Preventive Measures and Actions Taken for Addressing Salient Human Rights Issues

Last Updated: 2024.12.20
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Fast Retailing takes preventive measures and actions for solving human rights issues identified through our due diligence processes and stakeholder engagement, involving local and global experts.

Responsible Purchasing

We have formulated policies and guidelines to ensure responsible purchasing in our supply chain, and we are always striving to build better relationships with our production partners.

Responsible Purchasing Policy

All Fast Retailing brands act as entities that place orders and outsource the manufacturing of products to partner factories. We are aware that conducting transactions in an appropriate manner (responsible purchasing) helps ensure stable management and growth for the factories that receive those orders and promotes the creation of better working environments. We have created the Fast Retailing Responsible Purchasing Policy to serve as a guideline for the conducting of appropriate transactions. We believe that ensuring the implementation of this policy and clear accountability consistently will earn the trust of our customers and other stakeholders. To maintain consistency of the implementation and improvement of our purchasing policy, we cooperate with the Fair Labour Association (FLA) as well as the Better Work program, a program which is jointly supported by the United Nations International Labour Organization (ILO) and International Finance Corporation (IFC).

The Fast Retailing Responsible Purchasing Policy stipulates matters that must be taken into consideration when production departments or other purchasing-related departments placing orders to factory. For example, when placing orders, those departments are required to plan their orders based on the production equipment and capacity of a specific factory, place orders whereby product volumes and delivery dates agreed in advance with the factory, and only change the quantity or delivery date with prior consent of the factory. Departments are also prohibited from exploiting any superior bargaining power when negotiating order prices or period of payments. When negotiating order prices, purchasing-related departments must consider various factors such as rising labor costs including the statutory minimum wage and raw materials costs.

We may also occasionally phase out business with production partners based on business decisions. When we terminate a business relationship with a factory, we follow the responsible exit process set forth in the Fast Retailing Responsible Purchasing Policy to mitigate the impact on the factory and its workers.

Specifically, we assess the potential impact on the factory's business and its workers, considering factors such as the share of the production volume that Fast Retailing brands account for at the factory, the financial situation of the factory, and the potential impact on factory workers. Depending on the case, the matter will be submitted to the Business Ethics Committee for deliberation, which prepares a withdrawal plan that includes a schedule for terminating the transaction and the volume of orders leading up until termination. The withdrawal plan is communicated to the factory at an appropriate time, and transactions are reduced gradually. This allows the factory sufficient time to accept orders from other business partners and to implement various management reforms, mitigating the impact on the factory's business and its workers. After notification, we continue to monitor the situation of the factory until withdrawal is completed, working to prevent or correct any worker rights violations, or other problems that may arise.

Educational activities and monitoring

We conduct regular training for employees working in the production department and other purchasing-related departments based on our Responsible Purchasing Policy. In fiscal 2022, we conducted training for 454 members of Fast Retailing Group brands responsible for merchandising, product planning, R&D, production, and other functions. We also conduct regular surveys and interviews with partner factories regarding compliance with the purchasing policy and strive to implement consistent improvements (see items relating to the Business Ethics Committee below).

Production Department initiatives for building better partnerships

Fast Retailing has been building partnerships with partner factories for many years because we are committed to providing customers with truly good clothes, and that includes the background conditions in which our products are made. Through those efforts, we have successfully established long-term relationships with a select number of partner factories. By sharing our planned orders with the factories in advance, the factories are able to conduct a systematic production which can secure sufficient production capacity.

We have implemented various initiatives to strengthen partnerships in the past. The measures that we have put in place primarily at our major partner factories form the foundation of the responsible procurement policy we are pursuing today. For instance, any measures, as listed below, implemented by our flagship UNIQLO brand with effective results will be or have been implemented in our other brands.

• Information sharing in relation to our business development and product planning strategies with partner factories in a timely manner through the holding of regular meetings with senior management as well as annual factory conferences.
• Assign production department employees to our production offices in Shanghai, Ho Chi Minh City, Dhaka, Jakarta, and Bengaluru to manage product quality and monitor the progress of production processes. Employees of the production department will be responsible for specific factories, together with takumi artisans and textile industry experts, take a site visit of their assigned garment factories and fabric mills on a weekly basis to understand the condition of the factories at site, and give advice on improvements to ensure correct production processes. Through product quality and monitoring process, it helps us to identify the issues and understand the condition of the production capacity to place our orders properly.
• Share planned orders with our factories on a weekly basis.

