Factories included in our audit program are required to undergo periodic audits to ensure adherence to our Vendor Code of Conduct and local laws. We reviewed more than 2,400+ audits in fiscal 2022 which were either
conducted by our third-party auditors or accepted from accredited, third-party sources, like amfori’s Business Social Compliance Initiative (BSCI), Worldwide Responsible Accredited Production (WRAP), and
Sedex Information Exchange Limited (SEDEX). We believe this industry trend of collaboration and accepting audits from accredited sources is beneficial in that it helps reduce audit fatigue among factories, while
helping companies obtain important information to evaluate their supply chain.
Audits conducted by TJX and our third-party auditors are performed by representatives from UL, Intertek, and Omega. All three of these organizations are members of the Association of Professional Social Compliance
Auditors (APSCA), who agree to adhere to all quality and ethical requirements outlined in APSCA’s Code and Standards of Professional Conduct. The vast majority of audits conducted on behalf of TJX are
by APSCA Registered Auditors (RA), currently the highest APSCA achievable level. We have developed comprehensive compliance program guidelines for our third-party factory auditors and regularly review and modify
these guidelines for consistency with evolving social compliance issues and trends. Factories are expected to cooperate fully with us and our auditors and to provide access to facilities and documents.
These audits generally include one to two full working days at each audited factory, whether in-person or remote, and include the following components:
- Interview with factory management
- Policy, payroll, and documentation review, including confirmation that factory management has verified the ages of job applicants before hiring to protect against potential hiring of child labor
- Factory walk-through
- Health and safety inspection
- Chemical and hazardous materials review, including usage information and verification of Material Safety Data Sheets, chemical safety, and hazardous waste programs
- Confidential worker interviews
- Debrief with factory management
Our AVP, Global Social Compliance, and certain Associates that support our program in buying offices around the world participate in shadow audits with auditors. Shadowing is practiced to gain a better understanding
of the compliance audit process and challenges, and to better aid TJX in our review of both our audit results and, more broadly, our program’s effectiveness.
Corrective Action and Remediation
Audit reports are reviewed by TJX and assigned a rating of satisfactory, needs improvement, or unsatisfactory. For factories assessed as satisfactory, our goal is to conduct biennial audits. When a factory receives
a needs improvement or unsatisfactory rating, a Corrective Action Plan (CAP) is created and concerns are discussed by the auditors with factory management. A copy of the CAP is provided to factory management
to assist them in resolving any violations or deficiencies detected during the audit. To encourage collaboration between our buying agents and vendors, a copy of the CAP is also forwarded to both parties’
attention shortly following the audit. TJX receives a copy as well. Factory management is requested to sign the CAP to verify their understanding of the findings.
For factories with a needs improvement rating, our buying agents or direct vendors are expected to provide evidence to us that remedial action has been carried out within six months of the audit. However, where
moderate to more serious violations of the Vendor Code of Conduct or the local laws are detected, meaning the factory has received an unsatisfactory rating, we require that our third-party representatives re-audit
the factory or require a follow-up audit from an accredited, third-party source and aim to complete the re-audit within 6 months. At the conclusion of each audit, factories are notified of the issues found and
of the expectation of remedial action.
We expect that continuous improvement is verified during the re-audit. Our general goal is that each re-audit demonstrates measurable improvement from the prior audit. We recognize that if a factory receives several
consecutive noncompliant grades, this pattern may suggest that required remedial action is not being undertaken.
Though we strive to work with vendors to address and resolve shortcomings in their operations, under extreme circumstances, we may conclude that our merchandise can no longer be produced in certain factories, or
that they will be precluded from producing goods for us until 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 because improving working conditions in factories is an ongoing effort and TJX, like other retailers,
continues to face this challenge. We believe this is preferable to ceasing use of these factories as it gives us the ability to influence positive change. We believe that this “continuous improvement”
model is in the interest of the workers in the facilities from which we source goods.
There are several issues that we consider to be “zero tolerance” issues: for example, bribery/corruption; child labor and forced or slave labor; human trafficking; maintaining a facility with all doors
and/or exits locked; use of chemicals banned in the region; and failure to pay wages. If a factory is found to be in violation of our requirements on these topics, we inform our vendor that it can no longer
provide us with goods made by that factory.