11
L’OREAL OREAL Social audits programSocial audits program
Suppliers & SubcontractorsSuppliers & Subcontractors
EXTERNAL INFORMATION KIT
2
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.
3
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, ILO conventions and local laws.
L’ORÉAL is reinforcing its 2006 action plan:Internal social audits : plants and distribution centers External social audits : our suppliers and sub-contractors
- all sub-contractors : wherever located- packaging components, raw materials,
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.
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.com
5
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
6
Audit Scope & Texts of reference Audit Scope & Texts of reference
Themes Principles listed in our GTP
Child Labor ILO Conventions 138 et 182 + specific requirement from L’Oréal child = under the age of 16+ laws and regulations of the country
Forced and Prisoner Labor ILO Conventions 105 et 29, + laws and regulations of the country
Health and Security Laws and regulations of the country
Freedom of Association ILO Conventions 87 et 98+ laws and regulations of the country
Equality, Non discrimination ILO Conventions 100 et 111 + laws and regulations of the country
Disciplinary practices, harassment and abuse, hours of work, wages and primes, sub-contractor.
Laws and regulations of the country
7
Possible Audit ResultsFinal Social Audit Result
Actions
« Zero tolerance »Child labor < 16 years/
Concealed, forced, prison, dangerous
labor
Alert sent to L’OREAL HeadquartersInterruption of business relationship
with the factory
« Needs Major Improvement »
Major and recurrent issues
Re-audit within 90 days maximumFollow up audit with a “Needs Major Improvements” result twice in the
same section = “Zero Tolerance”
« Needs Improvement »Isolated Problem
Periodic re-audit to be planned
« Satisfactory »Best Practices
Periodic re-audit to be planned
« Access denied »Completely or partially
Re-audit to be planned as soon as alert received
2nd « Access denied » = Zero tolerance
88
L’ORÉAL L’ORÉAL L’ORÉAL
Day + 7
L’Oréal
Opening meeting
Facility tour
Documents review
Employee interviews
Pre-closing meeting
Closing meeting
Sign Corrective Action Plan
SITE MANAGER & INTERTEK
Intertek
Audit Window Audit
Sends Audit request to Intertek
Intertek
Satisfactory
Needs Improvement
Needs Major Improvement
Zero Tolerance
Intertek
Contact Intertek Local Office
Supplier facility
Initiation of Audit Request
Day + 7
Posts report on the Web Platform
Audit Report
Logs in on the Web Platform to check audit results
Provides L’Oréal and site with audit window
Prepares documentation & available management resource for audit day
Process FlowProcess Flow
L’Oréal
99
L’ORÉAL
Audit ProcessAudit Process
Documentary Documentary ReviewReview
Facility Facility TourTour
Pre-Closing Pre-Closing MeetingMeeting
Opening MeetingOpening MeetingWith INTERTEKWith INTERTEK
Closing MeetingClosing Meeting
Employee Employee InterviewsInterviews
10
Opening Meeting Explain to the management representatives:
The aim and scope of the audit,The standards and policies against which the facility will be audited, The audit procedure,The agenda of the audit,Learn about the facility,The site Manager, a health and safety manager and a human resources manager should be present at the opening meeting.
11
Facility Tour Verification of the Workplace Conditions, Fire Prevention, Dormitories,
Cleared and Identifiable AlleysCleanliness, First AidFire Prevention EquipmentTemperature, VentilationLighting, Potable WaterAccess to safety ExitsAccessibility in case of fireEarplugs, MasksGloves, Protective glassesSafety shoes, HelmetsUse of ChemicalsDormitories Toiletsetc..
12
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, OT hourly rate Paper/money deposits Salary Payment delay Unauthorized deductions/fines Clarification on normal/OT working hours Rest days, leaves Health & Safety and other local regulations
13
Interviewing Employees
Key Elements of the employee interview :
Without Management or site representativesOnly upon acceptance of the employee itselfConfidentiality of the interview and source of information ensuredInformal way to ensure efficiencyInterview in 1 by 1 (or group)Random Selection of the personnel list, based on facility ratio (Women/Men, Packaging/ admin dept..)Also employees identified during the facility tour
14
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
15
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
16
Reporting The report given to the requestor is made of:
A photo report (whenever possible) on main non conformities & best practices,
The audit report itself with details of the findings, 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
17
Example of an Audit Report 1st Page information on Factory and global
resultTo: From:
Audit Type: Initial
Name of Factory: XXX
Factory Address: YYYY
Mailing Address: Same as above
Telephone No.: 86-512-000000 Tel-Fax No: 86-512-00000
OVERALL RATING:
Zero Tolerance X Needs Major Improvement
Needs Improvement
Satisfactory Access Denied
18
Example of an Audit Report Overall result by section(1/2)
Overall Result by Section
Themes ComplianceLevel
BestPractices
Non Conformity Summary
1 Child Labor Satisfactory NIL
2 Forced & Compulsory Labor
Satisfactory NIL
3 Health & Safety Needs Major Improvement
NIL 1. No ventilation system was equipped to expel the foul air at the raw material department.
