APPAREL

Themes Key Findings

2018 Apparel & Footwear

The 43 Apparel and Footwear companies were assessed across the benchmark's seven themes, which were developed to capture the key areas where companies need to take action to eradicate forced labor from their supply chains: commitment and governance; traceability and risk assessment; purchasing practices; recruitment; worker voice; monitoring; and remedy. There are a total of 23 indicators across the seven themes. Each theme is weighted equally and determines the company's overall benchmark score on a scale from 0 to 100.

37

Overall Score 2018 Apparel & Footwear
49 Theme Score

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.

Auditing Process

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.

Audit Disclosure

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.

Auditing Process

The company audits its suppliers to measure compliance with applicable regulations and with its supply chain standards. The process includes non-scheduled visits, a review of relevant documents, interviews with workers, and visits to associated production facilities and related worker housing. The company also audits suppliers below the first tier.

The company has a supplier audit process that includes: (1) non-scheduled visits; (2) a review of relevant documents; (3) interviews with workers; (4) visits to associated production facilities and related worker housing; and (5) supplier audits below the first tier.

Low: 0
High: 100
59

Audit Disclosure

The company publicly discloses information on the results of its audits. This includes the percentage of suppliers audited annually, the percentage of unannounced audits, the number or percentage of workers interviewed, information on the qualification of the auditors used, and a summary of findings, including details regarding any violations revealed.

The company discloses: (1) the percentage of suppliers audited annually; (2) the percentage of unannounced audits; (3) the number or percentage of workers interviewed during audits; (4) information on the qualification of the auditors used; and (5) a summary of findings, including details regarding any violations revealed.

Low: 0
High: 100
39

Audit Process: Notable Example

Ralph Lauren

Ralph Lauren states that 70% of its audits were unannounced and that the percentage of workers interviewed during each audit is based on the size of the factory, and should be 5% or more (i.e., 25 interviews at a factory with 500 workers).

Recommended Action

Audit Process

Undertake unannounced audits and audit suppliers below the first tier.