Pvh Corp Assessment for Reaccreditation
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PVH CORP. ASSESSMENT FOR REACCREDITATION October 2016 PVH: ASSESSMENT FOR REACCREDITATION OF THE COMPANY’S SOCIAL COMPLIANCE PROGRAM TABLE OF CONTENTS Introduction ................................................................................................................................ 3 Section 1: PVH Company Affiliate Overview ........................................................................... 4 Section 2: PVH'S Supply Chain & FLA Due Diligence Activities from 2008-2016 ................. 5 Section 3: Analysis of PVH's Labor Compliance Program for Reaccreditation .................... 6 Reaccreditation ............................................................................................................................ Principle 1: Workplace Standards ................................................................................. 6 Principle 2: Responsibility & Head Office Training ........................................................ 6 Principle 3: Supplier Training ......................................................................................... 8 Principle 4: Functioning Grievance Mechanisms .......................................................... 9 Principle 5: Monitoring ................................................................................................. 10 Principle 6: Collection & Management of Compliance Information ........................... 12 Principle 7: Timely & Preventative Remediation ......................................................... 13 Principle 8: Responsible Purchasing Practices .......................................................... 14 Principle 9: Consulting with Civil Society .................................................................... 17 Princple 10: Verification Requirements ....................................................................... 19 Section 4: Conclusion and Recommendation to the Board of Directors .............................. 20 APPENDIX A: The PVH Code of Conduct .............................................................................. 21 www.fairlabor.org 2 PVH: ASSESSMENT FOR REACCREDITATION OF THE COMPANY’S SOCIAL COMPLIANCE PROGRAM INTRODUCTION On October 7, 2016, the FLA Board of Directors voted to approve the reaccreditation of PVH Corp.'s labor compliance program. When joining the FLA, Participating Companies and Participating Suppliers each commit to implementing the FLA Workplace Code of Conduct, which aim s to ensure “respectful and ethical treatment of workers” and “promotes sustainable conditions through which workers earn fair wages in safe and healthy workplaces.” The Principles of Fair Labor and Responsible Sourcing / Production (“Principles”) serve as the standards upon which Participating Companies and Participating Suppliers are assessed towards an accreditation of their labor compliance program. Participating Companies and Participating Suppliers with accredited compliance programs have demonstrated that they have the systems and procedures in place needed to successfully uphold fair labor standards throughout their supply chains. In assessing for reaccreditation, the FLA looks for continued implementation of the workplace standards and focuses on key components that innovatively support the FLA’s mission to “improve workers’ lives worldwide.” The FLA accreditation process involves staff conducting due diligence on the performance of a Participating Company or Participating Supplier during the implementation period. To assess an affiliate that has expanded the scope of its affiliation in the FLA since its last accreditation, the FLA will assess the implementation of all Principles to ensure a social compliance program has been implemented to accommodate the supply chain expansion. This assessment involved testing a selection of data points or information sources in order to verify actions by the company. Sources of information may include: 1) Affiliate Headquarter Assessment: Assessments at headquarters and field offices to interview staff involved in compliance and in other functions, and to review documentation, processes, and database capabilities. In some cases, the offices of agents are visited as well. In countries where the FLA is not able to conduct in-person assessments, interviews are conducted by phone with company staff involved in compliance and in other functions. 2) FLA Factory-Level Assessments: Independent External Monitoring (IEM), Independent External Verification (IEV), and Sustainable Compliance Initiative (SCI) assessments are all sources of information on compliance issues and remediation efforts. For reaccreditation, affiliates are subject to Verification Assessments, which verify remediation efforts and may include analysis of the affiliate’s assessment tool. 3) Annual Reports: Affiliate reports for each year of implementation provide data on the evolution of an affiliate’s compliance program in line with FLA Principles. 