ILS Audit Template

ILS Social Compliance Audit

Audit ID #: JSASCN18836431 Date Audit Conducted: 2018/05/31 Yr/Mo/Day

Code Conducted to: Disney Audit Report Date: 2018/06/06 Yr/Mo/Day

Audit Type: Initial First F/U Second F/U Third F/U Other F/U

Facility Information

Facility ID No.: No information

Facility Name: XINSHUN JINWANG LUGGAGE TRAVEL PRODUCTS (KUNSHAN) CO., LTD.

Address Line 1: 10th Room No.188, Jiguang North Road, Qiandeng Shipu Town, Kunshan City, Jiangsu Province, China.

Address Line 2: Nil

City: Kunshan State/Province: Jiangsu

Town: Qiandeng Shipu Country: China

Postal Code: 215300 GPS Location: Nil

Contact Last Name: Liao Contact First Name: Bin

Primary Email: [email protected] Telephone: 0512-57953285- 8002 Contact Person Title: HR Manager Fax: 0512-57953290

Name/Address/Ownership Updates

Facility Name: XINSHUN JINWANG LUGGAGE TRAVEL PRODUCTS (KUNSHAN) CO., LTD. Facility Address: 10th Room No.188, Jiguang North Road, Qiandeng Shipu Town, Kunshan City, Jiangsu Province, China. Facility Ownership Update: Private

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Upcoming Relocation or Expansion: Nil

Audit Team

Audit Firm: SGS-CSTC

Lead/ Exclusive Vertu Yang Auditor:

Number of Auditors: 1

Audit Team Member 1: Nil Audit Team Member 2: Nil

Audit Team Member 3: Nil Audit Team Member 4: Nil

Audit Team Member 5: Nil Audit Team Member 6: Nil

Audit Team Member 7: Nil Audit Team Member 8: Nil

Audit Details & Assessment

Facility Details

Access to Facility: Accepted Denied Denied Unable to Access – No by phone fault of facility Acceptable Predetermined Auditors attempted to conduct an audit and were denied access. Comments Other

Additional • 1. Factory rented part of the 1st floor of one 2-storey building (about Comments: 663 ㎡) used as offices and the 2nd floor of one 2-storey building (about 3054 ㎡) used as production workshop from Shanghai Songqiao industrial Co. LTD Suzhou branch, the lease contracts were provided during the audit. • 2. The factory was a new factory, which started production on Jul 03, 2017. 3. The address of the audit letter is 10th Room No.188, Jiguang Road, Qiandeng Shipu Town, Kunshan City, Jiangsu Province, but the business license address is 10th Room No.188, Jiguang North Road, Qiandeng Shipu Town, Kunshan City, Jiangsu Province. Confirm with management that both awere the same address.

Current % Capacity 0 Past % Capacity 0 Devoted to Disney: Devoted to Disney:

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Products Produced: Luggage

Disney Products Nil. No Disney products were observed. Observed:

Production Raw material-Cutting-Printing-Sewing-Inspecting-Packing-Finished goods Processes: # Total Employees: 72 #Production Employees: 60

# Buildings: 1

# Buildings by Part of the 1st floor of one 2-storey building used as offices and the 2nd Purpose: floor used as production workshop.

Peak Production Unknown April September Months: None May October January June November February July December March August

Low Production Unknown April September Months: None May October January June November February July December March August Facility Regular 08:00-12:00; Facility # of 1 shift/8 hours per day Hours: Shifts/Hours 13:00-17:00.

