Table of Contents

2 | 2011 Global Compliance Report

04 Introduction

08 Message from the Chairman, President and CEO

11 Message from the Director of Factory Compliance

12 About VF Corporation

Values StatementPerformance and Growth

18 The VF Corporation Global Compliance Framework

Owned Manufacturing

Ideal Plant Model

Terms of Engagement

Global Compliance Principles

VF Operated Factories

• The ideal plant model

Partnerships

• WRAP Principles and

Certification• FLA Membership• FFC Database

Audit Framework• Process• Timing• Suppliers• Training• Rating

Suppliers by RegionAudits by RegionAudit Defects by Region

64 Appendix

Supplier Audit

• Process graphic/visuals

• Factory walk through

• Sample questionnaire

Introduction

4 | 2011 Global Compliance Report | Introduction* Images shown in the following pages feature VF workers and factories across the globe.

Welcome to VF’s Global Compliance Report. As one of the world’s largest apparel

companies, we take our social responsibilities seriously. This report — an update to our

last one published in 2005 — provides an overview of VF’s commitments to associates,

business partners and communities, and the steadfast principles under which we operate.

At VF, conducting business with high standards is a non-negotiable imperative. We

embed our values of honesty, integrity, consideration and respect into the work we do on

a daily basis. We believe in providing a clean and safe work environment that is free from

discrimination and harassment, and in treating everyone fairly and respectfully. These

beliefs drive our efforts to continually strengthen our Global Compliance Program so

they support the thousands of associates around the world who make our products

and contribute to our success.

The following pages outline our approach to ensuring that the factories where our

products are manufactured follow our values and adhere to the requirements set forth

in our Terms of Engagement and Global Compliance Principles. At the publication of this

report, VF had recently completed the acquisition of the Timberland® and Smartwool®

brands. Because all data compiled is from 2010, figures from these brands are

not included.

Moving forward, we will continue to report our progress on social compliance initiatives.

In addition, in 2014 we plan to issue our first corporate sustainability report, which

will communicate our environmental impacts and our short- and long-term

sustainability goals.

6 | 2011 Global Compliance Report

VF owns some of the best-known brands in the world

— including The North Face®, Wrangler®, Lee®, Vans®,

Nautica® and Timberland®. Adherence to a disciplined

set of common compliance principles is a thread that is

woven globally through all our brands’ operations. As the

parent company of a portfolio of more than 30 brands, we

recognize our responsibility to provide stakeholders with

a greater level of engagement and transparency regarding

the social and environmental performance of our brands

and products. Through our size and scale, we have the

opportunity to shape the future of apparel and footwear

across multiple touch points, including those related to

where and how our products are made. Our company has

seen many changes since we last issued a Compliance

Report in 2005. We sold our Intimates business in 2007,

which resulted in a consolidation of our factories. We

acquired a variety of strong and well-known brands,

including Timberland®, Smartwool®, 7 For All Mankind®,

Lucy®, Kipling®, Eagle Creek®, Majestic®, Splendid® and Ella

Moss®. New brands provide us with new opportunities

for growth — but also present us with challenges as we

consider the goals we set forth in 2005. Since our last

report we have improved the process of integrating brand

acquisitions into the VF portfolio by incorporating a much

more stringent introductory period of audits to help these

facilities more rapidly meet our standards. At the end of

the day, we don’t just have to answer to our shareholders

and our customers; we also hold ourselves accountable

to those in the communities in which we operate on

a daily basis. Personal responsibility is the key to our

success and we will continue to aggressively pursue the

highest standards possible — for our customers, investors,

employees and partners.

Throughout the 30 or so years I’ve worked in the apparel industry, I’ve visited hundreds of factories

in dozens of countries. I’ve seen great factories — and I’ve seen some pretty bad ones too. As CEO

of VF Corporation, the world’s leading supplier of branded apparel and footwear, I recognize that our

company’s reputation is on the line every day in every factory in which our products are produced. We

strive to be a leader in factory compliance because it helps ensure the quality of our products, provides

us with a stable and productive workforce, and mitigates the legal and other risks associated with poor

compliance practices.

In 2010 VF had revenues in excess of $7 billion. And with our 2011 acquisition of The Timberland

Company, we’re well on our way to reaching $10 billion in revenues. We are proud that we accomplished

this growth while maintaining a culture of integrity, honesty, respect and consideration that is at the core

of VF’s values.

We don’t simply create initiatives around

our values; rather, they are the foundation

upon which everything we do is based. We

approach our Global Compliance Principles

the same way — and work to make sure

they are embedded into every partnership

across our expansive supply chain.

Our current Global Compliance program

stems from 12 Principles first established in

1996 and has since expanded to our current

16 Principles. These Principles represent

our commitment to our suppliers and

our customers that each piece of apparel

and footwear produced in our name will

be made consistent with internationally

recognized labor standards, such as the

U.N. Global Compact principles and the

International Labor Organization’s doctrine

for human rights.

The pursuit of excellence in compliance

cannot be accomplished in a silo. We’re

proud of our network of partnerships and

third-party organizations that help us meet

the high standards we’ve set for ourselves.

For example, Worldwide Responsible

Accredited Production (WRAP) ensures

that VF owned and operated facilities

comply with their certification standards

through stringent auditing procedures.

We work closely with the Fair

Labor Association

(FLA) at a number of our factories, and

we have a great working relationship with

the Fair Factories Clearinghouse (FFC),

on whose Board our Director of

Compliance sits.

A message from the CEO

8 | 2011 Global Compliance Report | Message from the CEO

Eric C. Wiseman

Chairman, President and Chief Executive Officer

In my time with VF, I have traveled more than

2 million miles, visited 58 countries and more

than 400 factories, and I have seen some

tremendous progress in the working conditions

of the apparel and footwear industry. While

VF and its brands still have a ways to go, the

Global Compliance Principles VF factories

adhere to have helped contribute significantly

to the reduction of child labor in the apparel

and footwear industry. Also, many more workers

now have access to clean drinking water and

work in a safe and healthy working environment

than when VF began this journey.

Many challenges still lie ahead with issues

such as freedom of association and factory

safety. We will face these challenges with the

confidence our past success has provided, and

work with others in our industry to continue to

raise the bar for success in the future.

Ron Martin

Director, Factory Compliance

This year marks the 15th anniversary of the Factory Compliance program at VF. The

program began in 1996 when we published our first Terms of Engagement document for

our suppliers. Our first factory compliance audits were held the following year and were

conducted by our quality control auditors. We built our first factory database in 1998 and

while we have changed our internal reporting platform several times since then, those

original factory audit reports are still accessible in our system.

In 2000, we had four associates who were dedicated to factory compliance. We now have

35 full-time associates in 12 different countries, and three of the original four are still on the

compliance team. In 2010, VF’s factory auditors conducted 1,785 factory inspections in

62 countries.

Since our last Global Compliance Report

in 2005, we have been building the

capacity of our teams and programs

through our affiliation with the Fair

Factories Clearinghouse (FFC) and the

rigorous certification of our audit team

through the International Register of

Certificated Auditors (IRCA). Through

the FFC factory database, which we

share with many other apparel and

footwear companies, we are able

to contribute audit information and

collaborate on future factory inspections.

Meanwhile, our affiliation with IRCA has

afforded us the opportunity to certify

our internal audit team against a set of

globally accepted factory monitoring

standards.

