New Balance seeks to ensure that the people who make our products – no matter where they are in the world – are treated with dignity and respect. We believe that all people have a right to make their voices heard, earn a fair wage and work in a safe and healthy environment.
New Balance believes in the importance of regular and constructive worker-management dialogue in the workplace. The New Balance Code of Conduct requires suppliers to respect fundamental human rights, including the right of employees to freedom of association and collective bargaining. Where freedom of association and/or the right to collective bargaining is restricted by law, employees shall be free to develop parallel means for independent and free association and collective bargaining.
In Indonesia, New Balance joined the Freedom of Association (FOA) Protocol in 2013, a national-level multi-stakeholder initiative comprised of brands, suppliers, non-governmental organizations (NGOs), trade unions and union federations. New Balance actively participates in the Protocol National Committee meetings where current challenges and opportunities related to industrial relations in Indonesia have been discussed. In 2017, the Protocol conducted a supplier survey on Protocol implementation and achievements to date, which will help inform the work of this multi-stakeholder initiative going forward.
In countries like Vietnam and Jordan, which have state-sponsored unions, we encourage suppliers to work with the ILO/IFC Better Work program to establish Performance Improvement Consultative Committees (PICCs), which are comprised of worker representatives and factory management. The role of the PICC in the workplace is to serve as an established channel for raising workers’ concerns to factory management as well as to discuss the remediation process for compliance audit findings.
In China, which also has a state-sponsored union, New Balance assisted one of our former footwear suppliers to pioneer the democratic election of union representatives in 2012-2013, when regional regulations changed to encourage the direct election of worker representatives. More recently, in 2018, New Balance has launched a workplace cooperation project with five suppliers in China to provide training for suppliers to establish worker-management committees. Workers participating in the program are democratically elected by their peers and the program aims to establish best practices that can be shared with other suppliers. Establishing effective worker-management dialogue is one of the most common needs raised through workplace surveys.
In 2016, the Fair Labor Association (FLA) notified New Balance of a complaint regarding a supplier in El Salvador that was reportedly firing workers who were forming a union. New Balance worked with other brands, the FLA, factory management, and workers and union representatives to get the workers reinstated. As a result of this intervention, the factory also developed a revised worker retrenchment policy for the future.
For more on this topic, please see how New Balance is working to promote workers’ rights in Mexico.
The New Balance Code of Conduct requires suppliers to develop and implement effective mechanisms to resolve workplace disputes and employee grievances. Suppliers may not retaliate against workers who voice concerns. Suppliers must also protect worker confidentiality if requested. New Balance assesses the availability and functionality of local grievance mechanisms as part of our regular audits, both by reviewing grievances reported as well as interviewing workers about their access to and understanding of a supplier’s grievance process.
Ideally, grievances should be raised and addressed appropriately within the workplace. That said, New Balance seeks to ensure that any worker or third party may contact New Balance directly if needed through the email address (CSR@newbalance.com) printed on the New Balance Code of Conduct. In addition to contacting New Balance, concerned parties can also reach out directly to our Compliance team during audits or other factory visits or use third-party grievance mechanisms, such as the Fair Labor Association’s third-party complaint mechanism.
LOCAL WORKER HOTLINES
Grievance mechanisms are most effective when they are localized and easily accessible to workers. Since 2016, New Balance has been working with third-party service providers in China and Vietnam to implement locally-based worker hotlines in supplier facilities in both countries, which represent the majority of our sourcing volume. Both of these local hotline providers train the workers on the hotline system and maintain multiple channels – including phone, text and mobile apps – for reporting grievances as well as raising concerns or asking questions. The third party receives the worker questions that come in and, as appropriate, refers them back to the factory for resolution. For high-risk issues, New Balance is informed immediately and, depending on the nature of the grievance, we may also conduct our own investigation to determine how to address the issue.
2017 ISSUES REPORTED
In 2017, workers placed more than 1,500 enquiries in China and Vietnam through the third-party channels. The vast majority who contacted the hotline were seeking assistance on personal issues or had basic questions related to working hours, factory management, payment of wages and benefits, or employment contracts. Of the total 1,500 enquires received in 2017, eight were classified as serious. Five were related to wages and benefits concerns, two were related to freedom of movement, and one was related to working conditions. New Balance also received one grievance in 2017 via e-mail from a union representative in Haiti regarding alleged restrictions on freedom of association. As of the end of 2017, these nine cases were resolved to the satisfaction of all parties.
