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Last Updated: 2015.02.18

Fast Retailing Strengthens its Commitment to Improve Working Conditions at Production Partners

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Fast Retailing has been engaged in Corporate Social Responsibility (CSR) initiatives since 2001, and CSR has become an integrated part of the company's overall business strategy. Over the years, while giving back to local communities and making efforts to reduce environmental impacts, the CSR program has placed priority on respecting human rights and improving working conditions in our supply chain.

In 2004 Fast Retailing established its Code of Conduct (CoC) for production partners, and since then the company monitors working conditions at all of its existing garment factories as well as new partners.

Current Fast Retailing monitoring program:

1. Pre-contract monitoring
-Conducted by external auditors to determine whether a new factory is eligible to do business with Fast Retailing.
-If eligible, the new factory must sign a CoC agreement.
2. Regular monitoring
On-site inspections conducted by external auditors typically bi-annually.
3. Evaluations
-Results are graded from A to E, based on Fast Retailing's framework.
-Factories with serious offenses (such as child labor) are graded E and contracts are reviewed immediately.
4. Follow-up monitoring
-Based on results, secondary monitoring takes place between 1 to 6 months after the initial evaluation and improvements are followed up continuously.
-C or D graded factories will be steered by Fast Retailing CSR and Production departments to make improvements.
5. Contract review
If improvements are not fulfilled, Fast Retailing will decide whether to the review the contract while considering the factory's business and employment conditions.

Fast Retailing conducts environmental monitoring with textile suppliers, while not maintaining contractual agreements with them.
From January 2015, Fast Retailing is enhancing its workplace monitoring further, including the monitoring of working hours together with the Production department. In addition, Fast Retailing will facilitate stronger dialogues between management and workers and cooperate with specialized NGOs and third party organizations in such areas as monitoring methods and training.

Fast Retailing improvement measures:

1. Introduce workplace monitoring at textile suppliers
-Conduct pilot program with UNIQLO's textile suppliers who provide 30% of all textiles used in UNIQLO products, by end March 2015.
-Complete workplace monitoring with all of UNIQLO's textile suppliers by end March 2016.
2. Improve auditing methods
-Increase number of unannounced audits, visits and on and off-site worker interviews to all garment factories, and monitor improvement plans continuously.
-Introduce a worker hotline pilot program from March 2015.
3. Implement training for factory management and factory workers
-Already conducted training on labor rights for management at selected factories, in collaboration with external experts.
-Roll out training at all major factories from May 2015 and complete in one year.

Additionally, Fast Retailing is strengthening collaborations with industry groups to share best practices. Fast Retailing is a member ofthe Accord on Fire and Building Safety in Bangladesh and the Sustainable Apparel Coalition (SAC) - a group of major apparel and footwear brands whose mission is to reduce impact on the environment.

"We believe that respecting human rights and ensuring fair working conditions are top priorities for the entire industry, and not just Fast Retailing. In order to address these issues properly, it has become increasingly important to engage in dialogue with other companies, NGOs, international organizations and society as a whole," said Yukihiro Nitta, Fast Retailing Group Executive Officer responsible for CSR. "While improving our own program, we aim to share our know-how, key insights and learnings and to play a leading role in generating positive change in working conditions across our industry."



Actions Taken at Tomwell Garment Co. and Pacific Textiles Ltd.

Following the January 11, 2015 report released by SACOM (Students & Scholars Against Misbehaviour), a Hong Kong-based nongovernmental organization, Fast Retailing instructed Tomwell Garment Co., Ltd. and Pacific (Pan Yu) Textiles Limited to take several steps (per the statement Fast Retailing issued on January 15) to improve working conditions. One month has passed since the January 15 statement, and here below is a list of the actions that have been taken as of February 13.

ItemsTomwell Garment Co., Ltd.Pacific (Pan Yu) Textiles Limited
Working Hours Reviewed production capacity and schedules

Reduced working hours of all factory workers to abide by Fast Retailing's framework
From January 2015, increased holidays for workers to one mandatory day per week

From March 2015, to review existing workforce numbers and create a system for reducing working hours while keeping production volumes
Government approved third party organization conducted air quality check

Necessary measures to be put in place within month of March 2015
Introduced new rules to set temperature level throughout factory; if temperature rises above set level, factory will increase ventilation

Construction work on windows to improve ventilation inside dyeing and finishing factories to be completed by end April 2015

Rolled out training to workers regarding safety and use of protective clothing
Investigation conducted by Fast Retailing together with third party auditor found no fines.

Investigation included on and off-site interviews with over 100 workers
Investigation results showed that existing incentive system actually operated like a system of fines

Existing incentive system will be reviewed by end March 2015

New incentive system will be introduced by end April 2015
Third party organization to roll out training to workers regarding labor rights

Establish framework for management and workers to have regular dialogue by end 2015

Fast Retailing maintains a dialogue with SACOM to resolve the four points regarding Pacific Textiles that it found to be in contradiction with the SACOM report.


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