LIDL HONG KONG LTD.COMPLIANCE & SUSTAINABILITYGUIDELINE
VERSION 8 (05/2018)
Remark: This Compliance & Sustainability guideline is a supplement to the Order Confirmation.
TABLE OF CONTENT
- Contact Details of the Compliance and Sustainability Team .......................................... 3
- Responsibility of supplier ................ .............................................................................. ..3
- Lidl Hong Kong Factory Pool Admission ........................................................................ 4
- Zero Tolerance LIDL's ...................................................................................................... 5
- Critical Non Compliance .................................................................................................. 6
- Audit Arrangement ........................................................................................................... 7
- BSCI audit cycle ................................................................................................................ 8
- Information Flow After the BSCI audit ……………….……………………..….………………………. 8
- General Social compliance & sustainability….……………..……..………..…….…..…………9
- Acknowledgment……….…………………………………………….………………………………..…………9
A. CONTACT DETAILS OF THE SOCIAL COMPLIANCE DEPARTMENT
Compliance
Centralized email address: compliance@lidl.com.hk
Sustainability
Centralized email address: sustainability@lidl.com.hk
B. RESPONSIBILITY OF SUPPLIER
Ensure factories meet Lidl’s requirements and comply with Amfori-BSCI (Business Social Compliance
Initiative) / SA8000 /Better Factories Cambodia & Advisory Servises requirements in order to be admitted into Lidl HK’s factory pool.
Lidl HK’s order can only be manufactured in factories with valid BSCI result or SA8000 certificates, Cambodia factory which join Better Factory Cambodia plus Advisory service and Bangladesh factory which joined Accord.
Ensure that all factories with wet-processes meet Lidl HK Greenpeace Detox Commitment requirements to eliminate 17 Hazardous Chemical groups by 2020, by diligently submit waste water sludge test, provide Lidl HK with Dye House information, and fill in the Supply Chain Information template and Chemical inventory for every selection.
Please contact Compliance and Sustainability team directly for any inquiries of the above.
C. LIDL HONG KONG FACTORY POOL ADMISSION
Factory Pool Admission
>> BSCI audit result –
Audit conducted based on 2014 COC:
Factory that fulfill below requirement can be registered as Lidl HK producer:
The overall audit result is grade “A”, “B” or “C”, with the condition of no findings in Performance Area 8: No Child Labor, Area 9: Special Protection for Young Workers or Area
and 11: No Bonded Labor. The BSCI validity exceeds 3 months.
For Textile and Footwear factory, Performance Area 7 Occupational Health and Safety must be grade “C” or above.
For Bangladesh Textile and Footwear factory, Performance Area 7 must be “B” or above.
Audit conducted based on 2009 COC:
The overall audit result is “Good” or “Improvement needed”, with the condition that there is no finding in chapter B5 (Child Labor and Young Workers) or B6 (Forced Labor / Disciplinary
Measures / Prison Labor). The BSCI validity excees 3 months.
>> A valid SA8000 certification recognized by BSCI/SAI and/or uploaded to the BSCI platform. The validity must exceed 3 months.
>> Accord for Fire and Building Safety Requirement for Bangladesh factories:
Bangladesh readymade garment factories or factories with knitting or sewing process must
register to the Accord factory list and must follow Accord requirement.
>> Better Factories Cambodia plus Advisory Service required for Cambodia factory with sewing process to join. The validity of the advisory service cycle must exceed three months.
** Final decision of whether a factory can be put into Lidl HK’s Factory Pool will be subjected to Lidl International.**
D. ZERO TOLERANCE
If Zero Tolerance issue are confirmed, Lidl HK will immediately terminate the business relationship with the supplier and the factory.
Definitions on Zero Tolerance:
Child labor
Child labor is defined as a person who is younger than 15 years old or the legal minimum age defined by the country.
It is a must that the factory develop and maintain functional system that verifies the age of each worker.
Bribery
Attempts to offer bribes or advantages to Lidl HK staff, Lidl HK Agents or any other business partner of Lidl.
Prison & Drug Detention Labor
Production of Lidl HK orders in prisons, drug treatment centers or any facilities where the workers are confined.
Illegal Discharge – Non-functional ETP
Factory with in-house wet process which the Effluent Treatment Plant were not functional or factory obtain bypass line to direct discharge waste water.
E. CRITICAL NON COMPLIANCE
If Critical Non Compliance is confirmed the factory will be put on a three-strike warning notice and
we will issue Warning Letter One. If no immediate remediation action is taken, a Second Warning Letter will be issued. If remediation of findings in Warning Letter One is completed, but we find a repeat of the same critical finding within an 18 Months Period we will issue Warning Letter Two. If no immediate action is taken, or a remediation has taken place but we find a repeat of the same critical finding a third time, a Third and final Warning Letter will be issued and we will terminate our business relation with the supplier and factory.
