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for Kohl’s. |
• Requiring our review and approval of all subcontractors that a vendor desires to use in the manufacturing process of Kohl’s proprietary goods. |
• Enforcing our zero-tolerance policy regarding forced labor, prison labor, slavery and human trafficking. |
to perform both announced and unannounced factory audits. |
• Monitoring each such factory for social compliance on a periodic basis at a frequency based upon a risk assessment and prior audit findings. |
Certification • In addition to the standards set forth in our Policy, any vendor partner desiring to do business with us must adhere to the terms of the contract under which we purchase goods from the vendor. |
Internal Accountability • Employing dedicated Policy compliance personnel who are responsible for the day-to- day duties and administration of the compliance program, and who are not involved in the product purchase negotiations. |
Training • Providing training for relevant company associates regarding identification and mitigation of the risks addressed by our Policy. |
We recognize that publication of our Policy is only one part of achieving compliance and that active enforcement of our Policy is required. |
To achieve this goal, we select vendor partners who share our commitment to the principles contained in our Policy, monitor our vendor partners’ compliance efforts, and exercise our ability to take corrective action when necessary. |
We believe in 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. |
As a result, we closely monitor social compliance and encourage our vendor partners to continually enhance their processes and procedures to protect the health, safety and human rights of workers. |
Socially-compliant factories contribute to a more predictable, efficient and effective supply chain able to better meet the long-term needs of our business. |
The core steps of the social compliance audit program completed at factories used by our merchandising vendor partners to produce proprietary merchandise for Kohl’s have remained consistent for almost two decades. |
The application of our core audit program steps facilitates comparison of year-to-year results in order to determine if progress is being made. |
Some non-core audit steps have been adjusted over the years based on more recently identified risks or the need for additional information. |
Overall, factory audit results have consistently improved over the past three years as evidenced by the significant decline in the number of factories that have been deemed not authorized to produce for Kohl’s. |
In 2015, 6 percent of factories visited were deemed noncompliant, 4 percent in 2016, and only 3 percent in 2017. |
Our overall social compliance program, including vendor education, factory monitoring, remediation efforts and training has improved social compliance at factories producing proprietary products. |
Proprietary Brand Vendor Partner Compliance Program Performance In 2017, there were 1,960 monitoring visits to 1,392 facilities; 41 percent of these were unannounced. |
At fiscal 2017 year-end, 80 percent of facilities were deemed compliant. |
This improved from three years ago, when 76 percent of facilities were deemed compliant. |
To that end, in 2014, there were 3,193 monitoring visits to 1,418 facilities; 56 percent of these were unannounced. |
The number of monitoring visits and percentage of unannounced visits have decreased over the past three years due to vendor consolidation and improved facility compliance, requiring fewer unannounced follow-up monitoring visits in order to be deemed compliant. |
We retain the services of three 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 who are able to speak the language of workers and management, and who have extensive experience with monitoring social compliance on behalf of international customers. |
Completion of our full audit program requires a two- day visit, while follow-up audits are completed in one day. |
In 2017, we began implementation of a new, automated risk assessment tool to more effectively evaluate risk related to facilities located in countries around the world. |
Full implementation of this tool will support improved focus of audit resources in managing risk while minimizing audit fatigue by scheduling more frequent audits at facilities with higher risk and less frequent audits at facilities with lower risk. |
Upon arrival at a factory, our third-party social compliance monitors conduct an opening meeting with facility management to review our Policy. |
If access to the facility is denied, the auditor immediately notifies us. |
Our Policy compliance team researches the reason for the denied access to determine if the factory will be granted another visit. |
If so, the Policy compliance team schedules an unannounced visit. |
If factory management denies access to the auditor a second time, we terminate our business relationship with the factory. |
Upon completion of the opening meeting, a factory tour is conducted and workers are randomly selected to be interviewed. |
Worker interviews are conducted in a private place and in the local language of the workers. |
