George: Doing the right thing 2011 2011 Doing the Right Thing 2011
Contents
page 03 Section 1 Our Beliefs
page 08 Section 2 Delivering on our commitments
page 11 Section 3 Community Projects
page 16 Section 4 Evaluating our success Doing the Right Thing 2011
Executive summary Success…but not at any price
Why you can shop at George with a clear conscience...
We’re proud of our Our pilot scheme in Bangladesh has been so successful we’re going to roll reputation for quality it out in factories in India and China. clothing at affordable It has achieved: prices. But we’re equally proud that our success 1 A 14 per cent increase in wages goes hand in hand with 2 A 10 per cent drop in absenteeism this guarantee: 3 A 5 per cent drop in labour turnover 4 A 17 per cent increase in efficiency From factory to wardrobe, we care passionately about the people who make our products. That’s just the start. This report sets out our commitment for the next two We work with more than 720 factories years. in 23 countries and although we don’t directly employ the people in them By 2013, our biggest suppliers must we take responsibility for protecting provide us with open costings about and promoting their welfare. human labour and full transparency on workers’ pay and rights. We work with NGOs and charities to improve workers’ rights, reduce By always doing the right thing, we working hours, improve working guarantee our customers can shop at conditions, increase skills and George with a clear conscience. provide health and education benefits. Doing the Right Thing 2011
Our Beliefs
This year, George Sharing the progress we’ve made in how we work with our overseas will celebrate a suppliers shows our customers they watershed – the have a real reason to put their 21st birthday of our brand. ongoing trust in us for another 21 Reaching this milestone years. gives us an opportunity to This update represents the first step celebrate and a chance to in what is a complex journey. We’ve made some fundamental changes to reflect on our journey so far the way we’re working with our – not only on the success suppliers to create new levels of we’ve achieved, but also transparency within our supply chain.
on our wider influence and From 2013, we will require all global impact as a company. suppliers working on core volume lines to share open costings on human Throughout those 21 years, we’ve labour. This is something that’s never remained true to a set of beliefs been done before and it’s a change founded on the importance of value, for the better; a change we’re Andrew Moore quality and trust and importantly on committed to help them make over MD, George at Asda doing the right thing. As a clothing the next two years. retailer, we recognise that our business relies on a supply chain that We also want to share how we are reaches across continents, improving workers’ rights, promoting encompassing factories and workers female empowerment, delivering in 23 countries. health and education, and at the same time delivering quality and value for As a responsible business, it’s our our customers. priority to ensure we treat people fairly, and show our customers they It hasn’t been an easy journey and we can trust us to do the right thing so don’t pretend we have all the answers. they can shop with us with a clear But with this update, we want to conscience. highlight the important progress we’ve achieved so far and to share our Because we’re part of Asda, offering hopes and aims in building George our customers quality, stylish clothing into a sustainable that’s fantastic value for money is in business for the future. our blood. The trust we have built with our customers over the past 21 years is of paramount importance to us. Doing the Right Thing 2011
Our Beliefs
In 1990, George Davies Our Commitments established the George at Asda brand, the first 1 High quality at an supermarket clothing brand in the UK. Throughout its affordable price 21-year history, George has remained true to its beliefs : 2 Style that lasts – in The George Beliefs: • The George brand stands for quality, style and value durability and in design • We put our customers first every day • We care for our colleagues every day • We strive to be the best we can be every day 3 Customer involvement
We also believe passionately in and influence within the doing the right thing. Our vision for sustainability is to ensure that George business is recognised as a trusted and innovative leader in ethical sourcing and environmental protection.
Through Asda, we were a founder 4 A sustainable approach member of the Ethical Trading Initiative (ETI) and although this was from factory to wardrobe a great starting point on which to base our ethical standard we want to continue to develop and deliver the highest standards possible. Doing the Right Thing 2011
Delivering on our commitments: From 2013, we will require all global suppliers working on core volume lines to share open costings on human labour with full transparency on worker pay, including workers’ rights. We are committed to helping them make that change over the next two years.
How will we do that?