A message from the Director of Factory Compliance

10 | 2011 Global Compliance Report | Message from the Director of Factory Compliance

With revenues of $8.5 billion in 2011, VF is a global apparel and footwear company, with a diverse,

international portfolio of brands and products that reach consumers wherever they choose to shop.

With our expertise in both the art and science of apparel and footwear, we have built a sustainable

base for continued long-term success. Our brands are sold in more than 150 countries through 47,000

retailers in all channels of distribution, from mass market and department stores to specialty retailers.

In addition, we own and operate more than 1,000 retail stores. Many of our brands also sell products

directly to consumers over the Internet.

Sourcing and manufacturing are managed through our Global Supply Chain organization, which

oversees the production of 500 million items annually at more than 1,400 owned or contracted

facilities in locations around the world.

VF’s world headquarters are located in Greensboro, North Carolina, where our senior management

team is based, along with our corporate Strategy, Finance, Global Business Technology, Global Supply

Chain, Law, Sustainability, Internal Audit and Human Resources teams.

Our portfolio of brands is managed under an organizational structure that supports our diversifi ed

business model. Brands with affi nities in terms of consumer lifestyle and merchandise category are

grouped together within our coalitions, which include Outdoor & Action Sports, Jeanswear, Sportswear,

Contemporary Brands and Imagewear.

Outdoor & Action Sports

The success of our Outdoor & Action Sports brands is based on our ability to forge strong and

authentic connections with specifi c consumer lifestyles like hiking, outdoor adventure, skateboarding,

surfi ng and yoga through brands such as Vans®, The North Face®, Kipling®, Napapijri® and lucy®. In

September, 2011 we completed the acquisition of The Timberland Company, adding the Timberland®

and Smartwool® brands to our Outdoor portfolio of brands.

Jeanswear

With a long heritage and approximately $2.5 billion in annual revenues, VF sells more pairs of jeans

than any other company in the world. We continue to drive success in our core Lee® and Wrangler®

brands by extending into additional categories, including shirts, shorts, accessories and other casual

apparel products.

About VF Corporation

Sportswear

With its strong nautical heritage and classic American design, Nautica® is an iconic

brand. In addition to men’s and women’s sportswear, the Nautica® brand is licensed

across a variety of categories including fragrance, home accessories and eyewear.

Our Sportswear coalition also includes the Kipling® brand’s U.S. business.

Contemporary Brands

Formed in 2007, Contemporary Brands consists of 7 For All Mankind®, Splendid®, Ella

Moss® and John Varvatos®. Inspired by modern design and a cultivated lifestyle, these

brands offer contemporary apparel, footwear and accessories to consumers who

appreciate sophisticated products and high-quality fabrication.

Imagewear

Our Imagewear coalition is comprised of two successful lines of business: Image and

Licensed Sports.

Our Image brands deliver the durability and service excellence that our commercial,

government and industrial laundry customers demand. Among our uniform clients, we

proudly supply the entire U.S. Transportation Security Administration workforce, outfi t

over 150,000 FedEx employees and service police departments across the U.S. We also

provide workwear and safety apparel and footwear to a wide range of customers in the

manufacturing, automotive, hospitality and restaurant industries.

Our Licensed Sports Apparel and Footwear business partners with the biggest names

in sports, including Major League Baseball, the National Football League, the National

Basketball Association, the National Hockey League and most major colleges and

universities in the U.S.

12 | 2011 Global Compliance Report | About VF Corporation

Sustainability Vision

We take a holistic approach to corporate

responsibility, and compliance is a component

of our overall sustainability vision. In 2009,

we created a Sustainability Council, made up

of associates from across our coalitions and

functions, to develop our sustainability vision

and framework. Approved by VF’s Operating

Committee in 2010, this vision incorporates

our social and environmental compliance

and responsibilities:

At VF, we seek to conduct our business with the

highest levels of honesty, integrity and respect.

These values are embedded in our approach to

sustainability, which reflects our commitment

to operating our business so future generations

can live with cleaner water and air, healthier

forests and oceans and a stable climate. By

actively encouraging our associates to lead us

in an environmentally and socially responsible

direction, we will innovate to deliver sustainable

products and services to people around the

world. In this way, we will create value for our

business and the communities in which we

operate, while continuously reducing our

impact on the environment.

Our people are the source of our success. With sales and manufacturing in over 75 countries,

VF associates share a deep commitment to diversity — in people and ideas. We seek to

conduct business with the highest levels of honesty and integrity and to foster a positive

working environment based on creativity, collaboration and congeniality.

Strong values guide everything we

do — particularly our relationships

with the associates around the

world who comprise the VF family.

We work hard to provide them with

clean, safe work environments,

free from discrimination and

harassment. We support the right

to fair compensation, the right

to associate freely and bargain

collectively.

We conduct business with

associates, customers, consumers,

suppliers and all others on an

honest, fair and equitable basis, as

described in detail in our Code of

Conduct, which can be found on

our website, www.vfc.com.

Our Values

Since our 2005 Compliance Report, our revenues have risen 36%, from $5,654 million

to $7,702 million in 2010. Earnings per share increased from $4.23 in 2005 to $6.46 in

2010. In February of 2012 we announced that 2011 revenues had reached a record $9,459

million, reflecting strong organic growth across our businesses as well as the Timberland

acquisition, which was completed on Sept.13, 2011. Earnings in 2011 rose to an all-time high

of $7.98 per share.

VF is a publicly-traded company listed on the New York Stock Exchange trading under the

symbol VFC. For more information on VF, its brands and its financial performance, please

visit www.vfc.com.

Our Performance and Growth

Revenues (in billions)

VF Corporation Financial Highlights

Dividends Per Share (in dollars)

Diluted EPS (in dollars)

Year End Stock Price

*excludes noncash impairment charges for goodwill and intangible assets

$7.0

$3.00

$6.00

$80.0

2005

2005

2005

2005

2006

2006

2006

2006

2007

2007

2007

2007

2008

2008

2008

2008

2009

2009

2009*

2009

2010

2010

2010*

2010

$6.0

$2.00

$5.00

$70.0

$5.0

$1.00

$4.00

$60.0

$50.0


The Global Compliance Framework is a set of guidelines and programs to ensure the

individuals who contribute to VF’s success are treated with respect and guaranteed

their basic rights to fair compensation; to associate freely and bargain collectively; to

work free from discrimination and harassment; and to work in a safe, clean workplace.

VF also works diligently to verify and ensure the absence of child and forced labor

across its supply chain.

This framework ensures that VF-owned and operated facilities as well as our suppliers

and licensees understand and comply with our standards and includes the following

components:

• The Ideal Plant Model sits at the core of our owned manufacturing compliance

program and helps direct our external facing programs.

• VF’s Terms of Engagement serve as the cornerstone of our relationship with

external factories. Every contracted supplier must sign our Terms of Engagement

in order to produce VF products.

• Our Global Compliance Principles (GCP) are the basic requirements that

suppliers must meet in order to produce VF apparel and footwear. These are

explained in detail on page 28.

• Partnerships and Stakeholders are an integral component to VF’s global work to

help us continually improve our standards and processes.

