social compliance audit process

Registration
All Target merchandise suppliers must register their factories that convert raw materials or components into Target owned brand products, Target exclusive products, Target-distributed products and/or nationally-branded products for which Target is the importer of record.  All registered factories are required to participate in our responsible sourcing program and must authorize unannounced compliance audits. 

 

Factory Audit Selection Process
Target has developed an audit model that segments responsible sourcing risk by country.  We have also created a system that forecasts our monthly audit plan to help mitigate risk. The forecast system identifies factories to audit (weighing factors like country risks, registration status, date of last audit and previously identified issues) and prioritizes them accordingly.  

 

Audit Purpose, Protocols and Resources
The purpose of Target’s social compliance audit is to assess factory conditions, worker treatment and compensation, hiring processes, environmental practices and more generally, compliance with applicable laws.  Our responsible sourcing audits are performed on an unannounced basis.  We use a combination of our own auditors and qualified, third-party auditors to validate a factory’s compliance with Target’s Standards of Vendor Engagement and applicable laws.  When we use third-party auditors, we provide them with extensive training within Target’s processes, which they are required to apply.  In countries where the International Labor Organization’s Better Work Program provides advanced monitoring and advisory services for factories, Target will accept their audit results in place of our own.

An unannounced audit consists of a meeting with factory management, documentation collection and review, a tour of the entire facility (including dormitories where applicable), and interviews with managers and workers.  Auditors also analyze personnel, wage and time records to verify compliance with local labor laws.  Additionally, auditors review the environmental practices and performance of the facility.  Environmental management indicators include possession of the appropriate permits, proper waste management methods, safe chemical usage and adequate wastewater treatment practices.  At the conclusion of an audit, auditors explain any violations discovered and proscribe necessary corrective actions to remediate those violations.  

 

Violations, Audit Results and Consequences for Violations
Target’s Responsible Sourcing Team reviews every audit and determines the final results based upon the findings presented.  We categorize violations as Non-Critical, Critical and Severe depending on their severity.  We categorize audit results as Acceptable, At-Risk, Needs Improvement, Immediate Remediation Required, and Non-Compliant.  An audit is ‘Acceptable’ if no or few Non-Critical violations are identified. ‘Needs Improvement’ or ‘At-Risk’ findings result when a combination of Non-Critical and Critical violations (such as health and safety, wage, excessive working hours and/or record-keeping violations) are identified.  A finding of ‘Immediate Remediation Required’ results specifically from environmental violations. 

A factory is Non-Compliant if:

  • Severe violations are discovered, including: underage labor, forced labor, corporal punishment, attempted bribery, sandblasting, unauthorized subcontracting, egregious wastewater treatment and/or absence of appropriate licensing/permitting;
  • It fails three consecutive audits;  
  • An excessive number of violations are discovered; or 
  • The auditor is denied access twice.

Non-compliant audits will result in the cancellation of purchase orders and/or termination of the business relationship. 

Target will only allow a supplier to use a previously Non-Compliant facility once the deactivation period has expired and provided they can then satisfactorily demonstrate compliance with Target’s Standards of Vendor Engagement and applicable laws.  The formal reinstatement process involves a review of the corrective actions undertaken and a re-audit to validate the issues were satisfactorily remediated. 
 

Corrective Action Plan Management
Target communicates audit results to our suppliers and requires a detailed corrective action plan (or CAP) for ‘Needs Improvement’, ‘Immediate Remediation’ and ‘At-Risk’ results. Our headquarters team has ongoing discussions with suppliers as they address the CAP requirements, focusing on steps taken, required timelines, facility accountability for ongoing monitoring, and long-term stability planning.  An important part of this process is helping the supplier identify the root causes of violations so they don’t recur.