As of January 2, 2016, we had approximately 86 active factories on our roster of which 79 were audited by our internal compliance team, Li & Fung auditors or third party auditors. Additionally, there were 76 follow up audits. In many cases, we rely on our agents’ audit reports. As such, we continue to conduct shadow audits to confirm that audit protocols and findings are consistent between the two companies.

We audit factories using both internal and independent monitors, provide capacity building for suppliers and look for ways to develop direct communication channels with workers to ensure that they are aware of their rights – built around the well-established Fair Labor Association best practices.

We are aware that auditing only confirms compliance at the time of the audit, and we continue to look for ways to improve our monitoring program and work with suppliers to create sustainable compliance at their factories. Creating workers’ awareness and establishing a channel of communication for reporting issues of non-compliance are two important strategies. We encourage all factories to establish internal grievance procedures and give workers the opportunity to report their concerns directly to the Company.

In the last year, we have provided supplier training covering the Company’s social compliance policy and standards. Training has also been provided to our sourcing agent to keep them current of the Company’s corporate social responsibility policies and compliance standards.