Page 117 - DMGT554_RETAIL_BUYING

Retail Buying

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Case Study Hudson’s Bay Co. (HBC) : A Case Study in Ethical
Sourcing

BC is Canada’s largest diversified general merchandise retailer, with over 580
retail locations and nearly 70,000 employees. HBC has 1,600 vendors from which
Hthey currently source their private label and captive brands. Most of the vendors
that manufacture HBC merchandise are located in China.
Policy & Program Scope
HBC established the foundation for their ethical sourcing program in 1998, when they
established a Code of Vendor Conduct (CVC). Their program has evolved since then into
a broader Social Compliance Program (SCP), which was formalized in 2001, containing
the CVC and a monitoring and remediation process, the overall goals of which are to
improve factory conditions, educate buyers and share industry knowledge.

In developing their CVC, HBC was guided by International Labour Organization (ILO)
standards and general social responsibility principles. Their ethical sourcing requirements,
as stipulated in the CVC, obligate suppliers to:
 meet local, regional and national laws and regulations;
 satisfy employment standards (no forced labour, no child labour, no harassment/
abuse, freedom of association and collective bargaining, no discrimination, protection
of health and safety, betterment of wages and benefits, reasonable work hours and
overtime, a dispute resolution process);
 satisfy environmental requirements (including adhering to applicable environmental
laws and regulations and taking active steps to protect and preserve the environment);
and
 Prevent illegal transshipping by establishing and maintaining programs to document
country-of-origin verification.
Although the CVC applies to all HBC’s vendors, their monitoring program, in which they
conduct factory audits to determine CVC compliance, focuses on the top vendors producing
their private or captive brands. HBC prioritizes their top vendors since this is where they
have the most potential for positive influence in their supply chain. In 2006 HBC conducted
over 1,000 supply chain audits. Please see Section 4 Compliance and Auditing for a full
explanation of how HBC determines its audit focus for each year.
Key Drivers of the Ethical Sourcing Program
The following are the key drivers for the development of their ethical sourcing program.
Risk Management
Risk management was a main driver for HBC to formalize their ethical sourcing efforts
into a Social Compliance Program. Although HBC had created their Code of Vendor
Conduct in 1998, when confronted with media attention probing the working conditions
in some of the vendors they used, the company found it difficult to prove that their
standards were being upheld in the manufacture of their products, since they had no
process for monitoring or documenting supplier conformance with their standards. To
address the risk of damage to the company’s reputation and brand, HBC shareholders
Contd...

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