1 Through Lean manufacturing 2 Standard Minute Value 3 Engagement of local NGOs and unions with international expertise on workers’ rights Delivering on our commitments
1
Lean Manufacturing About one in eight of the 721 The Aim factories we work with are based in • Empower the local workforce Bangladesh. Following a listening through improved skill levels group with the international • Increase earning potential for development agency ActionAid and workers, enabling them to enter a number of Bangladesh factory skilled pay-band levels workers in 2008, we committed to a • Reduce working hours to ensure a 12-month pilot project designed to better work/life balance increase factory productivity, improve worker skills, drive social The Result improvements, raise pay, improve The pilot was incredibly successful, quality, and reduce working hours, with factories achieving on average: labour turnover and absenteeism. • 14.2 per cent increase in workers’ wages We partnered with the local Dhaka- • Reduction of 7-10 hours wasted based arm of GTZ – the German time per week, per worker government’s overseas development • 17 per cent improvement in department – to help improve the efficiency productivity and efficiency of a • 5 per cent reduction in labour number of our Bangladeshi factories turnover by reducing waste, what’s known as • 10 per cent decrease in absenteeism lean manufacturing.
Working with four key factories, we introduced a pilot programme to retrain workers; improve and reengineer production flow; and reduce both product damage and downtime.
We are now rolling out the Lean manufacturing process on continuity lines across 17 factories in Bangladesh. The programme will then be rolled out to factories in India and China. Delivering on our commitments
Labour Turnover 25%
20%
Progress report on factories 15% that have participated in 10%
Lean Factory pilot program. 5%
The graphs show the detail behind the progress taking 0% place to date on wages, absenteeism, labour turnover and efficiency. Lenny Valiant Toyo KDS Before Lean After Lean 2010 Lean 2011
Wages % Wage Increase 9000 60%
8000 50%
7000 40% 6000 30% 5000 20% 4000
3000 10%
2000 0% Lenny Valiant Toyo KDS Lenny Valiant Toyo KDS
Avergare wage (before Lean) After Lean 2010 Lean 2011 Total including benefits % wage increase % wage increase Feb 2011 vs before LEAN % increase including benefits
% Productivity Increase Productivity 180% 9000
160% 8000 140% 7000 120% 100% 6000
80% 5000 60% 4000 40% 3000 20% 0% 2000 Lenny Valiant Toyo KDS Lenny Valiant Toyo KDS
After Lean 2010 Lean 2011 Before Lean After Lean 2010 Lean 2011
% Absenteeism Improvement Absenteeism 80% 14%
60% 12% 40% 10% 20% 8% 0% 6% -20% 4% -40% -60% 2% -80% 0% Lenny Valiant Toyo KDS Lenny Valiant Toyo KDS
After Lean 2010 Lean 2011 Before Lean After Lean 2010 Lean 2011 Delivering on our commitments
2
Standard Minute Value George has always been committed to For example, if the SMV for sewing in doing the right thing for all of its sleeves is 10p and it takes two minutes, colleagues, customers and suppliers. the cost per garment is 20p. Factory Although workers in the factories we owners usually calculate labour costs out source from are not directly employed of what’s left after they’ve accounted by us, we recognise that we have a for the price of commodities, freight and shared responsibility with other their profit margin. However, the George retailers to these workers to protect team will now work directly with and promote their welfare. factory owners and insist that cost prices to George buyers include Following the launch of ActionAid’s accurate labour costs upfront. This report, we have been investigating an helps us to check that workers are innovative new benchmark called being paid a fair rate for the job. ‘Standard Minute Value’. This process means factory owners can show accurate labour costs when quoting the cost of a garment. It’s a pioneering approach that defines an internationally-recognised method of accurately calculating, and therefore paying for, the work that goes into making a single garment.
3
Workers’ right s/NGO Engagement We are embarking on an impact assessment an international NGO using local unions in factories using lean manufacturing to see how further improvements can be achieved.
With NGO and union expertise, we are developing a training model focussed on workers’ rights and best HR practices.
Current programmes within Bangladesh have been reviewed and shared with UK NGOs as Bangladesh does not have an effective industry best-practice model.
The Bangladesh Garment Manufacturers and Exporters Association are keen to work with us to evolve the lean concept even further.
