V.A.L.U.E. Facts

How Our Global Vendor Social Compliance Program Works

We require our buying agents and direct vendors who produce private label goods for us to identify active factories that are used or that they intend to use to produce such merchandise. Our third party monitoring resources focus on those factories in countries that we believe present the greatest risk of noncompliance with our Vendor Code of Conduct or the local law.

The TJX Global Social Compliance Manual, which was created with the help of external experts, contains, among other important guidance, an audit procedure outline and factory evaluation checklist to help prepare the factory for the audit process. This tool offers detailed information designed to help our vendors and agents better understand the expectations of our Vendor Code of Conduct, as well as the monitoring and corrective action processes. We require our buying agents to disseminate this manual to their entire TJX vendor base.

We also have developed comprehensive compliance program guidelines for factory auditing. These guidelines help our third party auditors assess factories used to produce our private label merchandise. We regularly review and, as appropriate, modify these guidelines to try to ensure that they are consistent with emerging vendor compliance issues and trends.

On-site audits conducted by our independent monitors and principal buying agents generally include one to two full working days at each audited factory, and include the following components:

• Interview with factory management (opening meeting)
• Payroll and documentation review
• Health and safety inspection
• Confidential worker interviews
• Debrief with factory management (closing meeting)

Our Assistant Vice President, Global Social Compliance, participates in shadow audits with TJX's independent auditors and with our buying agents' in-house compliance auditors (in other words, she attends and participates in the audits themselves, assessing the audits and the quality of auditors who are, in turn, assessing TJX's private label supply base). She does this in order to gain a better understanding of the compliance audit process and challenges, and to better aid TJX in our review both of audit results and, more broadly, of our program's effectiveness.

Corrective Action and Remediation
It would be ideal if our training and audits resulted in a perfect score for every factory. However, the reality is that improving working conditions in factories in underdeveloped countries is an ongoing effort, and TJX, like other retailers, is facing this challenge. Our goal, when possible and reasonable, is continual improvement of conditions at factories. This is preferable to pulling out of factories, and gives us the ability to influence positive change.

At the conclusion of an audit, a Correction Action Plan (CAP) is created, if necessary, and all concerns are discussed by the auditors with factory management. Factory management is requested to sign the CAP to verify their understanding of the findings. A copy of the CAP is left with management to assist them in resolving the violations or deficiencies detected during the audit. A copy is also transmitted to TJX's Assistant Vice President, Global Social Compliance.

In an effort to encourage collaboration with our buying agents and vendors, a copy of the audit report and corrective action plan is forwarded to their attention shortly following a third party audit.

TJX requires that our third party monitors re-audit any factory where moderate to serious violations of the Vendor Code of Conduct or the local laws are detected. Recurring problems are tracked and vendors are notified of the expectation of remedial action. For less severe deficiencies, our buying agents or direct vendors are expected to provide evidence to us demonstrating that remedial action has been carried out.

We expect that with each subsequent re-audit, continuous improvement is verified. Our general goal is that each re-audit demonstrate measurable improvement from the prior audit. If a factory receives three consecutive noncompliant grades, this situation will be considered evidence that required remedial action is not being undertaken. While the reasons for this situation will vary from case to case, TJX reserves the right to suspend or terminate business with any factory.

Though we strive to work with vendors to address and resolve shortcomings in their operations, under extreme (though quite limited) circumstances, we must conclude that we can no longer do business with certain vendors, or that they will be precluded from producing goods for us until such time that they demonstrate that they have addressed the situation and have put management systems in place to prevent a recurrence.

Our preferred approach, however, is to work with vendors whenever possible to address and resolve issues identified during audits of their facilities. We believe that this "continuous improvement" model is in the best interest of the workers in the facilities from which we source goods.

Integral to the success of our compliance program is ongoing involvement and partnerships between TJX, UL Responsible Sourcing, Intertek, our buying agents and vendors to address shortcomings identified in audits, and to work towards improvement.

Buying Agent, Vendor and Factory Management Training
Since 2005, we have conducted 75 training sessions for our buying agents, vendors and management at factories producing TJX private label goods. Sessions have been held in China, Korea, Taiwan, Turkey, India, Indonesia, the Philippines, Thailand, Vietnam and the United States. These training sessions were conducted by either UL Responsible Sourcing or Intertek, and accompanied by our Assistant Vice President, Global Social Compliance. We believe that the presence of our Assistant Vice President, Global Social Compliance, at each of these sessions in each of these countries demonstrates to factory management, buying agent management and vendors that TJX is committed to its Vendor Social Compliance Program. To date, our training sessions have included the following topics:

• Review of TJX's Vendor Code of Conduct and of the expectations contained in our Code
• Review of local labor laws
• Review of anti-bribery laws (including the Foreign Corrupt Practices Act) and product compliance requirements
• Discussion on TJX's policy against forced and involuntary labor, including slavery and human trafficking
• Best practices and preventative actions
• Case studies to help demonstrate how to embed management remediation systems
• Open discussions with vendors and factory management on compliance challenges

Because of the strong, positive feedback from our agents and vendors, we will continue to devote resources to these important training initiatives and to review and update these initiatives as appropriate.

Associate Training
We also organize formal internal vendor social compliance training for TJX Associates involved in the procurement of our private label merchandise. Our Associates are trained and retrained on a biennial basis. Through informal meetings and discussions, our Assistant Vice President, Global Social Compliance, continues to update TJX's buying personnel on the requirements of TJX's Vendor Social Compliance Program.