OUR GUIDING PRINCIPLES
At VF, our Purpose and Guiding Principles influence everything we do. Modeling these behaviors and attitudes in a holistic manner helps our associates and business partners navigate even the most complex situations. We believe in partnering with others who share our values and who understand the importance of conducting business ethically. Worker well-being is a priority of our Made for Change sustainability and responsibility framework. We set a goal to measurably improve the lives of 2 million workers and others within their communities by 2030. As part of our focus on workers, we are committed to taking steps to address modern slavery.
This statement discusses the activities of VF Corporation and its current consolidated subsidiaries (collectively, “VF,” “we,” “us” and “our”) during fiscal year 2021 to address forced labor, human trafficking, slavery and servitude, debt bondage, child labor, deceptive recruiting for labor or services and other similar conduct (collectively, “modern slavery”) in our business and supply chains. All data below relates to VF’s continuing operations as defined in our Annual Report, excluding Supreme. This statement is published pursuant to both the California Transparency in Supply Chains Act and the UK Modern Slavery Act and relates to the fiscal year from March 29, 2020 to April 3, 2021.
We are committed to respecting all human rights as outlined in the United Nations Guiding Principles on Business and Human Rights, the Ten Principles of the United Nations Global Compact, and the Organisation for Economic Co-operation and Development (OECD) Guidelines for Multinational Enterprises and other applicable OECD guidance. This commitment to respecting human rights includes freedom from modern slavery. For additional information, see our Human Rights Commitment, Responsible Recruitment and Anti-Forced Labor Commitment and our 2020 Human Rights Report.
Our Business and Supply Chains
VF is a global leader in lifestyle apparel, footwear and accessories. In fiscal year 2021, 96% of our units were obtained from independent contractors.
VF sourced or produced approximately 295 million units spread across our brands. Our products were primarily obtained from approximately 265 independent contractor manufacturing facilities in approximately 36 countries. These contractors are engaged through VF sourcing hubs in Hong Kong (with satellite offices across Asia) and Panama. These hubs are responsible for managing the manufacturing and procurement of product, supplier oversight, product quality assurance, sustainability within the supply chain, responsible sourcing and transportation and shipping functions.
Policies, Principles, STANDARDS and Initiatives
Code of Business Conduct
All VF associates must comply with our Code of Business Conduct, which explicitly forbids the use of forced or involuntary labor in any of our locations or in the operations of facilities that produce goods for us. Violation of our Code of Business Conduct by an associate can result in disciplinary action, including termination of employment.
Global Compliance Principles
Our contracted supplier factories are expected to comply with VF’s Terms of Engagement. Contracted factories are also bound by our Global Compliance Principles. Our Global Compliance Principles are informed by the International Labour Organization, the Fair Labor Association, and other international standards on human rights. Consistent with internationally recognized labor standards, the Global Compliance Principles specify minimum working conditions for employees of our suppliers. The Global Compliance Principles expressly provide that contracted factories may not use involuntary or forced labor, including indentured labor, bonded labor or any other form of forced labor, including human trafficking. The Global Compliance Principles also address child labor, wages and benefits and working hours. Failure to comply with the Global Compliance Principles may result in termination of the relationship between VF and the contracted factory.
Contracted factories are prohibited from engaging subcontractors to produce VF products without the written permission of VF, and only after the subcontractor has agreed to comply with the Global Compliance Principles.
Vendor Terms of Engagement
We hold our contracted factories to the same standards of social and environmental responsibilities found in our own facilities. As such, we evaluate potential contracted factories against our standards and require them to agree to VF’s Terms of Engagement, prior to entering our supply chain. Our Terms of Engagement require contracted factories to conduct business in full compliance with all applicable laws, rules and regulations, which include those relating to modern slavery, and comply with the terms of VF’s Global Compliance Principles. A contracted factory’s breach of the Terms of Engagement can result in VF taking corrective action, including termination as an approved contracted factory.
The Global Compliance Principles are supported by Facility Standards, which provide more detailed compliance requirements relating to each of the Principles, including the Principle prohibiting forced labor. The Facility Standards are updated periodically.
The Facility Standards prohibit certain recruitment or employment practices that could result in forced labor. In addition, the Facility Standards contain specific requirements regarding migrant labor if it is used by the contracted factory. The Facility Standards prohibit deducting recruitment fees and expenses from wages, access to or control over bank accounts and withholding identity documents. The Facility Standards also require freedom of movement and access to grievance mechanisms.
