Accountability and Remediation
L Brands maintains policies and procedures for associates and suppliers that govern the consequences of noncompliance with L Brands’ sourcing and labor standards.
If we find a supplier or factory is not in compliance with our Supplier Code of Conduct or supply chain standards, we will partner with them in an attempt to bring them into compliance. L Brands has a robust remediation system where a corrective action plan (CAP) is automatically created for all non-compliance findings and suppliers are automatically notified when they need to complete a CAP. It is the supplier’s responsibility to submit all CAPs within 30 days. All corrective actions are expected to be completed within 90 days of receiving notification. All corrective action correspondence and support evidence is thoroughly documented in the system.
During fiscal 2017, more than 13,000 labor standards and workplace conditions audit findings were evaluated across our supply chain through our standard auditing process, and approximately 11 percent of those findings required corrective action. Less than one percent of those were considered major violations, the majority of which concerned lack of transparency and unauthorized use of subcontracting. The overwhelming majority of violations were successfully remediated by the factories in partnership with IPS, and those that were not resulted in the factory being removed from the L Brands approved factory list.
For major violations, IPS issues a warning letter and, in most cases, it includes a financial penalty. We provide the supplier with the option of waiving the penalty and continuing to work with us but only if they invest the money into building a robust and sustainable compliance program. If the factory agrees, we provide access to a third-party labor standards consultant who works in concert with the factory to identify the root cause of an issue and helps the factory build up their compliance program and management systems to ensure issues do not reoccur.
For example, two suppliers located in China are actively engaged in projects with IPS, the supplier and the third-party labor standards consultant to ensure their respective factories are appropriately managing their working hours, paying overtime wages to workers and operating in a more transparent way.
We have a dedicated corrective action management team that reviews CAP submissions daily. Once evidence has been provided to support full compliance or continuous improvement towards full compliance can be demonstrated, CAP submissions are approved.
If a factory does not make improvements in a timely manner, we have an escalation process in place which includes a warning letter to the supplier, reduction of business or ultimately loss of business. L Brands will not work with suppliers and factories that are unwilling or unable to work with us to achieve our compliance standards. The company also has a more accelerated escalation process to be used if a case of forced labor is suspected or identified so action can be taken immediately.
In many cases, IPS conducts unannounced follow-up visits to the factories to ensure the supplier has implemented all new procedures and processes accordingly.
The company also has a more accelerated escalation process to be used if a case of forced labor is suspected or identified so action can be taken immediately.