Corporate Responsibility & Sustainability Report 2015 Sears Holdings Corporation

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At Sears Holdings, our supply chain is broad and complex, making it an important focus of our corporate responsibility efforts. It spans across the producers of raw materials, manufacturers of goods, transportation and logistics service providers, and processing and storage systems. Each of these steps along the supply chain plays an integral role in bringing to market the products we sell in our stores and online. 

Products sold by Sears and Kmart are produced in over 5,600 factories in 65 countries. We have well-established due diligence checkpoints to ensure we are sourcing the quality products our members expect from safe factories that adhere to local country laws.  

Human Rights

We are committed to doing business with a high standard of ethics, regard for human rights, and in compliance with all applicable laws. We are also committed to working with vendors, factories and other partners who share these same values. We communicate these expectations in our Global Compliance Program Requirements, which define the basic obligations we require our suppliers to abide by in their operations. Pillars of our Global Compliance Program include a strong emphasis on ways we can support remediation, continuous improvement, and greater transparency and collaboration with the many valued members of our supply chain. 

Our Global Compliance Program Requirements cover 13 areas of ethical business practices:

  • Compliance with the Law
  • Health and Safety
  • Fire Safety Risk
  • Child Labor
  • Forced Labor, Slave Labor and Human Trafficking
  • Harassment or Abuse
  • Discrimination
  • Working Hours
  • Wages and Benefits
  • Freedom of Association
  • Environmental Compliance
  • Notice and Record Keeping
  • Factory Security

We provide our Global Compliance Program Requirements document in 26 different languages and require that it be visibly posted in the factories where all of our products are made. This communication also provides a way for factory workers to confidentially report any suspected violations of the law or company policy. To better engage with our vendor and factory community, Sears Holdings hosts workshops internationally throughout the year to provide education on our factory requirements, Sears Holdings compliance programs, and general industry trends and updates.  

Factory Compliance Audits
In addition to providing education and training, our Global Compliance team has implemented a factory auditing program to ensure compliance with our Program Requirements and continuous improvement in factory working conditions. Audits are conducted in all high-risk factories by an internal Sears Holdings auditor or a pre-approved third-party auditor, and take place on a semi-unannounced basis, meaning we provide our vendors and factories with a 15-day window during which the audit will take place. In certain cases, audits may also be conducted completely unannounced.

In 2015, Global Compliance conducted 3,039 audits in 2,574 of our highest-risk factories producing merchandise for Sears and Kmart.

Our audits include a review of factory records and documents, inspection of the factory itself, private and confidential interviews with selected employees, as well as opening and closing meetings with factory management. It is common to uncover some shortcomings through the audit process, and each audit is assigned a rating and follow-up review schedule.  Following the audit process, factories are required to supply a corrective action plan for each violation found during the audit process. Egregious violations such as child labor, forced labor, harassment, bribery or discrimination are not tolerated and will usually result in termination of the factory for future production. Additionally, a factory that receives a “Needs Improvement” rating and does not improve its results within three consecutive audits will be terminated and not allowed to produce future orders.

For additional details, please review our Global Compliance Program information.

Better Work

Sears Holdings is a participant of Better Work, an international organization dedicated to improving the lives of workers employed by the global garment industry. In key countries where it operates, the organization assesses the social compliance of garment industry factories based on core international labor standards and national labor laws. Better Work also provides training to factory workers and management, as well as research briefs and white papers on garment industry working conditions. Participating in the program allows us to use the Better Work factory assessments, and reduces duplicative auditing while allowing factories and participating companies to better focus on solutions and capacity building.

Alliance for Bangladesh Worker Safety

We are proud to be one of the founding Members of the Alliance for Bangladesh Worker Safety, a five-year, legally binding commitment to improve the working conditions of garment workers in Bangladesh. The Alliance was created in response to a series of tragic factory events in the garment industry. It represents a collaborative effort between North American retailers, nongovernmental organizations, factory workers, the government of Bangladesh, labor unions and private organizations to improve the safety of Bangladesh’s garment factories. Since its inception, the Alliance has successfully worked to develop a strict set of common standards for the fire, structural and electrical safety of factories. The Alliance has conducted safety assessments of all ready-made garment factories producing for Alliance members, and has provided important safety training for factory workers and managers. 

We believe that the garment industry provides important opportunities for income and quality-of-life improvements in developing countries. However, these opportunities need to be developed in a manner that provides safe and healthy environments for workers. The work being done through the Alliance is supporting measurable progress in the safety of the garment industry in Bangladesh.

Uzbekistan Cotton

Sears Holdings strictly prohibits the use of cotton sourced from Uzbekistan in its supply chain due to concerns over the use of child labor and forced labor to harvest cotton. We require that all of our suppliers and partners follow our policy prohibiting the use of Uzbek cotton in any phase of production for merchandise sold by Sears Holdings. We also prohibit our suppliers from doing business with companies that are invested in the cotton sector in Uzbekistan or using Uzbek cotton in other aspects of their business.

For more information on all of our policies related to Human Rights, click hereand to view the Sears Holdings Conflict Minerals Policy, click here.

Environmental Sustainability

In 2014, we initiated a pilot exercise to better understand the environmental impacts of our top 20 direct sourced apparel vendors, representing more than 130 fabric mills, dye houses and printing houses. We developed and administered a survey to better understand the environmental footprint of our private brand apparel, identify best practices, increase and promote transparency, and communicate the importance of environmental efforts at Sears Holdings. We modeled our survey after common retail industry reporting measures to maintain consistency with established best practices.

Vendors were surveyed on their environmental management systems, energy and climate activities, emissions to air, waste management practices, water consumption and conservation, wastewater treatment and community activities. Results of the survey and environmental market practices were shared at our Quality Assurance Vendor Summit to promote environmental awareness and encourage environmental sustainability among our vendors. 

In 2015, we expanded the survey to include an increased number of apparel vendors, expanding from 20 to 29 vendors.  We also expanded the type of categories surveyed to include six footwear vendors and six soft home vendors. We continued to survey for environmental management practices, energy and climate change efforts, waste management, and water conservation and treatment practices, and expanded our questionnaire to increase the level of detail received from our vendors.

Chemical Safety

Working together with our suppliers, we abide by all applicable laws and industry standards regarding materials and chemical substances used in products manufactured for Sears Holdings.  In response to growing consumer concerns, we have adopted a more extensive policy regarding the use of bisphenol-A.

BPA is a hardening agent used in a variety of plastics. In recent years, concerns have formed over potential negative health effects resulting from exposure to BPA. In response to these concerns, current regulations require that all pacifiers, baby bottles and other baby feeding products, as well as sports water bottles, be manufactured without the use of BPA. Sears Holdings proactively also requires that any reusable food or beverage container offered for sale in its Sears or Kmart stores is manufactured BPA-free.