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Hbc Social Compliance Manual V2007 Document Control A Document Control is a record of all changes made to a document between the publishing of different versions. The table below highlights the recent changes made to the Hbc Social Compliance Starter Kit Version 2005.
Table of Contents Introduction Glossary of Terms........................................................................ 4 The Purpose of This Manual.......................................................... 5 1. Hbc Social Compliance Policy What is social compliance?........................................................... 6 How does Hbc ensure compliance?................................................. 6 Policy # 1 ................................................................................. 6 Policy #2 - 5............................................................................... 7 Policy #6 - 7............................................................................... 8 2. Hbc Social Compliance Process Program Registration .................................................................. 9 The Audit................................................................................... 8 The Corrective Action Plan........................................................... 10 3. Participation in the Program How to Register for the Social Compliance Program......................... 11 How to Prepare for the Audit....................................................... 12 A. Hbc’s Vendor Code of Conduct.................................................. 13 B. Audit Request Form 1............................................................. 16 C. Social Compliance Certificate................................................... 18 Glossary of Terms Transshipment – Transshipment occurs when a shipment of goods is sent to an intermediate destination, then to another destination. This can be quite legitimate and is fairly common, but it can also be a method used to disguise intent, as is the case with illegal logging, smuggling, or grey market goods. Audit Grades: Zero Tolerance – The facility will be re-audited as early as two months. Production will be postponed or not accepted. Approved for Production (subject to improvement) - The facility will be re-audited within six months. Production may continue but there may also be a delay or cancellation depending on the results of the audit. Approved for Production - The facility will undergo an annual audit within one to two years and may proceed with production. Denied Entry - The facility will be audited immediately. Production may not commence until a full audit is conducted. The Purpose of This Manual Dear Supplier, Welcome to Hbc’s Social Compliance Manual! The Social Compliance Program ensures that Hbc’s vendors are socially responsible and are compliant with our Vendor Code of Conduct. This easy-to-use manual specifies our social compliance program, policies and standards. The manual will guide you along each step of the social compliance process and the standards you must meet in order to successfully conduct business with Hbc. Your success in following this manual will shape the quality of your relationship with Hbc. It will also drive the amount of future business with Hbc. Vendors who perform well become long term business partners. Those who do not meet our standards are phased out. Our goal is to ensure all vendors are successful. This manual advises suppliers (i.e. vendor, factory and/or agent) of the following Hbc goals: 1. Protect Hbc’s private brand products and ensure they are produced in humane conditions that respect the human principles as reflected by the International Labour Organization (ILO) and the United Nations (UN). 2. Educate vendors and their manufacturing facilities to ensure compliance with these standards and safeguarding the workforce. 3. Support continuous improvement with respect to compliance within our vendor base. It is essential suppliers read Hbc’s Social Compliance Manual and fully understands all policies, procedures and responsibilities required. 1. Hbc Social Compliance Policy What is Social Compliance? Social compliance monitors the Hbc supply chain to ensure vendor partners are adhering to the human rights and labour principles, as articulated by the ILO and the UN. The objective is to establish fair and safe working environments and to create effective, sustainable business practices. How does Hbc Ensure Compliance? Hbc’s program includes a focus on remediation and continuous improvement of working conditions. Hbc ensures compliance by working with its vendor partners to monitor manufacturing facilities and to foster facility improvements as identified by our auditors. The monitoring process is ongoing in order to ensure continual compliance. Policy #1 - No Exceptions Hbc’s Social Compliance program is mandatory. Domestic and direct vendors supplying private, captive or vendor label merchandise are required to disclose their facilities and participate in the factory audits. Failure to fully disclose or cooperate will lead to termination of business by Hbc.