New Balance believes, and research suggests, that good working conditions lead to higher productivity in factories.* To understand worker needs and priorities more clearly, New Balance is facilitating a series of workplace surveys. As of January 2018, we have conducted surveys at eight factories in China, Vietnam and Indonesia. Through the surveys, workers are empowered to voice confidentially the workplace issues that matter most to them. Participating suppliers receive the survey results in an aggregated report highlighting strengths and weaknesses and are encouraged to use the information to prioritize investments in training and communication.
The surveys have revealed interesting findings. For example, at one factory in China, the survey demonstrated an awareness gap between workers and supervisors around production targets. While supervisors and factory management believed everyone understood the production targets, only 29% of workers said they understood them. Surprised, factory management immediately took steps to clarify the targets, which has since improved workplace relations on the production floor and increased production efficiencies.
In China, the top priorities for workers surveyed included improving communication between supervisors and workers, female worker empowerment (such as more opportunities for career advancement, understanding their rights, and work-life balance) and programs for children of workers who do not live with their parents who work away from home. In Indonesia, 80% of workers indicated that they felt comfortable speaking up about an issue, problem or suggestion, and over half of the workers surveyed felt that their feedback would be taken seriously by management. However, a third of workers reported experiencing or witnessing cases of supervisors yelling. In Vietnam, 90% of supervisors cited training workers to be the most challenging aspect of their job, and more than half of workers felt that additional support is necessary to improve productivity.
This information has helped New Balance discuss priority issues with suppliers and assess ways to improve problem solving, workplace cooperation and skills development.
New Balance is committed to ensuring that the people who make our products are treated with dignity and respect. Our commitment includes fair compensation, the principle that workers are entitled to remuneration for work during a regular work week that allows them to meet their basic needs and provides for some discretionary income, which, for example, can be used to pay for school fees, clothing and medical costs.
New Balance suppliers are required to pay at least the minimum wage or the industry prevailing wage, whichever is higher, and all legally-mandated benefits. Suppliers are also prohibited from utilizing temporary work arrangements where the sole purpose is to avoid payment of legal benefits. In 2017, we had two suppliers with minimum wage violations. One supplier is in the process of implementing a new wage recording system and fixing the problem. In the other case, we are terminating our relationship with the supplier due to multiple noncompliance issues that have gone un-remediated, despite our best efforts.
In cases where workers’ basic needs are not met by these standards, New Balance is committed to working with suppliers and external stakeholders to find practical ways in which fairer compensation can be progressively realized. We recognize that compensation is a complex issue involving macro- and micro-economics, social and cultural norms, and political priorities. We are tackling it from a variety of angles, including improvements to factory efficiency and productivity, value-added manufacturing, skills training, public policy advocacy, promotion of effective legal wage-setting mechanisms, and a working environment that enables constructive worker-management dialogue around wages. For information on how we have helped to advocate for more effective wage-setting mechanisms in Cambodia, please click here.
Central to the New Balance approach has been our work with the Fair Labor Association’s (FLA) fair compensation project. In 2015, the FLA launched a strategy on fair compensation that began with the development of a new tool to benchmark current wage levels, understand high-risk compensation issues and compare compensation across countries, factories and against benchmarks like poverty lines and living wage estimates. Since 2016, New Balance has been utilizing the FLA wage collection tool and providing feedback that has informed FLA’s ongoing refinement of the tool and reporting. We continue to utilize the FLA tool and research in our own internal compensation benchmarking and fair compensation strategic planning process.
Although New Balance works closely with suppliers to monitor compliance with the New Balance Code of Conduct, local governments and labor inspectors have direct oversight of and authority for enforcing labor, health and safety standards and thus are the front line in protecting workers’ rights and regulating employers.
New Balance sources apparel from the country of Georgia, where the local labor code does not include a defined minimum wage. In 2015, we signed a letter led by the Fair Labor Association (FLA) to the Georgian Ministry of Labor Health and Social Affairs to encourage the government to establish a meaningful minimum wage along with other basic protections for workers, including effective labor inspections. We urged that the legal minimum wage be negotiated in consultation with workers, trade unions, civil society, brands and suppliers, to ensure a fair representation of all industry stakeholders.
In 2017, New Balance participated in a workplace health and safety training event for the newly formed Georgian labor inspection department to help improve understanding of and compliance with workplace regulations. The event was facilitated by the International Labor Organization (ILO) and the FLA, and the trainers included New Balance and other brands sourcing from Georgia. The trainees included 25 future labor inspectors from the Georgian Labor Conditions Inspection Department of the Ministry of Labor, Health and Social Affairs. For more information on the training, please see: http://www.ilo.org/moscow/news/WCMS_553473/lang--en/index.htm
New Balance expects suppliers to maintain the highest standards of workplace health and safety, based on the US Occupational Safety and Health Act (OSHA) standards or equivalent international standards, combined with local laws and regulations.
