To ensure compliance with our Supplier Code of Conduct and supply chain standards, we have implemented an internal audit process. To identify and evaluate the potential risks of human trafficking, slavery or violations of other local labor standards and/or those that may be unique to L Brands and our business, we conduct our own ongoing, internal verification of our product supply chain.

L Brands established Independent Production Services (IPS) as an independent compliance function reporting to the General Counsel to conduct an annual audit for all in-scope factories.  IPS uses a combination of both announced and unannounced audits. Production locations for the following items are audited:

  • all products sold in our stores, including those that are promotional
  • non-merchandise items such as gift bags, boxes, price tickets and hangtags
  • store fixtures
  • components for our core branded products that are produced by key tier 2 and tier 3 facilities

Our audits are typically conducted by a pair of auditors and include a meeting with facility management, a factory tour (including warehouses and dormitories) and a review of relevant documents, including information on wages, benefit deductions, working hours, labor contracts, termination documents, recruitment agency contracts, training and grievance records.

IPS audits at least 95 percent of its in-scope factories annually and exceeded this goal in 2016 and 2017 with 97 percent and 96 percent, respectively, successfully audited.

In addition to our normal audit process, 30 percent of our factories are selected annually for unannounced, intensive labor standards and workplace conditions audits that include worker interviews.  These audits are conducted by specialized external auditors.  Factories are selected based on an in-depth risk analysis conducted by IPS.

In addition to monitoring labor standards and workplace conditions for all factories, IPS conducts a trade assessment audit that enables us to identify any instance where unauthorized subcontracting has taken place at our factories. IPS has been conducting this specialized audit for more than 20 years. Unauthorized subcontracting is considered a major violation; therefore, we heavily monitor each factory to ensure all production is taking place at the factory named on the purchase order.  We conduct unannounced audits if we detect a risk through our capacity monitoring or through various other reporting methods.  If a factory is found to be using an unauthorized subcontractor, they are immediately put on probation, issued a heavy penalty based on the severity of the violation and subject to six to 12 months of unannounced monitoring at their expense to ensure they are fully operating within our compliance framework. If they are not able to meet this requirement, we will discontinue doing business with them. We continue to emphasize our intolerance of unauthorized subcontracting in our annual training with suppliers and factories as well as highlighting it in the IPS Compliance Guidebook.