Socially Responsible Product Sourcing
(Updated as of April 15, 2013)
Kohl's Department Stores, Inc. is committed to high standards of behavior on issues of social responsibility. Through our Terms of Engagement ("our Policy"), we hold all of our Vendor Partners to these same high standards. Our Policy is designed to protect the interests of workers engaged in the manufacturing of merchandise procured for Kohl's and we select Vendor Partners who we believe share our commitment to the fair and ethical treatment of employees. Our compliance philosophy focuses on taking corrective action on identified issues and continuous improvement. Our Policy is posted at connection.kohls.com under the "new vendors" tab.
Our Policy spells out Kohl's expectations to our Vendor Partners regarding wages and benefits, working hours, the use of child or forced labor, which includes without limitation, prison and slave labor or human trafficking for those purposes, discrimination, disciplinary practices, women's rights, legally protected rights of workers to free association, health and safety issues and more.
We contract with numerous Vendor Partners, who in turn contract with hundreds of manufacturing facilities worldwide to procure merchandise sold in our stores. It is critically important to us that each Vendor Partner's manufacturing facility treats its workers fairly, in compliance with local labor laws and all other terms of our Policy.
While the foundation of our efforts is our Policy, we believe compliance is a process that requires working closely with our Vendor Partners to identify and address challenges in a responsible manner that considers the needs and expectations of the affected Vendor Partner, its suppliers, employees and our shareholders. We continually monitor social compliance and challenge our Vendor Partners to protect the health, safety and human rights of workers.
OVERSIGHT OF OUR POLICY
Kohl's organizational structure supports the uniform and objective application of the compliance program to all Vendor Partners. Dedicated policy compliance personnel are responsible for day-to-day duties and administration of the compliance program and are independent of the Product Development and Merchandising departments who are responsible for development, sourcing and merchandising. As a result, day-to-day decisions regarding the social compliance status of potential factories and those factories that are being used to produce merchandise for Kohl's are made by Associates not involved in actual purchase negotiation.
We expect our Vendor partners to take all steps necessary to ensure compliance with our Policy in their manufacturing facilities that produce merchandise for us, whether the facility is operated by them or by one of their subcontractors. We require our Vendor Partners who produce private label and exclusive merchandise for us to identify all manufacturing facilities, domestic and foreign, that they plan to use to produce such merchandise and to provide us with written certification that each facility will operate in compliance with our Policy. Subcontractors that a Vendor Partner desires to use in the manufacturing process require our approval.
We recognize that publication of a statement of principles is insufficient to achieve compliance with these principles and that aggressive enforcement of our Policy is required. To achieve this goal, we actively monitor factories in which our merchandise is produced. We reserve the right to review all Vendor Partner facilities, including the use of unannounced on-site inspections of manufacturing facilities. Factory monitoring visits are performed by professional independent third party monitors and are ongoing. Once deemed compliant with our Policy, factories are monitored periodically, based on established risk level.
FACTORY MONITORING PROCESS
We have retained the services of two professional, independent third-party firms to monitor Vendor Partner compliance with our Policy. Our monitors have auditing professionals located in the territories in which the manufacturing facilities are located, able to speak the language of workers and management, and have extensive experience with monitoring social compliance on behalf of international customers.
The monitors visit each manufacturing facility, interviewing factory workers and management, observing facility conditions and performing detailed testing of facility business records in order to complete our factory monitoring program to determine the level of compliance with our Policy and applicable laws.
Our full-compliance audit program includes fifteen different modules:
- Laws and Regulations
- Wages and Benefits
- Working Hours
- Child Labor
- Health and Safety
- Free Association
- Disciplinary Practices
- Women's Rights
- Monitoring and Compliance
- Health and Safety - Dormitories
- Environmental Requirements
- Communication and Record Keeping
- Forced Labor / Slave Labor & Human Trafficking
During the course of each facility visit, the monitor documents all deficiencies related to our Policy. Upon completion of each visit, the monitor summarizes and discusses each deficiency with factory management to facilitate corrective actions and then sends a report to Kohl's. Kohl's Policy compliance team reviews factory monitoring reports and works with our Business Partners to implement corrective actions.
