Transcription
Social and Environmental ResponsibilitySupplier ManualRev 1-02-2018
TABLE OF CONTENTSINTRODUCTION . 1PROGRAM OVERVIEW . 1ROLES AND RESPONSIBILITIES . 2RESPONSIBILITIES OF THE HOME DEPOT 2RESPONSIBILITIES OF SUPPLIERS .3RESPONSIBILITIES OF FACTORIES .4SUPPLIER/FACTORY ENGAGEMENT . 6NEW FACTORIES 6ONGOING COMPLIANCE EFFORTS . 6TRAINING AND COMMUNICATION . 6COMPLIANCE MANAGEMENT . .6REMEDIATION AND TERMINATION 8SUBCONTRACTING .9EXHIBITSSOCIAL AND ENVIRONMENTAL RESPONSIBILITY STANDARDS EXHIBIT 1DEFINITIONS OF KEY STANDARDS TERMS .EXHIBIT 2TERMINATION GUIDELINES EXHIBIT 3FACTORY AUDIT EXPECTATIONS EXHIBIT 4FACTORY COMPLIANCE GUIDELINES EXHIBIT 5TRANSPARENCY AND IMPROVEMENT PROGRAM (TIP) EXHIBIT 6CORRECTIVE AND PREVENTIVE ACTION (CAPA) MANAGEMENT EXHIBIT 7APPENDICESGIFT AND ENTERTAINMENT POLICY . APPENDIX AFACTORY PROFILE QUESTIONNAIRE . . . . APPENDIX BFACTORY PRE-SOURCING CHECKLIST(CHINESE AND ENGLISH VERSIONS) . . . .APPENDIX CDOCUMENT REQUEST LIST. . .APPENDIX DCLOSING MEETING SUMMARY REPORT APPENDIX ESAMPLE CAPA PLAN. . . APPENDIX F
INTRODUCTIONThe primary purpose of this Social and Environmental Responsibility (SER) Supplier manual isto establish and outline The Home Depot’s (THD) compliance program policies and proceduresrelated to the Social and Environmental Responsibility Standards (Standards) – See Exhibit 1.The SER Supplier Manual is intended to be the primary reference document to help Suppliersmanage compliance with the Standards.The SER Supplier Manual applies to organizations providing products to THD (Suppliers) andfactories producing the related products including factories producing products directly for THD(collectively, Factories).THD expects our Suppliers and Factories to follow our Standards as outlined in the SERSupplier Manual. We understand that fully complying with these standards may be challengingfor some factories; however, it is the goal of THD to work with factories that are transparent andcommitted to continuous social and environmental improvement. THD is committed to a policyof “Remediation not Termination”, however, factories that fail to be transparent or fail to respondto outstanding compliance issues will be terminated.1
ROLES AND RESPONSIBI LITIESI.RESPONSIBILITIES AND POLICIES OF THE HOME DEPOTTHD is dedicated to ensuring adherence with the Standards. All activities associated withStandards compliance will be managed by THD SER Team under the direction of anappointed Social and Environmental Responsibility leader. THD SER Team will beresponsible for informing all Suppliers, which includes Factories, of THD’s compliancerequirements and expectations.THD’s VP of Sustainability/SER and Director of SER have joint authority to determine theappropriate sanctions for a factory or supplier. At the discretion of the VP ofSustainability/SER, the Emerging Issues Council (EIC) (which is comprised of seniorexecutives from various departments throughout the company) may be requested todetermine the appropriate sanctions for any critical or repeated violations at a specificFactory or Supplier.To manage compliance with the Standards, THD SER Team will be responsible for thefollowing:A. Training and CommunicationThe Home Depot SER Team will be responsible for conducting/coordinating Standardscompliance training (See Ongoing Compliance Efforts). In addition, The Home DepotSER Team will serve as the primary contact within THD for compliance relatedinformation with factories that produce products offered for sale by THD.B. Factory AuditsThe Home Depot SER Team will be responsible for the coordination of external factoryaudits (See Ongoing Compliance Efforts). The Home Depot SER Team will engage theservices of audit service providers and coordinate the efforts of trained, credentialedinternal resources.C. Remediation ManagementThe Home Depot SER Team will be responsible for oversight of remediation effortsmanaged by the audit service providers and undertaken by Suppliers and Factories toaddress issues identified through THD’s compliance management efforts includingfactory audits – (See Remediation and Termination).D. Investigation and Response to Identified Standards Issues Outside of the AuditPopulationTo the extent THD is made aware of allegations or instances of noncompliance with theprovisions of the Standards in factories or operations outside of the audit population TheHome Depot SER Team will undertake an investigation into the allegation/issue anddetermine the nature and extent of noncompliance. To the extent The Home Depot SERTeam is able to confirm noncompliance with the Standards and depending on theseverity of the noncompliance, The Home Depot SER Team will work with theresponsible Supplier or Factory to remediate the identified noncompliance and takeappropriate measures to ensure the issue will not recur.2