Global Compliance Framework

With over 15,000 employees working in our owned manufacturing plants producing

30% of our products in 2010, we clearly understand the importance of taking

compliance seriously. Internal manufacturing capabilities give VF control over the

many areas covered by our Global Compliance Principles. Our internal teams work

to provide a positive working atmosphere within our factories, ensuring that our

associates are treated fairly and are given the opportunity to raise concerns, ask

questions and share ideas.

Owned Manufacturing

All of our owned manufacturing plants participate in the Worldwide Responsible

Accredited Production (WRAP) Certification Program. WRAP certification requires

that an independent, accredited monitor perform unannounced audits to determine

compliance with twelve Production Principles, and also conduct confidential employee

interviews with associates to satisfactorily corroborate the facilities’ responses.

The Ideal Plant Model All of the factories we own and operate are subject to the requirements set forth in

the VF Corporation Ideal Plant Model (IPM), which since 1993 has defined the safety

standards for our owned and operated facilities. The IPM sets forth criteria that are

used to objectively grade safety performance in certain key areas against best-in-class

and/or industry leading safety practices. The IPM was developed to provide safe, clean

and comfortable working environments for all of our associates.

During unannounced audits, facilities are evaluated on the usual safety issues such as:

• Chemical safety

• Electrical/mechanical hazards

• Personal protective equipment

• OSHA standards and other applicable health and safety codes

Additional evaluations are undertaken to assess our facility managements’ involvement

in safety protocols and their ability to analyze accidents and incidents, enact changes

to prevent similar recurrences and respond to recommendations received during

previous audits or from outside sources such as insurers’ inspections.

The audit requirements were developed to meet Occupational Safety and Health

Administration (OSHA), National Fire Protection Association (NFPA) and other

regulations. In many cases, an even stricter requirement has been defined and adopted

as a VF best practice. All facilities, regardless of their location inside or outside of

the U.S., must satisfy the IPM requirements or host country regulations, whichever

are more stringent. Those facilities found to be in compliance and attaining a score

of at least 97%, with no deficiencies in the serious Life Safety category, and which

have accident rates less than the current industry-specific standards published by the

Bureau of Labor Statistics, are eligible for the coveted VF Safety Excellence Award. In

2010, 50% of the audited VF facilities achieved this award. The overall average score

for owned facilities was 96.9%.

18 | 2011 Global Compliance Report | Global Compliance Framework

Our owned and operated manufacturing plants are also subject to our Business Code

of Conduct, Ethics Helpline reporting, human resources policies and other policies and

programs available to our facilities. Facility managers are trained in the requirements

of the IPM and occupational safety and health standards.

All of VF’s facilities are monitored annually for compliance with the IPM and most of

those audits are conducted independently and unannounced. After completing the

annual audit, the auditor assigns a rating to each of 17 evaluation criteria, which are

as follows:

1. General Guidelines

This criterion evaluates the compliance level to the general safety culture of the

operation. Rating management involvement or pro-action toward safety activities is

more subjective than other performance issues but is an extremely important aspect

to evaluate. The performance issues considered include new hire orientation, safety

guidelines/safety policy, management involvement and on-site outside contractors.

2. Housekeeping

The term housekeeping is used in a very broad and comprehensive sense to include:

• Tidiness and order

• Waste control

• Storage of goods

• Smoking control

• Aisle way arrangement|

• Exterior maintenance and landscaping

• Equipment and operations arrangement

A good housekeeping program has many benefits including reduced operating costs,

material conservation, better use of floor space, reduced fire hazards and improved

morale. The overall impression of a facility is influenced by the housekeeping more

than any other single factor. The performance issues considered include trash removal,

unblocked aisles, smoking and general appearance.

3. Safety Committee

This section evaluates the safety committee activities and how those activities

compare with the VF Corporate Safety Guidelines concerning Central Safety and

Health Committee organization. The performance issues considered include safety

committee organization, documentation of the activities and meeting content.

4. Loss Review

Accident investigation is a very important aspect of the loss control efforts. The

performance issues evaluated include use of guidelines and recommendations, as

well as the timely, proper entry and classification of incidents onto the OSHA Log.

5. Ergonomics

Ergonomics is the study of the man/machine relationship, with the goal of matching

the workplace to the worker. VF Risk Management leads the apparel and footwear

industry in the development of an ergonomic program designed to prevent repetitive

motion disorders or cumulative trauma disorders. The expectations in this area are to

have all workers trained in ergonomic principles and for engineering to evaluate jobs

on an ongoing basis for work design improvements. The performance issues evaluated

include training, medical management, documentation and employee inquiries.

6. Lockout/Tagout

Lockout/Tagout is an OSHA mandated safety program that is designed to protect

workers against unexpected start-up of equipment and machinery that is being

serviced or repaired. The standard requires that all potential sources of energy, such

as electricity and compressed air, be de-energized and locked out to prevent the

equipment from starting while it is being repaired or serviced. The performance issues

considered include training, procedures, equipment and employee inquiry.

7. Hazard Communication

Hazard Communication — Hazcom or Right-To-Know — is an OSHA mandated safety

program whose purpose is to ensure that information concerning the hazards of

chemicals is transmitted to the employees working with or around those chemicals.

This standard requires a high degree of employee training, labeling of hazardous

chemicals and availability of Material Safety Data Sheets (MSDS) for each hazardous

chemical. The performance issues considered are documentation, training, labeling,

program organization and employee inquiry.

8. Occupational Health

Health exposures vary from facility to facility but there are common issues that need

to be addressed. The intent of this section is to determine if the management of the

facility has evaluated and implemented controls as necessary to deal with health

issues, including bloodborne pathogens, noise and formaldehyde, among others.

9. Facility Safety Hazard Controls

The intent of this survey is to determine if the management of the facility has

evaluated and implemented controls as necessary to deal with safety issues, including

“powered industrial trucks” operation and training, storage of hazardous materials and

other hazards.


10. Electrical/Mechanical Safety Hazards

This separate criterion is included to provide the needed emphasis on isolating

electrical and mechanical hazards presenting a high risk of injury or death that are

present in most facilities. The performance issues considered include electrical training,

electrical service, machine guarding, employee inquiry and maintenance programs.

11. Environmental/Regulatory Concerns

Each facility is affected by environmental regulations to differing degrees based upon

the type of operation or process, state or local legislation, past environmental/waste

practices and physical location. The Ideal Plant Model is not intended to be a guide

for compliance with the vast amount of environmental legislation. Rather, this section

serves as an evaluation tool to measure management’s commitment to complying with

regulations and the level of pro-action in these regards.

The major acts concerning environmental legislation are: Resource Conservation and

Recovery Act, SARA Title III, Underground Storage Tanks, Clean Water Act, Bloodborne

Pathogen Medical Waste Disposal, Clean Air Act, Waste Minimization and Storm Water

Run-off.

12. Emergency Procedures

There are numerous emergencies that need to be planned for from a safety

Perspective in order to reduce the impact of that emergency to personnel in the

organization. Disasters such as fire, flood, tornado and earthquake are potential threats

to personnel. The performance issues considered include plans, drills, exits, first-aid

and incidents of workplace violence.

13. Property Conservation

This criterion evaluates the effectiveness of the facility’s fire protection self-inspection

program and responsiveness to fire emergencies by a designated team. Performance

issues include adequacy of fire self-inspections to assure valves remain in the open

position and fire pumps are maintained operational; use of formal procedures to follow

in the event that a fire protection system must be taken out of service; the adequacy of

the site’s fire emergency response team; fire extinguishers; and a fire prevention plan.

