Our factory audit process

We take our factory and vendor relationships very seriously. Every factory that produces for our private label brands is expected to receive an annual audit for social and environmental compliance.

Audits evaluate things like workplace conditions, wages, hours worked, health & safety, and non-discrimination, among other factors. Our standards and expectations are built from local law and internationally accepted norms, including guidance from the International Labor Organization.

As of August 1, 2020 (the start of our 2021 Fiscal Year), we work with 121 factories in 22 countries. These factories employ over 49,000 people, 62% of them being women. You can view our factory list here.

Gender Representation

Graph showing 62% women

Our factory audit process

Before we engage in a new partnership, our vendors sign our Vendor Code of Conduct and we conduct a full social and environmental factory audit. We started auditing our private label factories in 2017, using independent, third-party, expert auditors to assess a factory’s compliance with our Responsible Sourcing expectations. Audits are conducted both with and without notice, and are aligned with local law and international labor standards. Where there are discrepancies between the two standards, the more stringent requirement is applied. We strive to audit all factories producing goods under our private label brands at least once per year.

Number of factory audits:

Number of factory audits

Our private label vendors must provide full transparency into all factories producing our goods. Transparency and integrity are of utmost importance to us, and we hold vendors accountable to be open and honest with us about the operations of the factories. Factories must provide us and our audit partners with access to workers, accurate and complete records, and factory work areas, when requested.

Transparency over time:

Transparency over time

Our Responsible Sourcing Team reviews every audit and determines whether the factory is considered Low Risk, Medium Risk, or High Risk, based upon the findings presented. A passing audit is either Low Risk or Medium Risk. Factories rated as High Risk after an initial audit will not be approved.

We categorize non-compliances as Minor, Major, High Risk, and Zero Tolerance. Definitions for these levels are as follows:

  • Minor.
    Isolated or singular non-compliance with standards that are not likely to cause immediate harm to workers or otherwise, and that are not systematic or likely to repeat.
  • Major.
    A significant failure in the management system—one that affects the ability of the facility to meet the standard(s). Without root cause remediation, repeated non-compliance over time will likely result. Or, non-compliance(s) to standards deemed likely to result in an intolerable risk to worker health and safety, the community, or the environment, and requiring immediate remediation.
  • High Risk.
    A grievous breach of ethical standards, or exploitative violations of worker rights, or a situation, practice or event that poses significant immediate harm to workers, the community, or the environment.
  • Zero Tolerance.
    A violation so serious, threatening such harm to workers, the community, or the environment, that it warrants immediate termination of a factory contract, such as forced labor, child labor, and unauthorized subcontracting.

We partner with our factories to develop Corrective Action Plans (CAPs) to help them improve over time. Our CAPs include a root cause analysis, detailed plan to bring the finding into compliance, the individual responsible for managing the plan, and an agreed-upon timeline.

There have been cases where we did not approve factories for production due to audit performance, and we exit factories which are unable and/or unwilling to meet our expectations.

NUMBER OF FACTORIES NOT APPROVED:

NUMBER OF FACTORIES NOT APPROVED

In 2018, we created a more rigorous audit grading system, so we could capture more significant data. In doing so, we are able to allocate resources more efficiently to better serve our factories. The chart below represents the top 10 non-compliance categories (i.e., in FY20, 18% of our non-compliance findings were related to Hours of Works). Being able to track our most common non-compliance categories allows us to better focus our work to improve factory compliance.

Non-Compliance Category as percentage of non-compliance

Non-Compliance Category as percentage of non-compliance