II. RESPONSIBILITIES OF SUPPLIERSA. Responsible OfficialEach Supplier will designate an official who will be responsible for supervising theSupplier’s efforts to ensure Factories utilized by the Supplier are in compliance with theStandards. Each Supplier will promptly notify The Home Depot SER Team of anychange in the identity of its official designated for this purpose.B. Identification of FactoriesSuppliers are responsible for reporting all factories used for the production of productsprovided to THD. As part of the periodic factory audit process, all Suppliers mustprovide THD with an updated listing of the Factories being used to produce products forThe Home Depot and only Factories approved by The Home Depot SER Team can beutilized for the production of applicable products. Suppliers are also responsible forreporting and registering any new subcontractors in THD Flex System within 15 daysafter business relationship is established. For all new programs, any subcontractorsbeing utilized should be added into THD Flex System at the time of onboarding.C. Information and TrainingThe Standards and the Definitions of Key Standards Terms (Exhibits 1 and 2) outlineTHD’s expectations related to the conditions under which products provided to THD aremanufactured. In addition, all Suppliers are encouraged to seek any needed guidancefrom The Home Depot SER Team on how to ensure their Factories and the relatedindividual compliance efforts meet THD’s expectations. THD may request theattendance of management from the Supplier and/or Factories at seminars presented byTHD or outside parties to assist in their understanding and adhering to THD’scompliance expectations. In addition, Suppliers are responsible for ensuring theFactories utilized in the production of products provided to THD have received andunderstand the Standards and the related requirements.D. Compliance Management SupportIn connection with THD’s compliance management efforts, THD will utilize factory auditsto confirm compliance with THD’s expectations. Suppliers will not interfere with ordiscourage communication with THD personnel or THD’s representatives. Suppliers willencourage factory management to permit THD personnel and THD’s representatives toconduct all audit procedures including interviews of employees without the presence ofother employees or management.Suppliers are responsible for the costs associated with THD’s factory audit efforts.Suppliers are expected to pay for the costs of announced audits directly in a timelymanner and facilitate the timely performance of all audits. Failure to pay for the auditsmay result in an offset of the Suppliers account by THD.E. RemediationSuppliers are expected to support efforts to ensure compliance issues are addressed byfactory management at the Factories. In certain instances, THD may request Supplierrepresentatives confirm remediation of identified issues (See Ongoing ComplianceEfforts).It is the responsibility of each supplier to ensure that the factories utilized to produceproducts for The Home Depot are compliant with the Standards. Suppliers who fail tomeet the guidelines in this manual may be subject to termination of their businessrelationship with The Home Depot. (Refer to The Home Depot Termination Guidelinesfor details. (Exhibit 3))3
III. RESPONSIBILITES OF FACTORIESA. Responsible OfficialEach Factory will designate an official who will be responsible for supervising theFactory’s efforts to ensure they are in compliance with the Standards. Each Factory willpromptly notify The Home Depot SER Team of any change in the identity of its officialdesignated for this purpose.B. Standards and Applicable LawAll Factories are expected to maintain, review, and comply with the Standards (Exhibit1). Factories should understand the laws and regulations related to age, wage, hours ofwork and health and safety.C. Compliance Management SupportFactories must meet the following monitoring and compliance obligations:1. Non-interferenceFactory management will not interfere with, discourage or punish employees whocommunicate with THD’s representatives. Factory management will permit THDand THD’s audit service providers to interview employees without the presenceof other employees or management, and will not disturb the confidentiality of anyemployee interview.2. Ethical PerformanceFactory representatives will not offer any incentives including gifts, meals,transportation or money to THD’s personnel and/or representatives in an effort toinfluence the results of an audit. To the extent factory representatives offerincentives of any kind to THD’s representatives, this fact will be immediatelyreported to THD. THD considers offers of incentives a serious issue and anysuch offer will have a significant adverse impact on Factories’ businessrelationships with THD.To the extent THD’s representatives solicit any form of incentive from the factory,this should be immediately reported to The Home Depot SER Team.3. TransparencyAll Factories