To ensure our supply chain is functioning smoothly and aligned with our standards, we regularly ensure compliance with our Supplier Code of Conduct and supply chain standards.

We rely on our own internal audits as well as third-party audits to monitor our suppliers and facilities for activities or practices that do not comply with our labor and workplace standards. 

Our factory audit program is managed by the IPS team. Formed in 1997 - IPS is responsible for social compliance in the supply chain, including but not limited to, ensuring all in-scope factories are audited annually. IPS uses a combination of internal and third-party audits. Production locations for the following items are audited: 

• All products sold in our stores, including those that are promotional
• Non-merchandise items (bags, boxes, price tickets and hangtags)
• Store fixtures
• Components for our beauty products

Our audits are typically conducted by a pair of auditors and include a meeting with facility management, a factory tour (including warehouses and dormitories) and a review of relevant documents, including information on wages, benefit deductions, working hours, labor contracts, termination documents, recruitment agency contracts, training and grievance records.

The online system that IPS utilizes to manage VS&Co's social compliance program allows our suppliers, auditors and associates to access critical information such as policies, guidance tools, supplier/factory information, audit reports, corrective action plans and remediation status at any time.

Unauthorized subcontracting

In addition to monitoring labor standards and workplace conditions for all factories, IPS conducts a trade assessment audit that enables us to identify any instance where unauthorized subcontracting has taken place at our factories. IPS has been conducting this specialized audit for more than 25 years.

Unauthorized subcontracting is considered a major violation of our policy; therefore, we heavily monitor each factory to ensure all production is taking place at the factory named on the purchase order. We conduct unannounced audits if we detect a risk through our capacity monitoring or through various other reporting methods. If a factory is found to be using an unauthorized subcontractor, they are immediately put on probation, issued a heavy penalty based on the severity of the violation and subject to six to 12 months of unannounced monitoring at their expense to ensure they are fully operating within our compliance framework. If they are not able to meet this requirement, we will discontinue doing business with them. We continue to emphasize our intolerance of unauthorized subcontracting in our annual training with suppliers and factories as well as highlighting it in the IPS Compliance Guidebook.

Improving Audits

To ensure both the Guidebook and audit tool are up-to-date with industry standards, IPS evaluates its audit tool and Guidebook annually, taking into consideration new laws and regulations as well as benchmarking with other auditing firms.

Our third-party audit firms have developed, and continue to develop, standard operating procedures for auditors that provide explanations for additional processes, including (but not limited to) how to handle certain situations or extenuating circumstances that may occur during an audit. Assessors must review and become familiar with all Standard Operating Procedures (SOPs) and are responsible for staying aware of any updates. 

Auditors are trained on labor standards and ILO forced labor indicators when they start working. They also receive video training focused on forced labor and foreign migrant workers with an online assessment test. Local offices hold regular meetings and trainings on labor standards and ILO forced labor indicators.

All auditors are registered with Association of Professional Social Compliance Auditors (APSCA) which is an industry association whose members represent a substantial majority of the social compliance audit industry. Our internal auditors are also trained on labor standards and ILO forced labor indicators when they start working. Updates on labor standards and ILO forced labor indicators are also discussed during regular team meetings.