People in the supply chain - Li & Fung

Our strategy

People in the supply chain

We partner with our customers and suppliers to raise the sustainability performance of the supply chain.

As a global supply chain solution company, we work with thousands of suppliers around the world to deliver a diverse range of consumer products for our customers. Achieving meaningful change and promoting sustainable development together with our suppliers is, therefore, a key focus area. We are committed to proactively sourcing sustainable products and services to create positive social and environmental impact.

1.Our focus area and commitments

Ensuring the safety, health, and wellbeing of workers along our supply chain

We work closely with industry partners to maintain high levels of fire and building safety, as well as overall occupational health and safety. Our goal is that no workers should be injured or suffer harm during the production of our products or while providing services to us. To achieve this, Li & Fung collaborates with key stakeholders – such as Better Work – to undertake thorough risk assessment on selected factories and provide educational training programs on health and safety. For example, we implemented targeted safety programs focusing on electrical fire safety, life, boiler & generator safety, and washing & laundry safety programs in hundreds of factories around the world. To learn more about our efforts in this area, please refer to our ESG report, which provides additional details and information.

Eliminating child labor in the supply chain

Li & Fung is committed to eliminating child labor in the supply chain. Our Supplier Code of Conduct reflects our commitment to act ethically in our business relationships and to enforce controls and systems to eliminate any forms of child labor in the supply chain.  Our strategy to eliminate child labor consists of three key focus areas including strengthening Governance and Policy, implementing Child Labor Prevention and Remediation Mechanisms, and Monitoring Child Labor Risks.  We work with various partners (i.e., The Centre) and programs to eliminate child labor and promote child rights protection, decent working conditions and family-friendly policies in our supply chain. More details can be found in our ESG report.

Ensuring no modern slavery or human trafficking in our supply chains or any part of our business

Li & Fung is taking a proactive approach to combatting all forms and enablers of modern slavery, recruitment fee and forced labor. Together with regular assessments and spot checks that include abusive labor practices, Li & Fung also makes use of technological solutions like DiginexLumen and DiginexAPPRISE to enforce controls and systems to eradicate any form of modern slavery in our supply chain. We are also a signatory to the 2023 Commitment to Responsible Recruitment spearheaded by the American Apparel & Footwear Association and the Fair Labor Association.  Details on our activities and goals to combat forced labor in supply chain can be found in ESG report and in Modern Slavery Disclosure that we issued annually.

Eradicating gender-based violence and promoting gender equality in our supply chain.

We believe that all workplaces should promote equality, diversity and inclusion and eradicate all forms of discrimination. As a result, we take a zero-tolerance approach towards any form of workplace violence including sexual harassment, and physical and psychological abuse. Over the years, we have been leveraging technology to advance gender equality and women’s empowerment and listen to workers’ voices directly. Additionally, we work closely with work closely with Better Work to educate suppliers and factories on this issue. More details can be found in our ESG report.

2. Managing risk and compliance

We manage supply chain risk through a process of risk assessment and strategic decision making whereby we direct and develop business with suppliers who have greater capability and reduced risks, while supporting other suppliers to improve their performance.

Supplier risk assessment starts with Li & Fung’s Supplier Code of Conduct. This is our supplier engagement document, and it outlines the minimum standards required in accordance with the ILO’s Core Conventions, the California Transparency in Supply Chains Act, the UK Modern Slavery Act and local laws, for human and labor rights, safety, environment and security, as well as transparency and ethics. All suppliers must accept these minimum standards as a condition of doing business with us. You can learn more on the Supplier section.

Compliance against the Code of Conduct is assessed by Li & Fung as well as external audit firms approved by us or our customers and/ or independent industry organizations. The audits may be unannounced, semi-announced or announced, depending on the requirements of our customers. Adding the capabilities and resources of our appointed third-party audit firms to our own has increased our visibility into our supply chain. At the same time, we are also establishing a stronger and more consistent methodology in our auditing program by regularly hosting joint training sessions with our third-party auditors.

Key elements of our risk monitoring program are outlined below:

3. Supplier capacity building

Sustained change in our industry takes time and investment. As a leading supply chain solutions company, we support our suppliers to improve factory working conditions systematically to meet ever-changing industry expectations.

Our assessment, technical support and capacity-building efforts focus on establishing better-managed factories and better working conditions. We believe that to achieve sustained change in the supply chain, it is essential to support factories to raise compliance standards and ensure that factories have the information and training to build their capacity to integrate social and environmental best practices into their day-to-day operations. Building capability across our supplier base helps raise compliance standards in the industry. We continue to provide training and leverage our industry partners on topics related to new legislation requirements, labor practices, health and safety, and customer-specific requirements.

4. Collaborating with industry

We recognize the power of collaboration to bring about change in the industry. We are involved in industry initiatives that bring our customers and industry partners together to effect change. Our collaboration efforts are focused on implementing programs that address the challenges of our industry and specific production countries where we operate.

We collaborate with our industry partners and implement several initiatives that aim to address specific health and safety and labor issues in the supply chain, as well as educate and empower workers, thereby creating a more socially inclusive business, all with the aim of raising sustainability performance. These are our partners: