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Workplace Monitoring

Last Updated: 2017.05.30
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Workplace Monitoring at Partner Factories

Partner Factories Approach and Objectives

Partner Factories Approach and Objectives

At the Fast Retailing Group, workplace monitoring is essential to generating value for both Fast Retailing and its partner factories, as it helps to ensure safe and secure working conditions, greater protection of rights and satisfaction for employees, and improvements in productivity and quality. Fast Retailing works with external auditors to verify that partner factories satisfy our Code of Conduct for Production Partners (CoC), a set of workplace standards established in 2004, and to provide them with feedback. Sites that require improvement are visited by Fast Retailing's Sustainability sourcing team, which works with the factories to identify and resolve the underlying problems. All partner factories are required to endorse and pledge compliance with the CoC. In fiscal 2016, workplace monitoring was conducted 901 times.

From fiscal 2015, we joined Better Work, a partnership between the UN's International Labor Organization (ILO) and the International Finance Corporation (IFC). The program aims to reduce audit and followup duplications for factories and build up factories' capability to implement sustainable improvements.

Fast Retailing also implements pre-contract monitoring for new business partners. Early improvements resulting from this monitoring led to fewer violations and higher evaluation scores after production began.

Upgrades to the Workplace Monitoring Framework

The Production department is expected to work in unison with the Sustainability department and proactively integrate the establishment of ideal workplace environments into its daily agenda to ensure workplace monitoring is of value to both Fast Retailing and its partner factories. This is natural because it is the department that works the closest with the business partners during production. The Sustainability department holds regular seminars to train the Production department and aid its efforts.

The Sustainability team also participates in monthly meetings with Production to verify their plans, and monitors Fast Retailing's directive to ensure that proper working conditions are maintained.

Introducing Workplace Monitoring at Fabric Manufacturers

Fast Retailing has been monitoring working conditions at sewing factories, our first-tier suppliers, since 2004. From September 2015 Fast Retailing also began workplace monitoring at certain fabric manufacturers, covering 70% of UNIQLO's production volume, in addition to monitoring their environmental impact.

Workplace Monitoring Framework

労働環境モニタリングの仕組み

1. Pre-Contract Monitoring

Pre-contract monitoring determines whether a factory is eligible to conduct business with Fast Retailing. We use our standard monitoring procedures and criteria, with added focus on key concerns such as previous violations of child labor laws.

Pre-Contract Monitoring

2. Regular monitoring

External auditors regularly conduct unannounced on-site inspections of first-tier sewing factories, with follow-up audits conducted by external auditors or supply chain sustainability team members. The inspections include an opening meeting, tours of the factory and related facilities (such as cafeterias and dormitories), interviews with factory workers and management, and examination of required documentation. Monitoring concludes with a wrap-up meeting, at which time the auditors review the findings with factory representatives and provide feedback for improvements, if required.

Regular Inspections

3. Factory grading system

Factory Grading System

We grade the monitoring results from A to E.

Factories that do not improve within a set timeframe are subject to strict scrutiny, including a Business Ethics Committee review of the business relationship. The supply chain sustainability team undertakes root-cause analysis of the issue, ensures that the factory develops appropriate improvement plans, and seeks commitment from factory top management to make improvements, as well as confirm any actions that have been taken by the factory before the review. As part of the business relationship review, Fast Retailing also takes into account the factory's business conditions and the local employment situation.

Factories with highly unethical or serious issues are given E grades, and Fast Retailing immediately reviews its contract with them. Regardless of the grade, we provide guidance for improvement to factories with noncompliance identified by an audit, and conduct follow-up monitoring to verify that the improvements have been made.

After implementing the review, Fast Retailing works with the factory to prevent the recurrence of the violations. If the required improvements are fulfilled, we review the business relationship and remove penalties that were put in place in the form of ceilings on our orders.

Workplace monitoring results (partner factory grades)

Despite a decrease in the number of overall workplace inspections, we monitored more individual partner factories than ever before. By increasing the number of local supply chain sustainability team staff, our overall grades have improved, with A and B grades increasing. We have seen a decrease in D grades from the prior year due to more rigorous pre-contract monitoring. Within C grades, where issues related to occupational health and safety are most common, we are continuing to strengthen factory management systems.

Regular Workplace Monitoring Results (as of August 31, 2015)

労働環境モニタリング結果

Improvements From Monitoring Efforts, Fiscal 2016

In October 2015, our supply chain sustainability team found working hours and overtime payment issues in a Bangladesh factory. Payment for overtime was delayed because of the lack of a management system and working hours were higher than expected: up to 75 hours a week in September. We ensured the factory understood our expectations for paying workers on time and minimizing extra working hours. In response, managers paid their workers the money owed and revised the management of overtime capacity planning, including hiring new employees where necessary. As of August 2016, the factory has steadily reduced working hours, maintaining weekly working hours within 60 hours (the stipulated maximum by Fast Retailing), and employees are no longer allowed to work after 7pm.

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