The content of worker interviews is kept strictly confidential. |
During the course of each facility visit, our independent compliance monitoring partner documents all deficiencies related to our Policy. |
The monitor then summarizes and discusses each deficiency with factory management to facilitate immediate corrective action. |
In addition, our audit report is sent to our Policy compliance team for review, and we work with vendor partners to implement corrective actions. |
We take appropriate action if we identify noncompliance with our Policy. |
Depending on the severity of the deviation, actions include working with our vendor partner to ensure that adequate steps are taken to address deficiencies, canceling affected orders, or even terminating the business relationship. |
Whenever possible, we attempt to bring noncompliant facilities into compliance rather than terminating the business relationship. |
For more details on proprietary brand vendor partner compliance, please refer to Key Metrics at the end of this report. |
Education and Training We provide training to and regularly communicate with vendor partners about our Policy and our expectation of compliance. |
In 2017, we conducted numerous individual and small group-training sessions for vendor partners to promote understanding and compliance with our Policy. |
In this way, we create a forum to clearly communicate our requirements and expectations and, in turn, hear from our vendor partners about the country’s specific political, cultural, social and economic issues that affect their businesses. |
In addition, we strongly encourage our vendor partners to develop and enhance their own internal social compliance functions to raise awareness and to sustain performance improvements. |
It is also key that our associates understand the importance of our Policy. |
Social compliance training is available to all Kohl’s associates. |
We conduct quarterly instructor-led training sessions for product development associates regarding our Policy requirements. |
For relevant Kohl’s associates who have direct responsibility for supply chain management, we provide targeted training on human trafficking and slavery, particularly with respect to mitigating risks within the supply chain. |
Product Quality Product integrity considerations are built into our product development process to ensure products meet all applicable federal and state mandates, and are safe for our customers. |
The product integrity team works with our manufacturers, vendors, and agents to ensure that all proprietary brand products are subjected to rigorous testing through our corporate testing program prior to shipment. |
Testing is conducted at independent third-party laboratories that we approve. |
Depending on the end product, testing can range from checking for mechanical hazards to flammability of fabrics. |
Our product integrity department works to remain current regarding changes in consumer product regulations at the federal, state and local levels. |
The department is responsible for ensuring that changes are incorporated into our product development process. |
The goal is to deliver a safer, quality product to our customers. |
Additionally, we have taken proactive steps in voluntarily adopting product safety programs in the best interests of our customers. |
Communication on Industry Issues As a retailer, we face varied challenges throughout our supply chain. |
We set policies, create programs, and partner with leading organizations and other retailers to promote socially-responsible practices both at Kohl’s and across the retail and apparel industry. |
We communicate these policies to our vendor partners during vendor meetings, through business correspondence and via our vendor portal. |
New proprietary brand vendors receive packets that include further information, along with a Certification of Compliance with All Legal Obligations form, to be signed and returned by a principal of the vendor partner. |
Kohl’s Terms of Engagement and Kohl’s Purchase Order Terms and Conditions also emphasize the importance of the topics described in this report. |
Social Compliance Governance We integrate social, economic and environmental considerations into our purchasing and risk management processes. |
Our Social Responsibility Committee guides the overall direction, assessment and continual improvement of our compliance program. |
The committee consists of senior leadership and executives responsible for business operations from many departments, including merchants, product development, legal, risk and compliance, and the global trade compliance departments, as well as executives directly responsible for the day-to-day efforts of our social compliance program. |
As part of the global trade compliance department, a team of dedicated compliance associates is responsible for day-to-day administration of the social compliance program. |
This team is independent of the product development and merchandising departments. |
As a result, day-to-day decisions regarding the social compliance status of potential and existing factories that are being used to produce our proprietary brand merchandise are made by associates not involved in the actual purchase negotiation. |
