we endorse the state’s efforts to end the scourge of slavery and human trafficking that decimates so many families around the globe who aren’t afforded California’s legal protections, including several countries that California increasingly depends on for imported energy.

CRC seeks to build relationships with suppliers and vendors that are committed to compliance with CRC’s policies, including those relating to human rights, fair labor standards and ethical business conduct. We expect — and our standard contracts require — suppliers and vendors to operate ethically and to comply with all contract terms, laws and CRC’s policies. We have a statewide Project Labor Agreement with the California Building and Construction Trades Council and its 300 unions with over 450,000 members, which ensures that our facilities are built and maintained with a safe, highly qualified workforce. Our drilling and well servicing is typically performed by dedicated contractor crews based in California whose work on our sites is reviewed or overseen by CRC employees. The equipment and materials we purchase are typically manufactured by specialized companies to detailed engineering specifications. Accordingly, we believe there is no appreciable risk of slavery or human trafficking in our supply chain. We nonetheless have a variety of mechanisms in place to assess and reduce risks in our supply chain, including:

CRC’s Business Ethics and Corporate Policies

CRC has a number of policies and systems in place that are designed to ensure CRC’s business practices are consistently effective and highly principled. Our Business Ethics and Corporate Policies (the “Policies”) delineate our commitment to promoting compliance with all applicable laws, rules and regulations, which include those prohibiting forced or compulsory labor, child labor, discrimination and harassment and those requiring fair labor standards.

Expectations for Suppliers and Vendors

CRC’s standard purchasing terms require suppliers to comply with all applicable laws, rules and regulations, which include laws governing human rights, labor and employment, and with the Policies. Suppliers and vendors providing goods and/or services to CRC are provided a copy of the Policies and are required to comply with their terms.

Employee Training

The Policies are provided to all CRC employees and all employees, including those with supply chain responsibilities, undergo mandatory annual training on the Policies. CRC’s training reinforces our company-wide commitment to operate in accordance with all applicable laws, rules and regulations and to sustain a diverse, inclusive and empowered workforce comprising our employees and those of our suppliers, vendors and joint ventures.

Verification and Supplier Audits

CRC’s standard supplier contracts allow CRC to conduct internal and external compliance audits. We apply a risk-based approach to determine which suppliers are subject to audit by our internal procurement or audit resources. As noted above, we believe there is no appreciable risk of slavery or human trafficking, given that we operate exclusively in California under the state’s world-leading standards. However, we regularly evaluate our risk profile and adjust the audit requirements to reflect perceived changes in the level of risk.

Accountability

CRC’s standard supplier agreements require our suppliers and vendors to commit that they will comply with all applicable laws, rules and regulations, which include laws governing human rights, labor and employment. A supplier’s or vendor’s failure to comply with this provision would constitute a breach of contract and may be subject to appropriate remedies, including termination of the supplier relationship. Employees who fail to comply with the Policies are subject to disciplinary action, up to and including termination of employment.