We focus the auditing portion of our Global Social Compliance Program where we have more influence in bringing the products to market. This means our auditing program typically reaches factories that produce merchandise
that we have helped design or develop just for us. We focus our auditing efforts on these factories because we believe this is where we are most likely to be able to have a meaningful impact. When we source
these products, we require the buying agents and vendors that are involved to identify any active factories that they use, or intend to use, to produce such merchandise.
Together with our representatives, UL Solutions LLC, Intertek Group PLC, and Omega Compliance Limited, we work closely with our buying agents and vendors so that they understand our Global Social Compliance Program,
our Vendor Code of Conduct, and our factory auditing process. Our internal teams also play an important role in educating vendors on our Program requirements and encouraging vendors to make improvements at their
facilities, when necessary. Additionally, we have Associates that support the program in various buying offices around the world.
Our TJX Global Social Compliance Manual contains, among other important guidance, an audit procedure outline and factory evaluation checklist to help prepare the factory for the audit process. This tool is available
in seven languages and offers detailed information designed to help agents, vendors, and factory management in our audit program better understand the expectations of our Vendor Code of Conduct, as well as our
monitoring and corrective action processes. We require our buying agents to disseminate this manual to their entire TJX vendor base and have it posted to our vendor website, which is available to all vendors.
Factories included in our Global Social Compliance Program are required to undergo periodic audits to confirm adherence to our Vendor Code of Conduct and local laws. In Fiscal 2023, we reviewed more than 2,900 audits,
including:
- Audits from recognized, third-party sources, including amfori’s Business Social Compliance Initiative (BSCI), Worldwide Responsible Accredited Production (WRAP), and Sedex Information Exchange Limited
(SEDEX)
- Audits conducted on behalf of TJX by third-party organizations, including UL Solutions (UL), Intertek, and Omega
Association of Professional Social Compliance Auditors (APSCA)
In Fiscal 2023, most of the audits we accepted were conducted by auditors rated at the Registered Auditor (RA) or Certified Social Compliance Auditor (CSCA) level by the Association of Professional Social Compliance
Auditors (APSCA), a leading industry association for social compliance auditing. Through their APSCA membership, these auditors agree to adhere to all quality and ethical requirements outlined in APSCA’s
Code and Standards of Professional Conduct.
Audit Reports
In recent years, industry collaboration has resulted in an increase in the number of factories that can provide us with a recent audit report from BSCI, WRAP, and SEDEX for our review. We believe this industry collaboration
is beneficial as it helps reduce audit fatigue among factories, while helping companies obtain important information to evaluate their supply chain.
We also continue to work with UL, Intertek, and Omega to conduct audits on behalf of TJX, especially when a BSCI, WRAP, or SEDEX report is unavailable. We have developed comprehensive compliance program guidelines
for UL, Intertek, and Omega, and regularly review and modify these guidelines for consistency with evolving social compliance issues and trends. Factories are expected to cooperate fully with us and our auditors
and to provide access to facilities and documents.
Auditing Process
When UL, Intertek, and Omega conduct audits on behalf of TJX, the audits generally include one to two full working days at each audited factory, whether in-person or remote, and cover the following components:
- Interview with factory management
- Policy, payroll, and documentation review, including confirmation that factory management has verified the ages of job applicants before hiring to protect against potential hiring of child labor
- Factory walk-through
- Health and safety inspection
- Chemical and hazardous materials review, including usage information and verification of Material Safety Data Sheets, chemical safety, and hazardous waste programs
- Confidential worker interviews
- Debrief with factory management
Our Assistant Vice President (AVP), Global Social Compliance, and certain Associates that support our program in buying offices around the world participate in shadow audits with auditors. Shadowing is practiced with an intent to gain
a better understanding of the compliance audit process and challenges, and to better aid TJX in our review of both our audit results and, more broadly, our program’s effectiveness.
Corrective Action and Remediation
Audit reports are reviewed by TJX and assigned a rating of satisfactory, needs improvement, or unsatisfactory. For factories assessed as satisfactory, our goal is to conduct biennial audits. When a factory receives a needs improvement
or unsatisfactory rating, a Corrective Action Plan (CAP) is created, and the auditors discuss concerns with factory management. A copy of the CAP is provided to factory management to assist them in resolving violations or deficiencies
detected during the audit. To encourage collaboration between our buying agents and vendors, a copy of the CAP is also forwarded to both parties’ attention shortly following the audit. Factory management is requested to sign
the CAP to verify their understanding of the findings.
For factories with a needs improvement rating, our buying agents or direct vendors are expected to provide evidence to us that remedial action has been carried out within six months of the audit. Where moderate to more serious violations
of the Vendor Code of Conduct or local laws are detected, meaning the factory has received an unsatisfactory rating, we require that our third-party representatives re-audit the factory or require a follow-up audit from a recognized,
third-party source within 6 months.
We expect that improvement is verified during the re-audit. Our general goal is that each re-audit demonstrates measurable improvement from the prior audit. Factories are notified of any additional remedial action following a re-audit,
as needed. We recognize that if a factory receives several consecutive noncompliant grades, this pattern may suggest that required remedial action is not being undertaken.
Though we strive to work with vendors to address and resolve shortcomings in their operations, under extreme circumstances, we may conclude that our merchandise can no longer be produced in certain factories, or that those factories
will be precluded from producing goods for us until they demonstrate that they have addressed the situation and have put management systems in place to prevent a recurrence. Our preferred approach, however, is to work with vendors
whenever possible to address and resolve issues identified during audits because improving working conditions in factories is an ongoing effort. We believe this is preferable to ceasing use of these factories as it gives us the
opportunity to encourage positive change. We believe that this continuous improvement model is in the interest of the workers in the facilities from which we source goods.
There are several issues that we consider to be zero tolerance issues: for example, bribery/corruption; child labor and forced or slave labor; human trafficking; maintaining a facility with all doors and/or exits locked; use of chemicals
banned in the region; and failure to pay wages. If a factory is found to be in violation of our requirements on these topics, we inform our vendor that it can no longer provide us with goods made by that factory.
Encouraging Environmental Protection
Audits conducted on behalf of TJX include a review of factory policies, practices, and procedures concerning the handling of chemicals and other hazardous waste, and a review of the factory’s compliance with applicable environmental
laws and regulations.
In addition, our Vendor Code of Conduct strongly encourages our vendors to share our commitment to protecting the environment by operating in a sustainable manner where possible, for example by conserving and protecting resources,
such as water and energy, and taking into consideration environmental issues that may impact local communities. Our social compliance training covers the protection and conservation of water, as well as an overview of the legal
requirements on the use of chemicals and hazardous materials in the regions where products are both manufactured and sold. Training includes case studies to assist vendors and factory management in better understanding our expectations
and our Vendor Code of Conduct requirements in this area.