Working conditions in external factories that manufacture our products have long been a priority issue for us. We have participated in the industry initiative the Business Social Compliance Initiative (BSCI) for many years and apply BSCI’s Code of Conduct.
All manufacturers must sign, and commit to abide by, the code of conduct, which is verified through periodic monitoring. Our licensees for bags and footwear are also active in BSCI.
Our goal is that at least 80 percent of the total purchase volume (own production) will come from manufacturers that have been audited by BSCI and achieved at least an approved level or have another recognized certification such as SA8000. Another goal is that all key suppliers will participate in BSCI’s monitoring system and undergo regular audits. A key supplier is one that supplies a significant share of the product volume (at least 10%) and/or products that are considered especially important for any reason.
What we are doing to achieve our goal
We have a structured supplier control program to identify and address challenges and risks associated with suppliers. An important part of the program is the Business Social Compliance Initiative (BSCI). We apply BSCI’s code of conduct, including the focus areas below.
BSCI’s code of conduct is based on the International Labour Organization’s (ILO) core conventions, the UN declaration on human rights and the UN Convention on the Rights of the Child. The code of conduct is an integral part of our supplier control program. The factories commit in writing to abide by it. Compliance is verified through audits by the companies participating in BSCI. BSCI participants that buy products from the same manufacturer can benefit from each other’s audits and monitoring.
We monitor that our factories undergo BSCI audits. If any key factories have not already been introduced to the control program by another BSCI participant, we take ownership, so-called RSP (Responsibility), for the factory in question. This means that we hold the principal responsibility for monitoring and control of the factory.
Deviations from the code detected during an audit are addressed through a special action plan, which in turn is followed up within one year to verify that the issues have been alleviated.
Our suppliers are encouraged to participate in BSCI’s Capacity Building training, with a focus on those that need developing.
98 percent of our products come from factories that are part of the BSCI program and have undergone audits.
In 2015, 85 percent of the total purchased volume came from production units that have been approved by BSCI, meaning having reached at least level 1 of 2, according to BSCI’s original scale.
Our four largest manufacturers, together accounting for over 80 percent of our production (based on volume, i.e., number of units produced), were all approved; see below. One of these factories, the company’s largest, also holds SA8000 certification, an internationally recognized workplace standard for factories. We hold RSP for all four of our principal suppliers.
In 2015 a total of five supplier audits were conducted: two by us at two large factories and three by other BSCI participants that manufacture at the same factories as the company. Of the two factories that we audited (which are also included in the table below), one received the highest grade (Level 2, ”Good”), while the other was rated as “Improvement Needed” (Level 1).
Share of production
|Factory 1, China||
|Yes||Good (2), SA8000|
|Factory 2, China||
|Yes||Improvement Needed (1)|
Factory 3, China
Factory 4, Turkey
Identified deviations in the case of the factory with the rating “Improvement Needed” involved insufficient documentation, e.g., policies that fell short of regulations and unclear roles and responsibilities internally (management system), but also excess overtime. An action plan was implemented in 2015 at the factory and a new audit will be performed in 2016. According to BSCI’s current grading system, however, both of the factories audited by us in 2015 formally achieved a rating of approved (at least 1 of 2).
One of our smaller factories is non-compliant in terms of maximum overtime, documentation of compensation and verification of employee ages. Safety issues were raised as well. We take this seriously and in 2015 therefore took RSP for the factory. In 2016 plans an initial audit according to BSCI 2.0 will be conducted. Due to the nature of the non-compliance, the company felt this was necessary even though the factory accounts for just a small share of its total production.
In 2015 purchasing for sports apparel was gradually phased out from the former licensee in the Netherlands (Björn Borg Sport B.V.), which is being wound down, and taken over by Björn Borg centrally. As part of this transition, focus in 2015 was on ensuring that all manufacturers of sports apparel signed and committed to BSCI’s code of conduct. In 2016 the sports apparel factories will be fully integrated into BSCI, including into the monitoring system. Going forward these manufacturers will therefore be included in the comparative figures in this report.
As part of its overall supplier control program, we also conduct our own semiannual factory evaluations. Once a year a more comprehensive evaluation of all manufacturers is done as well.