Respect for Human Rights at Ryohin Keikaku

Monitoring our Supply Chain

Considering respect for human rights, compliance with labor-related laws, improvement in the working environment, and environmental consideration in the supply chain our top priority issues, we are actively working to monitor our supply chain in accordance with the "Code of Conduct for Production Partners of Ryohin Keikaku."

Monitoring of the Working Environment

Factory Monitoring

Ryohin Keikaku does not own any production plants or production facilities, nor do we manufacture any products. All product manufacturing is outsourced to factories in Japan and other countries and regions. Some factories are located in countries/regions with a high risk of modern slavery due to poor governance and weak rule of law, according to reports from international organizations and NGOs. Recognizing that there are potential risks of labor exploitation, poor working environment, illegal labor, etc. in the case of an inadequate governance structure of a factory and inappropriate treatment of workers, we are working to reduce and prevent such risks by preferentially conducting on-site audits.
We monitor factories though regular on-site audits conducted by a third-party organization. The audit covers items such as human rights violation, working environment, and environmental impacts based on our "Code of Conduct for Production Partners," and the results are disclosed. We also share the results to work together for improvement with factories, in the case of any non-compliance.
Since 2016, we have also conducted audits through the Better Work Programme, a joint activity program between the International Labour Organization (ILO) and the International Finance Corporation (IFC). Better Work audits, which is widely adopted in the apparel industry, eliminates duplication of factory audits and enables factories to focus more on improving working conditions.

Figure:Third-party Auditing Mechanism for Business Partner Factories/Risk Evaluation

Factory Monitoring System /Risk Evaluation

On-site audits are conducted according to an established procedure, including interviews with factory employees/labor unions/employee representatives/management, reviews of records and documents, and site visits to check occupational health and safety conditions. We make sure that factories not only comply with national and regional laws and regulations concerning the environment but also conduct the following: formulating an environmental policy, conducting environmental impact analysis, and introducing a system to minimize adverse effects on the environment.
Factories that comply with the "Code of Conduct for Production Partners" and have no violations will be evaluated as A. Factories with relatively low-risk violations will be rated as B. If violations of occupational health and safety, wage & benefit, working hours, contract, etc. are discovered, those factories will be rated as C. If many violations of occupational health and safety, wage & benefit, working hours, contract, etc. are discovered, those factories will be rated as D. If there is an important discrepancy that raises suspicions of a high level of risk, it will be rated as an E. If the violations leading to a D rating are not resolved, or if any factory is evaluated as E, an internal deliberation will begin to review business transactions with such factories.
We also share the result of the audits with factories and work together with them to make improvements. Concerning the improvement reports prepared by factories, we do not simply check whether a non-compliant item has been corrected or not. Instead, we would identify the root cause of non-compliance, such as a specific activity/procedure or lack of an activity/procedure, and then discuss with factories whether it is necessary to change the system to prevent its recurrence.

Subcontract Factories Monitoring

Under the "Code of Conduct for Production Partners," Ryohin Keikaku prohibits outsourcing of production to factories that have not obtained prior approval of Ryohin Keikaku. We conduct pre-audits on subcontract factories to which we outsource part of the production process, and we oblige them to obtain approval from Ryohin Keikaku. Like our business partners, our subcontract factories are obliged to comply with the Code of Conduct, and if any serious violation of the "Code of Conduct for Production Partners" is discovered, they are required to take corrective actions and then undergo and pass another audit.

In-house Training

To promote initiatives for human rights and the environment, we have been holding sustainability study sessions since FY 2019 for managers and staff who are in charge of procurement, production management, product planning, and quality control that are related to the supply chain.

In FY 2019, a total of approximately 100 employees participated in the study sessions, and they learned about the following topics while looking at specific cases at factories of their own and other companies: what circumstances are referred to as serious human rights infringement in addition to modern slavery, which points to pay attention to when visiting a factory for checking, problems arising in the supply chain, and measures required of companies.

Moreover, for in-house training, we are working on educating our employees by confirming their awareness of current issues while providing questionnaires to participants to grasp the level of their understanding of social compliance.