Definition of Critical Non Compliance:
Occupational Health and Safety
Occupational health and safety violations that pose an imminent and significant threat to worker’s health, safety and lives. Poor factory condition that cause immediate concern of worker safety such as factory’s manufacturing process that include hazardous chemicals without safety measure, lack of health and safety measure for vulnerable worker such as young or pregnant workers, etc.
Excessive Overtime and unfair Remuneration
Overtime must be voluntary and the payment must be according to the law. A full calendar day off
after six consecutive working day is a must. Overtime hour should not exceed the legal limit according to ILO (International Labor Organization) and/or local laws.
Factory shall pay workers at least the applicable minimum legal wage established by the country within the scope of the services performed by the workers
Any wage deduction that violate the legal regulation is not allowed. All wages should be settled within legal timeline and in monetary form only.
Monetary fines is not accepted.
In line with BSCI requirements Lidl HK factories and suppliers must follow “employer pay” principle, meaning that if the factories need to hire migrant labor they have to cover broker fees, recruitment fees and all other cost occurred for the worker to become an
Undeclared Facility
The definition of ‘Subcontracting’ is when a supplier or factory contracts with additional manufacturer in writing or verbally to produce a whole/partly product or process due to; but not
limited to capability, peak season or to accommodate urgent and unforeseen business needs.
Lidl HK does not accept unauthorized subcontracting. All factories used for Lidl HK production must be registered and approved in writing before any production can take place.
It's a must that the supplier factory provide Lidl HK and the Compliance & Sustainability Team with
the subcontracted factory/ facility name, address, contact details and a brief description of the manufacturing process prior to moving any product there.
Lidl Hong Kong reserves the right to cancel any subcontracted order without provide prior notice.
Transparency and Cooperation
Lidl HK require that the factories and suppliers share sufficient data to our internal Compliance &
Sustainability Team, LHK representative and to our third party audit firm to adequately verify the factories compliance performance. Coaching workers is forbidden.
Illegal young workers
A worker between the age of 15 or legal minimum set by the country and below 18 years old; who is
hired without protection according to the national labor law or BSCI requirement. (No night shift, overtime or hazardous work is allowed for young workers).
Bonded Labor, Slavery, Prison Labor, Inhumane treatment and harassment
Factory shall only hire workers who seek employment on a voluntary basis.
Lidl HK do not accept any kind of violence or threat of violence, harassment, mental or physical coercion or verbal abuse.
It’s forbidden to produce Lidl HK orders in prisons, drug treatment centers or any facilities where the workers are confined.
It’s not acceptable for producers to withhold workers property included but not limited to original Identification Documents such as passports, National ID nor legally mandated benefits such aswages.
Denial of Access
Denial of access to the factory, or partial denial of audit of buildings or documents, unreasonable delay of audits either for third party audit firm or Agent acting on behalf of Lidl HK or the Lidl HK Internal Compliance & Sustainability team is not accepted.
All cost will be borne by the supplier if an audit cannot be completed due to denial of access.
Dormitory
Dormitory must be separated from the production area and/or warehouse. Dormitory should not be used for any production or storage.
Home Worker
Homeworking is not allowed for Lidl HK orders.
Lidl HK Detox Commitment
Lidl HK requires all factories with wet-processes to submit waste water sludge test, provide Dye House information, fill in the Supply chain Information and provide Chemical inventory every
selection
F. AUDIT ARRANGEMENT
BSCI audit
All BSCI audits arranged by Lidl HK will be assigned to an authorized certificate body (Third party audit firm). For the initial audit for a factory new to the BSCI program the audit firm will contact the factory directly, either by phone or email, to confirm the actual audit date. It is a requirement that the factory must inform Lidl HK Compliance team as soon as the audit date(s) are fixed.
If the factory has not received any information from the audit firm within two weeks after audit
arrangement the factory must inform Lidl HK. The factory name and Lidl ID (if any) must be quoted on the subject header of the email.
The factory have the right to reschedule confirmed audit arrangement if necessary, however the new audit date(s) should be within the time frame set by Lidl HK.
If the factory already has had a BSCI audit, it will be considered a “Re-Audit”. All re-audits are semi-
announced, meaning the factory will be provided a 1 month window for when the re-audit will take place.
Internal audit by Lidl HK
As part of our internal Due Diligence Lidl HK conducts internal audits regularly. All first Internal
Audits conducted by the Lidl HK team is announced, but we do reserve the right to also do unannounced audits.
We do seek our producer’s cooperation in this regard and will not accept repetitive postponement of planned audits.
If we find that our producers are postponing our internal audits with no due cause, we will view this as Denial of Access.
The internal Lidl HK audits are free of charge.
BSCI Audit Cost/Billing –
The cost of the official BSCI audits vary from the size of the factory, location, country etc. Pleaserefer to the BSCI System Guideline for more information.