Related Link

• Quality and Safety

Deliberations in the Fast Retailing Business Ethics Committee

Any serious problems in business between Fast Retailing and partner factories (e.g. defects, delivery delays) are escalated to the Business Ethics Committee. The committee discusses the issue to determine the share of responsibility, the need to revise our business relationships, and other related matters. The Fast Retailing Business Ethics Committee includes standing and external Audit and Supervisory Board members.

Annual Questionnaire for Business Partners

Fast Retailing sends an annual questionnaire to our major business partners to ensure we engage in fair business practices. For key garment factories and fabric mills, since fiscal 2022, we have switched the survey to an anonymous questionnaire by Better Buying, a global NPO that promotes responsible purchasing by brands, initiated by suppliers in the apparel industry. Questions include whether we place orders in a way that supports the labor conditions and human rights of our partner factories. When questionnaire results indicate a need for improvement, our Sustainability Department conducts interviews of both Fast Retailing and our business partners. When issues are identified, they are escalated to the Business Ethics Committee.

Related Link

• Business Ethics Committee

Prevention of Child Labor

Child labor is a serious social issue that impedes the healthy growth of children and deprives them of educational opportunities. Fast Retailing is committed to abolishing and preventing child labor and upholds the rights described in the international guidelines such as "Children's Rights and Business Principles".

Fast Retailing has mandates that production partners have preventive measures against child labor in the supply chain, and this is clearly stipulated in our Code of Conduct for Production Partners. During workplace monitoring, auditors check whether factories validate the ages of workers with proper identification in recruitment.

Fast Retailing has a zero-tolerance policy for serious violation of human rights. Child labor is one of the issues that fall under the zero-tolerance classification. When a child labor-related issue is found, the matter is escalated to the Business Ethics Committee, which determines whether to terminate or review our business relationship. In parallel, we discuss measures with the factory and monitor them until improvement is completed. The Business Ethics Committee considers the potential financial impacts on the factory, as well as on worker employment, and makes a recommendation on the business relationship to the Production Department. We may terminate business when remediation of serious issue is not validated in a follow-up audit. Fast Retailing strives to avoid such scenarios by closely monitoring factories and preventing serious issues that may lead to contract review or business termination.

Responsible Recruitment

Fast Retailing has clarified in its Code of Conduct for Production Partners to specify that there is zero-tolerance for forced labor including human trafficking. In the supply chain, migrant workers are especially vulnerable to discrimination in the recruitment process and during employment. Committing to respect the International Convention on the Protection of the Rights of All Migrant Workers and Members of Their Families, we monitor carefully to ensure workers are treated fairly during the recruitment process and during employment. We also enforce trainings to primary employers of migrant workers in the apparel sector such as garment factories and fabric mills. We also disclose information on the percentage of migrant workers at each factory via our production partners list.

Related Link

• Enhancing Traceability and Production Partners List

Responsible Recruitment Policy

In February 2019, Fast Retailing first signed the commitment to Responsible Recruitment as defined by the Fair Labor Association (FLA) and the American Apparel & Footwear Association (AAFA) in October 2018.This is the industry's commitment to mitigate potential forced labor risks for migrant workers in the global supply chain. When the FLA and AAFA updated their commitment in March 2023, we renewed our support for Responsible Recruitment and further strengthened our policies to protect foreign migrant workers' rights. We require our garment factories and fabric mills to commit to the following four standards:

• No worker pays for their job.
• Workers receive a timely refund of fees and costs paid to obtain or maintain their job.
• Workers retain control of their identity documents, travel documents, or any other personal documents, and have full freedom of movement.
• All workers are informed, in a language they understand, of the basic terms of their employment before leaving their country of origin.