No information Other Brands Present? Establishment 2017/3/16 Date: Yr/Mo/Day

Audit Details

Attendance Records Reviewed: Unknown April September None May October January June November February July December March August

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Payroll Ledgers Reviewed: Unknown April September None May October January June November February July December March August

Last Pay Date: Yr/Mo/Day 2018/05/30 Number of 20 Records Sampled:

# Individual Employee 10 # Employee 0 Interviews: Group Interviews:

Numbers per Group: 0

Additional Locations Audited? No Yes; Locations not under same business license Yes; Location under same business Yes; unknown

Explain Additional Location NA Details:

Comments/Observations: Nil

Communicated Findings With: Ms. Liao Bin/ HR Manager

Agreed to and Signed CAPAR? Yes No Unknown

Audit Entered by: (Name) Vertu Yang

Comments Details

Comments: Nil Name and Title of Others Present (ex. translators, observers, trainees): Nil Attendance Records Provided: 11 months from 2017/07/03 to 2018/05/31 Payroll Records Provided: 10 months from Jul 2017 to Apr 2018 Number of Records Sample: Current: 10, Random: 5, Random: 5. Resources Received from Facility (i.e. transportation, meals): The factory provided meals for auditors. Factory Representative in opening meeting (name/title): Ms. Liao Bin/HR Manager; Mr. Sun Wenming/Manager Factory Representative in closing meeting (name/title): Ms. Liao Bin/HR Manager; Mr. Sun Wenming/Manager Page 4 of 17 CONFIDENTIAL – © Disney

(Note: other comments may include but not limit to: details if “Agreed to and signed CAPAR” is indicated “No”; further details regarding audit scope; special observation or comments on the audit process; etc.)

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Audit Violations Age Child Labor: Requirement Acceptable Needs Improvement N/A Unable to Verify

Predetermined Comments: Acceptable

Law / Code: Additional Comments: No apparent violations.

Other: Acceptable Needs Improvement N/A Unable to Verify

Predetermined Comments: Acceptable

Law / Code: Additional Comments: No apparent violations.

Young Persons: Acceptable Needs Improvement N/A Unable to Verify

Predetermined Comments: Acceptable

Law / Code: Additional Comments: No apparent violations.

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Association: Acceptable Needs Improvement N/A Unable to Verify

Predetermined Comments: Acceptable

Law / Code: Additional Comments: No apparent violations.

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Coercion and Other: Harassment: Acceptable Needs Improvement N/A Unable to Verify

Predetermined Comments:

Acceptable

Law / Code: Additional Comments: No apparent violations.

Physical Abuse or Sexual Harassment: Acceptable Needs Improvement N/A Unable to Verify

Predetermined Comments: Acceptable

Law / Code: Additional Comments: No apparent violations.

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Compensation: Minimum Wage: Acceptable Needs Improvement N/A Unable to Verify

Predetermined Comments: Acceptable

Law / Code: Additional Comments: No apparent violations.

Remarks: Local minimum wage standard: (wage per hour or per month): RMB1940 per month since Jul 1,2017.

Overtime Hours: Acceptable Needs Improvement N/A Unable to Verify

Predetermined Comments: Employees work in excess of the legal overtime limit.

Law / Code: Labor Law of the People’s Republic of China (1994), Article 41 requires that The employing unit may extend working hours due to the requirements of its production or business after consultation with the trade union and laborers, but the extended working hour for a day shall generally not exceed one hour; if such extension is called for due to special reasons, the extended hours shall not exceed three hours a day under the condition that the health of laborers is guaranteed. However, the total extension in a month shall not exceed thirty-six hours.

Additional Comments: Auditor noted that workers’ monthly overtime working hours exceeded the legal requirement. • Based on attendance records (from Jul.03, 2017 to the audit day) provided by the factory, about 80% sample workers’ monthly overtime working hours (except Jul 2017 and Feb 2018) exceeded 36h, the maximum was 70h, which happened in Mar.2018.

Remarks: Attendance Recorded by: (automated/electronic, timecard, manual, no recording, etc.): electronic

Through reviewing of the provided attendance records from Jul.03, 2017 to the audit day and employees’ interview, working hour statistics was as the following: 1) For Nov 2017 (Random month), the maximum weekly working hours were 56 hours. The maximum monthly overtime was 60 hours per month. 2) For Mar 2018 (Random month), the maximum weekly working hours were 52 hours. The maximum monthly overtime were 70 hours per month. 3) For Apr 2018 (Current month), the maximum weekly working hours were 56 hours. The maximum monthly overtime was 60 hours per month.

