Our supply chain encompasses more than 1 million people, employed through 757 global suppliers, who run more than 2,000 production units, across four entirely different sourcing regions and many different cultures. Even though these numbers appear to be very large, our part of the supply chain represents only a very small part of the entire apparel and textile industry. On one hand, this represents a real opportunity to help normalise sustainable behaviour amongst diverse populations. On the other, it requires vigilance and dedication to better practices. We must identify issues and build capacity for change, working in close partnership with our suppliers and stakeholders.
We start with our supplier relationships because we understand that we can, collectively, create positive impact. We always look for ways to collaborate and improve standards further, driving sector-wide change on important issues, together with other industry partners that think alike. We focus on two main areas: ensuring that the people who make our clothes are safe and treated fairly, and that we foster and support a clean environment to support healthy communities in our sourcing countries.
A sustainable supply chain from farmer to customer
Sustainability means moving towards a circular model where clothing is designed with it's next use in mind – clothing that is also made with fewer, safer chemicals, renewable energy, clean water, and safe and dignified working conditions.
To normalise sustainable behaviour, we believe in building capacity across our supply chain - from the farmer’s field to the factory floor. We see compliance as the starting point but not the ultimate goal: we must collaborate with our suppliers and their factories to create change. We’re also making steps towards our goal of circular fashion – where we create endless flows of materials and clothing in a fair and restorative manner. We are focusing on how to design sustainability considerations in from the start – rethinking how we design products with their next use in mind. This means carefully selecting materials and chemicals that are safer from the beginning and by working with our suppliers’ factories to ensure that working conditions are safe and fair. We’re also seeking to expand the ‘end of use’ solutions we offer our customers.
of our products will be from top-performing, A-and B-rated suppliers.
We will build capacity and supplier ownership within our supply chain going beyond auditing to engage our suppliers and their workers.
discharge of hazardous chemicals.
reduction of carbon footprint in C&A stores, distribution centres and head offices (from 2012 baseline).
30% reduction of water use in the production of our raw materials (from 2015 baseline).*
10% reduction of water use in C&A stores, distribution centres and head offices (from 2015 baseline).*
Zero waste to landfill in our retail operations chain.*
Making transparency the norm
The apparel industry’s supply chain is notoriously complex; ours spans around 2,000 tier-1 and tier-2 production units. This creates challenges, but also a huge scope for impact and creating change. By re-evaluating our own standards and influencing the development of shared ones, we’re taking the industry with us, embedding good practice as we go.
Being transparent is one part of the solution. We need to create traceability and accountability across the apparel industry’s supply chains. That way, we can collaborate with stakeholders including other brands, to understand shared challenges, offer the right kind of support, reward good behaviour and drive the change we want to see in the industry. We continually increase the scope of our supply chain transparency and publish a list of our tier-1 and tier-2 suppliers’ factories at least once a year.
Our overall approach
An important first step to achieving greater transparency in our supply chains is to make sure we are gathering accurate data about our suppliers’ performance – for everything from chemical, energy and water use, to issues such as wages or safety in the workplace – and assessing their ongoing actions and results. The more comprehensive and accurate the information is, the more targeted and effective support we can offer.
Different monitoring and assessment tools are currently being used by different businesses and organisations in the apparel industry. However, we believe – as do many of our stakeholders – that we must create convergence and use standardised tools to increase the quality of our data, the efficiency of our actions and therefore, the rate of change.
The Sustainable Apparel Coalition’s (SAC) Higg Index provides that centralised standard of assessment. It is already used by many major brands, including C&A, and is growing in its scale and effectiveness. C&A is currently piloting the Higg 3.0 Facility Environment Module (FEM), which, once operational by the end of 2017, will act as a full environmental assessment tool for the entire apparel supply chain. We are also part of the Social and Labour convergence project within SAC that aims to develop an assessment tool for human and labour rights.
In the meantime, we are using a combination of our own auditing and assessment tools, existing Higg modules, and the ZDHC’s audit protocol. We will continue to use and/or supplement these tools as long as necessary, and to avoid any ‘gaps’ in coverage, driving towards one solution endorsed by all brands in a multi-stakeholder consultation process.
In 2016, the NGO Human Rights Watch approached 72 global apparel brands including C&A, to commit to the newly created Transparency Pledge. The pledge is part of an initiative to encourage brands to adopt a consistent approach towards transparency in their supply chains. The pledge will help the apparel industry reach a common minimum standard for supply chain disclosures, requiring them to publish standardised information on all factories in the manufacturing phase of their supply chains. We committed to the Pledge in February 2017, and have since aligned fully with the requirements and provided this information in a consistent manner.