are expected to maintain and present to THD personnel and THD’srepresentatives true and accurate records reflecting compliance with theStandards. Failure to be transparent is a serious issue and will have a significantadverse impact on Factories’ business relationships with THD.4. Employee Awareness and EducationEach Factory is responsible for the communication to its employees regardingthe Factory’s obligation to them, and to THD, in accordance with the Standards.5. RecordkeepingFactories will maintain on-site documentation necessary to demonstratecompliance with the Standards including records of the names, ages, hoursworked and wages and benefits paid for each employee for at least thepreceding one-year period. Factories will make such records immediatelyavailable (while auditor is on-site or within 24 hours if request is external) to THDor its representatives upon request.4
6. Corrective ActionFactories are expected to correct all non-compliance as a condition of continuedbusiness. Factories are expected to develop Corrective and Preventive Action(CAPA) plans to address identified non-compliance in a timely manner. AllCAPA Plans are expected to be closed within the agreed upon days from thedate of THD SER Team’s approval. In the event that a Factory fails to correctthe deficiencies in the expected timeframe, THD will place the factory into “Noncompliance” status and no new purchase orders will be given to the factory. Ifthe factory remains in the “Non-compliance” status for 60 days they will beautomatically terminated. (Refer to The Home Depot Termination Guidelines fordetails. (Exhibit 3))D. Factories that meet the definition of a Subcontractor per THD SER definitionshould take the same responsibilities as THD primary factories. (For detailsrefer to New Factory Engagement – On-Boarding, Section IV Subcontracting)5
SUPPLIER/ FACTORY ENGAGEMENTI.NEW FACTORIESA. Factory AuditsThe Home Depot SER Team may require selected Factories to be evaluated through afactory audit as an element of the on-boarding process. The audit will be performedconsistent with The Home Depot’s Factory Audit Protocols (See Ongoing ComplianceEfforts). Based upon the results of the audit, The Home Depot SER Team or itsrepresentatives will provide the Factory with any necessary corrective actions. If theFactory meets the requirements outlined in this manual, The Home Depot SER Team willapprove the Factory for production. The approval of the Factory will be communicated tothe responsible Supplier or responsible THD representative, as applicable.ONGOING COMPLI ANCE E FFORTSI.TRAINING AND COMMUNICATIONThe Home Depot SER Team will organize periodic factory compliance training forrepresentatives from Suppliers and Factories. The primary purpose of the training programs isto educate and communicate the Standards compliance expectations to the Factories andSuppliers.The Home Depot SER team provides the following free training options so that suppliers andfactories can easily participate and get the most updated information regarding THD SERstandards and process: On-site training (in THD Shanghai and Shenzhen offices every month alternatively) Online training for those suppliers and factories where on-site training locations arenot accessibleThe website link for online training is: https://thdser.talentlms.com/catalogII.COMPLIANCE MANAGEMENTIn order to assess compliance with the Standards, THD will undertake steps to confirmcompliance with the provisions of the Standards. In addition to the certification processoutlined above, THD’s compliance management will be comprised of the performance of onsite factory audits. (See grading below in Section III – Remediation and Termination)A. External Factory AuditsThe Home Depot SER Team may engage a social compliance audit firm(s). Auditorswill be responsible for executing independent audits consistent with THD’s auditprotocols. In 2017, THD implemented the Retail Ethical Sourcing Assessment (RESA)template for all THD SER audits. RESA is a single audit template developed inpartnership with Lowe’s. The goal is to avoid imposing added cost of conductingmultiple audits where the same factories are being used by THD and Lowe’s.(i) Audit Execution6