The BSCI audit cost and related expenses incurred due to cancellation and/or rescheduling audit will be billed to the producer.
BSCI Audit(s) arranged by Lidl HK will be paid by Lidl HK in advance and Lidl HK will issue a debit note to the producer.
Note that you may receive the debit note from Lidl HK 3 to 4 months after a BSCI audit is conducted.
Lidl HK Account Department will send a scanned copy of the debit note by email to the supplier in advance. The original copy will be sent by mail to the supplier on the following working day.
The supplier is required to settle the payment within 10 calendar days after they receive the scanned copy from Lidl HK’s Account dept.
BSCI Random Unannounced Checks
To support the integrity of its audit cycle, BSCI has developed a program, Random Unannounced
Checks (RUCs).
RUCs are unannounced full audits designed to verify producers audit results in the last 12 months. The RUCs audit result will supersede the previous audit result. If the RUCs result is a downgrade, the
factory will have to pay for the audit fee and the expenses occurred.
The factory will remain in the Lidl HK’s Factory Pool if the RUCs result is either
“Good” ,“Improvement Needed” “A” “B” or “C” with no finding in PA8 (Child Labor),PA9 (Young Labor) or PA11 (Forced Labor) and for textile and footwear factory “C” or above in PA7 “B” or Above
in PA7 for Bangladesh textile and footwear factory.
Information provided by supplier
Producers must inform Lidl HK immediately if there is any change of Management, Factory’s address or contact details, expansion/ consolidation/ reduction of the property or if the factory is planning to
reduce or even close the business.
If a factory is not able to operate due to routine incidences such as power cut or public holidays the factory must inform the audit firm and Lidl HK 10 working days in advance.
If the factory is not able to operate due to unforeseen circumstances and critical issues such as
strikes, fires, floods, earthquakes, etc., they need to inform Lidl HK and the third party audit firms within 24 hours.
All cost will be borne by the supplier if any audit (BSCI or internal) cannot be conducted due to inadequate factory information provided by the factory.
G. BSCI AUDIT CYCLE
The initial audit for BSCI will be fully announced. All other audit(s) after the initial audit will be semi- unannounced, meaning the factory will be provided with a time frame (4 weeks) but not with a specific date for the audit.
The BSCI audit cycle is based on continuous monitoring and improvement. Once the first or full audit is arranged, the audit cycle start to run and count for two-years. The next audit will be conducted within 2 years, 1 year, 12 weeks or 4 weeks, depending on the result. After the audit cycle is
completed, another 2 years audit cycle will start (provided the factory wants to be active in BSCI system.)
The actual audit date is arranged by the third party audit firm.
Next step of the BSCI Audit
A BSCI audit will be conducted 2 years after the initial audit/or over 1 year after last audit.
If the producer get an overall “D” grade, findings in PA 8, 9 and 11 and/or “D” in PA7 (Apparel and Footwear), “C” in PA7 for Bangladesh (Apparel & Footwear), the producer may face a penalty up to 25% of the total purchasing volume.
H. INFORMATION FLOW AFTER THE BSCI AUDIT
After the BSCI audit, the auditor will issue an onsite report to the factory before they leave the factory. Please send the onsite report to LIDL HK at the end of the audit date. The official BSCI audit report will be uploaded by the audit firm to BSCI platform within 10 working days. The supplier and
the factory can check their result and download the BSCI audit report through the BSCI platform. Please visit http://www.bsciplatform.org/home to login the BSCI platform.
I. COMPLIANCE RECOMENDATIONS
Lidl HK encourages all our factories to follow country laws and internationally recognized regulations
to safeguard their workers’ rights and properties from harm. We recommend developing good management systems and put in place a competent internal HSE (Health, Safety and Environment)
team to monitor the factory, to hire competent human resource staff to manage recruitment and develop good internal human resource management system. We encourage the management and
workers to do training and capacity building as suggested by factories’ own initiative, BSCI, Better Work or by Lidl HK Compliance & Sustainability team.
J. SUSTAINABILITY RECOMMENDATIONS & REQUIREMENTS
Lidl HK recommend that all our suppliers have an environmental management system and an environmental policy that includes Chemical, Waste, Water and Energy Management.
All factories with wet-processes must familiarize themselves with the Greenpeace Detox Commitment.
It's a requirement that all factories with wet-processes submit waste water sludge test, provide Lidl HK with Dye House information, and fill in the Supply chain Information template and Chemical inventory for every selection.
Lidl HK conduct internal Detox Risk Assessments for suppliers to verify progress on the Greenpeace Detox Commitment, verify risk regarding the factory Chemical Management, ETP functionality etc. This process also includes identification of potential environmental regulatory or legal risks for the business and the environment.
K. ACKNOWLEDGMENT
We, the undersigned hereby confirm that we have read the Compliance & Sustainability Guideline and understand our responsibilities set out therein and will follow the corresponding requirements
accordingly.
