Audit Practices and Oversight
Third-Party Factory Audits
Hasbro requires all third-party factories to comply with its ethical sourcing program, which requires all third-party factories to be audited by a third-party auditor.
If a third-party audit reveals significant non-compliance, the factory is put on probation and is required to correct the non-compliance. During probation, factories are subject to regular unannounced audits by Hasbro and appointed third-party firms to verify improvements have been made. Factory audits focus on the following areas:
- Working hours
- Wages and compensation
- Child labor
- Forced labor and prison labor
- Disciplinary practices
- Employee representation
- Fire prevention
- Environmental, health and safety
- Employee welfare (dormitories, cafeteria services, medical)
Although our ethical sourcing program includes a comprehensive auditing program, audits alone are not sufficient to address worker concerns. Therefore, factory workers are also provided access to a helpline that serves as a worker grievance mechanism.
In addition to the audits conducted by our ethical sourcing program partners and by our licensing partners, Hasbro employees conduct additional oversight audits to verify that the systems for implementing our Global Business Ethics Principles are effective. These spot checks help ensure the integrity of the audit process and that factories maintain compliance between regular ethical sourcing program audits. We conduct oversight audits in various levels of our supply chain.
Corrective Action Plans (CAP)
Following social compliance audits, corrective action plans (CAP) are developed to address any violations that are found. The process for verification of the CAP varies depending on the nature of the non-compliance. In some cases a desktop review is required (i.e. factory policy must be reviewed) but in other cases, our ethical sourcing partners will send in third-party auditors again to verify that corrective actions have been taken. A CAP typically includes the following procedures:
- Description of the noncompliance violation
- Action plan to address the violation and prevent future occurrences
- Person accountable for action plan and anticipated completion dates
- Documentation needed to support the corrective action
A follow-up audit will then be conducted to ensure the CAP has been implemented. We recognize that factories are not perfect workplaces and take an approach of continuous improvement. Hasbro firmly believes in working with factories to ultimately raise standards and improve conditions for all. If, however, a factory cannot meet our standards or is unwilling or unable to remediate instances of non-compliance we will not utilize the factory, or in the case of ongoing production, we will terminate our relationship with the factory.
Evaluating Our Social Performance
We are always looking for ways to improve our supply chain engagement and performance. In 2015, working with key vendors in China, we partnered to pilot a mobile phone survey tool in four vendor factories, to collect information and further understand the opinions of workers. While most factories saw some improvements in worker opinions on increased job satisfaction, improved worker/management relationships, and reduced worker stress, we will continue to partner with our vendors and explore tools that increase outreach capabilities and foster workplace improvements in vendor factories.