THD’s external audits will include periodic audits of Factories, Specific Responseaudits, and On-Boarding Audits (See New Factory Engagement – On-Boarding).a. Periodic AuditsFactories will be subject to periodic audits based on the results of the previousinitial audit. The timing of periodic audits based on the previous initial auditresult may be as follows: Grade A – Two (2) years from the CAPA closure* (if CAPA is required)or most recent audit date (if no CAPA required or factory enters “Noncompliance” status for not closing CAPA within required timelines.) Grade B – One (1) year from CAPA closure or most recent audit date (iffactory enters “Non-compliance” status for not closing CAPA withinrequired timelines.) Grade C – Six (6) months from CAPA closure or most recent audit date(if factory enters “Non-compliance” status for not closing CAPA withinrequired timelines.) Grade F – Factory is required to undertake the Transparency andImprovement Program (TIP) (Exhibit 6). New audit required six (6)months from the date of the audit. At that time the Factory is expectedto achieve a grade C or higher.*THD reserves the right to audit more frequently at their discretion.b. Specific Response AuditsOn a periodic basis, THD may become aware of issues or allegations ofnoncompliance at factories producing products for THD. Based on the natureof the issues or allegations, The Home Depot SER Team may coordinate anaudit or engage an external auditor to perform the audit. These audits will beconducted on an immediate basis, with special consideration for the identifiedissues or allegations.Based on the nature of the issues and allegations, specific response audits maybe performed on an unannounced basis.B.Use of Current Factory Audit ReportsTHD will consider waiving the initial audit requirement for a Supplier or Factory withan audit existing report, provided all of the following conditions are met:1. RESA audit performed for other retailers. At the time of audit scheduling,suppliers need to inform The Home Depot’s appointed 3rd party service providerwithin 3 calendar days if an audit conducted by Lowe’s using the RESAtemplate is on file. If so, The Home Depot will obtain a copy of the audit reportand all relevant corrective action related documents from Lower’s directly andnot conduct an additional SER audit.)2. Suppliers/factories wishing to use an existing report are required to provide thereport to THD SER team within 3 calendar days from date of audit notification.3. Audit was performed by a THD recognized provider: Bureau Veritas Intertek SGS UL/STR TUV7
Other, as determined by THD in its sole discretion4. The initial audit was performed within the prior 12 months.5. The report converts into a grade of “B” or higher on THD’s grading system.6. The Supplier or Factory must contact the service provider who conducted theaudit and request the Service Provider forward the final report directly to THD.THD will not accept reports directly from a Supplier/Factory.7. The Supplier or Factory must demonstrate that a strong CAPA plan wasimplemented, if applicable. If remediation was not finalized, a strong CAPAplan with clear timelines must be presented to THD.To the extent THD accepts the audit report THD will approve the factoryconsistent with the initial grade (See Remediation and Termination).III.REMEDIATION AND TERMINATIONTHD is committed to working with approved Factories to address non-compliance with theStandards. Factories are expected to develop CAPA plans to address identified complianceissues in a timely manner. Factories are expected to correct all identified compliance issuesas a condition of continued business. THD’s relationships with Factories that are unable orunwilling to address identified compliance issues may be terminated consistent with The HomeDepot Termination Guidelines (Exhibit 3).Factories are expected to complete and provide their completed CAPA plan to the responsibleaudit service provider within 7 days in response to all compliance issues identified throughTHD’s compliance management efforts. The timetable for corrective action will depend on thenature, severity and prevalence of the identified findings. Based on the identified noncompliance, the timetable for corrective action will generally be based upon the CorrectiveAction Guidelines.Based on the findings identified during the audit, the Factory will receive one of the followingoverall ratings based on the most significant findings identified during the audit.Grade “A”: A Grade “A” overall rating indicates there were (i) only minor or nocompliance issues identified in the execution of the audit resulting in a scorebetween 95-100; or (ii) through the performance of follow-up audits, allidentified compliance issues have been addressed. Factories with a Grade“A” overall rating during an initial audit are approved for THD production fortwo years.Grade “B”: A Grade “B” overall rating is assigned when there are isolated deviations forissues considered Non-Critical as defined in Exhibit 3 which result in an auditscore between 80-94. Factories with a Grade “B” overall rating generally arerequired to have a follow-up audit conducted within 90 days to evaluateremediation of identified compliance issues. Upon completion of theseremediation efforts, Factories with a Grade “B” overall rating are approved forTHD production for one year.Grade “C”: A Grade “C” overall rating is assigned when there are deviations for issuesconsidered to be Non-Critical as defined in Exhibit 3 which result in an auditscore between 65-79. Factories with a Grade “C” overall rating generally arerequired to have a follow-up audit conducted within 90 days to evaluateremediation of identified compliance issues. Upon completion of theseremediation efforts, Factories with a Grade “C” overall rating are approved forTHD production for 6 months.8