2. No belt guard was equipped to two Sponge Grinding machines in Pen making department.
4 Freedom of Association
Satisfactory NIL
5 Non Discrimination
Satisfactory NIL
19
Example of an Audit Report
Overall Result by Section
6 Disciplinary Practices
Satisfactory NIL
7 Harassment and Abuse
Satisfactory NIL
8 Compensation & Benefits
Needs Major Improvement
NIL 1.The factory had not signed labor contracts with 11 out of 16 interviewees.
9 Hours of Work Needs Major Improvement
NIL Hours of Work could not be verified during this audit due to:1)The factory only provided the manual attendance records of January 2006, which issued by department supervisor, and no detailed working hours and overtime hours were registered on the records. The manual attendance records for 2005 were not maintained as the factory had finished the year-end sum-up.
10 Subcontracting Satisfactory NIL
Overall result by section(2/2)
20
Example of an Audit Report
Overall Result by Section
Overall Assessment Factory Overview XXXX., Ltd is located in Province, China. The total land area occupied by the facility is about 60,000m². They have started their operation in existing location since February 1991. The main products manufactured by the factory are High-Class Cosmetic Packaging Components.
Percentage dedicated to L’Oréal: 10%
Other brands in the factory: X, Y, Z …..
Number of employees interviewed: 16
Number of Record reviewed & review period: 16Last period paid: January 2006Peak period: N/ARandom Period: December 2005 and October 2005Peak Months of the Facility: N/A
Communicated Findings with (Facility Manager): Mr. XXX / Vice General Manager
Agreed to and signed Corrective Action Plan (CAP): Yes
21
Example of an Audit Report
Overall Result by Section
Detailed Findings by section, example 8. 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, a labour contract shall be concluded where a labour relationship is to be established.
Finding/Objective evidence: It was noted that the factory had not signed labor contracts with 11 out of 16 interviewees.
Management response: During the audit, the factory provided one copy of <Labor Services Agreement>, 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, the copy was not accepted during this audit. The factory explained that ‘XXX., Ltd.’ exported the 8 out of 11 interviewees who did not sign labor contracts with the factory. And the rest 3 were new workers and their labor contracts were in process. Proposed corrective action: It is recommended that the factory should sign labor contracts with all workers.
22
Example of a Photo Report
Overall Result by Section
Detailed pictures on non conformities & best practices
Blocked Emergency Exit of Dormitory
Electric Appliance Controller Box without Cover and Warning Sings
Evacuation Plan provided
Sponge Grinding Machines without Belt Guard
23
Example of a Corrective Action Plan (CAP)
Overall Result by Section
Section NON CONFORMITY CORRECTIVE ACTION DEADLINE
Health &Safety No ventilation system was equipped to expel the foul air
at the raw material department.
Factory will equip ventilation system of the raw material
department to ensure workers working under
healthy condition.
1 week
factory did not supervise and
train employees to properly wear and
to use the personal protective
equipment such as respirator, two workers in raw
material department did not
wear respirator.
factory should supervise and train employees to properly wear and use the personal
protective equipment.
Immediate for workers not trained yet
and training plan for others.
CAP is submitted in both local language and translated in english.
CAP is signed by both the audit team and facility
24
« Need Social Audit countries list » « Need Social Audit countries list » PC / RM / POS & Promotional Items suppliers’ plants located in :
ArgentinaBoliviaBrazilChiliColombiaDominican RepublicEcuadorHonduras MexicoNicaraguaParaguayPeruUruguayVenezuelaGuatemala
BangladeshBruneiCambodiaChinaHong KongIndiaIndonesiaMacauMalaysiaPakistanPhilippinesSouth KoreaSri LankaTaiwanThailandSingapore Vietnam
DubaiEgyptGhanaIsraelKenyaLesothoMauritiusMoroccoSouth AfricaSwaziland
BulgariaCroatiaEstoniaHungaryLatviaLithuaniaPolandRomaniaRussiaSerbiaSlovakiaSloveniaTurkeyUkrainia