Keren Long (Second left) and Indira Chauhan (Right) from the George Bangladesh team Doing the Right Thing 2011
Delivering on our commitments: How we provide quality and value to our customers every day
At George, we recognise that times Reducing costs is not achieved by are extremely tough for customers. one single measure but instead We have a duty to provide high demands a holistic view and rigorous quality clothing that is affordable for examination of all our processes, all. But how do we achieve that? spanning everything from supplier relationships to reducing the size of It is often wrongly assumed that swing-tag labels. George’s low prices are simply a result of how we source our garments. In It is important to understand how fact, it is because of a consistent focus our business model differs from a on efficient operations, and margins traditional clothing retailer on the that are considerably less than those High Street. Being part of Asda of the High Street fashion retailers. makes a major difference.
From supply chain to the shop floor, we reduce excess costs we can pass those savings on to our customers while ensuring that our business practices remain ethical and sustainable. Delivering on our commitments
Around 80 per cent of As a result we don’t need to charge our customers a premium for clothes, what Asda sells each week and we are able to operate on much is groceries, with the rest slimmer margins than traditional High made up of non-food Street fashion retailers. purchases. Clothing makes Our focus at George has always up about half of our been on selling large volumes of lower non-food sales. We have priced garments. Over the years that has proved to be a winning formula, around 380 stores across and means we are now a large the UK, the vast majority of clothing retailer in our own right. them fairly large edge-of- That scale has in turn delivered town supermarkets. We further benefits and cost savings. also have more than The largest cost in a garment is fabric. 18million customers who do We centrally source high volumes of materials including cotton, fabric, their weekly shopping with buttons and zips to drive cost savings us. So our George which are then shared with factory departments benefit from owners. In many instances we leverage our scale with Walmart to the huge footfall our food source globally. business generates each week.
Our customers tend to pick up an item of clothing while shopping for their food, rather than visit our stores just to buy clothing. This is important for a couple of key reasons.
Firstly it means that it’s not necessary to spend huge amounts on advertising; and secondly, because our stores tend to be quite large, and they are located on the edge of towns, our operating costs as a proportion of revenue are significantly lower than smaller High Street stores. This delivers savings in rent and it is far more efficient to deliver products in bulk to our stores than to smaller High Street stores. Delivering on our commitments
Good for people, good for the planet Transportation: Boat five times cheaper than air We centrally source all packaging, hangers and The second largest cost is freight. swing tags and have even reduced the size of those The ways in which we transport our tags to cut costs. Through our in-store garment clothing ranges allow us to reduce costs. By planning our ranges well in hanger recycling process we have recycled over 65 advance, expensive air freight is used million hangers. only as a last resort. The average cost of transporting a garment by boat is five times cheaper than by air. We can also radically reduce our freight costs because of the economies of scale available by working with Walmart.
20% reduction in garment transit packaging Through volume we are able to negotiate much better rates on a global scale. In 2010 we committed to deliver a further 20% reduction in garment transit packaging via measures such as redesigning our footwear packaging and the introduction of thinner garment hangers to reduce the amount of plastic used.
Cut out the middle man We work directly with factory owners and manufacturers to avoid expensive agent’s costs. Because of these relationships we can also work in partnership to create more sustainable businesses; improve factory conditions and efficiencies in production techniques and, as a result reduce working hours and align working pay with improvements in productivity. The work we have done in the past year in Bangladesh is a perfect example of that.
