3 Loreal Social Audits Program Suppliers Subcontractors

L’OREAL Social audits program Suppliers & SubcontractorsEXTERNAL INFORMATION KIT 1 Why Such a Program ? L’Oréal has been a signatory of the United Nations Global Compact since June 2003 and is committed to a set of core values in the areas of human rights, labour standards, the environment and anti-corruption as set out in the Global Compact’s ten principles. 2 L’ORÉAL is reinforcing its 2006 action plan: Internal social audits : plants and distribution centers External social audits : our suppliers and subcontractors .Social audits program L’ORÉAL has decided to reinforce the social audit program in order to ensure compliance with the L’ORÉAL’s General Terms of Purchase and Payment. POS & promotional items suppliers for factories located in « countries at risks » The social audits program will be realized by a third part auditing body Intertek.all sub-contractors : wherever located . raw materials. 3 .packaging components. ILO conventions and local laws. com   4 .Third part auditing body : Intertek  Global quality control service provider with 15000 employees in 110 countries and 309 laboratories   15'000 audits per year in more than 100 countries Global Network of more than 300 qualified auditors close to most of the main industrial areas Professionals in terms of social and environmental responsibility Already working in this area with many international Groups www.intertek. What is a Social Audit ?  The social audit will cover the following areas: > > > > > > > > > > child labor forced labor health and safety freedom of association non-discrimination disciplinary practices sexual and moral harassment pay working time relations with sub-contractors and suppliers  The auditors will check the compliance with both the L’OREAL General terms and conditions and with the ILO conventions and local laws 5 . Laws and regulations of the country 6 . sub-contractor. Non discrimination Disciplinary practices. + laws and regulations of the country Laws and regulations of the country Forced and Prisoner Labor Health and Security Freedom of Association ILO Conventions 87 et 98 + laws and regulations of the country ILO Conventions 100 et 111 + laws and regulations of the country Equality.Audit Scope & Texts of reference Themes Child Labor Principles listed in our GTP ILO Conventions 138 et 182 + specific requirement from L’Oréal child = under the age of 16 + laws and regulations of the country ILO Conventions 105 et 29. harassment and abuse. hours of work. wages and primes. dangerous labor « Needs Major Improvement » Major and recurrent issues « Needs Improvement » Isolated Problem Actions Alert sent to L’OREAL Headquarters Interruption of business relationship with the factory Re-audit within 90 days maximum Follow up audit with a “Needs Major Improvements” result twice in the same section = “Zero Tolerance” Periodic re-audit to be planned « Satisfactory » Best Practices « Access denied » Completely or partially Periodic re-audit to be planned Re-audit to be planned as soon as alert received 2nd « Access denied » = Zero tolerance 7 .Possible Audit Results Final Social Audit Result « Zero tolerance » Child labor < 16 years/ Concealed. forced. prison. Process Flow Initiation of Audit Request Audit Window Audit Satisfactory Needs Improvement Needs Major Improvement Zero Tolerance Audit Report Day + 7 L’Oréal Sends Audit request to Intertek Intertek Provides L’Oréal and site with audit window SITE MANAGER & INTERTEK Opening meeting Facility tour Documents review Employee interviews Intertek Posts report on the Web Platform Intertek Contact Intertek Local Office Supplier facility Prepares documentation & available management resource for audit day L’Oréal Logs in on the Web Platform to check audit results 8 Pre-closing meeting Closing meeting Sign Corrective Action Plan L’ORÉAL . Audit Process Documentary Review Opening Meeting With INTERTEK Facility Tour Employee Interviews Closing Meeting L’ORÉAL Pre-Closing Meeting 9 . Opening Meeting  Explain to the management representatives: The aim and scope of the audit. The audit procedure. The site Manager. The standards and policies against which the facility will be audited. The agenda of the audit. Learn about the facility. a health and safety manager and a human resources manager should be present at the opening meeting. 10 . Potable Water Access to safety Exits Accessibility in case of fire Earplugs. Fire Prevention. 11 . Ventilation Lighting. First Aid Fire Prevention Equipment Temperature. Cleared and Identifiable Alleys Cleanliness. Masks Gloves..Facility Tour  Verification of the Workplace Conditions. Dormitories. Protective glasses Safety shoes. Helmets Use of Chemicals Dormitories Toilets etc. leaves Health & Safety and other local regulations 12 . OT hourly rate Paper/money deposits Salary Payment delay Unauthorized deductions/fines Clarification on normal/OT working hours Rest days.Documentation Review A review and analysis of : Personnel recruitment file and contract Working Hours recording system for normal/OT hours Payslip records Social Security payment Proof of salary payment Health and safety records & certificates Fire protection records and SOP Health & Safety Management systems Minimum Wages. based on facility ratio (Women/Men..) Also employees identified during the facility tour 13 .Interviewing Employees  Key Elements of the employee interview : Without Management or site representatives Only upon acceptance of the employee itself Confidentiality of the interview and source of information ensured Informal way to ensure efficiency Interview in 1 by 1 (or group) Random Selection of the personnel list. Packaging/ admin dept. Pre Closing Meeting A meeting between auditors to : Clarify and cross check information & issues found Clarify and Debate among themselves if necessary Write down the Non conformities in the Corrective Action Plan