14. Response to Recommendations and Loss Documentation

This criterion evaluates facility management’s response to recommendations

generated from outside resources. Such outside resources include: OSHA, EPA, the

local or state regulators, insurance and engineering service providers, VF Corporate

Risk Management Department and VF Risk Management Task Force directed audits

or assessments. The responsiveness by the facility management to outside generated

recommendations is a strong indicator of the depth of the safety culture within an

organization. Additionally, claims management requires proper documentation to

ensure claims are controlled and administered properly.

15. Personal Protective Equipment

The assessment/equipment selection, training and utilization of personal protective

equipment (PPE) are evaluated here, in compliance with OSHA’s PPE standard based

on hazard assessment.

16. Special Emphasis Programs

This criterion evaluates the effectiveness of several key programs required by OSHA

Standards that deal with the use of dust masks and respirators, entering confined

spaces, welding/hot work permits and fall protection.

17. Business Continuity and Business Recovery Planning

This criterion evaluates the preparation of the facility to recover from specific

potential disasters.

Health and Safety

We emphasize the health of our associates and their communities,

beginning with a facility’s concept phase and continuing through annual

internal environmental audits and regular compliance with environmental

agencies’ laws. However, VF’s safety and health programs go far beyond

compliance and audits. The Hepatitis B vaccine is offered to associates

having a potential occupational exposure free of charge at many of the

locations where the risk of contracting Hepatitis B is elevated. Seasonal

flu and pandemic (e.g. H1N1) vaccines are also often provided at no cost.

Educational posters dealing with the prevention of illnesses and posters

reminding associates to use ergonomically correct postures for various

activities are prominently displayed throughout the facilities. Many of

these posters, as well as safety-themed calendars, have been created by

associates in response to contests sponsored by the VF Risk Management

Safety Promotions Committee. Other award programs have recognized

a VF Safety Associate of the Year, and many facilities offer an award that

rewards associates for being anonymously observed going beyond their

usual responsibilities in the area of safety. Opportunities to obtain training

in the use of fire extinguishers, fire hoses, AEDs, etc., are made available,

along with opportunities to learn first aid and CPR. Not only are these skills

helpful during an incident within a facility, but this training has often proven

valuable outside of the workplace. Committees comprising a Green Team

that deals with sustainability issues, or comprising the facility’s Central

Safety and Health Committee, encourage participation by associates

regardless of job title, providing opportunities to improve the workplace

and community and to personally “make a difference.” Specialized

trainings, offered both onsite and offsite and taught either by VF staff or

by outside trainers, provide associates with opportunities to grow in their

current job while preparing for career advancement as opportunities arise.


The VF Corporation Terms of EngagementThe cornerstone of VF’s global compliance framework is the VF Terms of Engagement.

The Terms of Engagement, which include the Global Compliance Principles, ensure

that our suppliers adhere to a single set of policies, despite cultural and legal

differences among the many countries where VF produces or sources goods.

These Terms also ensure that our apparel and footwear is manufactured in a

manner compatible with the high standards that have contributed to the

outstanding reputation of our brands and our company.

VF requires all suppliers to submit a signed Terms of Engagement document prior to

the placement of any orders for VF products.

By agreeing to the Terms of Engagement, each contractor, supplier and agent agrees

to abide by and implement them and to require each VF-approved and authorized

subcontractor to do the same. A failure to meet this commitment will compel VF to

reevaluate, and possibly terminate, the relationship with the supplier.

Adherence to the VF Terms of Engagement, including the Global Compliance

Principles, is enforced through regular audits conducted by auditors employed

or contracted by VF.

Ethical Standards

VF will only do business with contractors, suppliers and agents who

operate within a set of ethical standards compatible with VF’s Code of

Business Conduct.

Legal Requirements

VF will only do business with contractors, suppliers and agents that

comply with the applicable laws and regulations of the jurisdictions in

which they operate.

Intellectual Property Rights

We will not do business with contractors, suppliers and agents who do

not respect the intellectual property rights of the company’s brands.

Product Labeling

All VF contractors, suppliers and agents must accurately label the

company’s products with the country of origin, in compliance with the

laws of the United States and those of the country of manufacture. For

products shipped to countries other than the United States, the laws of

the importing country will prevail.

Indemnification

Every VF contractor will indemnify and hold VF harmless from and

against all losses arising out of or resulting from such contractor’s failure

to adhere to these Terms of Engagement.

VF Corporation Global Compliance Principles

All VF manufacturers will manufacture products in accordance with the

VF Global Compliance Principles

01

02

03

04

05

06


The Global Compliance Principles set forth the basic requirements that suppliers

must meet in order to produce VF apparel and footwear. We encourage suppliers

to promote best practices and continuous improvement in all of their factories.

In 1996, we adopted an initial set of 12 principles as VF’s Global Compliance Principles.

Since then, these principles have been expanded and modified to keep pace with

evolving standards and expectations. Principles have been added and modified over

the years, making more explicit our recognition of freedom of association (Principle 6)

and to strengthening our affirmation of women’s rights (Principle 10). We also added

Principle 15 to reflect U.S. Customs guidelines, which require factories to establish

security procedures for outbound cargo shipments to the United States. Our 16th

Principle reflects our commitment to environmental responsibility.

The VF Global Compliance Principles are consistent with the core labor standards

established by the International Labor Organization in its Declaration on Fundamental

Rights and Principles at Work, adopted in 1998. They are also consistent with the codes

established by the two principal external independent monitoring and certification

frameworks with which we engage - the WRAP and FLA.

These Global Compliance Principles apply to all facilities that produce goods for VF,

including all subsidiaries, divisions or affiliates, as well as facilities owned and operated

by VF and its contractors, agents and suppliers herein referred to as “VF Authorized

Facilities.”

While VF recognizes that there are different legal and cultural environments in

factories around the world, these Global Compliance Principles set forth the basic

requirements all factories must meet in order to do business with VF.

VF strongly encourages contractors, agents and suppliers to exceed these Global

Compliance Principles and to promote best practices and continuous improvement

throughout all of their factories. These Global Compliance Principles, or their

equivalents, must be posted in all major workplaces and translated into the

language(s) of the employees.

Principle 1 – Legal and Ethical Business Practices

VF Authorized Facilities must fully comply with all applicable laws of the countries in

which they are located including all laws, regulations and rules relating to wages, hours,

employment, labor, health and safety, the environment, immigration and the apparel

and footwear industry. Employers must be ethical in their business practices.

Global Compliance Principles

Principle 2 – Child Labor

No person shall be employed at an age younger than 15 (or 14 where consistent with

International Labor Organization guidelines) or younger than the age for completing

compulsory education in the country of manufacture where such age is higher than 15.

All VF Authorized Facilities must observe all legal requirements for work of employees

under 18 years of age, particularly those pertaining to hours of work and working

conditions.

Principle 3 – Forced Labor

VF Authorized Facilities will not use involuntary or forced labor — indentured, bonded

or otherwise.

Principle 4 – Wages and Benefits

VF recognizes that compensation packages vary by country. All VF Authorized

Facilities must compensate their employees fairly by providing compensation

packages comprised of wages and benefits that, at the very least, comply with legally

mandated minimum standards or the prevailing industry wage, whichever is higher,

and shall provide legally mandated benefits. Employees must be fully compensated

for overtime according to local law and each employee must be provided with a clear,

written accounting for each pay period.

