As human rights issues in our industry become more complex, we are taking a proactive approach to protecting the rights, dignity and livelihoods of the nearly one million workers in our supply chain. Our Chief Risk Officer holds overall responsibility for our factory assessment program, which is central to managing risks in our supply chain and addressing any human rights violations. At the core of our approach is partnering with suppliers to improve performance, in line with A Shared Commitment.
We evolved our global human rights program in 2014, bringing operational excellence and increased consistency to the way we source our products and monitor supplier performance. In 2015, we took our program to the next level with three key initiatives: strengthening our supplier partnerships, driving operational excellence and moving beyond compliance by enhancing our remediation and capacity-building. In this way, we aim to achieve a lasting impact for workers in our supply chain and industry. Our efforts were recognized on the 2015 Corporate Responsibility Magazine “100 Best Corporate Citizens List," with the #2 ranking in the Human Rights category.
Our factory assessment is the first step on a journey to achieve continuous improvement with our suppliers. Our CR assessors evaluate finished good factories with ratings based on a traffic light-like system. The rating feeds into our sourcing decisions and determines how regularly we conduct subsequent assessments. High-rated factories receive “green” or “yellow” ratings. An “orange” rating indicates that action is required to help the supplier improve, while the “red” rating results in termination of the business relationship with the factory through a responsible exit.
Throughout the assessment process, we look beyond typical auditing by partnering with our suppliers to address shared goals. We share our expectations at the outset, giving factory managers the opportunity to ask questions. We then conduct a thorough check of the factory's data management systems, inspect every area of the factory and seek workers' views in confidence. Finally, we present our findings to the managers and, together, review them. We encourage an open discussion and collaborate to determine how the factory will resolve any issues.
We are increasingly working with our suppliers to help them build systems to better and more effectively manage human rights and environmental risks within their factories. In 2015, we worked hand-in-hand with suppliers to resolve pressing issues, conducting over 2,150 factory assessments and visiting approximately 1,400 factories outside of the usual assessment process to share practical strategies to improve working conditions and employment practices. Additionally, we delivered over 160 sessions and 49,575 hours of training to approximately 7,525 internal and external partners to promote change, covering topics such as fire safety, human rights implementation, worker-management relations, chemical management, assessment practices and data management.
In particular, our CR and sourcing teams collaborated with suppliers to explore the reasons why issues occur, including the role of purchasing practices. These efforts are informing our thinking on responsible purchasing, as we begin to help associates understand how forecasting and timing of order placement impact suppliers’ production capabilities, and in turn, the workers who make our products.
In order to help our suppliers make lasting improvements that go beyond responding to assessment feedback, we have enhanced our capacity-building program, as follows:
We are also piloting a number of social impact programs to enhance workers’ quality of life, including initiatives to support worker health in Vietnam and provide professional skills training for workers in China. We will expand and integrate successful programs in the coming years.
To support these efforts, our internal CR assessors will help develop and strengthen suppliers’ skills and knowledge by evolving their approach. For example, assessors are now making follow-up visits to help suppliers implement remediation activities identified in their CAPs and following up with a more regular and mandatory cadence. The information we gain will further inform our discussions on responsible purchasing practices.
We continuously aim to improve the effectiveness and efficiency of our assessment programs. To better monitor supplier performance, we rolled out a new data management system globally and evaluated opportunities to further improve our assessment tool, seeking feedback from key stakeholders such as the FLA. We are now testing new features through two pilot programs:
We are proud of what we accomplished in 2015. We know that moving beyond compliance is a journey requiring ongoing commitment, and we realize there is a long way to go. In 2016, we will continue to refine our assessment program, by incorporating more environmental criteria into our assessment tool, conducting a mapping of our level 2 suppliers (including mills, dye houses and trim suppliers) and starting to pilot assessments with these suppliers in partnership with our Global Supply Chain team. We will empower our suppliers by providing practical remediation strategies, piloting elements of our capacity-building program and expanding the most promising social impact pilots. Additionally, we will participate in the Social and Labor Convergence Pilot, an initiative facilitated by the SAC that seeks to bring together brand owners, manufacturers, civil society and other stakeholders to create a unified approach to social and labor assessments. We are also starting to address the complex issue of fair and living wages in partnership with the FLA, and plan to launch a fair compensation plan by the end of 2017.
|Assessments||Total (Not Subcategory)||2,167|
|Non-Assessment CR Engagement||1,397|
|Factory-Specific Capacity Building or Investigative Visit||250|
|Training: Person-Hours||Total (Not Subcategory)||49,577|
|Training: Attendees||Total (Not Subcategory)||7,524(1)|
In Sri Lanka, we partner with “best-in-class” factories that are leading the field in lean manufacturing and sustainable practices. These suppliers are among the first in our Gold Program, which recognizes suppliers who take ownership over identifying and remediating issues in their factories. For example, one supplier constructed the world’s first purpose-built factory certified Platinum by Leadership in Energy and Environmental Design (“LEED”) – the highest rating from the most widely used third-party verification for green buildings. It is also helping its largely female workforce develop new skills to advance their careers. Another supplier generates wind and hydroelectric power on-site, sharing the excess with Sri Lanka’s national grid. Its flagship factory uses 48% less energy and 70% less water compared to a conventional facility. It also contributes to the surrounding community by investing in local health services and schools. We are proud to work with suppliers who share our integrated CR approach and look forward to strengthening and building similar partnerships in the future.
We are piloting a number of social impact projects in our supply chain that have benefits into the surrounding communities beyond our direct operations. One example is an FLA initiative to better understand and prevent child labor in Turkey’s cotton industry. This is an area of growing concern as more Syrian refugees seek employment in the country. We are engaging with two suppliers in Turkey to gain improved visibility of their labor practices, raise awareness of the issue and support them in requesting information from their raw material suppliers. Together with the FLA and other participating brand owners, we seek to increase transparency through collective action and make a difference in the industry’s practices. The knowledge we gain will also inform our buying decisions and remediation strategies. We plan to continue testing social impact programs and expand on the initiatives that yield the greatest impact.