Macy’s, Inc. is committed to using more sustainable sources, respecting the human rights of our workers and protecting the environment. Having specific, reliable information on each step of a product’s life cycle – from source to store – gives us the ability to identify the greatest impacts, risks and opportunities for improvement. We are working on several fronts to gain greater transparency into our entire supply chain.
To help us get closer to end-to-end traceability of our products, Macy’s Private Brands is introducing a new, online information system, SGS Transparency-One, that will enable the direct exchange of technical information and data with our suppliers. We will use this system to map our supply chain, make our training materials and resources more accessible to our suppliers, help us to more efficiently track working conditions, ensure compliance and better manage business risks.
We require all suppliers for both our private brands and the national brands we carry to operate ethically, with respect for the human rights of their workers, and with regard for their environmental impact. Our Vendor and Supplier Code of Conduct (Supplier Code) outlines the minimum standards we require from our suppliers to ensure that our merchandise is produced in workplaces that are free of abusive, exploitative or unsafe working conditions. We also require that our suppliers comply with the applicable laws and regulations of the United States, and those of the respective country of manufacture or exportation.
We work to safeguard the welfare and rights of workers involved in producing the goods we sell and take action to ensure that their working conditions are just, safe and fair. We regularly educate our suppliers and colleagues with supply chain responsibility on the need to protect human rights and delivered updated training with information on trafficking and slavery in 2018. View our Human Trafficking statement. As an example, we recognize that cotton from Uzbekistan and Turkmenistan may have been harvested through a state-orchestrated forced labor system. This violates international conventions prohibiting forced labor, and we prohibit Macy’s Private Brand suppliers from sourcing cotton from these countries.
Under the Dodd-Frank Wall Street Reform and Consumer Protection Act, publicly traded companies are required to submit to the U.S. Securities and Exchange Commission (SEC) an annual report disclosing the use of “conflict minerals” originating from the Democratic Republic of Congo or adjoining countries (hereafter collectively referred to as DRC). The conflict minerals are tin, tantalum, tungsten and gold. This Conflict Minerals Rule reflects the concern that revenues obtained from the minerals fund the ongoing armed conflict in the DRC and the resulting humanitarian crisis.
The Conflict Minerals Rule requires public companies like Macy’s to conduct due diligence inquiries of their supply chains to determine the source(s) of the conflict minerals used by their suppliers. Our Conflict Minerals Policy applies to private brand products produced by Macy’s, Bloomingdale’s, Bluemercury and their respective subsidiaries, and we prepare and file an annual Conflict Minerals Report with the SEC. As part of our due diligence, we use an independent third party to survey our suppliers annually to determine if conflict minerals are used in their supply chains and to identify the sources of those conflict minerals. We also require that our Tier 1 private brand suppliers source metal trim components from our Nominated Trim Supplier list. Trim suppliers who are not able to meet or maintain these expectations risk being removed from our program.
We want to help our suppliers understand and meet our standards, both when they join our supply chain and on an ongoing basis. All new suppliers undergo a social compliance audit and must meet or exceed minimum standards before they are approved for production and are added to our merchandise ordering system. Our social compliance team prepares and trains prospective suppliers on our Supplier Code, audit protocols and terms of engagement. Current suppliers receive ongoing education from our social compliance team, which communicates our requirements and expectations, encourages robust internal compliance policies and collaborates on continuous improvement at manufacturing facilities.
We actively monitor working conditions in all factories, which includes auditing all of our Tier 1 facilities using the tools described in the 2018 sustainability report. We employ a qualified third-party firm, UL Responsible Sourcing, to conduct on-site audits. To ensure ongoing compliance, our independent auditors conduct unannounced social compliance audits at least annually, or more frequently as needed, at all factories producing private brand goods. We regularly collaborate with our suppliers to help them improve their social compliance scores.
To strengthen our approach for dealing with human trafficking and forced labor risks, in 2018 we enhanced our Manufacturing Compliance Evaluation Report, the social compliance audit tool we developed in partnership with UL Responsible Sourcing for use in all of our domestic and overseas private brand factories. This audit tool covers local laws in the country of manufacture and all principles in our Supplier Code, including health and safety, harassment and abuse, non-discrimination, freedom of association, wages and working hours, and child labor.
We work to improve security measures at our production sites and reduce the risk of terrorist activities throughout the supply chain. Suppliers that are not already certified under the Customers Trade Partnership Against Terrorism (CTPAT) program are required to undergo annual security audits at their overseas factories for private brand production. The security audit covers CTPAT-required security measures such as container and trailer integrity, personnel checks, cargo handling and information technology. We updated the security audit tool in 2018 to guard against human trafficking and slavery, and amended the accompanying Security Manual to keep current with the U.S. Customs and Border Protection guidelines. Macy’s has been a member since the program was introduced in 2002 and maintains the highest level of CTPAT compliance.
Macy’s, Inc. does not tolerate human trafficking and slavery in the supply chain. Our Private Brands Macy’s social compliance team will investigate any reports alleging these activities, or any other serious violations against our Code of Conduct. Action is taken against any suppliers for failing to comply with our standards, which may result in termination of the business relationship. We do work with our suppliers to correct issues, and in factories where corrective actions have been required, we conduct audits more frequently. If high-risk violations are found, immediate action is taken to investigate and evaluate next steps.
In some cases, the supplier and/or factory relationship may be terminated. During 2018, we conducted 836 factory audits, with four factories falling under the High-Risk category. Of those four factories:
Once we have determined which standards and certifications are most meaningful, we will set benchmarks for incorporating these raw materials and fabrics into targeted product categories. We intend to pursue this in a thoughtful and strategic way. We currently offer 28 independently certified private brand products made with some or all eco-conscious fibers and materials including cleaner cotton, recycled polyester and environmentally responsible leather.
Responsible chemical management, which has always been integral to our product safety efforts, is taking on growing importance as customers seek information about product ingredients and increasingly purchase products that have been formulated without harmful chemicals. Macy’s Private Brands is expanding our Chemical Management Program to enhance education and training around chemicals of concern and to provide increased ingredient transparency when appropriate.