Human Rights Commitment and Responsible Recruitment & Anti-Forced Labor Commitment
Our business partners are required to adhere to our Human Rights Commitment and Responsible Recruitment and Anti-Forced Labor Commitment. These documents reinforce our commitment to upholding human rights and mitigating the risks of forced labor in our value chain. When we learn of potential human rights issues in our supply chain, we immediately investigate and engage in appropriate remediation. We have ended and will end our business relationships with suppliers who refuse to remediate human rights issues.
Cotton Fiber Sourcing
To uphold compliance with legal requirements and our commitment to responsible sourcing, VF publicizes its Policy on Cotton Fiber Sourcing. The policy details VF’s cotton sourcing requirements and mandatory steps that all VF suppliers must take to track the origin and flow of material through each stage of their cotton supply chains.
North Korean Labor Prohibition
The United States has adopted measures that create a presumption that all goods produced in whole or in part by North Korean labor, wherever located geographically, involve the use of forced labor and may not be imported into the United States. Authorized facilities and their supply chains for VF goods may not use North Korean labor located anywhere, including outside of North Korea, unless it can be demonstrated by the facility to our satisfaction in advance that the North Koreans employed in making the goods were not subject to conditions of forced labor. For more information, see our North Korean Labor Prohibition.
Consistent with our values, we have signed numerous public pledges demonstrating our firm opposition to the use of forced labor and otherwise collaborate with multi-stakeholder initiatives. These pledges and initiatives include, among others:
We are signatories to the American Apparel and Footwear Industry (AAFA) and the Fair Labor Association’s (FLA) Apparel and Footwear Industry Commitment to Responsible Recruitment. As such, we commit to work with our global supply chain partners to create conditions so that no worker pays for their job; workers retain control of their travel documents and have full freedom of movement; and all workers are informed of the basic terms of their employment.
VF has also signed the Mekong Club’s Business Pledge Against Modern Slavery. Together with the Mekong Club, VF enhanced the forced labor section of our Global Compliance Principles, which outline our expectations for how every business partner and supplier behaves and treats their workers. This includes criteria on human rights, ethical practices, health and safety, transparency, environmental requirements and subcontracting.
To incorporate our “zero-fee” requirement for migrant labor recruitment, we continue to partner with the International Organization for Migration (IOM) to build capacity within VF and with our suppliers regarding responsible recruitment practices and ethical treatment of migrant workers. With technical assistance from the IOM, we have updated our Facility Standards, our audit scope, the data we collect on migrant workers, and formalized a set of guidelines for the ethical and responsible recruitment of migrant workers.
Risk Assessments and FACTORY Audits
Human Rights Risk Assessments
In line with the expectations of the UN Guiding Principles on Business and Human Rights, we map our human rights risks. This includes a Human Rights Impact Assessment (HRIA) to help us identify our most salient issues. We partner with human rights experts as part of our HRIA. Since 2019, we have annually partnered with Article One to conduct this assessment. In FY20 and FY21, we assessed the risks within our top five commodities: cotton, rubber, leather, wool and down. Additionally, we have set up country specific briefings with local subject matter experts to better understand the potential negative impacts on domestic migrant workers in certain higher risk jurisdictions.
We contracted with Verité in late 2019 to compile and analyze publicly available information on documented forced labor incidents and forced labor vulnerabilities in more than 40 countries. These profiles include countries that supply finished products to VF as well as countries further upstream in our supply chain. This deeper analysis informed our prioritization of actions to mitigate forced labor risks and identify and engage with credible partners or initiatives to implement solutions.
Our forced labor risk assessment helped us prioritize worker rights engagement at the Tier-2 level (fabric mills). In December 2020, we launched the pilot project “Your Voice Matters,” with our partners Ulula and Quizrr and with support from the IOM. Through this project, we engaged our Tier 2 suppliers in Jordan, Taiwan and Thailand to proactively learn, understand and discuss recruitment processes, conditions for migrant workers, and how we can work together on improvements. To gain additional assurance that we hear from the workers themselves and to understand the impact of the project, we are working in partnership with Ulula and Quizrr to roll out digital solutions for remote impact assessment, more effective communication and online training for both management and workers.
Our Human Rights Report provides more information on our actions in 2020.
