1. Monitoring Our Supply Chain
Introduction
Hbc has one of Canada’s most comprehensive social compliance programs. Each year, we attempt to expand this program to include additional areas of importance to our customers and society at large. For example, in 2007 we added environmental compliance to our audit process. In 2008, we will complete audits of our top vendors for several sensitive commodity areas: toys, Olympic apparel and kidswear.
Our audit process starts with the fundamental belief that we can make a difference in the factories from which we source merchandise. We have a thorough process in place that starts with educating our stakeholders; then we ask vendors to comply with Hbc’s Vendor Code of Conduct, which is based on the International Labour Organization’s conventions.
Hbc Vendor Code of Conduct
A. Expected Ethical and Business Standards
Hbc fully intends to conduct its business in a socially responsible manner and we are determined to build our business with our business partners and their employees based on the highest ethical principles of trust, teamwork, honesty and respect for the rights and dignity of others. We require our business partners and their employees to endorse a set of ethical standards compatible with our own and encourage and favour those who fully conform to standards of business practice that are consistent with our principles. We will only engage business partners who demonstrate a commitment to contribute to the improvement of community working conditions and strive to meet our requirements stated in this Code.
B. Legal Expectations
All business partners and their employees must comply with all contract provisions, legal requirements and standards of their industry under local, regional and national laws and the regulations of the countries in which the business partners are doing business. Should the legal requirements and the standards of the industry conflict, business partners and their employees must comply with the higher standard in the country in which the products are manufactured. Nothing in this Code is to be construed as encouraging, authorizing or condoning any action by any company or individual that breaches any applicable law or regulation, directly or otherwise. By extension, the provisions of this Code are not to be read as creating or implying meanings beyond those specifically explained in this document.
C. Employment Standards
No Forced Labour
Business partners must maintain employment on a voluntary basis, respecting the right of employees to decide to work or not. Business partners shall not use forced labour, whether in the form of prison labour, indentured labour, bonded labour or otherwise in the manufacture of, or in their contracting, subcontracting or other relationships for the manufacture of, their products.
No Child Labour
The use of child labour is not permissible. Workers can be no less than 15 years of age (or 14 where the law of the country of manufacture allows), or the age at which compulsory schooling has ended, whichever is greater. In situations involving hazardous working conditions, we require that workers be at least 18 years of age. We support the development of legitimate workplace apprenticeship programs for the educational benefit of younger people as long as they are not being exploited or given jobs that are dangerous to their health or safety. No child or younger person of compulsory school age should be employed during school hours and the combined time spent on school, transportation and at work cannot exceed 10 hours a day.
No Harassment or Abuse
We require that every employee shall be treated with respect and dignity. No employee shall be subject to any physical, sexual, psychological or verbal harassment or abuse, including corporal punishment.
Freedom of Association and Collective Bargaining
Management practices must respect the right of employees to free association and collective bargaining where applicable.
No Discrimination
Hbc recognizes and respects the cultural differences around the world. We will favour business partners who ensure that no employee is subject to any discrimination in employment, including hiring, salary, benefits, advancement, discipline, termination or retirement, on the basis of gender, race, religion, age (other than normal hiring or retirement limitations), disability, sexual orientation, nationality, political opinion, union participation, social or ethnic origin or membership in any legal organization. Employment decisions will be made on the basis of knowledge, skill, efficiency and ability to do the job and meet its requirements.
Health and Safety
Hbc will only utilize business partners who provide safe and healthy work environments for their employees. Factories producing Hbc merchandise shall provide adequate first aid supplies, fire exits and safety equipment, well-lit workstations and clean restrooms, and ensure that all are well maintained and in good working order. Worker housing, where provided by the business partner, must meet a reasonable standard of health and safety.
Wages and Benefits
Hbc will seek business partners who share our commitment to the betterment of wage and benefit levels to address the basic needs of workers and their families so far as possible and appropriate in light of national economic conditions. Business partners are required to pay the higher of the prevailing industry wage, the minimum wage or a wage that results in a decent living. Business partners shall provide all legally mandated benefits.
