Our Risk Based Compliance Framework

Our ‘Ethical Sourcing’ framework is grounded in industry standards, ongoing learnings and a philosophy of continuous improvement.

The Company’s Ethical Sourcing program is led by the Group Risk and Assurance Manager whilst managed at a local level by our Regional Sourcing Compliance Manager who is based in China. The Regional Sourcing Compliance Manager is responsible for regional partnerships, manages the audit process and collaborates with the Company’s suppliers and its sourcing teams to facilitate the remediation of often complex compliance issues. The Social Compliance team are independent of the Company’s operating businesses. The Group Risk and Assurance Manager keeps senior management and the Board regularly abreast of the Company’s program and provides updates in relation to various measures of Social Compliance.

The Regional Sourcing Compliance Manager is supported by Social Compliance Officers who are responsible for conducting pre-audit research, supplier set-ups, factory specific audits, detailed corrective action plans and ongoing supplier remediation. The team operates out of the Company’s Dongguan and Shanghai offices and their remit covers all sourcing markets. The Company’s social compliance team engages third party specialised auditors (TÜV SÜD & SGS) when required.

Our Ethical Sourcing program starts with the engagement of a new supplier and continues throughout our sourcing and on-going supplier relationship management processes. Some of our supplier relationships have been in place for in excess of 10 years. 

Where a direct supplier is new to Pacific Brands, the Social Compliance team will conduct pre-audit screening based on information provided by the supplier and current third party audit reports. This screening determines if a factory progresses to a formal audit conducted by the Pacific Brands social compliance team or an independent third party auditor in order to determine whether the supplier meets the Company’s compliance standards to be an approved supplier.

Post approval, the Company also regularly conducts audits (announced and unannounced) of its direct suppliers to determine ongoing compliance with its supplier code of conduct. Where non-compliance is found, the Social Compliance team works with the supplier to develop a corrective action plan which is monitored. Where a supplier is unable to achieve compliance, the Company will work with that supplier, however ultimately a range of sanctions including termination may apply if compliance cannot be achieved in critical areas. 

Our Risk and Compliance Framework enables us to review and manage suppliers based on our risk profiling matrix.

All medium and high risk factories are audited within a 12 month period, with low risk factories audited within 18 months. Regular factory follow-ups are scheduled based on the risk assessment level defined in the Company’s formal audit process. This risk level is dependent on a number of factors such as, brand, nature of product, business volume, the factories’ prior audit results and historically how they have responded to any corrective action plans identified. 

We also apply a vendor scorecard that incorporates key social compliance criteria when evaluating key suppliers. This provides us with a holistic view of supplier performance.

Given the size and complexity of the Company’s supply chain, there is a need to prioritise its efforts. The current scope focuses mainly on cut-make-trim suppliers. The audit program generally does not directly extend to all raw material producers and suppliers, component suppliers or other second tier suppliers in the supply chain. However a key objective in the Company’s Ethical Sourcing Strategic Plan is to improve on this and Pacific Brands has commenced initiatives to improve visibility to the second tier. In the meantime, the Company’s direct suppliers are made responsible for ensuring that second and subsequent tier suppliers comply with the Company’s supplier code of conduct.

 

Our Audit Activity

Our program ensures that all medium risk, high risk and core suppliers are audited within a 12 month period and sometimes more frequently when required to address outstanding issues. Low risk suppliers are audited within a 18 month period.

 For further information on audit activities, please refer to our key country pages.