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Overtime Wage: Acceptable Needs Improvement N/A Unable to Verify

Predetermined Comments: Acceptable

Law / Code: Additional Comments: No apparent violations.

Social Benefits and Other Compensation: Acceptable Needs Improvement N/A Unable to Verify

Predetermined Comments: Employees are not provided with legally mandated benefits.

Law / Code: Labor Law of the People’s Republic of China (1994) requires that Article 72, The sources of social insurance funds shall be determined according to the categories of insurance, and an overall pooling of insurance funds from the society shall be introduced step by step. The employing unit and laborers must participate in social insurance and pay social insurance premiums in accordance with the law. Article 73, Laborers shall, in accordance with the law, enjoy social insurance benefits under the following circumstances: 1. Retirement; 2. Illness or injury; 3. Disability caused by work-related injury or occupational disease; 4. Unemployment; and 5. Child-bearing.

Additional Comments: Auditor noted that the factory did not provide social insurance for all employees. Based on the document review, the factory had 72 employees, including 2 retired workers, factory only provided 5 kinds of social insurance to 24 (about 34.29%) employees, provides the commercial insurance to the other employees.

Remarks: Regular Pay Date: 30th of each month. Wage pay in/by (cash, check, direct deposit, etc.): Cash

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Health and Dormitories: Safety: Acceptable Needs Improvement N/A Unable to Verify

Predetermined Comments: N/A

Law / Code: Additional Comments: No dormitory was provided.

Fire & Emergency Safety: Acceptable Needs Improvement N/A Unable to Verify

Predetermined Comments: Acceptable

Law / Code: Additional Comments: No apparent violations.

Hazardous Material: Acceptable Needs Improvement N/A Unable to Verify

Predetermined Comments: Acceptable

Law / Code: Additional Comments: No apparent violations.

Machine & Electrical Safety: Acceptable Needs Improvement N/A Unable to Verify

Predetermined Comments: Special equipment operators (e.g., forklift operator) and employees responsible for special operations (e.g., electrician and welder) are not adequately trained and/or licensed as required.

Law / Code: Regulations on Safety Supervision of Special Equipment (2009 Amendment), Article 38 requires that Operators and the relevant managerial staff of boilers, pressure vessels, elevators, lifting appliance, passenger ropeways, large amusement devices and specialized vehicles used at site (factory) (hereinafter referred to as the operators of special equipment) shall not engage in corresponding operation or management until they have passed the examination organized by the departments for safety supervision administration of special equipment as required by the State and acquired certificates for special operators with a nationally unified formula.

Additional Comments: Auditor noted that factory did not provide the elevator operator certificate. Base on document review, the factory did not provide the elevator operator certificate for review.

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Medical & First Aid: Acceptable Needs Improvement N/A Unable to Verify

Predetermined Comments: Acceptable

Law / Code: Additional Comments: No apparent violations.

Other: Acceptable Needs Improvement N/A Unable to Verify

Predetermined Comments: Occupational health examinations are not provided to employees as required.

Law / Code: Law of the People's Republic of China on Prevention and Control of Occupational Diseases (2011 Amendment), Article 36 requires that For employees conducting operations with exposure to occupational disease hazards, an employer shall organize pre-job, on-the-job, and off-the-job occupational health examination of employees according to the provisions of the work safety administrative department and health administrative department of the State Council and inform in writing employees of the examination results. The expenses for the occupational health examination shall be assumed by the employer. Employers shall not assign employees who have not undergone the pre-job occupational health examination to operations with exposure to occupational disease hazards; shall not assign employees with occupational contraindications to operations causing such contraindications; shall transfer employees who are found during occupational health examination to have suffered health injuries related to their jobs from such jobs and settle such employees appropriately; and shall not rescind or terminate labor contacts with employees who have not undergone the off-the-job occupational health examination. The occupational health examination shall be conducted by medical health institutions approved by the health administrative departments of the people's governments at and above the provincial level.