Principle 5 – Hours of Work

VF Authorized Facilities must ensure employees’ hours worked shall not, on a regularly

scheduled basis, exceed the lesser of (a) the legal limitations on regular and overtime

hours in the jurisdiction in which they manufacture or (b) 60 hours per week including

overtime (except in extraordinary business circumstances). Employees must be

informed at the time of hiring if mandatory overtime is a condition of employment.

All employees will be entitled to at least one day off in every seven-day period.

Principle 6 – Freedom of Association and Collective Bargaining

VF Authorized Facilities shall obtain and comply with current information on local

and national laws and regulations regarding Freedom of Association and Collective

Bargaining. No employee shall be subject to harassment, intimidation or retaliation

in their efforts to freely associate or bargain collectively.

Principle 7 – Health and Safety

VF Authorized Facilities must provide their employees with a clean, safe and healthy

work environment, designed to prevent accidents and injury to health arising out of

or occurring during the course of work. All VF Authorized Facilities are required to

comply with all applicable, legally mandated standards for workplace health and safety

in the countries and communities in which they operate.


Principle 8 – Nondiscrimination

While VF recognizes and respects cultural differences, employment — including hiring,

remuneration, benefits, advancement, termination and retirement — should be based

on ability and not on belief or any other personal characteristics. VF Authorized

Facilities may not discriminate on the basis of race, age, color, national origin, gender,

religion, sexual orientation, disability, political opinion, or social or ethnic origin.

Principle 9 – Harassment

VF Authorized Facilities must treat all employees with respect and dignity. VF

Authorized Facilities may not subject employees to corporal punishment, physical,

sexual, psychological or verbal harassment or abuse. In addition, VF Authorized

Facilities may not use monetary fines as a disciplinary practice.

Principle 10 – Women’s Rights

VF Authorized Facilities must ensure that women workers will receive equal

remuneration, including benefits, equal treatment, equal evaluation of the quality of

their work and equal opportunity to fill all positions open to male workers. Pregnancy

tests will not be a condition of employment, nor will they be demanded of employees.

Workers who take maternity leave (of a duration determined by local and national

laws) will not face dismissal nor threat of dismissal, loss of seniority or deduction of

wages, and will be able to return to their former employment at the same rate of pay

and benefits. Workers will not be forced or pressured to use contraception. Workers

will not be exposed to hazards, including glues and solvents, which may endanger their

safety, including their reproductive health. Facilities shall provide appropriate services

and accommodation to women workers in connection with pregnancy.

Principle 11 – Subcontracting

VF Authorized Facilities will not utilize subcontractors in the manufacturing of

VF products or components without VF’s written approval and only after the

subcontractor has agreed to comply with the Terms of Engagement, including

these Global Compliance Principles.

Principle 12 – Monitoring and Compliance

VF Authorized Facilities will maintain on site all documentation necessary to

demonstrate compliance with these Global Compliance Principles. VF and its

subsidiaries will undertake affirmative measures, such as announced and unannounced

on-site inspections of production facilities, to monitor compliance with these Global

Compliance Principles. VF Authorized Facilities must allow VF representatives full

access to production facilities, employee records and employees for confidential

interviews in connection with monitoring visits. In addition, VF Authorized Facilities

must respond promptly to reasonable inquiries by VF representatives concerning the

subjects addressed in the audit.


Principle 13 – Informed Workplace

VF Authorized Facilities should inform employees about the workplace standards

orally and through the posting of standards in a prominent place and undertake other

efforts to educate employees about the standards on a regular basis.

Principle 14 – Worker Residence (Dormitory)

Dormitories of VF Authorized Facilities must provide a clean, safe and healthy

residence environment. The dormitory design must provide adequate privacy, security

and freedom of movement for all occupants. Dormitory facilities must comply with

all applicable, legally mandated standards for public domiciles in the countries and

communities in which they are located.

Principle 15 – Facility Security

It is VF policy that all suppliers establish facility security procedures to guard against

the introduction of non-manifested cargo into outbound shipments. Such items would

include drugs, biological agents, explosives, weapons, radioactive materials, illegal

aliens and other contraband.

Principle 16 – Environment

VF Authorized Facilities must comply with all laws and regulations relating to

environmental protection in the countries in which they operate. Facilities should have

policies and procedures in place to ensure environmental impacts are minimized with

respect to energy, air emissions, water, waste, hazardous materials and other significant

environmental risks. Facilities are expected to make sustainable improvements

in environmental performance and require the same of their suppliers and

subcontractors. Violations of these Global Compliance Principles will be appropriately

remedied at the cost of the facility. VF reserves the right to take necessary measures

to ensure future compliance with these Global Compliance Principles. Failure to

comply with these Global Compliance Principles may ultimately result in termination

of the relationship between VF and the Authorized Facility. For sample questions from

the VF Corporation Facility and Suppliers Acceptance Program questionnaire, please

reference the Appendix on page 64.

As mentioned earlier, we are working with many groups to continuously

improve our compliance program, and to apply best practices within the

apparel and footwear industry throughout our supply chain. In addition

to working with WRAP to certify our owned manufacturing and to

supplement our sourced manufacturing factories, we also work with the

Business and Social Responsibility (BSR) Mills and Sundries working

group, the FLA, and AFFIRM, and we collaborate extensively with the Fair

Factories Clearing House (FFC) database. For example, we joined BSR’s

Mills and Sundries working group to expand our third-party partnerships

for greater stakeholder assurance. In total, we audited approximately

50 fabric mills, 40 of which were done internally and 10 of which were

performed by BSR trained third-party auditors.

We are dedicated to engaging and working with industry peers, working

groups and Non-Governmental Organizations (NGOs) to foster and

promote a healthier and safer work environment. We cannot do this work

alone, nor would we want to, so by working together as an industry we can

expedite better working conditions throughout the entire supply chain.

Following are some of the groups we work closely with who have had a

positive impact on our compliance programs. We appreciate all the work

these groups have contributed to not only our programs, but to the entire

apparel industry.

Partnerships


In addition to adherence to the IPM requirements, VF-owned and operated facilities

are required to comply with the Worldwide Responsible Accredited Production

(WRAP) certification process. WRAP is an independent, non-profit organization

dedicated to lawful, humane and ethical manufacturing throughout the world. Since

2000, WRAP has grown to become the world’s largest factory-based certification

program for the apparel and footwear industry with participation from almost 5,000

factories in over 70 countries.

The WRAP program has 12 stated principles that aim to ensure that factories produce

goods under lawful, humane and ethical conditions. These principles, which prohibit

forced and child labor and call for the right to associate freely and bargain collectively,

are consistent with those adopted by VF in our Global Compliance Principles

(pertaining to suppliers), as well as those set forth by the International Labor

Organization.

In order to become WRAP-certified, individual factories must apply to WRAP, and

then they are given a self-assessment handbook explaining WRAP’s principles and

procedures. After the factories document their adoption of these principles, they

notify WRAP that they are ready to be monitored. WRAP then authorizes the factories

to hire independent monitors from a pre-approved list.

A factory has six months to submit the evaluation report to WRAP with a favorable

recommendation. During the one- or two-year certification period, all facilities,

especially those that needed a second audit, are subject to unannounced inspections.