CORRECTIVE ACTION AND REMEDIATION
If noncompliance with Kohl's Policy is identified, we take appropriate action, which, depending on the severity of the deviation, ranges from working with our Vendor Partner to ensure adequate steps are taken to address deficiencies, to canceling affected orders, to terminating our relationship with our Vendor Partner. We require our Vendor Partners to adopt a corrective action plan whenever possible. Follow-up evaluations are completed to verify subsequent adherence to our Policy. We make every effort to attempt to bring noncompliant facilities into compliance, rather than terminate our business relationship.
EDUCATION AND TRAINING
We provide training to Vendor Partners on our Policy and our expectation of compliance. We regularly communicate with our Vendor Partners on compliance issues. In 2012, we conducted numerous individual training sessions for Vendor Partners to promote understanding and compliance with our requirements. In this way, we clearly communicated our expectations and, in turn, our Vendor Partners had the opportunity to explain their practical challenges to us. The following topics were reviewed during training sessions:
- Expectations for Suppliers
- Policy Definitions
- Best Practices
- Site Verification Methods
In addition, we strongly encourage our Vendor Partners to develop and/or enhance their own internal social responsibility functions to raise awareness and to sustain performance improvements. We emphasize open, ongoing Vendor Partner communication.
We also conduct internal training sessions for Product Development Associates regarding our Policy requirements quarterly. We provide relevant Kohl's Associates, who have direct responsibility for supply chain management, training on human trafficking and slavery, particularly with respect to mitigating risks within the supply chain.
Vendor Partner Certification of Compliance
Kohl's requires direct suppliers to certify compliance with all laws and regulations, including but not limited to, laws regarding slavery and human trafficking in the country or countries in which they do business.
Social/Labor Working Group - Sustainable Apparel Coalition
Kohl's is a member of the Social Labor Working Group formed under the Sustainable Apparel Coalition. The Social Labor/Working Group is developing a component of the Apparel Index to align group members on a set of indicators meant to capture a continuum of performance - from basic awareness and compliance to aspirational and industry leading practice at brand and facility levels.
Better Work Program Participant
In 2012, Kohl's participated in the Better Factories Cambodia (BFC) and Better Work Vietnam (BWV) programs, which are International Labour Organization programs focused on strengthening labor standards in export garment industries in specified countries. Our reliance upon BFC and BWV factory monitoring results helps reduce audit fatigue and factory monitoring costs, which provides factory management with more time to focus on corrective action and sustainable, continuous improvement.
Policy Regarding Cotton From Uzbekistan
Consistent with our commitment to social responsibility, Kohl's does not knowingly carry products that use cotton originating from any country that condones the use of child labor and/or forced labor. Kohl's does not source any Private or Exclusive Brand products from Uzbekistan and, to the best of our knowledge, cotton from Uzbekistan is not used in goods produced for Kohl's in other countries. Until we are convinced that forced child labor is not being used to produce cotton in Uzbekistan, Kohl's specifically prohibits the use of Uzbekistan cotton in the manufacture of merchandise intended for sale in our stores.
Clean Diamonds Trade Act
We require our suppliers of diamonds and jewelry to ensure that the merchandise they sell to Kohl's meets the requirements of the Clean Diamonds Trade Act and the Kimberly Process Certification - and that this merchandise does not contain conflict diamonds.
COMPLIANCE PROGRAM PERFORMANCE STATISTICS
Fiscal 2012 vs. Fiscal 2011
|Fiscal Year 2012||Fiscal Year 2011||
# Monitoring Visits
# of Facilities Visited
# Compliant Facilities
# Not Compliant Facilities
# Inactive Facilities
# Still In Monitoring Process
# Factory Visits Not Announced
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