Additional Comments: Auditor noted that inadequate occupational health examinations. Base on document review, the factory did not provide pre-job occupational health examination reports of the cutting workshop (contacted with dust) and the printing workshop (contacted with chemicals) for review. Remark: Base on document review and management interview, there were no demission personnel in the cutting and printing workshop from Jul 03, 2017 to the day of audit.

Personal Protective Equipment (PPE): Acceptable Needs Improvement N/A Unable to Verify

Predetermined Comments: Acceptable

Law / Code: Additional Comments: No apparent violations.

Sanitation: Acceptable Needs Improvement N/A Unable to Verify

Predetermined Comments: Acceptable

Law / Code: Additional Comments: No apparent violations.

Involuntary Labor: Mandatory Overtime: Acceptable Needs Improvement N/A Unable to Verify

Predetermined Comments: Acceptable

Law / Code: Additional Comments: No apparent violations.

Other: Acceptable Needs Improvement N/A Unable to Verify

Predetermined Comments: Acceptable

Law / Code: Additional Comments: No apparent violations.

Prison, Bonded, Indentured, Forced Labor: Acceptable Needs Improvement N/A Unable to Verify

Predetermined Comments: Acceptable

Law / Code: Additional Comments: No apparent violations.

Monitoring and Ethics: Compliance: Acceptable Needs Improvement N/A Unable to Verify

Predetermined Comments: Acceptable

Law / Code: Additional Comments: No apparent violations.

Insufficient or Inadequate Records: Acceptable Needs Improvement N/A Unable to Verify

Predetermined Comments: Acceptable

Law / Code: Additional Comments: No apparent violations.

Other: Acceptable Needs Improvement N/A Unable to Verify

Predetermined Comments: Acceptable

Law / Code: Additional Comments: No apparent violations.

Transparency: Acceptable Needs Improvement N/A Unable to Verify

Predetermined Comments: Acceptable

Law / Code: Additional Comments: No apparent violations.

Non- Acceptable Needs Improvement N/A Unable to Verify Discrimination: Predetermined Comments: Acceptable

Law / Code: Additional Comments: No apparent violations.

Other Laws (if Labor Contract: applicable): Acceptable Needs Improvement N/A Unable to Verify

Predetermined Comments: Acceptable

Law / Code: Additional Comments: No apparent violations.

Other: Acceptable Needs Improvement N/A Unable to Verify

Predetermined Comments: Acceptable

Law / Code: Additional Comments: No apparent violations.

Protection of the Acceptable Needs Improvement N/A Unable to Verify Environment: Predetermined Comments: The Environmental Compliance Certificate has not been obtained and/or not provided for review.

Law / Code: Environmental Protection Law of the People’s Republic of China (1989), Article 26 requires that Installations for the prevention and control of pollution at a construction project must be designed, built and commissioned together with the principal part of the project. No permission shall be given for a construction project to be commissioned or used, until its installations for the prevention and control of pollution are examined and considered up to the standard by the competent department of environmental protection administration that examined and approved the environmental impact statement.

Additional Comments: Auditor noted that factory did not provide environmental facilities inspection and acceptance approval.

Publication: Acceptable Needs Improvement N/A Unable to Verify

Predetermined Comments: Acceptable

Law / Code: Additional Comments: No apparent violations.

Subcontracting: Acceptable Needs Improvement N/A Unable to Verify

Predetermined Comments: N/A

Law / Code: Additional Comments: Auditor confirmed that XINSHUN JINWANG LUGGAGE TRAVEL PRODUCTS (KUNSHAN) CO., LTD. did not subcontract or receive Disney-branded production from any facility or other sources during Jul.03,2017 to May.31,2018.