Resampling costs reduced by 40% We work with our suppliers to plan and control our mutual business to reduce costs. Our suppliers, with whom we have long-standing relationships, work on long-lead times of up to nine months, and on high volumes, allowing them greater control of production planning. In addition, we’ve invested in local on-the-ground teams who work with factory owners. That means, for example, that quicker decisions are taken on design, avoiding re-sampling costs. Our local team in Bangladesh helped reduce re-sampling costs by 40% in 2010. Doing the Right Thing 2011
Community Projects
As part of its ongoing • Geosansar - providing 20, 000 Meet the team bank accounts commitment to corporate We also work with Geosansar, which and ethical responsibility, provides access to banking services George has partnerships for workers who don’t possess bank accounts, promoting inclusion and with a number of leading enhanced quality of life through charities and other cause- benefits including lower interest related organisations that rates, local out-of-hours banking kiosks and other financial products – reflect its ethical priorities targeting 20,000 accounts by 2015 and supplier locations. Examples of these • Other cause-related partners that benefit from George’s support include programmes include: - WaterAid and the Ethical Trading Initiative • Phulki - improving the lives of 300 Paul Wright families • Zero waste to landfill Head of Quality and Ethics George works with the Bangladeshi We have signed up to the Defra NGO Phulki which aims to promote Sustainable Clothing Action Plan . the rights of women and children, As part of this, we achieved zero providing access to in-factory waste to landfill by the end of 2010. childcare centres and ensuring We are rolling out recycling bins in all adequate care and education our stores as part of a Salvation Army facilities, with the target of initiative where money is also donated improving the lives of 300 families to Children In Need . by 2015 • New LIfe - improving the lives of • HERproject - promoting the health terminally ill and disabled children and empowerment of 20, 000 female We give all our returned and workers damaged clothing to New Life Working with BSR Business for Foundation. All our clothing is either social responsibility on female health sold to customers, recycled through and education and the female health New Life or sent by the foundation charity HERproject, we are for reuse in other industries such as Indira Chauhan introducing factory-based initiatives mattress fillers. By doing this we Senior Ethical Manager designed to improve female health support New Life to fund medical and empowerment in Bangladesh research and give specialist and India, with the aim of reaching equipment helping improve the lives 20,000 workers by 2015 of terminally ill and disabled children. Community Projects
George HOPE School Successful Stories
With the help of the HOPE Foundation worldwide, we opened the Jamgara George School in Ashulia in March 2009. There are currently 182 children attending the school and by 2013 we hope to have 250 pupils.
The school is also used as a vocational training centre which offers courses in tailoring, reading, writing, computer skills and beauty. 200 people take advantage of the courses available there, some even going on to start their own business.
By the end of 2013, we hope to offer scholarships for further education and university, and opportunity for work experience within the George buying office. Community Projects
Jamgara Industrial Centre of HOPE Successful Stories
The vocational training centre has helped many people, these are a couple of stories where HOPE and George have helped turn lives around.
Joshna Begum has lived in Jamgara for three years with her husband and two children. Her husband has a small grocery shop. She married when she was sixteen but because of complications with her first child, she was unable to work and support her family.
When she heard about the training centre, she immediately joined the tailoring centre. While she was still a student, she started her own business and managed to secure orders from many different people. Now she earns about 4,000 taka per month.
Adhuiry Begum moved to Jamgara when she married three years ago. Her husband works in a medicine company and earns 2,000 taka per month. Adhuiry was in education but was unable to complete it because of financial problems.
When she heard about Industrial Centre of HOPE from a friend, she was very happy to train in the tailoring Centre, because the fees were affordable. She was very attentive and keen on learning, and though she was still a student she managed to get many orders from different people. At present she earns 2,000 to 3,000 taka per month. Doing the Right Thing 2011
We source from these countries:
- Bangladesh - Cambodia - India - Indonesia - Sri Lanka - Mauritius - China - Pakistan - Turkey - Taiwan - Brazil - Thailand - Britain - Vietnam - Bulgaria - United Arab Emirates - Italy - Egypt - Portugal - Morocco - Romania
Evaluating our success
Ethical performance to date
700
600 34% s e i
r 500 o t
c 33% 37% a 29%
f 400 45%
f o
r 300 e 27% 55% b 31%
m 39%
u 200
N 44% 100 42% 36% 23% 9% 10% 1% 0 1% 2006 2007 2008 2009 2010
Orange Yellow Green Disapproved Industry audit Evaluating our success
Over the past 10 years, George has worked hard to promote the welfare of workers in the countries from which we source. Historically, our programme of work has relied heavily on a rigorous scheduled of production site audits, conducted against the criteria provided by the ETI Base Code – a voluntary system that addresses issues including child labour, forced labour, working hours, freedom of association and living wage.
We currently use 150 suppliers through 721 factories across the world. Each year, we conduct approximately 500 unannounced ethical audits, specifically across our George clothing factories and processing plants.
Each audit takes a minimum of one day, is conducted by two independent auditors, and involves interviews with Traffic Light System workers, site inspections and document reviews. We conduct all of our audits unannounced. Green = No issues All factories used by George must be ethically audited before they are approved for production. Once these Yellow = Minimal issues, for example missing EXIT audits have been completed, a risk sign on fire door, incomplete First Aid box – the site is assessment process is then conducted required to develop a corrective action plan and a and factories are graded using a traffic re-audit is scheduled for one year’s time light system.