Our audit assesses more than 60 different measures related to health and safety. Some of these include: structural safety and building permits, fire safety and prevention systems, use of personal protective equipment, machinery and electrical safety, injury prevention and first aid, working conditions (including indoor air quality, ergonomics and cleanliness), chemical management and conditions in the factory canteen and dormitories.
New Balance encourages factories to develop policies and management systems to ensure health and safety standards are met on the factory floor every day. Management systems should include procedures for communicating standards and training employees to identify and deal with workplace hazards, reporting systems to manage problems as they arise, and methods for keeping up-to-date on best practices for minimizing the hazards inherent in the factory’s specific manufacturing processes.
In 2015, night-shift workers safely evacuated during a warehouse fire at a New Balance supplier factory in Vietnam. Thankfully, the factory had a strong history of regular fire drills and no one was injured, but the fire left behind significant property losses and was a valuable reminder about the importance of fire safety.
We have conducted annual inspections of supplier factories for fire hazards and other safety concerns for several years. Our auditors verify that factory buildings are safe for occupancy, have functional fire alarms and extinguishing equipment and maintain unobstructed exits and evacuation paths. They also test factories’ fire readiness, making sure staff is trained on basic fire safety measures, including how and where to evacuate, whom to contact in an emergency and how to operate extinguishers.
Following the 2015 warehouse fire in Vietnam, New Balance launched a program to expand fire safety efforts. We began with key factories in Vietnam. Five factories volunteered to conduct a guided self-assessment of their facilities and each then implemented a fire safety improvement plan. Upon completion of the initial assessment, two of the factories were rated “low risk” and three were rated “medium risk”.
The improvement plans led to significant enhancements, including installation of water and foam sprinkler systems in production and storage areas, regular maintenance and monitoring of existing sprinkler systems, trained fire safety volunteers in each department who were equipped with protective clothing and firefighting equipment and extensive assessments of building electrical systems to reduce electrical fire hazards.
Upon reevaluation in 2016, these five factories demonstrated measurable improvement in their fire safety scores. Four of the five participating factories were rated “low risk” and the fifth supplier improved their score, but was still considered “medium risk”. More importantly, these factories have embraced a fire safety culture that will help them proactively identify and address future hazards. Fire safety continues to be a priority for New Balance and is a focus area for our “beyond compliance” program.
For more information, see Beyond Compliance.
New Balance strives to eliminate and minimize the use of hazardous chemicals in manufacturing. Where hazardous chemicals are necessary and no alternative exists, New Balance works with suppliers to protect the health of workers through responsible chemical management practices. Chemicals that are known to be toxic, corrosive, flammable, reactive, or pose other potential risks to human health must be carefully managed.
Click here for more information on New Balance Restricted Substances and Product Chemistry.
New Balance seeks to invest in programs that benefit people both in the workplace and beyond. Such programs focus on topics ranging from worker health and education to ways to balance the demands of work and home life. In addition to having a positive impact on workers’ lives and local communities, these programs help retain a skilled workforce and increase worker satisfaction.
We recognize the importance of programs that specifically address the needs of women, given that women comprise the majority of the workforce in the global footwear and apparel industry. In many developing countries, women have lower education levels than men and many also lack basic knowledge related to personal health and finances. Furthermore, we believe – and research supports – that investing in women is also an investment in the wellbeing of children, families and communities.
The World Health Organization estimates that 844 million people around the world lack access to safe drinking water.* This includes people in many of the countries where New Balance products are manufactured. To combat this issue, New Balance requires that all suppliers provide employees with access to clean and safe drinking water. Failure to do is a zero tolerance issue. In countries where the US Centers for Disease Control has deemed tap water unsafe for consumption, factories are required to test their drinking water at least twice per year to ensure it meets minimum safety guidelines. Testing may also be required for any water source that is considered uncontrolled or “unimproved” or when there are worker complaints or auditor observations that suggest cause for concern.
As part of the New Balance audit process, we review drinking water test results to ensure workers have access to clean water. Initially, in some cases we found that workers often distrusted a factory’s water supply, even when our tests demonstrated that it was safe. After regular testing was implemented and enforced, with results posted, we saw that workers became more likely to trust that the water was safe to drink.