Driven by our commitment to Responsible Recruitment, in September 2019 Fast Retailing launched a new partnership project with the International Organization for Migration (IOM) to study the recruitment and employment conditions of migrant workers in the company's supply chains. The IOM is the leading international organization in the field of migration. The partnership project aims to increase visibility into the company's supply chains, as well as to develop our capacity to respond to identified challenges related to the human and labor rights of migrant workers. The collaboration included an assessment of recruitment practices carried out by garment factories and fabric mills that employed migrant workers in Japan, Malaysia, and Thailand. The project also included training for Fast Retailing management, sourcing teams, and country officers to embed principles and measures protecting migrant workers in company policies and guidelines.

Fast Retailing Standards and Guidelines on Responsible Recruitment of Migrant Workers for Production Partners and Due Diligence Activities

In 2020, with the support of the IOM, FLA and ASSC*, we adopted the Fast Retailing Standards and Guidelines on Responsible Recruitment of Migrant Workers for Production Partners (the Standards and Guidelines) and the methodology to assess compliance with the Standards and Guidelines by factories. The Standards and Guidelines were updated in September 2023 to reflect the stricter Responsible Recruitment principles as renewed by the FLA and AAFA in March 2023.

• Fast Retailing Standards and Guidelines on Responsible Recruitment of Foreign Migrant Workers for Production Partners (688KB)

*ASSC: The Global Alliance for Sustainable Supply Chain (ASSC), an NGO in Japan that promotes initiatives on human rights and working environment issues, including those of migrant workers

Since March 2020, we have held explanatory and training sessions for garment factories and key fabric mills that employed foreign migrant workers located in Japan, Malaysia, and Thailand to explain and increase their understanding of the Standards and Guidelines. Factories have enhanced their management systems and made efforts to operate in accordance with the Guidelines and they also have been proactively conducting training on related laws and regulations. For example:

• In August 2022, Fast Retailing conducted training with the support of IOM on how to implement the guidelines for production partners in Japan. The training helped factories better understand how to identify human rights risks to migrant workers in the recruitment process, and how to assess internal recruiters' practices for compliance.
• In August to September 2022, IOM provided basic training of responsible recruitment to recruitment agencies in Sri Lanka and Nepal, countries where many migrant workers come from. Through the training, we confirmed that the recruitment agencies understood and complied with Fast Retailing's standards and guidelines of responsible recruitment.
• In October to December 2024, Fast Retailing conducted training on FR's new standards and guidelines targeting suppliers in Malaysia and Thailand that employ foreign migrant workers. A total of 8 factories participated in the sessions.

We have also started to reach out to recruitment agencies in the countries of origin of migrant workers. In December 2023, to deepen our knowledge and due diligence of the migration corridor between Nepal and Malaysia, members of the Sustainability Department, together with one of FR's production partners and local civil society members, travelled to Nepal to carry out awareness raising campaigns on ethical recruitment, with an aim to minimize risk in the country of origin of migrant workers. We also participated in two agency due diligence assessments to understand the whole recruitment process from village level to pre-departure in Kathmandu.

Workplace Monitoring Focused on Foreign Migrant Workers' Recruitment and Employment

In January 2022, we launched workplace monitoring focused on foreign migrant workers' recruitment and employment in line with the Guidelines. Production partners in our garment factories, and core fabric mills fall within the scope of monitoring.
Prior to an assessment of the recruitment process and working conditions for foreign migrant workers, we also carry out a pre-assessment, collecting information from production partners to understand their workforce composition and how the recruitment process is managed at home and destination countries. This pre-assessment provides insight into priority risk areas to focus on during the on-site assessments.

On-site assessments include onsite inspections, documentation reviews (e.g. policies on: recruitment, wages and benefits, and grievance handling, payslips, employment contracts etc.), and interviews with management and workers. If the production partner provides accommodation to workers, workers' dormitories will also fall under the scope of assessment. In cases where we identify high risks, or we suspect production partners were not transparent during the assessment process (e.g. false records, double bookkeeping, worker coaching etc.), supplementary measures will be initiated, including follow up interviews with workers in a safe, off-site location, follow up assessments, or additional unannounced visits.