What we expect of suppliers is clearly laid out and communicated through our Supplier Code of Conduct and checked using regular audits by our Sustainable Supply Chain (SSC) team, which comprises over 100 people worldwide, including 42 auditors and 29 development officers. In 2017, we updated the standards expected within the Supplier Code of Conduct on fire safety, environment and working hours, making them more stringent. When there are breaches of our Supplier Code of Conduct we invite suppliers, C&A employees and workers in our suppliers' factories to let us know through our Fairness Channels, where breaches can be escalated to management in an anonymous fashion. All of our suppliers are required to sign our code of conduct as part of our contractual relationship and purchashing agreements.
How we rate suppliers
When it comes to rating our suppliers on sustainability, our first guiding principle is transparency, supported by our commitment to capacity building. This is reflected in our ratings. Sustainability criteria makes up 20% of our overall supplier ‘scorecard’ rating and has the same weight as price, quality, delivery and product execution. Each production unit is rated from A to E based on a set of assessment criteria for the elements of our Supplier Code of Conduct.
Production units rated A and B are those that have no serious violations as rated against weightings that correspond to each element of our Supplier Code of Conduct. As an example, the discovery of a serious issue like insufficient firefighting equipment or repeatedly missing fire drill will result in a D rating, while the discovery of any zero-tolerance issue will result in an E rating.
A supplier’s overall rating is calculated as the average of the total number of production units used for C&A production. However, if a supplier has one E-rated production unit, the overall supplier rating will become E. It is our policy not to place production orders with E-rated suppliers – although we work closely with them to address these issues and improve their rating over time so they are able receive new orders in the future. New suppliers and production units must be able to demonstrate that they meet our sustainability criteria, and if needed, make improvements before they can start working with us.
In cases where suppliers and the factories are on-compliant with our Code of Conduct, we seek to work with the supplier, factory management and our internal teams to improve. Unless the non-compliances are serious and of a zero tolerance nature, we maintain our business relationship to avoid unintended consequences to workers.
If a supplier maintains a non-compliant factory (E-rated) for longer than 6 months, the relationship with the supplier and associated factories is suspended. Because every situation is unique, potential exit strategies must be tailered to each situation. In all cases, we ensure that the workers are not adversely impacted by a potential termination of our business relationship – at a minimum, by following the local laws.
Our zero-tolerance criteria
To continually improve our auditing process and drive the right behaviour, we update our audit protocols every year to raise the bar on our standards over time. For example, C&A's code for underage workers is set at the ILO standard (16 years of age) that can be above national regulations (14 years of age). In 2018, we will work with a new set of zero-tolerance issues to keep improving working conditions in our supply chain.
The box below shows the complete list of our zero-tolerance issues and their rationale:
Forced, bonded, indentured or prison labour
Forced work – by actual or perceived threat
Serious forms of child labour
A worker under 16 years old who is subject to slavery, forced or compulsory labour, prostitution, pornography, drug trafficking or other work which is likely to harm the worker’s health, safety or morals
Child labour/underage workers
Workers who are below 16 years old
Any evidence of physical, sexual, verbal or mental abuse
Failure to pay minimum wages
If less than 50% of sampled workers do not receive the legal minimum wage
Failure to pay probationary wages
If >50% of sampled workers do not receive the legal probationary wage
Foreign or migrant workers without legal work permits
Workers do not have the right to work or have a valid work permit
Production which is placed in an unauthorised home production unit
Not granting unrestricted access to workers, records, all areas of the production unit and dormitories, without unreasonable delay for a second time
Any case where workers work over 91 hours/week and are not paid for all overtime hours worked in accordance with legal requirements and at a premium rate
One day off per week
Any case where workers work 31 days or more consecutively
Workplace Health & Safety
The use of manufacturing practices that propel very fine bits of material at high velocity to clean or etch a surface. This process often uses sand with crystalline silica that could lead to silicosis
Production unit located in a multi-tenant building where four minimum criteria are not met
No legal building certificate or permit
A building certificate/permit allowing legal use and occupancy is not available, not valid or does not cover the entire building and/or the building does not have approval for industrial use
Structure and use of the building are not aligned with the legally approved building plan
For example, items like incorrect or addition of floors, number of buildings included in the legal approval and the roof of the building is not constructed or used in accordance with the legally approved building plan.
Business licence not valid
The production unit address does not match the address on the business licence
No fire licence
Fire licence is not available, not legally valid or does not cover the whole building
Dormitory or living area is not clearly separated from the production area and/or warehouse
Industrial generators and/or boilers are not isolated from the production area
In our Supplier Code of Conduct we describe in more detail what C&A expects from our suppliers regarding legal compliance, labour practices, environmental performance, and anti-corruption. The provisions in the Code constitute the minimum, never the maximum standards. These are different to the zero tolerance issues outlined above. For instance, in the Supplier Code of Conduct when we outline our expectations for working hours, our suppliers should meet the following minimum standards:
The majority of our production (93%) is concentrated in nine sourcing countries.