Quote the Local laws to address the findings 14 . Closing Meeting A meeting with the management representatives to: Present the Best Practices /Observations/ Non Conformities Clarify and Debate necessary issues Explain and find an agreement on the Corrective Action Plan A copy of the Corrective Action Plan is provided to the management representatives at the end of the audit 15 . objective evidence and details of local laws if applicable A copy of the Corrective Action Plan (CAP) in English that will help the requestor to follow up with the supplier A copy of the signed CAP in the local language to get the proof that it has been signed by the facility representatives 16 . The audit report itself with details of the findings.Reporting  The report given to the requestor is made of: A photo report (whenever possible) on main non conformities & best practices. : XXX YYYY Same as above 86-512-000000 Tel-Fax No: 86-512-00000 OVERALL RATING: Zero Tolerance X Needs Major Improvement Satisfactory Needs Improvement Access Denied 17 .Example of an Audit Report  1st To: Page information on Factory and global result From: Audit Type: Initial Name of Factory: Factory Address: Mailing Address: Telephone No. 2.Example of an Audit Report  Overall result by section(1/2) Compliance Level Best Practices NIL Non Conformity Summary Themes 1 Child Labor Satisfactory Satisfactory 2 Forced & Compulsory Labor Health & Safety NIL 3 Needs Major Improvement NIL 1. No belt guard was equipped to two Sponge Grinding machines in Pen making department. No ventilation system was equipped to expel the foul air at the raw material department. 4 Freedom of Association Non Discrimination Satisfactory Satisfactory NIL 5 NIL 18 . and no detailed working hours and overtime hours were registered on the records. 9 Hours of Work NIL 10 Subcontracting Satisfactory NIL 19 . The manual attendance records for 2005 were not maintained as the factory had finished the yearend sum-up.Example of an Audit Report  Overall result by section(2/2) 6 Disciplinary Practices Harassment and Abuse Compensation & Benefits Satisfactory Satisfactory Needs Major Improvement Needs Major Improvement NIL 7 NIL 8 NIL 1. Hours of Work could not be verified during this audit due to: 1)The factory only provided the manual attendance records of January 2006.The factory had not signed labor contracts with 11 out of 16 interviewees. which issued by department supervisor. Percentage dedicated to L’Oréal: 10% Other brands in the factory: X. XXX / Vice General Manager Agreed to and signed Corrective Action Plan (CAP): Yes 20 . Z ….. Y. The total land area occupied by the facility is about 60. They have started their operation in existing location since February 1991. The main products manufactured by the factory are High-Class Cosmetic Packaging Components.Example of an Audit Report  Overall Assessment Factory Overview XXXX.. China. Ltd is located in Province. Number of employees interviewed: 16 Number of Record reviewed & review period: 16 Last period paid: January 2006 Peak period: N/A Random Period: December 2005 and October 2005 Peak Months of the Facility: N/A Communicated Findings with (Facility Manager): Mr.000m². Ltd. And the rest 3 were new workers and their labor contracts were in process. the factory provided one copy of <Labor Services Agreement>.. Proposed corrective action: It is recommended that the factory should sign labor contracts with all workers. a labour contract shall be concluded where a labour relationship is to be established. signed between the audit factory and ‘Kunshan XXX Due to the factory could not provide the original version of the <Agreement> and there were several unclear points on it.’ exported the 8 out of 11 interviewees who did not sign labor contracts with the factory. the copy was not accepted during this audit. 21 . Finding/Objective evidence: It was noted that the factory had not signed labor contracts with 11 out of 16 interviewees.Example of an Audit Report  Detailed Findings by section. Management response: During the audit. Compensation & Benefits: Zero Tolerance Needs Major Improvement X Needs Improvement Satisfactory Access Denied Subject : Labour contract Law:In accordance with the PRC Labor Law article 16. The factory explained that ‘XXX. example 8. Example of a Photo Report  Detailed pictures on non conformities & best practices Blocked Emergency Exit of Dormitory Evacuation Plan provided Sponge Grinding Machines without Belt Guard Electric Appliance Controller Box without Cover and Warning Sings 22 . CAP is signed by both the audit team and facility Section Health &Safety NON CONFORMITY No ventilation system was equipped to expel the foul air at the raw material department. 23 . CORRECTIVE ACTION Factory will equip ventilation system of the raw material department to ensure workers working under healthy condition.Example of a Corrective Action Plan (CAP) CAP is submitted in both local language and translated in english. factory did not supervise and train employees to properly wear and to use the personal protective equipment such as respirator. DEADLINE 1 week Immediate for workers not trained yet and training plan for others. factory should supervise and train employees to properly wear and use the personal protective equipment. two workers in raw material department did not wear respirator. « Need Social Audit countries list » PC / RM / POS & Promotional Items suppliers’ plants located in : Bulgaria Croatia Estonia Hungary Latvia Lithuania Poland Romania Russia Serbia Slovakia Slovenia Turkey Ukrainia Argentina Bolivia Brazil Chili Colombia Dominican Republic Ecuador Honduras Mexico Nicaragua Paraguay Peru Uruguay Venezuela Guatemala Dubai Egypt Ghana Israel Kenya Lesotho Mauritius Morocco South Africa Swaziland Bangladesh Brunei Cambodia China Hong Kong India Indonesia Macau Malaysia Pakistan Philippines South Korea Sri Lanka Taiwan Thailand Singapore Vietnam 24 .