Monitoring Production Partners

Introduction

The Ryohin Keikaku Group outsources the manufacturing and production of its products to production partners in Japan and other countries and regions around the world. Some production partner factories are located in countries and regions identified by international organizations and NGOs as having a high risk of modern slavery, due to weak governance and inadequate rule of law. Ryohin Keikaku understands that the entire supply chain for its business activities can have a direct or indirect negative impact on human rights, and recognizes the importance of its responsibility to respect human rights.
Together with our production partners, we engage with factories to fulfill our social responsibility by promoting respect for human rights and compliance with labor laws, improving working conditions and advancing environmental initiatives. Through these efforts, we are working to prevent and mitigate negative human rights impacts in the supply chain.
As part of our engagement with factories, we have a third-party organization that conducts regular on-site audits based on the Code of Conduct for Production Partners, covering aspects such as human rights violations, labor conditions and environmental impact.
Since 2016, we have also incorporated audits conducted under the Better Work Programme, a partnership between the United Nations International Labour Organization (ILO) and the International Finance Corporation (IFC). Better Work audits, which have been widely adopted in the apparel industry, reduce duplication of factory audits and enable factories to focus more on improving working conditions.

Factory Monitoring

Factory Monitoring Framework

Note: The evaluation and improvement process for factories participating in the Better Work assessment program is not subject to the above framework.

Audit Items

Ryohin Keikaku, in collaboration with a third-party auditing organization, has established its own audit items based on the Code of Conduct for Production Partners and various ILO conventions.

Classification of audit items:
Child labor and young workers, forced labor, employment contracts, health and safety (fire safety, building safety, machinery safety, electrical safety, chemical management, occupational health and safety, personal protective equipment, workplace accidents, first aid, dormitories and canteens), freedom of association, discrimination, disciplinary actions, working hours, wages and compensation, monitoring of compliance, ethics (anti-bribery, management systems), procurement management, environmental management

Assessment Method

Since 2019, Ryohin Keikaku has been conducting audits through a third-party organization for factories that are not subject to the Better Work Programme. Audits are generally conducted once every two years for all Tier 1 factories. During the audit, auditors visit the factory to review records and documents such as labor contracts, pay slips, work records, and timecards, and to confirm occupational health and safety conditions through on-site inspections. They also conduct interviews with factory employees (without management present) as well as management. If dormitories are provided, these are also inspected to ensure adequate living space, proper hygiene management and other important conditions.
From 2023, third-party on-site audits have been gradually extended to Tier 2 factories that supply apparel and textile products. The audit items and assessment methods are the same as those applied to Tier 1 factories.

Risk Assessment

Ryohin Keikaku rates factories on a five-point scale from A to E, based on the severity and number of findings in the audit results, as an indicator of human rights and environmental risk at the factories.

Corrective Action

Ryohin Keikaku provides feedback to factories on identified issues and risk assessment results, then requests factory management to implement improvements while offering support to facilitate the correction process. Based on reports prepared by factories, Ryohin Keikaku works with factories to identify root causes, such as specific activities/procedures or lack thereof, that led to the issues. We also assess whether systemic changes are necessary to prevent recurrence.
For factories where the risk assessment has been rated as D or E through the audit, follow-up audits will be conducted focusing on the issues identified. If the remediation of identified issues is not validated during follow-up audits, Ryohin Keikaku will carefully review the possibility of reassessing the business relationship in meetings attended by inside directors, taking into account the factory’s management and employment conditions. If, as a result of human rights due diligence throughout the supply chain, including on-site audits, serious human rights violations are confirmed, and if corrective action cannot be expected even if Ryohin Keikaku exerts its influence, the termination of the business relationship with the factory will be considered as an option in accordance with the Code of Conduct for Production Partners.

Factory Monitoring Results

Please refer to the report below for the audit results of the factories for 2024/8.

Subcontracted Factory Monitoring

Under the Code of Conduct for Production Partners, Ryohin Keikaku prohibits production partners from subcontracting to factories without prior approval. In addition, when subcontracting production to other factories, production partners must ensure the subcontracted factories’ business practices comply with the Code of Conduct for Production Partners.