Policy #2 - Hbc Code of Conduct All vendors are to comply with Hbc’s Vendor Code of Conduct (CoC), which includes all applicable country labour laws. Hbc’s CoC reflects the basic principles of the International Labour Organization and the United Nations. Vendors using facilities that breach this code will be given six months to correct their shortcomings. Failure to correct these violations may lead to a suspension of business until the vendor is fully compliant. Policy #3 - Zero Tolerance Violations Child labour, forced labour, and transshipment will not be tolerated. It does not matter if the merchandise is being manufactured, in transit or on the retail floor. Goods from factories found with zero tolerance violations will be rejected or recalled at the expense of the vendor. Policy #4 - Local Laws & Regulations Vendors must comply with all laws and regulations mandated by the country in which the merchandise is manufactured. If a facility has breached a local law, Hbc will take appropriate action. Actions may range from working with the vendor to ensure that steps are taken to address the violations and prevent reoccurrence, to cancelling orders, terminating business with the vendor, and/or commencing legal action against the relevant parties. Policy #5 - Vendor Participation & Funding Vendors are to pay for social compliance audits and are to ensure compliance of their facility. The cost of the initial audit is $850 ( All vendors who meet Hbc’s Code of Vendor Conduct in their initial (year one) audit will be subject to an annual audit in their subsequent years to ensure the facility is consistently adhering to Hbc standards. The annual audit is $850 (US). IMPORTANT: The prices quoted above apply to the Asia Pacific region only. For all other regions please contact the Hbc Social Compliance Manager. In countries where there is no local presence by the auditing agency, a cost estimate will be provided to Hbc for approval and sent to vendors for review before travel arrangements are made.) Policy #6 - On-going monitoring and Annual Audits Monitoring facilities for social compliance is ongoing. The initial audits ensure the facilities are meeting Hbc’s CoC. The annual audits monitor a facility’s standards over time and ensure ongoing improvements are underway. Vendors and facilities that receive favorable audit results will be exempted from annual audits for up to two years. Policy #7 – Penalties for Non-disclosure Suppliers that misrepresent and or do not disclose the factory location(s) of where Hbc merchandise is manufactured will face a financial penalty of up to $2000.00 ( 2. Social Compliance Process This section outlines the social compliance process and what a supplier can expect when their facility is audited. The audit process involves a number of steps which help ensure that Hbc’s Code of Conduct is adhered to. Program Registration Suppliers should fill out a Vendor Release Agreement and an Audit Request Form 1 (Appendix B) with a list of all manufacturing facilities actively producing Hbc goods. Do not forget to include full contact information. Please note: Vendors are also responsible for notifying Hbc of any changes to their active list of supplying facilities. An invoice will be sent to vendors requiring payment for upcoming audits. Upon payment of the invoice, our auditors will set an undisclosed date to perform the audit. It is the vendor’s responsibility to notify and prepare the factory for the impending audit. Please be aware of the auditing agency’s cancellation or rescheduling policy; Cancellations or Rescheduling requested more than 2 business days but less than 5 business days before the committed audit day will be liable for 50% of the full audit charge in addition to traveling expenses already incurred and non-refundable. The Audit When the inspectors arrive at the facility, they will require full access to the work floor, employees and all relevant documents. Failure to provide full access could result in the need for a re-audit. The inspectors will assess the facility based on Hbc’s Code of Conduct, as well as prevailing country-specific laws. They will discuss their findings with the facility manager to make them aware of areas where they were in compliance and areas where improvements could be made to ensure future compliance. A Corrective Action Plan (CAP) will be left with the facility manager so they can work to implement the recommendations. Vendors will be notified of the grade the facility received and a copy of the final report will be forwarded to you. We encourage you to discuss these findings with the facility as well as with Hbc. Post-Audit and Re-Audits Depending on the grade the facility received, a re-audit may be necessary. The grade and audit schedule is outlined in the following chart:
It is important to note that Hbc employs a ‘Three Strikes Policy’. Factories who: • receive a fail grade; • do not fully disclose factory locations; • do not pay for a program; • do not participate in the program; and are in default of any other parameters of this program may be suspended and/or terminated from doing business with Hbc if they breach any of the above terms three times in a fiscal year. The Corrective Action Plan (CAP) The Corrective Action Plan (CAP) provides the vendor and facility summary of violations and/or concerns that demonstrate non-compliance. Please review the report and CAP and discuss the findings with Hbc and your factory. Should a re-audit be required, please inform your facility by explaining that by the time of the next audit, the violations cited in CAP need to be corrected in order to demonstrate compliance. The specific corrections can be found within the CAP sent to you. A time frame required for re-audit is also included in the CAP. A follow-up audit will be scheduled to verify these corrective actions and that the facility meets all the requirements.