Grade “F”: A Grade “F” rating is assigned when (i) there are deviations for issuesconsidered to be Non-Critical as defined in Exhibit 3 which result in an auditscore below 65; or (ii) there are deviations for issues considered to be Criticalas defined in Exhibit 3. If THD proceeds with Factories who score a Grade“F” overall rating, the factory will be required to enter into THD Transparencyand Improvement Program (TIP) and to have a follow-up audit conducted at30 days to evaluate remediation of identified compliance issues. Uponcompletion of these remediation efforts and a successful follow-up audit,Factories with a Grade “F” will be approved for THD production for 6 monthsfrom the initial audit date. Purchase Orders may not be released to thesefactories until confirmation of entry into TIP and subsequent approval by theSER Team.A. Critical or Repeated Noncompliance findingsWhen requested by THD’s VP of Sustainability/SER, the Emerging Issues Councilmade up of senior executives within THD will determine the appropriate sanctions forany critical or repeated violations at a specific Factory or Supplier. Where applicable,THD will consider sanctions for the Supplier associated with a Factory found to havecritical or repeated violations. However, whenever possible, THD will support theFactory’s timely remediation efforts before resorting to possible termination. (See TheHome Depot Termination Guidelines (Exhibit 3))B. Follow-up Factory AuditsFollow-up factory audits may be necessary to ensure corrective actions are taken. TheHome Depot SER Team will authorize follow-up audits within 30 to 90 days after aninitial audit has identified noncompliance. If a Factory has any critical findings, thefollow-up will generally be scheduled within 30 days of the initial audit to ensure timelyremediation.C. Events That May Impact the ScheduleIn the event that THD discovers a deficiency (e.g., SER, Quality Assurance,Security/C-TPAT, Etc.) at a Factory during the cycle times stated above, the cycletimes will reset based on the results of these new findings.A factory shipping seasonal products to the Home Depot is expected to receive a SERassessment during the related seasonal project peak production window by either a3rd party service provider of our choosing or by THD SER team. If audit in peakproduction window for a factory during the cycle times stated above, the cycle timeswill reset based on the results of seasonal audit.IVSUBCONTRACTINGA. DefinitionSubcontractor – subcontractors in the manufacture of products or product components forThe Home Depot are factories, other than the facility identified for the production of a productfor The Home Depot, involved in either the final assembly of the product or the manufacture ofproduct components with the logos of any of The Home Depot’s brands.”Unauthorized Sub-contractor – Factories meeting the definition of Subcontractor above whohave not been disclosed to The Home Depot and properly assessed prior to producing theitems listed in the definition.9
B. PolicyAll Suppliers must notify Home Depot of subcontractors meeting definition. Each supplier hasthe responsibility to report and register in THD Flex System any new subcontractors within 15days after such relationship is established. For all new programs, any subcontractors beingutilized should be added to THD Flex System at the time of onboarding;1. Penalty system or termination of relationship when unauthorized subcontracting isdiscovered.--If an unauthorized subcontractor is discovered, the Supplier relationship may beimmediately terminated.--If the relationship is not immediately terminated during the first or second offense,the following penalty system will be implemented based on Cost of Goods: First Unauthorized Subcontracting Finding:o 10,000 fine for vendors with COGs between 0 and 5Mo 25,000 fine for vendors with COGs between 5M and 50Mo 50,000 fine for vendors with more than 50M in COGs Second Unauthorized Subcontracting Finding:o 25,000 fine for vendors with COGs between 0 and 5Mo 50,000 fine for vendors with COGs between 5M and 50Mo 100,000 fine for vendors with more than 50M in COGs Third Unauthorized Subcontracting Finding:o Automatic Termination of the Vendor2. Immediate audit required within 14 days of discovery.3. Purchase orders may be placed on hold or canceled.C.THD Private Brand List (Examples as below but not exclusively)10
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D. Subcontractor ExampleFactory A, final assembly factory: YesFactory B, producing product components with THD brand: YesFactory C, producing product components without THD brand: NoLabel printing factory: NoInvolves with product components with THD‘s logo: Yes12
