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Under Armour, Inc. Assessment for Accreditation

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Under Armour, Inc. Assessment for Accreditation UNDER ARMOUR, INC. ASSESSMENT FOR ACCREDITATION FLA BOARD OF DIRECTORS MEETING FEBRUARY 2019 UNDER ARMOUR, INC: ASSESSMENT FOR ACCREDITATION OF THE COMPANY’S SOCIAL COMPLIANCE PROGRAM TABLE OF CONTENTS TABLE OF CONTENTS .............................................................................................................. 2 INTRODUCTION ......................................................................................................................... 3 SECTION 1:UNDER ARMOUR COMPANY AFFILIATE OVERVIEW ......................................... 4 SECTION 2: UNDER ARMOUR SUPPLY CHAIN & FLA DUE DILIGENCE ACTIVITIES FROM 2015-2018 ................................................................................................................................... 6 SECTION 3: ANALYSIS OF UNDER ARMOUR LABOR COMPLIANCE PROGRAM FOR ACCREDITATION ....................................................................................................................... 7 SECTION 4: CONCLUSION AND RECOMMENDATION TO THE BOARD OF DIRECTORS .. 30 APPENDIX A: THE UNDER ARMOUR CODE OF CONDUCT ................................................. 31 APPENDIX B: UNDER ARMOUR’S REMEDIATION PROGRESS CHART .............................. 32 UA’s Light House Facility in Baltimore, MD, USA www.fairlabor.org 2 UNDER ARMOUR, INC: ASSESSMENT FOR ACCREDITATION OF THE COMPANY’S SOCIAL COMPLIANCE PROGRAM INTRODUCTION On February 27th, 2019, the FLA Board of Directors approved Under Armour for accreditation; this report provides an assessment of the labor compliance program of Under Armour, Inc. (UA) and concludes with a recommendation to the FLA Board of Directors regarding the accreditation of the company’s program. When joining the FLA, Participating Companies and Participating Suppliers commit to implementing the FLA Workplace Code of Conduct, which ensures “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 bedrock 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. The FLA accreditation process involves staff conducting due diligence on the performance of a Participating Company or Participating Supplier during the implementation period. 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 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. 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 The FLA recognizes the assessment for accreditation of UA’s social compliance program verifies UA contributes to upholding other internationally recognized benchmarks for human and labor rights. www.fairlabor.org 3 UNDER ARMOUR, INC: ASSESSMENT FOR ACCREDITATION OF THE COMPANY’S SOCIAL COMPLIANCE PROGRAM SECTION 1: UNDER ARMOUR COMPANY AFFILIATE OVERVIEW Name of Under Armour, Inc. Category Participating Company Company (UA) Accessories, Apparel, Footwear, Baltimore, Maryland, Location Product/s Digital Health and Fitness USA Communities Current Number Total Annual $5.2 Billion USD of Applicable 154 Revenue Facilities End of FLA Affiliation October 2014 Implementation October 2017 Month/Year Period FLA Lead: Jeff Sybertz (Associate, Social Compliance) Accreditation Supports: Tat Udomritthiruj (Sr. Associate, Social Compliance); Courtney Moran Lead/Support (Associate, Social Compliance); Tiffany Rogers (Manager, Social Compliance) 1) Under Armour, Inc. (UA) was founded in 1996 by Kevin Plank in Washington D.C. in his grandmother’s basement; UA became a publicly traded company on NASDAQ in 2005. Unique 2) UA has exclusive field licenses with several major universities, including the Company University of Notre Dame, the University of California at Berkeley, the Characteristics University of California at Los Angeles, Yale, Northwestern and the University of Wisconsin. 3) UA has a strong emphasis on technology and innovation throughout the product lifecycle, from material and product development to consumer use. 1) Top management commitment, including through the Sustainability Leadership Council; 2) Regular training on workplace standards, transparency, root cause analysis, and health & safety for strategic suppliers; 3) Grievance procedures ensure workers have access to and are aware of the Summary of Key multiple grievance channels they can access, including directly to UA Strengths through its confidential reporting channel; 4) Comprehensive monitoring program that includes pre-assessment meetings with unions, worker representatives’ structures, and/or civil society organizations; and 5) Demonstrated civil society and union engagement in key sourcing regions, especially East Asia, Southeast Asia, and Central America. 1) Continue to provide all headquarter and regional staff with training on the UA Supplier Code of Conduct and Workplace Standards; 2) Continue to grow the Sustainability Team, especially regional staff in key sourcing regions; Summary of Key 3) Continue to improve and expand implementation of and training on Suggestions for responsible purchasing practices; Strengthening 4) Continue to formalize and implement the evaluation of and incentives offered to suppliers for strong sustainability performance; and 5) Continue to support suppliers to sustainably remediate labor violations in UA’s supply chain. www.fairlabor.org 4 UNDER ARMOUR, INC: ASSESSMENT FOR ACCREDITATION OF THE COMPANY’S SOCIAL COMPLIANCE PROGRAM Under Armour, Inc. (UA) was founded in 1996 by Kevin Plank with the goal of creating athletic apparel that stayed drier and lighter than traditional cotton. Plank used moisture-wicking synthetic fabrics, instead of cotton, which stayed dry and light regardless of sweat. The company experienced significant growth throughout the 2000s after developing relationships with Major League Baseball, the National Hockey League, and the University of Maryland. UA filed its initial public offering (IPO) on NASDAQ in 2005; and is publicly traded on the New York Stock Exchange. Currently, UA has exclusive on-field licenses with several major universities, including University of Notre Dame, the University of California at Berkeley, the University of California at Los Angeles, and the University of Wisconsin. Apparel and accessories make up about 80% of UA’s overall revenue, while footwear makes up about 20%. UA also acquired three digital application companies, Endomondo, MapMyFitness and MyFitnessPal, in 2013 and 2015, respectively. UA joined the FLA as a Category B Licensee in 2006 and affiliated as a Participating Company (PC) in October 2014, selecting a three-year implementation period. UA’s Sustainability Team consists of seven full-time positions: currently, there are five headquarter staff and one regional team member; UA currently has an open regional manager position in Asia. The team is led by the Vice President and Managing Counsel, Sustainability and CSR (VP, Sustainability & CSR), who reports to the Executive Vice President, General Counsel & Corporate Secretary. UA sources from 154 factories; Vietnam, China, and Indonesia were the top sourcing countries at the time of the Accreditation process. From the time of its original affiliation through the FLA’s accreditation process, UA has made significant improvements to strengthen its monitoring
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