3. Participation in the Program This section of the manual details how suppliers can register for the social compliance program and assists suppliers in preparing for the audit with some tips to help prepare. How to Register for the Social Compliance Program Please follow the instructions below: 1. Please fill out all sections of Audit Request Form 1 (see Appendix B) and send to the contact information on the form. You will receive an invoice from Hbc’s preferred auditing agency. Audits will be scheduled upon payment of invoice. 2. Read Appendix C on How to Prepare Your Facility. You may contact the auditing agency if you have additional questions about the audit. 3. Inform your factory of upcoming audit and visit by the auditors. 4. Audit takes place; you can expect your report in 3-6 weeks. A report will be generated five business days after audit has taken place. The entire audit process takes 4-6 weeks. 5. Review the audit report sent by the auditing agency and share with your facility. Your facility will be ‘graded’ and will receive a corrective action plan (CAP). It is your responsibility to ensure that your facility implements the CAP. Failure to do so can lead to suspension of business. A re-audit will be conducted to verify improvements. How to Prepare for the Audit The following tips will allow you to prepare for the social compliance audit and assist you with bringing your facility into full compliance. 1. Pay for your audit - not paying for an audit results in non-participation in the Hbc Social Compliance program. If delinquent payment persists, it could result in the eventual termination of work orders. 2. Make sure factory personnel and/or security are aware an unannounced visit by social compliance auditors will take place and have permission to be on the premises. Have factory managerial personnel available at all times to provide the necessary information to conduct the audits. 3. The auditors visit will take 1-2 days. 4. Ensure factory manager understands the factory should be 100% operational in order to allow for accurate reporting. 5. Ensure factory manager understands required documentation will be required by auditors for review - required i.e. payroll information, identity papers, age documentation etc. 6. If you receive a Self-Audit questionnaire, review the Self-Audit Questionnaire with factory manager. Ensure they understand all the questions and answers expected. 7. Prepare the factory based on the Self-Audit Questionnaire i.e. PERMANENTLY DISCONTINUE ANY INSTANCES of child labour, forced labour, transshipment, etc. to ensure 100% social compliance. 8. Explain to the factory that interviews with randomly selected employees will be conducted and that employees should be allowed to meet privately with the auditor. 9. Understand the Vendor Code of Conduct and review Hbc’s policy with the factory. 10. Ensure factory is following local laws and legal expectations are being met. Appendices Appendix A: Code of Vendor Conduct Expected Ethical and Business Standards Hudson's Bay Company (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 practices 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. 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 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 breeches 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. 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 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 age 15 (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 are 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 the child's 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 the use of 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 found in the world. We will favour Business Partners who ensure that no employee shall be 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, 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 that 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 are doing business. In the absence of exceptional circumstances, Hbc will favour Business Partners who utilize less than a sixty-hour work-week 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 work week 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 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 the 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. Appendix B: Audit Request Form 1 Please fill out the Audit Request Form completely, including full facility contact information. If you have more than one facility producing Hbc goods, please provide all facility information. Completed forms and inquiries should be sent to: Xiomara Drepaul Social Compliance Coordinator, Hbc Telephone: 416.861.4984 E-mail: xiomara.drepaul@hbc.com Hbc Vendor Information *The vendor noted above is financially responsible for the cost of the audit and will be billed by the auditing agency.
Appendix C: Social Compliance Certificate Hbc Social Compliance Certificate |
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