Our governance policies and business strategies include risk management activities to help provide the consistent, socially-compliant supply chain necessary to achieve our long-term financial performance goals. |
Better Work Programs We participate in the International Labour Organization’s Better Work Vietnam (BWV), Better Work Nicaragua (BWN) and Better Work Indonesia (BWI) programs, which focus on strengthening labor standards in export garment industries. |
We rely on BWV, BWN and BWI factory monitoring results for applicable factories in lieu of performing our own scheduled audits to reduce audit fatigue. |
This process provides factory management with more time to focus on corrective action and sustainable, continual improvement. |
Alliance for Bangladesh Worker Safety Kohl’s is a founding member of the Alliance for Bangladesh Worker Safety, formed in July 2013. |
The Alliance is focused on protecting and empowering workers, and elevating fire and building safety in Bangladesh garment factories. |
• Developed and adopted a common safety standard to create consistency with other initiatives. |
• Completed structural, electrical and fire safety inspections of all alliance factories with more than 300 factories having already achieved Corrective Action Plan completion. |
• Provided basic fire training for more than 1.5 million factory workers and specialized training for more than 27,000 security guards in Alliance factories. |
• Provided refresher fire safety training to more than 1.4 million workers. |
• Established a team of technical experts and remediation case managers in Bangladesh. |
• Has driven significant progress in Bangladesh worker safety through factory worker and management training initiatives, and via factory inspections and remediation monitoring efforts during its more than four years of operation. |
• Implemented a worker helpline in more than 950 factories for more than 1.4 million workers to confidentially share safety concerns without fear of retaliation. |
• Launched democratically-elected safety committees comprised of both workers and management in more than 165 factories. |
• Is working to build capacity within the Government of Bangladesh to take responsibility for factory safety in the Ready Made Garment industry. |
• Is working to foster the sustainability of its progress by transitioning to an independent, credible, locally-led safety monitoring organization in 2018 that will continue inspections, factory monitoring, and the highly successful worker Helpline and Basic Fire Safety programs. |
Conflict Minerals We expect all vendor partners to ensure that merchandise sold to us is free of any conflict minerals. |
Conflict minerals are tin, tantalum, tungsten or gold sold to finance conflict in the Democratic Republic of the Congo or an adjoining country. |
We have put in place policies, a due diligence framework and management systems to help ensure our vendor partners’ compliance with this expectation and to enable us to comply with the reporting requirements of the Security and Exchange Commission’s Conflict Minerals Rule. |
We have engaged an outside firm with specialized expertise in mapping and tracing supply chains to support our conflict minerals compliance program. |
We expect vendor partners to establish their own due diligence programs to ensure conflict-free supply chains and take any other steps necessary to abide by our policies and the contractual commitments provided to us. |
View the Kohl’s Policy on Conflict Minerals and Kohl’s Conflict Minerals Report for further details here. |
Kohl’s is a member of the Responsible Minerals Initiative (RMI), which helps companies make informed choices about conflict minerals in their supply chains. |
RMI membership provides access to Reasonable Country of Origin Inquiry, country of origin information associated with facilities that are validated through the Responsible Minerals Assurance Program, and access to the latest information and insight about developments on regional issues, sourcing initiatives and regulatory schemes in support of responsible sourcing. |
Clean Diamond Trade Act We require all diamond jewelry suppliers to ensure that the merchandise they sell to us meets the requirements of the Clean Diamond Trade Act and the Kimberley Process Certification, and to ensure that merchandise sold to us does not contain diamonds involved in funding conflict. |
Uzbekistan Cotton We do not knowingly carry products that use cotton originating from any country that condones the use of child or forced labor. |
We do not source any proprietary brand products from Uzbekistan and, to the best of our knowledge, cotton from Uzbekistan is not used in goods produced for us in other countries. |
Until we are convinced that forced child labor is not being used to produce cotton in Uzbekistan, we specifically prohibit the use of Uzbekistan cotton in the manufacture of merchandise intended for sale in our stores. |
View the Kohl’s Policy on Uzbekistan Cotton for further details here. |
Subsets and Splits