Summary of Results
Notably, 17 out of the 20 companies assess risks of forced labor at potential suppliers prior to entering into contracts with them. For example, adidas has a strict initial assessment process of potential suppliers which includes forced labor and migrant labor concerns. The company estimates that 50% of potential suppliers pass this initial assessment process. Ralph Lauren assesses conditions and policies including passport retention, wage deductions, living conditions, freedom of movement, and recruitment fees at potential suppliers. Notably, Nike's initial assessment of potential suppliers is undertaken using a Manufacturing Index which scores factories on their sustainability performance, including labor practices, equal to other considerations, such as cost, quality, and on-time delivery.
Half of the companies address risks associated with subcontracting. For example, one company aims to address undeclared subcontracting through pre-sourcing assessments of factories' corporate responsibility and production capacities. Six companies require approval of subcontractors, usually accompanied with an undeclared subcontracting policy. Notably, Under Armour's approval process of subcontractors includes the Dhaka Principles for Migration with Dignity. For Hanesbrands, subcontracting is a zero tolerance issue, which the company clearly communicates to its suppliers and, in case of a breach, will lead to termination of contract.
Fourteen companies either demonstrate awareness that purchasing practices such as short-term contracts and/or sudden changes of workload can increase the risk of forced labor or have some good purchasing practices in place (such as longer term contracts). Only five companies demonstrate they understand this link and take steps accordingly to minimize forced labor risks related to purchasing practices.
Nine companies report putting in place longer term contracts, ranging from multi-year contracts to partnerships over decades. For four of the companies, this goes in hand with consolidating their supplier base. Three companies report on training purchasing teams on their impacts and responsibilities with suppliers. Other good practices include regular discussions of production plans with suppliers, longer lead times, or smoothing out production between peak and low seasons.
Twelve companies state that they integrate supply chain standards into supplier contracts, but only two provide evidence of doing so by disclosing the contracts or the contractual language used. Four other companies do not have enforceable contracts with suppliers in place, but require suppliers to adhere to their standards or sign a commitment.
Nine companies require their first-tier suppliers to ensure that their own suppliers implement standards that are in line with the company's supply chain standards. Five companies encourage their suppliers to do so.
Notably, adidas specifies that it encourages suppliers to share the company's standards with their own suppliers, including catering and security firms, and is among a number of companies which extend their monitoring processes to sub-contractors (see monitoring).
Fast Retailing and Inditex disclose their codes also apply to home workers. Inditex specifies its code applies to "all suppliers and factories that make up the company's supply chain, irrespective of which tier they are or what process they do." The company requires suppliers to communicate and enforce its code with subcontractors and report to the company the locations and working conditions of subcontracted homeworkers.