Our social compliance program is global and attention to ethical sourcing spans across many departments. We have a global Social Compliance Committee that helps guide corporate management in setting strategy and executing the program, with our international buying offices and merchants all playing key roles in achieving our goals.
Our Social Compliance Committee is comprised of senior leadership from the U.S., Canada and Europe and from relevant disciplines within TJX, including merchandising, sourcing, imports, compliance, enterprise risk management, legal and global communications. The Committee meets on a regular basis and oversees compliance of TJX’s ethical sourcing initiative, which is coordinated by our Assistant Vice President (AVP), Global Social Compliance, who has specific responsibility for managing and overseeing our ethical sourcing program. This global social compliance position reports to the Senior Vice President, Chief Risk and Compliance Officer, and works closely with representatives of the different purchasing functions across all of TJX’s businesses and with the Social Compliance Committee.
As we continue to develop and evolve our social compliance program, we engage with various audiences and consider their guidance. We have reviewed and incorporated many of the international human rights standards enunciated by international bodies, such as the United Nations and the International Labor Organization, and have received and incorporated valuable insights and suggestions from socially responsible investors. We have retained several organizations that have extensive experience and knowledge in the field of ethical sourcing – UL, Intertek and Omega – to assist us with program development, education and training, and compliance monitoring. We are members of the National Retail Federation, the Retail Industry Leaders Association, Ethisphere’s Business Ethics Leadership Alliance and the Ethics & Compliance Officer Association. We also participate in industry conferences and stay current on the latest developments in social compliance and ethical sourcing. Finally, we review and benchmark ourselves against the programs of companies comparable to ours.
Some of our merchandise is manufactured for us and some is designed by our own fashion and style experts, particularly when what we are seeing in the marketplace is not the right value for our customers, meaning the right combination of brand, fashion, price and quality. We believe our responsible sourcing efforts are best devoted to products we have designed and have been manufactured for us, because this is where we are most likely to be able to have a meaningful impact. When we source these products, we require the buying agents and vendors that are involved to identify any active factories that they use, or intend to use, to produce such merchandise.
We and our representatives work closely with our agents and vendors so that they understand our social compliance program and our Vendor Code of Conduct. Our merchants also play an important role in educating suppliers on our social compliance program requirements and encouraging them to make improvements at their facilities, when necessary. We created the TJX Global Social Compliance Manual, which contains, among other important guidance, an audit procedure outline and factory evaluation checklist to help prepare the factory for the audit process. This tool is available in seven languages and offers detailed information designed to help our agents, vendors and factory management better understand the expectations of our Vendor Code of Conduct, as well as the monitoring and corrective action processes. We require our buying agents to disseminate this manual to their entire TJX vendor base.
Factories manufacturing the products we design are required to undergo periodic audits to ensure adherence to our Vendor Code of Conduct. Our goal is to conduct biennial audits of factories in good standing. Factories requiring additional monitoring are targeted to be revisited within six months of the prior audit.
Factories manufacturing the products we design are expected to cooperate fully with us and our auditors and to provide access to facilities and documents. We have developed comprehensive compliance program guidelines for our third-party factory auditors. We regularly review and, as appropriate, modify these guidelines to try to ensure that they are consistent with evolving social compliance issues and trends.
On-site audits conducted by our independent monitors and principal buying agents generally include one to two full working days at each audited factory, and include the following components:
Our AVP, Global Social Compliance, and International Buying Office Associates participate in shadow audits with TJX's independent auditors and with our buying agents' in-house compliance auditors. Shadowing is practiced in order to gain a better understanding of the compliance audit process and challenges, and to better aid TJX in our review of both our audit results and, more broadly, our program's effectiveness.
At the conclusion of an audit, if necessary, a Corrective Action Plan (CAP) is created and concerns are discussed by the auditors with factory management. Factory management is requested to sign the CAP to verify their understanding of the findings. In certain cases, we may require our third-party monitors to re-audit the factory. Our goal is to have re-audits complete within six months of the prior audit, and we strive to work with factories to continuously improve their operations.
At the conclusion of an audit, a copy of the CAP is left with management to assist them in resolving the violations or deficiencies detected during the audit. To encourage collaboration between our buying agents and vendors, a copy of the CAP is also forwarded to both parties’ attention shortly following a third-party audit. TJX receives a copy as well.
For lower risk deficiencies, our buying agents or direct vendors are expected to provide evidence to us demonstrating that remedial action has been carried out. However, where moderate to more serious violations of the Vendor Code of Conduct or the local laws are detected, we require that our third-party monitors re-audit the factory. Problems are tracked and factories are notified of the expectation of remedial action. There are several issues that we consider “zero tolerance” issues. That is, we would immediately terminate the relationship if a factory is found to be in violation of this aspect of our program, including for example, issues like bribery/corruption; child, prison, slave or forced labor; human trafficking; maintaining a facility with all doors and/or exits locked; use of chemicals banned in that region; and failure to pay any wages.
When a problem requires remediation, we expect that continuous improvement is verified during the re-audit. Our general goal is that each re-audit demonstrates measurable improvement from the prior audit. If a factory receives several consecutive noncompliant grades, this pattern may suggest that required remedial action is not being undertaken.
Though we strive to work with vendors to address and resolve shortcomings in their operations, under extreme circumstances, we must conclude that we can no longer do business with certain factories, or that they will be precluded from producing goods for us until they demonstrate that they have addressed the situation and have put management systems in place to prevent a recurrence.
Our preferred approach, however, is to work with vendors whenever possible to address and resolve issues identified during audits of their facilities because the reality is that improving working conditions in factories in underdeveloped countries is an ongoing effort. TJX, like other retailers, is facing this challenge. Our goal, when possible and reasonable, is continuous improvement of conditions at factories. This is preferable to ceasing business with these factories and gives us the ability to influence positive change. We believe that this "continuous improvement" model is in the best interest of the workers in the facilities from which we source goods.
Integral to the success of our compliance program is ongoing involvement and partnerships between TJX, UL, Intertek, Omega, our buying agents and vendors to address shortcomings identified in audits and to work toward improvement.
In keeping with our commitment to protect the environment, audits conducted on behalf of TJX include a review of factory policies, practices and procedures concerning the handling of chemicals and other hazardous waste, and a review of whether the factory is in compliance with applicable environmental laws and regulations. Our Vendor Code of Conduct strongly encourages our vendors to share our commitment to protecting the environment by operating in a sustainable manner where possible, for example by conserving and protecting resources, such as water and energy, and taking into consideration environmental issues that may impact local communities. Furthermore, our supplier training program has been expanded to include considerable coverage of the protection and conservation of water, as well as an overview of the legal requirements on the use of chemicals and hazardous materials in the regions where products are both manufactured and sold. Training includes case studies to assist vendors and factory management in better understanding our expectations and our Vendor Code of Conduct requirements in this area.
The driving tenet of TJX’s Vendor Code of Conduct and our social compliance program is continuous improvement. While we expect each of our vendors and agents to adhere to the expectations set forth in our Vendor Code of Conduct, we also encourage them to make improvements throughout their operations. To advance these objectives, we do more than simply audit suppliers to test compliance; we also provide education and training to our agents, vendors and factory management, so that they understand our expectations and can develop meaningful processes to meet and exceed these expectations.