Hours of Work/Overtime
Business partners shall maintain reasonable employee work hours in compliance with local standards and applicable national laws of the countries in which business partners do business. In the absence of exceptional circumstances, Hbc will favour business partners who utilize less than a sixty-hour workweek and not those who, on a regularly scheduled basis, require employees to work in excess of a sixty-hour workweek. Where this is not established at a lower level by local laws, Hbc defines a standard workweek to be not more than 48 hours and considers all hours in excess of this amount to be overtime, whether mandatory or not. Business partners are required to compensate employees for overtime hours, including at such premium rates as are legally required in the country of manufacture or, in those countries where such laws do not exist, at a rate at least equal to their regular hourly compensation rate. Unless exceptional circumstances exist, employees should be permitted at least one day off in every seven-day period, and leave privileges.
Resolution of Disputes
Business partners should incorporate a dispute resolution process as part of their management practices to allow employees to voice workplace grievances without fear of reprisal.
Environmental Requirements
Hbc will favour business partners who conduct their business using progressive environmental practices and take active steps to preserve and protect the well-being of the environment. All business partners must adhere to all applicable environmental laws and regulations regarding protection and preservation of the environment in their country.
Transshipment
Vendors will comply with applicable customs importing laws and, in particular, will establish and maintain programs and documentation to support country-of-origin production verification to prevent the illegal transshipping of merchandise.
International Labour Organization (ILO)
The ILO’s governing body has identified eight conventions as fundamental, covering subjects that are considered as fundamental principles and rights at work: freedom of association and the effective recognition of the right to collective bargaining; the elimination of all forms of forced or compulsory labour; the effective abolition of child labour; and the elimination of discrimination in respect of employment and occupation. These principles are also covered in the ILO’s Declaration on Fundamental Principles and Rights at Work (1998).
Fundamental conventions
- Freedom of Association and Protection of the Right to Organise Convention, 1948 (No. 87)
- Right to Organise and Collective Bargaining Convention, 1949 (No. 98)
- Forced Labour Convention, 1930 (No. 29)
- Abolition of Forced Labour Convention, 1957 (No. 105)
- Minimum Age Convention, 1973 (No. 138)
- Worst Forms of Child Labour Convention, 1999 (No. 182)
- Equal Remuneration Convention, 1951 (No. 100)
- Discrimination (Employment and Occupation) Convention, 1958 (No. 111)
Hbc Audit Procedure
To ensure that the merchandise created for Hbc stores is manufactured in an ethical manner, we ask all vendors to support our Vendor Code of Conduct. This Code, which has been in place since 1997, explains what is and is not acceptable treatment of factory workers.
Hbc uses an independent audit firm, Intertek Labtest (ITS), to travel around the world visiting hundreds of factories. Audits are conducted over one or two days and consist of:
- An interview with the factory manager
- Interviews with factory employees
- A tour of the facility
- A complete review of legal documentation, such as wage/payroll/time cards, contracts and personnel files
- A closing meeting with the factory manager to review findings and develop a corrective action plan if necessary
Auditing Our Top Vendors
We focus our auditing program on the top 250 vendors who produce private or captive brands for Hbc. The vendors with the highest volume of business are labelled “Priority A”. Because our influence is greatest in facilitating change with our largest vendors, we can ensure that Priority A vendors participate in the program.
In 2008, we will focus on corrective actions at factories where we have high volumes of business. Going forward, our reporting emphasis will be on improvements made to working conditions rather than on the number of factories that have been audited.
Number of Factories Audited by Priority Class
| Priority Class | 2004 | 2005 | 2006 | 2007 |
|---|---|---|---|---|
| Priority A | 199 | 330 | 220 | 142 |
| Priority B | 207 | 241 | 186 | 340 |
| Priority C | 148 | 63 | 240 | 289 |
| Total | 491 | 634 | 646 | 771 |
Grade Comparison 2003–2007
| 2003 | 2004 | 2005 | 2006 | 2007 | |
|---|---|---|---|---|---|
| Approved | 395 | 474 | 605 | 629 | 764 |
| Not Approved | 46 | 17 | 29 | 17 | 6 |
Three Strikes Policy
Hbc employs a “three strikes” policy in auditing vendors. In 2007, the number of vendors receiving strikes decreased: five vendors and six factories received one strike each. The audit results show that most vendors complied with Hbc’s Code; however, issues at the factories have remained consistent year over year. Hbc will be focusing on improving these issues. Most of our suppliers are now familiar with Hbc’s program, policies and processes, so that we can graduate to assisting factories with training and education.
Main Issues for 2007
Issue Analysis
Main Issues 2007
Audits by Country