In 2016, one New Balance supplier in Thailand showed elevated bacteria levels in its drinking water supply. After improving its water filtration system and cleaning its water reservoir, the factory consistently passed drinking water tests. The factory continues to test its drinking water twice per year and is monitored by New Balance. As a result, around 300 workers were given access to clean drinking water.
In 2017, New Balance worked with one of our key footwear suppliers in Vietnam and BSR (Business for Social Responsibility) to implement BSR’s HERHealth program for 2,000 female workers. HERHealth aims to support healthy behaviors and enhance the availability and uptake of health services by raising awareness and strengthening workplace systems. A health needs assessment was conducted at the start of the program and training and peer education programs are now underway focused on nutrition, reproductive health, pre- and post-natal care and early detection of breast cancer.
Finding quality and affordable childcare is a challenge for working families all around the world. In Central America, New Balance has been working through the Americas Group to facilitate national, multi-stakeholder dialogue on childcare and other issues, which has included several public discussions in which factories have shared both success stories and challenges about providing childcare for workers and how such initiatives have benefited their workforce. Recently, the Americas Group has also been surveying workers at apparel suppliers throughout El Salvador to better understand their childcare needs and preferences. We are continuing to explore possible models and ways to address this issue with our suppliers as well as looking for collaboration opportunities.
The International Labor Organization (ILO) estimates that about 152 million children are victims of some form of child labor.* While this number has been decreasing since the year 2000, child labor remains a problem in the global textile and footwear industries.
New Balance enforces a strict zero tolerance policy for child labor in our supply chain. Factories manufacturing New Balance products are prohibited from employing workers under the age of 16 (or 15, where governing laws allow). Factories are also expected to take reasonable steps to verify workers’ ages before hiring them to ensure documentation has not been falsified to make a candidate appear older than his or her true age.
New Balance compliance audits include a rigorous review of documentation in employee files as well as interviews with employees. If an underage worker is identified, factories must arrange for the child to return home and pay for the child’s education until the age at which school is no longer compulsory or the legal working age, whichever is greater. Once the child is of legal working age, he or she must also be offered employment at the factory. Suppliers must also ensure that any vendors or subcontractors they work with follow the same hiring and employment standards.
The New Balance Child Labor Response Procedure is included in the New Balance Supplier Standards Manual.
In the footwear and apparel industry, human trafficking and slavery risks are greatest where there are migrant workers. In many cases, suppliers may not recognize that withholding of passports, often cited for security reasons, or using labor brokers who charge recruitment fees can lead to forced labor risks.
Forced labor is a zero tolerance issue for New Balance. New Balance has approached forced labor with a two-pronged approach – through awareness raising and by conducting due diligence. We have worked with our Tier One suppliers to increase awareness on forced labor by incorporating training materials into supplier summits and workshops. Also, any supplier that employs foreign or domestic migrant labor undergoes additional scrutiny for potential forced labor risks during the compliance audit. Detailed guidance is provided in our Supplier Standards Manual, including requirements related to foreign worker contracts, access to passports and personal identification documents and prohibition of recruitment fees.
For more information, please see our most recent New Balance Human Trafficking and Modern Slavery Statement.
Forced labor risks are a focus in Taiwan manufacturing due to the widespread employment of migrant labor. Many textile mills located in Taiwan bring in migrant workers from South and Southeast Asia. Because brands have less leverage upstream in the supply chain, brand collaboration is important to address the issues more effectively. In 2016, New Balance joined a project with four other brands to work on reducing forced labor risks in shared textile mills in Taiwan. We started by sharing the list of mills we each worked with and then identified one mill shared by all five brands. As a result of our joint efforts, the mill returned passports and personal identification documents to the workers, provided them a safe place for storage of personal affects with 24-hour access and took steps to remove disciplinary policies that were discriminatory toward migrant workers. We continue to work with the mill on a ‘no fees’ recruitment policy and an enhancement of its systems to manage other potential forced labor risks.
The humanitarian crisis in Syria has caused more than 4.5 million people to be displaced throughout North Africa and Europe. The exodus of people from the war-torn nation has left many refugees living in precarious conditions in other countries, with little to no financial support or employment opportunities. Two of the major host countries for Syrian refugees, Turkey and Jordan, are home to significant apparel production. We recognize that refugee workers may be particularly vulnerable to unethical recruitment practices, unfair pay, child labor and other risks. New Balance has taken specific steps to help protect the rights and support the needs of refugee workers in Turkey and Jordan.
