Corporate responsibility

Our suppliers

Why is it important for Next to trade ethically?

The challenge of ethical trading is one many stakeholders, including consumers, investors and campaign organisations, have engaged with Next on for a number of years. For over a decade, since 1998, we have adopted and implemented a code of conduct to deliver benefits for workers across the globe and as a means by which we can fulfil our responsibility to uphold international labour standards with our suppliers. The Next Code of Practice (COP) is our set of ethical trading standards, which forms an integral part of our business and relates to all products bearing the Next Trade Mark or sold by Next. Our COP is aligned to the Ethical Trading Initiative (ETI) Base Code and reflects the most relevant international standards with respect to labour practices (International Labour Organisation Conventions¹).

Our priorities are to:

Communicate our ethical standards to suppliers
Promote good work places through our factory monitoring programme
Support our suppliers through a programme of continuous improvement
Build capacity within our international supply chain
Work in collaboration with others to pursue solutions for some of the more complex and systemic problems we cannot solve alone

Our Approach

Our Code applies to every country we source from, including the UK, and has ten key principles which set out the minimum standards we expect our suppliers to comply with in relation to workers' rights and conditions of work including working hours, minimum age of employment, health, safety, welfare and environmental impacts.

There are 10 key principles to our Code:

No forced labour
No child labour
Freedom of Association
Healthy and safe working conditions
Reasonable wages and benefits
Reasonable working hours
Equal opportunities
Employment security
Respectful treatment of employees
Effective management system

PROGRESS ON OPPORTUNITIES FROM 2009 REPORT

KEY

= Achieved

= Ongoing/on track

= Not commenced

Opportunities identified in 2009	Status	How we have progressed
1. Promoting Good Workplaces A major focus for our ethical trading team over the next two to three years will be to develop an internal factory monitoring system that will replace the current supplier policing approach achieved through auditing. Our objectives are: to put responsibility for change into the hands of employers and workers to develop robust management systems that will enable good labour practices in workplaces		We have been working with the International Textile, Garment and Leather Workers' Federation (ITGLWF) global trade union and an international NGO on project Autopilot with two factories in India. After a period of tri-partite preparatory work, the pilot started in October 2009 and has completed: Briefings to all employees at all levels in the factories Focused participatory work with management, supervisors and workers both separately and then together to identify shortfalls in the workplace For more information on the pilot, see Promoting Good Workplaces on page 9
2. Supplier and Worker Internal Communications An essential part of a 'good workplace' is the relationship between workers and their management. In 2009 we will develop the tools that will enable these relations and facilitate the internal ownership for compliance to our Code. In 2010 we will run pilots at two of our key suppliers’ manufacturing sites. These pilots will: Enable workers and management to work together to identify shortfalls in the workplace against labour law, ethical codes and ILO conventions Link shortfalls into new robust management systems Develop the understanding and ownership of both workers and management of the policies, procedures, rights and responsibilities within a management system Embed social compliance standards into the workplace through training at all levels		An integral part of project Autopilot is the development of a model management system to facilitate more internal ownership and deliver the objectives we have identified. We have developed a similar programme in China as part of an ETI project to bring about long term improvements to working conditions, this work will begin during 2010. Achieved Ongoing Ongoing Ongoing For more information on the pilot, see Promoting Good Workplaces on page 9
3. Freedom of Association One of the ten principles of our Code is to uphold workers’ rights to freedom of association. In 2009 we will: Continue to establish contact and build relationships with local affiliates of the International Textile, Garment and Leather Workers' Federation (ITGLWF) in our key sourcing regions Work through the necessary steps in order to achieve our long term objective where workers and management are able to resolve issues together and reach a point where mature industrial relations exist		As part of project Autopilot we have now built a working relationship with affiliates of the ITGLWF. This includes a partnership with the Ambekar Institute for Labour Studies (AILS) which is sponsored by the Indian National Trade Union congress in India. It works closely with workers and trade unions on a daily basis. AILS is a current partner alongside the ITGLWF in the implementation of project Autopilot in India. We believe project Autopilot is a proactive and constructive approach towards building a negotiating process between workers and management For more information on the pilot, see Promoting Good Workplaces on page 9
4. Purchasing Practices In 2008 we completed the research phase of our purchasing practices work. In 2009 we will take this learning to enhance our buying practices in ways that will minimise their impact on our suppliers' ability to meet the requirements of our Code. We aim to deliver: Greater integration of our purchasing practices with our ethical trading standards and commitments A positive impact on the workers in our supply chain whilst enabling our business to remain flexible and competitive Through an ongoing programme of regular briefings and training, provide better awareness for all relevant employee groups who are in contact with suppliers		In 2009 we built a new internal system and management process which allows us greater integration of our purchasing practices with our ethical standards within our Product teams Ongoing Ongoing Ongoing as all new employees will receive training For more information, please see Collaboration on page 12
5. NGO Collaboration Our work in promoting better workplaces is being done in collaboration with an international NGO and Trade Union. In preparation for the pilots we will be running in 2010, we are developing relationships with potential partners and local NGOs in our key sourcing regions, where the aim is to: Extend local stakeholder networks to facilitate capacity building activities Develop and deliver locally the training models for the better workplace pilots		Ongoing Through our NGO engagement we have identified and initiated projects in collaboration with organisations such as: SAVE ( Social Awareness and Voluntary Education) in India within project Autopilot LESN (Labor Education & Service Network) based in Hong Kong as part of the decent work project in China SEWA (Self Employed Womens Association) in India as part of the homeworker project Ongoing For more information, please see Collaboration on page 12
6. Living Wages The final phase of our promoting Good Workplaces pilot, will be to develop the worker and management communications mechanisms into a system of mature industrial relations in respect to workers' rights to freedom of association and collective bargaining on working conditions, including wages. In addition to promoting the better workplace pilots in 2009 we will: Maintain our commitment to the ETI Wages Group Continue through our own work on this issue, to learn more about how we might implement a global strategy that will ensure the provision of a living wage is sustainable		Through Project Autopilot we are implementing a process with selected suppliers to create factory based mechanisms that enable workers to determine their own needs and priorities and participate with management in decision-making relating to themselves and their workplace. As members of the ETI we are committed to the principle of a living wage, and have undertaken a number of different pieces of work over the last year to research and understand this area of our Code more fully In China, we have developed a productivity initiative with seventeen factories, prompted specifically with the intention of improving wages for workers through the introduction of a number of actions such as training and assistance and reducing labour turnover For more information, please see Collaboration on page 12

¹The International Labour Organisation (ILO) is the United Nations (UN) body that sets internationally recognised labour standards to protect the rights of workers globally.

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