Orange = Major issues, for example non payment As part of Asda, our audits are of overtime, excessive working hours – the site is conducted through Walmart’s global required to develop a corrective action plan and is supplier programme, making it the re-audited within six months largest and most rigorous programme of its kind in the UK.
Red = Major violations occurring – the site has 30 days to appeal, before being delisted
NB: Where a site has been graded as orange three times (not necessarily consecutively) within a period of two years, that site will be delisted for up to one year. Audits are then carried out continuously on all our production sites. George will not take on any new factories until they are graded as yellow or green. Evaluating our success
Tracking the results of our We also value collaborative efforts, Our Bangladesh office was opened in especially around issues of such 2010 by Keren Long, a longstanding factory audits and re-audits complexity that they are difficult to George colleague who moved from has revealed a significant resolve through audit programmes Lutterworth in Leicestershire to Dhaka . improvement in the way alone. In 2009, George moved to a Having a team on the system of 100 per cent unannounced ground allows us to production sites have audits and also partnered with an develop our addressed labour NGO to conduct a pilot project of relationships further standards, including wages audits off-site. with factory owners, NGOs and workers. and freedom of association We also publish details of an Keren now has a issues. anonymous ‘whistleblower’ hotline team of 30 people. number in all those factories that However, industry experience supply George products, enabling shows that, at a global level, routine workers to report instances of labour Keren violations of voluntary supply chain standards violation. codes are still sadly rife. Many industry stakeholders therefore By using the best-practice ethical argue that audit-centric assessment auditing codes developed by our programmes such as that operated parent company, Walmart, and Monday by George must be supplemented by complementing these with innovative, other innovative approaches to collaboration-based approaches to 1 to 1s with team to tackling this problem. monitoring labour standards across plan priorities for the the supply chain, George aims to Whilst we have no plans to abandon make a positive, lasting difference to week, weekly update our audit-driven system – quite the the clothing industry at a global level. n key projects like opposite, in fact – in 2008 we also o adopted a number of supporting Training and coaching LEAN, training measures that we believe will help our • We have rolled out a George suppliers and factories address academy training programme for sessions. systemic issues. all colleagues, focusing on ethical trading Tuesday These additional approaches include:- • Working closely with factory - This programme offers an Supplier and NGO management to understand root induction session in ethical cause of issues such as excessive trading to all newcomers to the meetings, planning working hours, and to drive change, business, as well as all new d strategy work. identify solutions and establish best suppliers and factory owners we an practice. start working with. Wednesday & - Our orange school programme • We also offer a bespoke ethical gives dedicated in-country training buying course, developed and Thursday and guidance at factory level on a delivered in conjunction with an one-to-one basis to support ETI trainer, which aims to create Factory visits and/or factories in driving change and awareness of the impact of buying supplier meetings, improvement decisions on the production floor. Catch up with UK • Coaching and training suppliers’ • We are part of the ETI purchasing middle-management on George’s practice programme which reviews teams. CSR requirements the impact on workers through the supply chain. Friday • Educating workers as to what they should expect – right down to such for church simple steps as how to interpret Time their payslips and what information for me and prayer to look out for, as well as making es for sure that all workers have a contract in the mosqu the team, critical • Conducting workers’ interviews off- site, through local NGOs, in order to path meetings. gain a full picture of labour conditions Evaluating our success
Timeline of progress Visual of key milestones in George’s 21 year history
1990 George started by George Davies as the first supermarket clothing brand
1995 George bought by Asda
1998 The Ethical Trading Initiative is established. Asda is a founder member
2009 George moves to a system of 100% unannounced audits
09 George joins the DEFRA sustainable clothing roadmap
09 15th July: George introduces the first ever 100 day quality guarantee on school uniforms
09 November: In partnership with GTZ, George launches pilot project to increase productivity, upskill workers and increase wages
2010 8th March: 100 day quality guarantee extended to all George clothing
10 15th March: George is first clothing retailer to put webcams in clothing factories
2011 George pledges that from 2013, we will require all global suppliers working on core volume lines, to share open costings on human labour