Commitment and Governance
L Brands is fully committed to ensuring our products are ethically sourced. This commitment starts with our chairman and CEO and cascades throughout our organization. As part of that commitment, all associates are annually required to review and acknowledge our Associate Code of Conduct. Based on our values, this Code defines behaviors that are acceptable and those that are not.
We hold ourselves and each other accountable to our values in all that we do. In that spirit, we strongly believe that the quality of our merchandise begins with the treatment of the people who create our products. L Brands only works with suppliers that share our commitment to ethical and responsible business practices. This commitment is embedded in the many measures by which we evaluate supplier partners, and has been part of our comprehensive and proprietary approach to how we do business for decades.
L Brands sources goods from approximately 350 factories around the world — the vast majority of which are located in the United States, China, Sri Lanka, Vietnam and India. In fact, the majority of our production comes from these five locations and include many strategic supplier partners that are long-term, low-turnover and share our values.
Sourcing Risk Council
L Brands has a Sourcing Risk Council comprised of senior executives from various company divisions and functions that meets quarterly to discuss core business, sourcing, purchasing practices and approve policies as required. These include:
- Chief Compliance Officer
- Government Affairs
- Independent Production Services (IPS)*
- Regulatory and Quality Assurance
The council assesses current risks, including geopolitical, social compliance and associated supply risks and sets policies related to responsible sourcing. The Sourcing Risk Council operates under the guidance and oversight of the Board of Directors’ Audit Committee. The Chair of the Sourcing Risk Council reports to the Audit Committee on a regular basis, and the Audit Committee updates the Board of Directors.
L Brands suppliers are required to sign a Master Sourcing Agreement (MSA) that explicitly states that the supplier and their factories will comply with all applicable laws and L Brands policies, including each of the policies and guidance listed below.
1. Supplier Code of Conduct
To ensure that our expectations are clear, our standards are specifically outlined in our L Brands Supplier Code of Conduct.
2. Sourcing Country Policy
L Brands will not source product from any country prohibited or restricted by law as sanctioned by the Office of Foreign Assets Control of the U.S. Department of the Treasury. In addition, some countries with potential geopolitical or social risks may pose a threat to our supply chain and, as a result, require pre-approval from L Brands executive leadership with compliance oversight. Any associate who violates this policy is subject to disciplinary action, including, but not limited to, termination of employment.
3. Foreign Migrant Worker Policy
The L Brands Supplier Code of Conduct clearly states that prison, indentured, bonded, involuntary or slave labor or labor obtained through human trafficking shall not be used. Experts report that foreign migrant workers who travel across country borders to obtain employment are most at risk for human trafficking and forced labor and, therefore, we have established a Foreign Migrant Worker Policy to ensure that we reduce the risk of human trafficking or forced labor within our supply chain. In order to use a factory that employs foreign migrant workers, the sourcing team must obtain executive approval which can only be given if the factory receives positive results on a specialized audit developed in accordance with the International Labour Organization’s handbook on Combating Forced Labour. Factories that employ foreign migrant workers are closely monitored to ensure there are no forced labor violations and that workers have freedom of movement and are treated in accordance with the law. Any associate who contracts a factory that uses foreign migrant workers without executive review and approval is subject to disciplinary action, including, but not limited to, termination of employment.
4. Uzbekistan and Turkmenistan Cotton Policy
L Brands is committed to ensuring that forced labor of any kind is not used in the manufacturing of our products. Because of the reports documenting the systemic use of forced labor (including the worst forms of child labor) in the harvest of cotton in both Uzbekistan and Turkmenistan, we have adopted a policy to prohibit the sourcing of Uzbek and Turkmen cotton for the manufacturing of any of our products until their respective governments end the practice of forced labor, including child labor, in the cotton sector. Until the elimination of these practices is independently verified, we will maintain this commitment and will collaborate with other stakeholders to raise awareness of this very serious concern and advocate for its elimination.
5. Conflict Minerals Policy
L Brands prohibits its suppliers from using conflict minerals which may directly or indirectly finance or benefit armed groups in the Democratic Republic of the Congo and its adjoining countries in accordance with the Dodd-Frank Conflict Minerals Provisions. Form SD and Conflict Minerals Reports previously filed by L Brands can be viewed as part of our SEC filings.
6. Independent Production Services (IPS)* Compliance Guidebook
IPS, a compliance function within L Brands, publishes a Compliance Guidebook (Guidebook) annually and distributes it to all of our suppliers worldwide. The Guidebook is a collection of policies and standards with which our suppliers are expected and legally obligated to comply. The Guidebook provides additional clarification to supplier partners and their factories regarding a broad range of compliance standards and requirements that we are committed to as an enterprise and expect our suppliers to follow. Included in the Guidebook are the L Brands Supplier Code of Conduct, compliance standards related to forced labor and human trafficking, the Uzbek and Turkmen cotton policy and the conflict minerals policy, among others.
The Guidebook is made available to all suppliers and associates involved in the production and purchasing process and outlines the requirements each must meet to work with L Brands. The expectation of adherence to our core values and always doing the right thing is emphasized by our Chairman and CEO in his opening message to suppliers and associates.
* Independent Production Services (IPS) is a compliance function within L Brands that works with suppliers to ensure goods are sourced from factories that meet or exceed L Brands compliance standards. Reporting into the Office of the General Counsel, IPS is responsible for monitoring and enforcement of L Brands’ social compliance program and has been supporting global compliance for more than two decades, enabling improvement in working conditions, supply chain security, trade compliance and brand protection in our supply chain through monitoring, remediation, capacity building and training.