If a zero-tolerance issue arises, such as, where fees and costs paid by foreign migrant workers are not reimbursed, or we find no validated improvement of a previously identified serious issue, the matter is escalated to the Business Ethics Committee. The Committee discusses the potential financial impact on the factory in question and the associated risk of worker dismissal. The Committee then determines whether to terminate or review our business relationship and makes recommendations to the Production department. In parallel, we discuss measures with the factory and monitor them until improvement is completed. We may terminate business when remediation of a serious issue is not validated in a follow-up audit. When other issues are found, factories are required to develop the improvement plan within a timeframe agreed on with Fast Retailing and execute improvement actions. The status of the actions will then be confirmed in the next annual audit.

We have found several issues in our garment factories and core fabric mills that violate the basic principles such as the payment of recruitment fees (e.g. travel costs, passport renewal fees) by migrant workers, and the fact that migrant workers sometimes do not fully understand the terms and conditions of their contracts before they leave their countries. We have agreed on improvement plans for these issues with factories and monitor progress until the planned improvements are completed.
In 2022, in partnership with IOM, training was conducted to enable production partners to effectively implement the guidelines.

Through this partnership with IOM and production partners, we confirmed that by the end of May 2024, more than 9,800 foreign migrant workers received repayment of recruitment fees and related costs, which amount to over USD 4.5 million.

Related Links

• Case Study of the IOM and Fast Retailing Partnership: Navigating the Path towards Ethical Recruitment and Fair Labour Practices in Garment and Footwear Supply Chains

Coercion and Harassment

Coercion and harassment is an issue that can lead to adverse effects on the working environment and workers' physical and mental health. For a healthy working environment, it is crucial that workers can work without fear of coercion and harassment. Fast Retailing does not accept any forms of coercion and harassment and clearly stipulates in our Code of Conduct for Production Partners that all workers shall be treated with respect and dignity.

Establishment of Complaints Committees at Factories in Bangladesh

As a result of grievances and country risk analysis, we found that remedies and preventive measures against harassment issues were required in factories in Bangladesh. Subsequently in 2019, we launched a pilot project to put in place a complaints committee in some of our factories partnering with two local NGOs in Bangladesh, Awaj Foundation and Change Associates Ltd. The committee must consist of at least five members, the head of the committee and the majority of its members must be female, and two members must be from outside of the factory. The committee is to establish anti-harassment policies and guidelines, investigate issues and conciliate harassment cases. The committee will meet every second month. Management, workers and committee members were trained by the NGOs to gain basic knowledge on harassment through open discussion on concrete cases of inappropriate language and behaviors.

By the end of fiscal 2021, training by the NGOs was provided to factory management, workers and committee members at 29 factories. The training included train-the-trainer for two employees per factory. The trained employees in turn conducted training on gender equality and committee protocol for middle managers and all employees at each factory. In 29 factories where we conducted training in fiscal 2021, we provided additional training focused on problem solving for two trainers per factory in fiscal 2022. These trainers provided training on gender equality and complaint committees to middle management and all employees in their factories. In fiscal 2022, Fast Retailing provided training to management, workers, and complaint committee members in eight factories that we started doing business with. In fiscal 2023 and 2024, we provided similar training respectively in four and two factories.

By the end of fiscal 2022, all garment factories in Bangladesh established policies and guidelines on harassment prohibition, procedures to manage a Complaints Committee and established such committees. As a result, in fiscal 2022, total 25 grievances have been resolved through investigation and arbitration by the committees. In fiscal 2024, the committees resolved a total of 18 grievances. In addition, Fast Retailing developed audio clips, aiming at raising employees' awareness of harassment in factories, and conducted checks that they are played onsite during factory visits. The audio clips provide a simple, easy-to-understand definition of harassment, including who employees should report their grievances to and what action can be expected from the committee. Fast Retailing also assessed the functionalities of the committees. The assessment evaluated policies, guidelines, mechanisms and operations of management systems for training and grievances in the factories.

Health and Safety

International Accord for Health and Safety in the Textile and Garment Industry

In August 2013, Fast Retailing joined the Accord on Fire and Building Safety in Bangladesh (Accord) which was established to protect the safety of garment factory workers from building collapses and fire. We have worked to help partner factories establish health and safety committees as recommended by the Accord as part of its central aim to ensure safe workplaces.