Factory Compliance Audits
We conduct routine Factory Compliance Audits at every contracted supplier facility to assess their adherence to VF’s principles. Before conducting business with VF, each contracted factory must undergo a Factory Compliance Audit. Our audit process includes scheduled and unannounced audits by our trained factory compliance auditors and third-party auditors. We use our own trained factory compliance auditors as well as accredited third-party auditors to assess vendor compliance with our Terms of Engagement and Global Compliance Principles. We inspect for evidence of health and safety concerns, wage and social compliance, forced labor and human trafficking, child labor issues, harassment-free workplace policies, and environmental issues. Regarding forced labor, our auditors look for recognized indicators, including excessive recruitment fees, absence of formal contracts, document retention, excessive working hours, payment of on-time wages and restrictions on freedom of movement. Our audit procedures also apply to nominated Tier-2 factories, cutting facilities, sewing plants, screen printers, embroiderers, laundries, licensee factories and key fabric mills. VF’s Facility Standards provide direction for our contracted factories to assist in compliance with our audit program.
To receive an “accepted” rating, a factory must not have any serious health, safety or labor issues in its facility. A factory receiving an accepted rating is audited annually. A factory receiving a “developmental” rating may still produce our products, but a follow-up audit will be scheduled after six months and the factory is expected to have all issues remediated that were noted in the corrective action plan. A factory with persistent safety, health or labor issues that fails to remediate issues in an acceptable manner will be rejected as our supplier and unauthorized to supply product for VF.
Under our Global Compliance Principles, contracted factories must allow VF representatives full access to production facilities, employee records and employees for confidential interviews in connection with monitoring visits.
Audit Results and Response
In fiscal year 2021, approximately 1,158 audits were conducted globally. The audits included an assessment of compliance with our labor standards, among other issues. Factories were rejected for failing to meet one or more of our standards, including issues related to health and safety, wages and benefits, and environmental requirements. In some parts of the world, supplier factories may face unique challenges in conforming to our Global Compliance Principles. In these cases, we work to help those factories understand their deficiencies and how to resolve the issues that exist. Our Sustainable Operations Team members serve as coaches to help factory management understand how they can make improvements to meet VF’s compliance requirements. However, if a factory has persistent safety, health or labor issues that they fail to remediate, we will terminate our business relationship in a responsible manner.
We developed a multi-pronged approach to address certain challenges created by the global COVID-19 pandemic. We introduced virtual auditing, deployed third-party auditors in countries where VF auditors could not conduct on-site audits, adopted desktop verifications of certain data points and conducted continuous virtual monitoring. There was an increase in findings related to unauthorized subcontracting and wage payment issues given the many business disruptions caused by COVID-19. We worked to remediate these issues when they occurred.
VF-Owned and Operated Factory Certifications
All VF-owned and operated factories also undergo independent certification by Worldwide Responsible Accredited Production (WRAP). WRAP is an independent, objective, non-profit team of global social compliance experts dedicated to promoting safe, lawful, humane and ethical manufacturing around the world through certification and education.
VF associates are required to complete online and facilitator-led training on our Code of Business Conduct during their first 30 days and sign an agreement to abide by its principles, including those related to modern slavery. For our associates and management who have direct responsibility for monitoring, auditing and enforcing our Global Compliance Principles, we provide additional training conducted by our staff or a third party. Training includes topics such as identifying child labor, involuntary or forced labor and preventing human trafficking. Over 4,500 associates have received training on human trafficking.
Our relevant on-the-ground teams have also undergone two modules of capacity building training with the IOM regarding forced labor indicators, the migrant worker journey and best practice guidance for responsible recruitment.
In addition, our Sustainable Operations Team assists factory management at VF-owned and contracted factories in understanding how they can make improvements to meet our modern slavery compliance requirements.
Grievance mechanism and ethics helpline
VF is committed to fostering dialogue and communication through multiple channels, including our Open-Door Policy and our Ethics Helpline. Labor issues can be reported through the VF Ethics Helpline, which includes multiple channels for raising concerns. The Helpline is a free, confidential way for anyone to seek guidance, ask a question or raise a concern. It is available 24 hours a day/seven days a week in every country where VF has associates. Reporters can contact the Helpline in over 100 languages, and anonymous reporting is available where allowed by law. Each report is reviewed by a member of our Ethics and Compliance team and assigned to an appropriate investigator. To contact the helpline, call 1-866-492-3370 or visit ethics.vfc.com.
VF’s Ethics Helpline and other grievance mechanisms are available to the entire supply chain, including workers in the second or third tier of the supply chain. VF prohibits suppliers from taking retaliatory action against workers using these mechanisms. VF also encourages suppliers to establish their own grievance mechanisms.
VF is committed to upholding human rights globally. We believe it is the responsibility of every person who touches our business to assist in upholding those rights as outlined throughout this statement.
This statement covers March 29, 2020 to April 3, 2021 and has been approved by the Board of VF Corporation.
Chairman, President and Chief Executive Officer