WRAP Principles and Certification

“VF and Worldwide Responsible Accredited Production (WRAP) have enjoyed

a tremendous partnership since its inception in 2000 and the organization’s

principles are fully aligned with VF’s commitment to ensuring ethical standards

of operation across all VF-owned and licensed factories. WRAP and its

extensive membership have been integral to our efforts up and down the

supply chain to establish best practices and hold all facilities that VF engages

to lawful, humane and ethical production.”

Candace S. Cummings, Vice President-Administration & General Counsel,

VF Corporation and member of WRAP’s Board of Directors

VF was heavily involved in the development of WRAP in the late 1990s and

has been a strong supporter since. Candace S. Cummings, VF’s Vice President

— Administration, General Counsel and Secretary, has been a member of

WRAP’s Board of Directors since its inception. VF accepts WRAP as meeting

its factory compliance requirements and encourages all factories it sources

from to seek WRAP certification. In addition, VF has been an active partner of

WRAP working toward the mutually desired goal of continuously improving

social audit quality and standards. By conducting joint audits, independent

verification audits at WRAP-certified factories and through regular

communications, VF and WRAP have helped each other ensure the high

factory compliance standards they uphold are being properly maintained.

We use WRAP for our owned and operated facilities, of which 31 out of 32 are

WRAP certified. Our new facility in Egypt has yet to undergo the certification,

but in 2012 we plan to implement the Ideal Plant Model and pursue WRAP

certification there. We also accept WRAP certification, as well as the Social

Accountability International 8000 certification, for contracted facilities.

The WRAP certification levels are as follows:

• Platinum

Factories that have a clean history and have been WRAP certified for

at least three consecutive years. A Platinum rating allows for two years

between audits.

• Gold

Standard WRAP certification. Facility is audited annually.

• Silver

Similar to VF’s “Accepted to be Upgraded” rating, with minor violations

requiring internal follow-up, which occurs every six months until Gold status

is achieved.

For more information on WRAP, please visit www.wrapapparel.org.

For more on SA8000, please visit www.saasaccreditation.org/certSA8000.htm

VF Contracted Facilities (WRAP and SA800 Certified)


WRAP Platinum 76WRAP Gold 159WRAP Silver 14SA8000 31

Our compliance process is complemented by our engagement with the Fair Labor

Association (FLA). Many colleges and universities that want assurance that products

bearing their names are produced under fair working conditions are affiliated with the

FLA. These schools require all of their licensees to participate in the FLA program.

Three of our brands — JanSport®, Lee Sport® and Majestic® — produce college goods

with college logos, and VF is a “Category B” member of the FLA with respect to

these brands.

Every quarter, licensees that are FLA Category B members, such as VF, are required to

submit a list of facilities that manufacture products under license from FLA-affiliated

schools. In our case, we submit a list of the factories that produce JanSport®, Lee

Sport® and Majestic® branded products — typically 45 to 50 factories. The FLA then

audits five percent of the factories on this list.

These facilities are required to comply with the FLA workplace code of conduct

and internal company monitoring as well as agree to be inspected by accredited

independent external monitors. The FLA also issues a public report every year on

its members’ implementation of their standards and the remedial steps taken,

where necessary.

For more information on the FLA, please visit www.fla.org.

FLA MembershipIn 2006, we made changes to our contractor database. We replaced our aging

Compliance Monitoring System (CMS) with a web-based interactive system called the

Fair Factories Clearinghouse (FFC). The CMS database had served us well over the

years but the technology could not keep pace with the accumulated volume of audit

reports, factory photographs and signed codes of conduct. We took great care to

ensure the data from our old system was incorporated into the new FFC database.

The FFC is a non-profit organization that provides an audit sharing platform for global

brands, with approximately 20 companies sharing a factory database that includes

over 30,000 factory names and addresses. Each member company is responsible

for maintaining its group of contractors, while the audit details and factory history

remain restricted from other members. However, if another member company wishes

to engage a factory that is already in the system, it can contact the fellow member

that is already active with a factory and ask them to share audit reports. VF has

found the other member companies to be receptive to the Sharing Platform, which

has the potential to significantly reduce the number of audits and the resulting audit

fatigue of contractors. Another benefit of the FFC database is the ability to store

virtually unlimited amounts of data which can be used to track trends and support the

reporting of statistical data.

So far, FFC members have collaborated with up to eight members in the audit of

the same factory. Commonly, in order to become collaboration partners, members

establish a “comfort level” with each other; this includes obtaining deeper knowledge

about each other’s policies and practices. Typically, members must also agree on a

sufficiently inclusive audit scope when collaborating. VF chooses partners that have

similarly comprehensive audit principles.

VF is the leader in sharing its visits for forthcoming audits in its factories. VF also

trains its auditors to share the out-of-compliance issues from audits of factories

to the Sharing Platform as a reference for other members.

For more information on FFC, please visit www.fairfactories.org.

FFC Database


Oversight of the VF Audit Process

The director of factory compliance and his auditing staff report to Scott Moree, VF’s

Vice President, Internal Audit, to ensure that the factory audit process is conducted

on an objective basis. Each quarter, a report summarizing the results of factory audits

is presented by the VP, Internal Audit and to the Audit Committee of VF’s Board of

Directors for their review and consideration of risk management matters.

The Contractor Audit Procedure

A typical audit can last anywhere from six hours to two days, depending on the size of

the factory and the number of workers employed at the location. The auditor begins

the audit with an opening meeting with the factory manager or his representatives to

review the audit process and the Global Compliance Principles.

The actual audit includes a thorough review of the facility for Health and Safety,

Factory Compliance and Environmental issues. Factory records involving payroll,

operating licenses and employee personnel records are examined for legal compliance

with local laws. Plus, randomly selected employees are interviewed — in a private

and safe environment without the presence of factory managers or supervisors —

to evaluate working conditions at the facility.

In situations where VF is producing goods under license for another brand, the VF

auditor may be required to gather additional information on behalf of the licensor. In

certain countries, the licensor may insist that an independent monitor of their choice

accompany the VF inspector on the audit. Factories producing college-branded

goods may be subject to unannounced audits by the Fair Labor Association (FLA).

If the factory denies the auditor access to the building, fails to provide requested

documents, or refuses to allow employee interviews, the factory is automatically

rejected. In addition, VF will not, under any circumstances, tolerate any attempt to

influence the outcome of an audit — either through a cash payment, gifts or any other

methods. Any such attempt will result in the automatic rejection of the factory. For

example, throughout Asia the very first thing an auditor presents to a factory is an

Anti-Bribery Statement that must be signed prior to the audit. This ensures that the

factory understands that there is zero tolerance for attempted bribes. In addition,

follow-up audits are performed by different auditors to ensure accountability.

The VF Audit Process

At VF, we have made a commitment - to ourselves, to our customers and to our

suppliers — that every item of apparel and footwear we make, or that we license others

to make, will be made in factories that conform to our Global Compliance Framework.

At the end of an audit, a closing meeting is held between the factory representative

and the VF-authorized auditor, at which time the factory representative is advised

of any problems noted during the audit. If problems are noted, the VF-authorized

auditor reviews a Corrective Action Plan (CAP) with the factory representative; the

factory then has 90-180 days to implement the CAP. Depending on the severity of the

problems, a follow-up audit is scheduled 90-180 days from the day of the initial audit

to ensure that the CAP has been implemented. The factory has three opportunities

to successfully implement the CAP and pass the audit with an “Accepted” rating.