In 2021, the Accord signatories renewed their partnership and established the International Accord for Health and Safety in the Textile and Garment Industry (International Accord), which was also signed by Fast Retailing in September 2021. This agreement confirms the continued commitment of signatories to support workplace safety programs in Bangladesh through cooperation with the RMG Sustainability Council (RSC), a national tripartite organization governed by brands and retailers, trade unions, and manufacturing associations. The signatories to the International Accord further committed to exploring the expansion of its scope to include other human rights due diligence responsibilities.

In May 2023, Fast Retailing also signed the Pakistan Accord on Health & Safety in the Textile & Garment Industry, which is a Country Specific Safety Program (CSSP) and an Addendum under the International Accord. The newly launched Pakistan Accord is a legally binding agreement with independent oversight, and the program will be implemented through close collaboration and involvement of the Pakistan government authorities and the manufacturing industry. Developed in cooperation between brands and unions, it will deliver increased safety for vulnerable manufacturing workers in Pakistan. As an early signatory to the Pakistan Accord, Fast Retailing underlines its strong and ongoing commitment to ensuring worker health and safety at the facilities of all our production partners where we conduct manufacturing.

Promoting Initiatives to Empower Female Workers

Respecting Rights of Women Working in Factories through Workplace Monitoring

In the workplace monitoring of factories, Fast Retailing monitors gender-related issues such as discrimination and harassment as well as health and safety issues relevant to women's rights. Our audit checklist used for workplace monitoring includes the following questions:

• Is the facility's written rules and regulations and workplace standards regarding coercion and harassment and discrimination compliant with local laws and Fast Retailing's Code of Conduct for Production Partners?
• Have there been any instances of sexual harassment?
• Are the disciplinary rules and practice fair, reasonable and compliant with legal requirements? Are they applied to any physical, sexual, psychological or verbal violence, harassment or abuse, and also applied to the facility management?
• Have there been any instances of discrimination in employment, promotion, compensation, welfare, dismissal and/or retirement? Are there any pre- and/or post-employment requirements such as pregnancy tests?
• Are workers trained regarding anti-discrimination and is there a system in place for them to file discrimination-related grievances?
• Have there been any instances where the facility management attempted to prevent workers from legitimately executing their rights of freedom of association?
• Is drinking water accessible and adequate at each facility floor?
• Is the facility's noise levels, ventilation, temperature, lighting, cleanliness, and tidiness suitable as a working environment?

When improvements are required, we support our partners to implement measures for improvement. In addition, through our hotline for factory workers, we have identified gender-related issues and have taken concrete action for improvement such as supporting establishment of complaints committees at factories in Bangladesh.

Initiatives to Empower Female Workers

Since 2019, Fast Retailing has engaged in a program named "Women Empowerment Program" to support the career advancement of female workers in garment factories in Asia, the company's main production hub. In June 2019, Fast Retailing partnered with UN Women and visited Bangladesh to better understand the challenges faced by female workers and factories. To provide proper support, we firstly worked on identifying challenges that female workers and factories faced. We also had dialogues with the local CSOs (civil society organization) and management of factories to help shape a pilot project with our partner factories. Our baseline assessment revealed that challenges faced by female employees included a lack of interest in undertaking the role of a supervisor due to lack of services such as transportation, childcare and maternity support, and also that challenges faced by factory management included unfavorable policies for career advancement of female workers.

For these identified issues, we provided training for selected male and female employees at partner factories, including gender equality and worker rights and responsibilities. Advanced training on leadership and technical skills was provided to female participants aspiring to become supervisors to set these workers on a path of career promotion. We also trained internal trainers in our partner factories so that they would be able to conduct the training.

This program began in 2021 and from June that year, we began partnering with a consulting company in Bangladesh that contributed significant research on women's work styles and trainings on women's empowerment. With its support, we have been expanding the project to other partner factories in Bangladesh providing training for target workers.