The manufacturer of rubber plate with THD’s logo: YesPrinter where printing was done with the logo as "THE HOME DEPOT": YesFactory produces plastic plates with Husky logo for the tool chest: Yes13
Lampe aging line for LED work light with Husky logo: YesPowder coating factory for LED work light with Husky Logo: YesDie casting factory for LED work light with Husky Log: Yes14
Silk-printing the THD label and final packing in Factory A: YesManufacturing the fish tape without THD logo in Factory B: NoManufacturing the tools without THD logo in Factory A: NoSilk printing with THD logo & final packing in Factory B: Yes15
SOCIAL AND ENVIRONME NTAL RESPONSIBILITY STANDARDSThe Home Depot and its affiliates, divisions, and subsidiaries strive to conduct business in a responsible manner. As weexpand our business activities and work with suppliers domestically and globally to meet customers’ needs, it isimportant to preserve our collective commitment to human rights and safety in the workplace.The Home Depot expects that all suppliers will abide by all applicable international and local laws, rules and regulationsin the manufacture and distribution of merchandise or services provided to The Home Depot. All suppliers are stronglyencouraged to exceed The Home Depot’s guidelines and promote continuous improvement throughout theiroperations.All suppliers must be able to demonstrate compliance with these requirements at the request of The Home Depot.These guidelines provide an introduction to the minimum requirements that all Suppliers must meet in order to conductbusiness with The Home Depot. These requirements are part of all commercial agreements with The Home Depot.Laws and RegulationsSuppliers must operate in full compliance with all applicable laws and regulations of the countries in which they operate.Child LaborSuppliers must not employ workers younger than the greater of 15 years of age -- or 14 where the local law allows suchexception consistent with International Labor Organization guidelines -- or the age for completing compulsory educationor the minimum age established by law in the country of manufacture.In addition, Suppliers must comply with all local legal requirements for the work of authorized young workers, particularlythose pertaining to hours of work, wages, and working conditions.Forced LaborSuppliers will not use of any form of involuntary labor including forced, prison, indentured, bonded, slave, or humantrafficked labor.Harassment and AbuseSuppliers must treat all workers with respect and dignity. No worker shall be subject to corporal punishment, or physical,sexual, psychological or verbal harassment or abuse. In addition, Suppliers will not use monetary fines as a disciplinarypractice.CompensationSuppliers must comply with all wage and compensation requirements as defined under applicable labor laws andregulations for regular work, overtime work, production rates and other elements of compensation and employeebenefits.
Exhibit 1Hours of WorkSuppliers must ensure that, except in extraordinary business circumstances, on a regularly scheduled basis, workers shallnot be required to work more than the lesser of (a) sixty (60) hours per week, including overtime or (b) the limits on regularand overtime hours allowed by the law of the country of manufacture. In addition, except in extraordinary businesscircumstances, all workers shall be entitled to at least one day off in every consecutive seven day period.Non DiscriminationWhile The Home Depot recognizes and respects cultural differences, Suppliers will ensure employment – including hiring,salary, benefits, advancement, discipline, termination and retirement -- should be based solely on the person’s ability toperform the job requirements and not the person’s beliefs or any other personal characteristics.Freedom of Association and Collective BargainingSuppliers must recognize and respect the rights of workers to exercise lawful rights of free association, including joining ornot joining any association. Suppliers must also respect the legal right of workers to bargain collectively.Health and SafetySuppliers must provide a safe and healthy working environment in accordance with applicable laws and regulations.EnvironmentSuppliers must comply with all local environmental laws and regulations applicable to the workplace. Factories mustconduct business in a manner which minimizes their impact on the environment.SubcontractingSuppliers must not use subcontractors in the manufacture of products o
The Home Depot SER Team may require selected Factories to be evaluated through a factory audit as an element of the on-boarding process. The audit will be performed consistent with The Home Depot's Factory Audit Protocols (See Ongoing Compliance Efforts). Based upon the results of the audit, The Home Depot SER Team or its