4) FLA Third-Party Complaints: Where relevant, an affiliate’s involvement in, and responsiveness to, FLA Third-Party Complaints provide additional insight into compliance programs and remediation strategies. 5) FLA Strategic Projects: Where relevant, an affiliate’s participation in FLA Strategic Projects provides opportunities to learn about the affiliate’s compliance strategies for detecting and remediating complex issues. 6) Observation: Wherever possible, FLA staff accompanied affiliate compliance staff on internal audits, training sessions or remediation visits. 7) Routine Interactions: Information on the affiliate’s compliance program has also been collected through discussions and interactions with affiliate compliance staff in the course of each year’s program. Exchanges with civil society organizations and other stakeholders interacting with the affiliate provide additional perspective. www.fairlabor.org 3 PVH: ASSESSMENT FOR REACCREDITATION OF THE COMPANY’S SOCIAL COMPLIANCE PROGRAM SECTION 1: PVH COMPANY AFFILIATE OVERVIEW Name of PVH Corp. Category Participating Company Company Location New York, New York, Product/s Apparel, Footwear, and USA Accessories Total Annual $8.02 Billion USD, 2015 Current Number 918 Revenue of Applicable Facilities FLA Affiliation 1996 (Founding Previous June 2008 Month/Year Member) Reaccreditation Month/Year FLA Reaccreditation Lead: Tiffany Rogers, Business Accountability Program Manager Reaccreditation Reaccreditation Support: Jennifer Caruso, Associate Director of Business Lead/Support Accountability; Kenan Ercel, Associate Director of Workplace Accountability; Joe Shen, Regional Manager of East Asia; Francisco Chicas, Regional Manager of the Americas; Jingwen Peng, Eastern Hemisphere Senior Business Accountability Associate; Sam Myers, Workplace Accountability Associate; Arno Gasteiger, Business Affiliates Program Manager Unique Company 1) Since its 2008 Reaccreditation, PVH acquired Tommy Hilfiger (2010), The Characteristics Warnaco Group (2013), and sold G. H. Bass & Co. (2013) to focus on the Calvin Klein and Tommy Hilfiger businesses. 2) In addition to Calvin Klein and Tommy Hilfiger, PVH business includes its Heritage Brands including: Van Heusen, IZOD, ARROW, Speedo, Warner’s, and Olga. 3) In 2016, PVH was named the third-largest licensor globally1. It has a social compliance program for its licensees. PVH’s licensee business is not within the FLA’s applicable scope. Summary of Key 1) The centralization of the management of Corporate Responsibility program for Strengths the consolidated sourcing divisions for all PVH brands; 2) The Company’s public commitment and accountability to uphold workplace standards in its supply chain; 3) The Company’s resources devoted to social compliance and sourcing data analysis to inform enhancements to the Corporate Responsibility program and purchasing practices; 4) Comprehensive procedures and training to implement the PVH assessment methodology in a global supply chain; and 5) The Company’s leadership and collaboration with CSOs, associations, and other brands to improve workplace conditions. Summary of Key 1) Further implementation of a mechanism to capture the effectiveness of relevant Suggestions for trainings provided to PVH staff, assessors, suppliers, and workers; Strengthening 2) Ensuring the implementation of sustainable and effective remediation at the factory level; 3) Development of a comprehensive responsible purchasing policy articulating the practices incorporated by the Corporate Responsibility Department and sourcing divisions; 4) Further implementation of an accountability mechanism across all sourcing divisions; and 5) Development of a comprehensive and proactive CSO Engagement Strategy that articulates the current relationships and plans for engagement with CSOs in other high-production countries such as Brazil. 1 Reference: Global License Magazine http://www.licensemag.com/license-global/top-150-global-licensors-2 www.fairlabor.org 4 SECTION 2: PVH’S SUPPLY CHAIN & FLA DUE DILIGENCE ACTIVITIES, 2008 - 2016 The above map shows PVH’s sourcing countries in 2016 and the range of factories in each highlighted country. The orange to red color scale shows the new sourcing countries brought into PVH’s scope of FLA affiliation with the acquisitions of Calvin Klein and Tommy Hilfiger. In 2015, prior to the expansion of the scope, FLA had 132 applicable facilities for PVH; after the expansion of scope in 2016, FLA had 918 applicable facilities for PVH. From 2015 to 2016, PVH exited two sourcing countries, which are highlighted in grey on the map: Dominican