Summary of Results
Most companies in the benchmark disclose an audit process for their suppliers that includes labor standards. However, company disclosure tends to focus on reporting on the audit process rather than disclosing outcomes of the audits and how they work in practice. It is encouraging that 20 out of 43 companies disclose that some audits have been conducted on suppliers below the first tier.
The majority of the companies (36 out of 43) disclose a supplier audit process that includes assessment against social standards, such as labor rights. However, fewer companies report on the detail of such processes. Eighteen companies describe what documents they review as part of audits and 20 report that audits include assessments of worker housing or dormitories when visiting site facilities. For example, Michael Kors discloses that it will review records of all migrant workers at a facility, including contract terms, copies of employment agreements, employment history, anticipated and actual date of return, any recruitment fees that have been paid, and agreements with agencies or brokers. Puma discloses detailed requirements for break areas, canteens, changing rooms, dormitories, and other welfare facilities. It reports that it inspects dormitories, shower and toilet facilities, kitchen and dining areas, and any facilities outside of the factory premises during audits. Twenty-nine companies disclose that they conduct interviews with workers as part of their audits. Burberry, for example, conducts confidential interviews with workers selected at random, but it states that those interviewed must include union and worker representatives and migrant workers. Ralph Lauren reports that, where it audits a supplier that employs foreign migrant workers, it expands the scope of its audit to ensure that there is a proportionate number of migrant workers included in both document reviews and worker interviews. It further states that, as part of its audits, it conducts worker interviews in the workers' language, individually and with a group.
Unannounced audits appear to be commonly used in the sector, with 25 out of 43 companies disclosing that they conduct unannounced audits. Notably, 20 companies disclose that they audit some suppliers beyond the first tier of their supply chains. VF discloses that it audits some strategic second-tier suppliers, including cutting facilities, sewing plants, screen printers, embroiderers, laundries, licensee factories, and key fabric mills.
There is a pattern in company disclosure across themes which shows that, while companies often report on the policies or processes they have in place, there is a lack of detail disclosed on how such processes work in practice. Only 17 companies disclose the percentage of suppliers audited annually; 11 companies report the number or percentage of workers interviewed during audits and 11 disclose the percentage of unannounced audits. For example, Adidas discloses that, in 2017, 46% of audits were unannounced, compared to 26% in 2016.
More than half of the companies (23 out of 43) report on the quality of their auditors, disclosing information on the expertise of their auditors in relation to forced labor and human rights. Lululemon discloses that its in-house auditors have a minimum of ten years' experience with combined qualifications including the Social Accountability International SA8000 Standard, Responsible Business Alliance (RBA), and Worldwide Responsible Accredited Production (WRAP); the auditors receive training annually and have also undertaken forced labor-specific training.
Eighteen companies disclose a summary of their audit findings, including detail on any violations discovered during supplier audits. Gap, for example, states that it found 0.4% of violations were related to forced labor across 855 supplier facilities in 2017. It also discloses audit findings relating to an absence of contracts for migrant workers and workers that did not have the required travel or employment documentation. Since 2016, nine companies have disclosed more information on audit outcomes, including Lululemon which has disclosed audit outcomes for its second-tier suppliers.