Garment sourcing countries by % share of volume of product made
2016 was the first year we reported our global supplier ratings by production unit and by percentage of workers. Throughout 2015, Brazil and Mexico began implementing the global Sustainable Supply Chain (SSC) programme guidelines and audit process. As a result, 2016 was the first year the new Supplier Code of Conduct was in effect in all sourcing regions, allowing us to provide global figures.
It is important to note that Brazil and Mexico have sizeable domestic supply chains. 80% of products sold in Brazil and 50% of the products in Mexico are produced domestically. Because our new requirements are unique for the supply chain in Brazil and Mexico, we are working closely with each supplier and factory to build their capacity and improve ratings over time to meet our Supplier Code of Conduct requirements.
Proportion of products sourced from A/B rated suppliers (% volume/region)
In 2017, nearly 55% of the workers in our supply chain work in A- and B-rated factories. This is a reduction of six percentage points since 2016, when 61% of workers were in top-rated factories. The reduction is a result of the re-categorisation of 11 crucial questions into a higher severity level, causing a drop in ratings for many suppliers.
14% of the total still work in D- and E-rated factories, an increase of seven percentage points since 2016 – again, due to the re-categorisation of questions. To continually improve ratings over time, all D- and E-rated factories have corrective action plans (CAPs), are monitored by local teams, and have order placements restricted until their performances improve significantly.
In Brazil and Mexico, 41% and 37% of supply chain employees work in D- and E-rated factories respectively in 2017. These regions adopted the full Supplier Code of Conduct for the first time in 2016, meaning that we now have a single global standard for suppliers in all regions. In 2018, the teams working with the domestic supply chains of Brazil and Mexico will focus on building capacity and technical know-how in all production units to progress towards our goal.
Validating our programme
Our Sustainable Supply Chain (SSC) team is made up of expert practitioners and located in different sourcing hubs – including China, Bangladesh, India, Turkey, Hong Kong, Cambodia, Brazil and Mexico. They are supported by the Global Sustainability team, who share learnings and drive the implementation of sustainability across all our sourcing countries and retail markets. This allows the SSC team to focus on driving the SSC programme on the ground, supporting production units through their continuous improvement journey.
In 2015, C&A set up a third-party relationship with a professional services provider to carry out ongoing human rights due diligence in our supply chain, using the UN Guiding Principles for Business and Human Rights to verify whether the current SSC programme is fit for purpose against the requirements outlined in the C&A Supplier Code of Conduct.
Through the process, extensive testing and analysis was conducted to assess our progress in implementing the SSC strategy, examining how it was rolled out through all our sourcing countries in Asia, Europe, EMEA, Brazil and Mexico. We took a phased approach, beginning in 2016 with C&A Europe and following with C&A Brazil and Mexico in 2017.
This analysis covers the company’s supplier portfolio, audit programme, capacity building programme and approach to minimising human rights risks. As part of this ongoing due diligence process, shadow and validation audits are conducted in different sourcing countries to assess the accuracy, precision and repeatability of our audit processes. In addition, desk assessments and interviews are conducted with the Sourcing, buying and Sustainability teams.
The due diligence was designed to test our SSC operations against ten strategic pillars:
The assessment showed that the SSC programmes have different levels of maturity. Europe and Brazil are the most advanced and their programmes are working effectively within their mandate. The programme in Mexico is in the process of improvement, and the leadership team is committed to addressing the gaps.
The third-party auditor concluded that, to effectively address the human rights risks in our supply chain, C&A should continue moving towards a more strategic and systematic approach. We have taken note of the individual recommendations and have built an integrated, transparent approach through an online real-time project management platform. Regional action plans are currently being implemented and will be independently verified through third-party assessment for SSC Europe, and second-party assessment for SSC Brazil and Mexico.
After almost two years since the third-party assessment took place, the majority of the recommendations have been implemented through the regional action plan. SSC Europe is currently updating its strategy, in which it will address the remaining opportunities for improvement.
The 2017 assessment found that our SSC programme in Brazil contains several elements in line with international good practice, setting a benchmark in the country. Key functions and responsibilities have been set up, and there is a good level of interaction between the SSC team, Sourcing and the broader Sustainability team. Awareness of the Supplier Code of Conduct is high and there is a clear and effective on-boarding process for suppliers and production units.
A solid audit and corrective action plan (CAP) process is in place. Shadow and verification audits of six productions units generated the same ratings as the SSC auditors. CAPs were being generated as required, and all issues identified in the CAPs were discussed with the suppliers and their factories. The assessment also found that some of the requirements of the Supplier Code of Conduct still need to be adapted locally, particularly building and fire safety.
The third-party assessment in 2017 found that the SSC programme in Mexico was not fit for purpose regarding the majority of the strategic pillars, but noted that the leadership team was committed to addressing the shortcomings. Since then, strong progress has been made: the SSC team now has a dedicated manager, and processes and procedures have been aligned. The next step is to implement an integrated SSC system.