Supply Chain Act
California Transparency in Supply Chains Act of 2010
The California Transparency in Supply Chains Act of 2010 requires companies doing business in the state of California to disclose their efforts to eradicate slavery and human trafficking in their supply chain. This law is designed to increase the amount of information made available by companies on their efforts to eliminate slavery and human trafficking, thus allowing consumers to make more informed choices regarding the products they buy and the companies they choose to support. PacSun believes that workers at our supplier factories have the right to freely choose where they work and be treated with dignity and respect. Our efforts to ensure that slavery and human trafficking are not used in the production of our goods include the following:
- Supplier Certifications: Through our supplier agreements, PacSun vendors and their factories must certify that their factories adhere to all terms and conditions of the agreement which includes prohibiting the use of forced labor. PacSun has also created a Vendor Code of Conduct, in line with international standards, conventions and laws which forbids the use of all forms of forced labor in the manufacture of our products. Our definition of forced labor is inclusive of slavery and human trafficking.
- Verification ion and Evaluation of our Supply Chain:
PacSun requires all suppliers to complete and sign a questionnaire disclosing information on all factories who produce PacSun's proprietary branded merchandise. Part of this questionnaire requires that factories agree to a third party audit to verify compliance with PacSun's Vendor Code of Conduct. Additionally, whenever possible, our sourcing and Quality Assurance teams will conduct factory walkthroughs to evaluate their suitability to produce PacSun goods. Part of this evaluation includes assessing workplace conditions and notifying our social compliance team of any human rights issues observed during the walkthrough.
Third Party Audits PacSun uses independent third-party monitoring firms to audit factories manufacturing PacSun's proprietary branded merchandise to verify compliance with our code of conduct. All factories and certain significant subcontractors are audited on an annual basis. Our goal is to audit all subcontractors by 2017. Audits are conducted on a semi-announced and announced basis. The entire factory, including dormitories, if applicable, is audited. The auditors will interview groups of employees as well as individuals without management presence, to allow them to freely comment on their work conditions. Additionally auditors review employee documentation for residency, age, pay, etc.
Our factories are given a two week window as to when their audit will take place. Our Overall Compliance average (OCA) goal for our factories is 90%. Any factory that scores below 80% will be put on a corrective action plan (CAP); which clearly lists the areas that need improvement, a subsequent desk top review will be done to confirm corrections that were completed. If a re-audit is necessary we will give the factory three to six months to complete the CAP and then schedule a re-audit.
PacSun schedules audits on annual bases; any existing factory that has generated 20,000 plus units at the time of their audit renewal date must undergo a PacSun, commissioned audit. We will accept WRAP certification in lieu of a PacSun audit. New factories may submit a recent audit from a retail company, whose code of conduct includes the prohibition of all forms of forced labor, including slavery and human trafficking. They must provide a passing comprehensive audit report that has been performed in the last six months and proof of the completion of the CAP.
- Accountability: PacSun has a zero tolerance policy for violations involving any form of forced labor, slavery and human trafficking. Vendors or factories found to be in violation of this policy will be immediately terminated. Our social compliance team works closely with our senior leadership and General Counsel to ensure that our suppliers are in compliance with our Code of Conduct. Our executive management is accountable to the Nominating and Governance Committee of PacSun's Board of Directors which is provided 6 updates on our social compliance program on a regular basis.
- Training: PacSun has conducted training with its sourcing teams on the purpose of the Transiency Act, and on monitoring the risk for human trafficking that adherence to our Code of Conduct. Additional training with merchant groups will take place on an Annual base. We also meet regularly with our key suppliers and reiterated PacSun's zero tolerance policy for factories who engage in slave labor or human trafficking. Suppliers have been informed that they must make every effort possible to guarantee that workers in their factories and the factories of their subcontractors are employed at their free will. Any supplier or subcontractor found in violation of this policy will be terminated. PacSun takes issues involving human rights seriously and we expect our suppliers to do their best to ensure that forced labor in any form is not used in the production of our goods. We will continue to update our policies and procedures as needed to make certain that the appropriate safeguards are in place to prevent any mistreatment of persons involved in our supply chain.