Turkey is the single largest host country of Syrian refugees, receiving more than 3.4 million people since 2011.* Turkey is also the third largest supplier of garments to Europe.* Not surprisingly, many refugees have turned to the garment industry for work. Because Turkish authorities have issued very few refugee work permits, many Syrians who fled to Turkey turn in desperation to unauthorized employment. As of the end of 2017, New Balance sourced apparel from four suppliers in Turkey, which together employed more than 1,000 workers. New Balance requires suppliers to hire people authorized to work in Turkey. We monitor suppliers for hiring of unauthorized refugee workers, while also working to increase awareness and promote worker rights for refugees in Turkey.
New Balance has been an active participant in discussions hosted by the Fair Labor Association (FLA) and the Ethical Trading Initiative (ETI) and between the Turkish Ministry of Labor and brands, trade unions, and non-governmental organizations (NGOs) to help identify collaborative and practical solutions to minimize labor abuses against Syrian refugees. These solutions include adopting clear policies, monitoring supply chains and remediating labor violations involving unauthorized refugee workers.
Our position on Syrian refugees working in the Turkish garment industry is guided, first and foremost, by our desire to respect the dignity and humanity of the people involved. New Balance suppliers are prohibited from knowingly utilizing unauthorized refugee labor. However, if unauthorized refugees are found working anywhere in a supplier’s facility or subcontractors, the supplier must take steps to help the refugee worker become authorized, including registration with the Turkish government to obtain the appropriate work permit. Although we require that unauthorized workers stop working while their status is pending, we also insist that the factory continue to pay their full salary, equivalent to the salary of a local worker, for one year. If underage refugee labor is identified, suppliers will also be required to help the child enroll in school in addition to paying the child’s salary while he or she attends school. (Click here for more on New Balance’s Child Labor Response Procedure.)
To enable Syrian refugees in Turkey to better understand their rights, New Balance helped sponsor a collaborative effort to publish a bilingual Arabic and Turkish booklet for Syrian refugees seeking employment. We continue to monitor our Turkish supply chain closely and to increase awareness among our suppliers about Syrian refugee worker rights.
In 2017, New Balance worked with two suppliers in Jordan, neither of which employed migrant or Syrian refugee labor. However, in light of the severity of the Syrian refugee crisis in the country, New Balance Global Compliance and the New Balance Foundation worked with CARE Jordan and the Jordan Hashemite Charity Foundation to donate more than 7,000 pairs of shoes from our New Balance UK manufacturing facility to Syrian refugees living in Jordan. For a video on how we matched our products with a global humanitarian cause, please watch here.
New Balance prohibits harassment and discrimination of any kind. As issues of harassment and discrimination continue to take worldwide prominence, we recognize that these issues must be examined closely in the global supply chain, too.
Sexual and other forms of harassment and discrimination can be hard to detect in factories – as they are in most workplaces – due to lack of evidence or fear of retaliation. New Balance looks closely for any indications of harassment and discrimination during our audit process, including during on- and off-site worker interviews and reviews of a supplier’s policies and procedures. New Balance suppliers are required to maintain effective grievance channels where employees can report violations, and must train employees on the grievance process.
For more information on how New Balance addresses issues related to harassment and discrimination, please see the New Balance Supplier Standards Manual.
The New Balance Code of Conduct requires suppliers to comply with national laws on working hours. Weekly hours should not exceed a regular workweek of 48 hours plus 12 hours of overtime, or the maximum hours permitted by national law, whichever is less. Suppliers must also provide workers with one day of rest in every seven-day period.
For our footwear suppliers, we have an Overtime Application Policy that requires suppliers to seek New Balance approval for any working hours beyond the 48-hour standard workweek (or less, depending on national law). Our goal is to ensure not only that we have visibility to overtime worked, but also to explore whether there are alternatives to working overtime in specific situations, such as pushing back delivery dates. Only in extraordinary circumstances will New Balance authorize excessive overtime – and this requires approval by the heads of both Footwear Sourcing and Global Compliance. Footwear suppliers that work unauthorized excessive overtime will not only be cited for compliance violations, but will also have points deducted from their supplier scorecard for on-time delivery performance.
Despite our policy, as well as widespread industry alignment between global apparel and footwear brands and retailers on working hour standards, compliance with working hours remains a challenge. Most suppliers produce for many brands at one time, which limits the visibility of any one brand and can create unforeseen bottlenecks and scheduling conflicts. Moreover, laws are not strictly enforced in some countries, which has resulted in long-standing cultural practices of long workweeks. Despite our best efforts, workweeks exceeding our Code requirements were the single most frequent issue that we identified in 2017 and remain one of the top challenges we face in our supply chain.
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