Monitoring and Enforcing Global Standards for Suppliers (GSS)

We audit suppliers before production begins on any of our products, and annually thereafter, to ensure adherence to Hanesbrands’ Global Standards for Suppliers (GSS). This applies to all finished-goods contractors who have not achieved WRAP certification; all facilities that produce goods for a licensor that requires such audits; and facilities in high-risk areas, even if they have achieved WRAP certification or have been audited by the FLA.

All initial audits of our contractors and all annual follow-ups are conducted using internationally recognized audit firms. In 2009, these firms conducted nearly 251 audits on our behalf.

GSS audits are very detailed and in-depth. Each audit begins with a formal 30-question interview. It is followed by a thorough facility and dormitory (if applicable) tour. Site work then focuses on a detailed payroll analysis to ensure all wages and benefits are paid as legally and contractually required. A minimum of 20 employees are then selected for private, confidential interviews, and no other facility personnel are permitted in the room. The employees are asked a series of 24 questions focusing on everything from working hours to payment and disciplinary practices to freedom of association. The audit closes with a meeting where corrective action forms are discussed and a timeline for remediation outlined.

As is typical with many companies, we often find nonconformance to our high standards during these audits. Our preferred approach is to work with facilities to help them achieve compliance, rather than simply “cutting and running.” When we find nonconformance, the facility is given a formal Correction Action Plan and a specified number of days (typically no more than 90) in which to correct the observed problem. The vast majority of follow-up audits are conducted by our internal compliance teams and are unannounced to ensure the problems are indeed being fixed. We have fully dedicated internal compliance employees reporting to the vice president of corporate social responsibility in the United States, El Salvador, Honduras, Hong Kong, China, Thailand and Bangladesh. These teams conducted nearly 460 unannounced follow-up audits in 2009.

It is important to note that we reserve the right to audit any facility at any time. We do so unannounced, nearly every day, even for facilities that have WRAP or other certifications.

In cases in which our auditors find a zero-tolerance violation of our Global Supplier Standards, or when observed issues are not corrected after sufficient opportunities to do so, we will disapprove a facility. Such facilities are tracked on our social compliance alarm list which is circulated throughout our organization and up to senior management. “Disapproval” means that production at that facility must cease for at least one year and the facility must fully pass a new audit and receive written approval from the Hanesbrands vice president of CSR before production may begin again. In 2009, we disapproved 20 facilities.