Some factories that have improved from an “Accepted to be Upgraded” rating to an

“Accepted” rating have gone on to have long-term relationships with VF.

The development and implementation of a Corrective Action Plan (CAP) is

one of the final stages of the audit procedure, if problems are noted within

a factory. Plans vary by factory and audit, but each provides a prescriptive

approach for addressing a range of issues within a factory so that it remains

fully in-line with VF’s Global Compliance Principles.

Examples of actions detailed in a CAP could include improving chemical

storage procedures, increasing workers’ lunch and dinner breaks, securing

appropriate permits from local governments or installing improved or more

efficient equipment.

Following the introduction of the official CAP, a factory must provide

initial feedback within the first 30 days. Factories have 90-180 days to

fully implement the CAP, providing VF auditors with a clear and specific

description of the actions taken and supporting documents and/or pictures

for further verification.


Timing of Audits

It is VF policy to monitor every facility that is involved in the manufacture of a VF-

branded product and brands for which VF is licensed to produce. This includes all

cutting facilities, sewing plants, screen printers, embroiderers, laundries and packaging

locations. Audits also encompass raw material suppliers for knit and woven fabrics.

No production can be performed in a facility until a factory audit has taken place.

Production includes samples that are regularly produced at the same location as well

as bulk orders. Violation of this policy can result in the termination of any existing

contracts or licensing agreements.

New suppliers must be identified to the VF Compliance Office at least six weeks prior

to the anticipated start of production. On average it takes three to four weeks to

schedule and execute an initial factory audit.

Factory audits will be conducted by a VF Compliance Auditor or by an accredited

third-party audit company. The facility manager and any associated agent will be

notified prior to the audit.

Apparel and footwear manufacturing cannot begin until the VF Terms of Engagement

have been signed and the facility has successfully passed an initial audit. Violation of

the Terms of Engagement can result in the termination of existing contracts, purchase

orders and/or apparel licensing agreements. After the initial audit, our policy is to

inspect every factory a minimum of once per year for the duration of the relationship

with VF.

Exceptions to the Supplier Audit Process

In certain limited situations, VF is willing to grant partial exemptions from our supplier

audit process. These cases are as follows:

Outside Certification

Factories may be exempted from a VF supplier audit if they are currently certified

by an internationally known factory certification program, such as SA8000

(sponsored by Social Accountability International) or Worldwide Responsible

Accredited Production (WRAP).

To qualify for an exemption, the supplier must furnish VF with the letter of

certification clearly showing the program name, factory name and address,

registration number, and the certification expiration date. We do not accept

letters of certification from other manufacturers or retailers.

VF may perform random audits to validate the effectiveness of these outside

certification programs.


New Acquisitions

Suppliers, whether involved in direct or licensed production, that have a relationship

with VF as a result of an acquisition by VF must be audited and submit a signed

Terms of Engagement within 12 months of the acquisition. VF will organize a training

session within 60 days of the acquisition in order to clarify compliance requirements

and begin the process of preparing suppliers for the initial audit.

Due to the challenges of transitioning into the VF compliance program, factories

that receive a “Rejected” status after the initial audit are given an extra three months

to achieve the “Accepted to be Upgraded” level. During this three-month period,

the affected VF brand(s) will be able to continue to place orders with the factory.

However, if the factory fails to be upgraded in the re-audit, no further orders may

be placed.

In our last report we acknowledged that, from a compliance perspective, we had not

done a good job of rapidly integrating new brand acquisitions into the VF portfolio.

Up to that point we had assumed that new acquisitions would have a fully compliant

supplier base that would be up and running from day one. We have now implemented

a program whereby each acquisition is followed by a 60-day introductory period.

During this 60-day period we contact the new brand and explain the VF factory

compliance program. We provide program literature, access to our factory database

and we conduct introductory seminars for suppliers where appropriate, and at the end

of the 60-day period we begin to audit each of the new suppliers. Any rejected facility

is given three months to reach the level of “Accepted to be Upgraded.”

Audit of Supplier Facilities

Every supplier facility that manufactures apparel or footwear for VF and every

supplier facility that manufactures for our licensees is audited for compliance with

the Global Compliance Principles. We recognize four different categories of supplier

facilities that are subject to VF’s supplier audit process:

• Cutting, manufacturing, finishing and shipping facilities, embroidery, screen printing and laundry facilities. All primary suppliers of VF merchandise

and VF-licensed apparel or footwear must sign the VF Corporation Terms of

Engagement and pass a factory audit prior to the placement of an order for VF

apparel or footwear. A list of all subcontractors engaged in embroidery, screen

printing or laundry activities must be presented to VF prior to the placement

of any order for production of VF apparel or footwear. Each facility will be

required to sign the VF Terms of Engagement and will be audited. Although a

determination to audit the factory will depend upon the country of origin and

the volume of production, most such facilities are, in fact, audited.

• Licensees. Each licensee must present a list of its suppliers to VF prior to the

placement of any order for the production of VF-licensed apparel or footwear.

To be eligible to start production of VF licensed apparel or footwear each facility

must sign the VF Terms of Engagement and pass a factory audit.

In prior years we did not do a credible job of keeping track of our licensee

suppliers. VF’s compliance policy states that all licensee factories must be held to

the same standard as contractors in VF’s supply chain. Each licensee is responsible

for reporting active factories to its respective VF brand or coalition. In 2010,

we conducted a webinar to educate all VF licensing managers and compliance

personnel with regard to reporting standards for licensee suppliers. Embedded in

the webinar were a new set of guidelines for reporting protocols, frequency and

penalties for non-compliance. Also, our licensing community generally includes

non-apparel or footwear items such as furniture, rugs, eye glasses, wrist watches,

umbrellas, etc. In many cases, we found that factories in these non-apparel

or footwear industries had never been subjected to a compliance audit and

consequently failed our inspection. While still enforcing critical issues such as child

labor, forced labor and minimum wage, we have expanded the time parameters

for non-apparel suppliers to become fully compliant. If a factory has non-critical

issues, and is rated as “Accepted to be Upgraded,” we will give them 12 months

before a follow-up audit is required, instead of the customary three to six months.

• Facilities that manufacture promotional items. Promotional items include

items given to retailers, customers and employees, such as key chains, coffee

mugs, pens, umbrellas and similar products. The manufacturer of such items must

present a list of suppliers to VF and sign the VF Terms of Engagement. Suppliers

may be randomly selected and audited at the discretion of VF.

• Raw materials. Raw materials are component materials that are commercially

purchased with no VF brand identity, such as fabric, thread, and blank tee shirts,

and are out of the scope of VF’s factory audit process. An exception to this policy

would be a vertical operation where the raw material is manufactured at the

same address that the final assembly of VF branded apparel or footwear takes

place. Such a facility would require a full audit. As described previously, our new

partnership with BSR is expanding our audit process of fabric mills. Facilities that

manufacture commercially-purchased products and raw materials are not subject

to VF’s factory audit process. These include the following:

• Commercially-purchased products. Commercially-purchased products are “off

the shelf” products purchased by VF for resale. Such products include industrial

work shoes, caps, jackets and similar items sold as part of uniforms. Suppliers of

these products must sign the VF Terms of Engagement, acknowledging that their

suppliers are compliant with applicable laws and regulations regarding workers’

rights, health and safety. These factories are not audited by VF.