To promote the initiative, we have set the following three targets to be achieved by the end of 2025 at eight of the company's partner garment factories in Bangladesh:

1. 1,500 female workers trained to be supervisors
2. On average, at least 30% of supervisory and/or managerial roles to be held by women
3. Female employees will have increased access to:
   • childcare facilities and services;
   • physical and mental wellbeing support; and
   • safe transportation to and from the workplace

As of the end of March 2024, 959 female workers have completed the training, and on average, 16% of supervisory and/or managerial roles are held by women in participating factories. In 2024, we continue to expand and deepen the impact of the program. In addition to increasing the number of training sessions to include a greater number of workers, a new focus for the program will be to strengthen the enabling environment for female workers to thrive and feel safe in the workplace. Activities will include supporting the implementation of new and fit-for-purpose childcare facilities and services for production partners; understanding the challenges and opportunities female workers have to access better physical and mental wellbeing support; and reviewing and addressing with factory management the existing risks female workers face when commuting to and from the workplace.

Wages and Benefits & Living Wage

Living Wage

In order to ensure fulfilling and stable lives of people working in the supply chain, Fast Retailing aims not only to guarantee minimum wages, but also to realize living wages. To meet legal requirements regarding wages and benefits, we set clear goals to reduce the number of audit findings on wages and benefits, and working hours. Our Sustainability Department supports factories through close follow up, sharing good practice examples to secure worker income while working hours are reduced.
In the Fast Retailing Code of Conduct for Production Partners, we state that a living wage should be at a level which not only satisfies workers' basic needs for clothing, food and housing, but also enables workers' decent lives.

Fast Retailing is a member of the Fair Labor Association (FLA) which established a commitment to fair compensation in 2015. The FLA uses compensation data collection methodology derived from the Ankers' methodology of the Global Living Wage Coalition and various civil society organizations' expertise in setting living wage benchmarks and understanding workers' basic needs from a local perspective. Fast Retailing will analyze compensation data and how it is paid in our factories in collaboration with FLA to understand how solutions can be implemented to address identified wage gaps.

For more details of Fast Retailing's goals and initiatives to realize the living wage, please visit:

• Living Wage Approach (256KB)

Global Partnership For Social Protection and Improved Environments for Asian Workers （ILO）

In September 2019, Fast Retailing and the International Labour Organization (ILO) announced a partnership to improve social security systems and worker environments in Asia. From September 2019, Fast Retailing provided US$1.8 million in funding over a three-year period. The funds were invested in ILO research on labor markets and social security systems in Asian countries, as well as promoting employment insurance in Indonesia and strengthening worker support mechanisms during periods of unemployment.

Asia's workers, especially garment-manufacturing workers, are at high risk of job displacement due to the rapidly-shifting employment needs of the region's evolving economies. However, existing social protection schemes and labor market policies in the area often do not fully protect workers from risks of unemployment or from risk of hardship associated with protracted unemployment. Through this project, the ILO helped create momentum for this change, supporting government action toward the establishment of the scheme. As a result of such efforts, in November 2020, the Omnibus Law on Job Creation was issued in Indonesia and an employment insurance scheme to secure an income during periods of unemployment was added to the country's social security system. The Indonesian government began implementing unemployment benefits in February 2022.

In addition to this support, the ILO developed and delivered training for employment bureau staff and vocational counselors of the Ministry of Manpower who helped facilitate a return to work for people who unexpectedly lost their jobs. The ILO also provided technical support to broaden the range of skill and knowledge programs offered by public vocational training centers to facilitate reemployment. This included training for emergent industries in Indonesia, where reemployment prospects were growing, such as computer networking and animation production.

Related Links

• Partnership with the International Labour Organization (ILO)
• More information about the work of the ILO/UNIQLO partnership in Indonesia

Furthermore, the ILO has been investigating the necessity and feasibility of social security system enhancement in other Asian countries. For instance, an initiative has been launched in Bangladesh to establish a scheme that provides income replacement for workers arising from employment-related injuries leading to death or permanent disability.

Launched in June 2022, the Pilot for the Employment Injury Scheme (EIS) marks the first ever scheme of its kind to protect workers from loss of income arising from workplace-related injuries in Bangladesh. Fast Retailing was among seven brands to offer early support for the EIS, and continued supporting this pilot in fiscal 2024.

Related Links

• Partnership with ILO to Support Employment Injury Insurance Program for Workers in Bangladesh
• More information about EIS Pilot

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