VF Corporation recognizes that many of our suppliers benefit from training —

both in understanding our compliance requirements as well as in developing their

own procedures to meet these requirements. We either conduct these training

sessions ourselves or hire independent contractors to do so.

For example, we used Bureau Veritas, an international social auditing firm, to build

employee relationship management skills in facilities in El Salvador. Also, after we

acquire a company, we hold training sessions for suppliers to the newly-acquired

company.

Before we begin working with a supplier, we introduce VF’s Global Compliance

Framework and Factory Audit Process to the facility’s management team. Key

suppliers that are having problems meeting our compliance requirements are offered

the opportunity to receive training and support from VF auditors or independent

consultants, provided that they demonstrate a commitment to meeting the goals set

forth in our Global Compliance Framework. If they accept the offer, VF works with the

supplier to assess working conditions and develop a training program to remediate the

identified problems. VF policy dictates that purchase orders can be placed with this

supplier only upon notification from the trainer that a program has been established.

A final review is conducted by VF auditors at the conclusion of the training to

ensure compliance.

All VF associates involved in the procurement of VF merchandise are responsible for

the distribution of the VF Global Compliance Principles to authorized suppliers, agents,

licensees and factories. In addition, VF requires the Global Compliance Principles to

be posted in all major workplaces and translated into the native language(s) of

the associates.

Since our last report we have made significant progress in providing training for our

factory auditors, VF associates, and outside contractors. All of VF’s factory auditors

are trained and certified to the standards of the International Register of Certificated

Auditors (IRCA). This is an organization that was founded in 1984 in the U.K. to

establish and monitor British standards. Over the years the organization has expanded

to train auditors worldwide in many different areas including the ISO program. To

date, IRCA has certified over 35,000 auditors in 150 countries. Each coalition provides

regular training sessions for key employees involved in sourcing and compliance,

while we periodically set up training sessions for our suppliers in critical areas. In 2010,

we conducted nine supplier training sessions: India (2), China (5), Thailand (1) and

Vietnam (1), which involved 193 key suppliers. Topics included water treatment, payroll

calculations, and health and safety.

Training


At the completion of each factory audit a rating is awarded to each facility. If the audit

is conducted by a VF-employed auditor, the factory receives a rating of “Accepted,”

“Accepted to be Upgraded” or “Rejected.” If an independent audit company conducts

the audit, the factory receives only the audit report and CAP from the auditor; a

rating is assigned after a certified VF compliance auditor reviews the audit report. All

factories will receive a written notification of the results within seven to 10 working

days of the audit.

The Three Ratings:

Accepted

A factory is rated “Accepted” when a thorough audit results in no major outstanding

safety, health or labor issues. Any factory that receives an “Accepted” rating is

certified to produce VF merchandise or related licensed products for a period of 12

months, at which time an annual audit is necessary to maintain an “Accepted” rating.

In certain cases the certification period can be extended to 18 months. A factory can

qualify for this extended certification period if it has a strong history as a compliant

facility, has an internal support structure that can sustain a compliant environment or

is located in a country where conformity with the local law is closely monitored. Such

extensions are granted at the discretion of VF.

Accepted to be Upgraded

If the factory has some minor safety, health, or labor issues, it is given a rating of

“Accepted to be Upgraded.” While the factory is authorized to produce VF or related

licensed products, VF requires that the problems will be corrected in a timely manner

and a follow-up audit will be scheduled within three to six months depending upon

the severity of the issues. If the problems are corrected to VF’s satisfaction, then

the status of the factory will be elevated to “Accepted.” If the factory has made no

attempt to address the problems at the time of the third visit, the factory will be

downgraded to a “Rejected” status.

A factory will receive this rating if it is generally in compliance but certain safety,

health or labor issues are discovered during the course of the audit. The types of

issues that would result in this rating include but are not limited to: missing exit signs,

incomplete personnel files (including age verification and signed work contracts),

obstructed fire-fighting equipment or exits, occasional excessive working hours

and inconsistent payment of overtime. A factory will only be rated “Accepted to be

Upgraded” if the factory has committed to correct the problems in accordance with

the applicable CAP.

Facility Ratings The VF Audit Process

12 Month Annual Audit

Proposed Factory

No Orders

Orders Placed

90-Day Follow-Up

90-Day Follow-Up

Accepted

Areas of Improvement

Orders Placed

Orders Placed

Rejected

Non-Compliance Resolved

Non-Compliance Resolved

MajorNon-Compliance

Areas ofNon-Compliance

No Areas of Non-

Compliance

No Progress Situation

Deteriorated

No Progress Situation

Deteriorated



Factory Inspection


A factory is expected to remediate the items on the CAP prior to the follow-up audit.

Every factory with this rating has three chances to achieve the “Accepted” level. If

after the third audit the factory has not attained this level, it is dropped to the status

of “Rejected” (discussed below). If a factory is rejected, VF policy dictates that open

purchase orders can be finished and shipped, but no further orders can be placed

with the facility. In select cases, when a factory straddles the line between “Accepted”

and “Accepted to be Upgraded,” or when the CAP can be easily completed and

corroborated with the aid of photographs and documents, the follow-up audit period

can be extended — at the discretion of VF — to six months.

In our 2005 report, we acknowledged that for a variety of reasons we were not

fulfilling the obligation to do a return audit within the three to six month timeframes.

Since 2005, we have increased our global audit staff, introduced an audit scheduling

function to our systems platform and have included audit follow-up as a group

objective that is tied to compensation. We now have the ability to track actual verses

scheduled audits and for the last quarter of the 2010 reporting year we achieved a

follow-up rating of 93% for on-time audits.

Rejected

If serious safety, health or labor issues are found at a factory it is rated as “Rejected.”

Incidents of child labor, the use of involuntary or forced labor, excessive working

hours, incorrect overtime compensation, locked emergency exits, physical or verbal

abuse, attempted bribes or falsified records are automatic grounds for rejection. Other

reasons for rejection could include an accumulation of certain types of less serious

violations, a history of wage violation or non-cooperation of factory management,

such as denial of access to auditors. In these instances, the factory is not authorized

to produce VF or related licensed products until the issues are fully resolved.

If, at a later date, the factory feels that it has taken corrective action to merit another

audit, we will reconsider the facility for production and conduct another audit. If

a factory receives two consecutive “Rejected” ratings, no further audits can be

conducted until a waiting period of 12 months has elapsed.

If a rejected factory is used for VF or related licensed production, or if a factory fails

to follow through on agreed upon facility upgrades, VF will cancel any outstanding

contracts or licensing agreements.

At the end of the audit the factory manager will be verbally advised which status his

facility has attained. He will also be presented with a written list of action items for

any irregularities that have been found during the audit. After seven to 10 working

days the factory manager and any associated agent will be mailed a detailed factory

evaluation report.

Due to political, environmental and human rights issues, there are certain countries

that are deemed unacceptable for the manufacture of VF products. This is a

continually changing situation due to legal and political shifts. Currently, U.S. law

prevents trade with Cuba and Myanmar (Burma), and U.S. State Department

permission is required for trade with Iran, North Korea and Sudan. In addition, due

to ongoing issues surrounding the use of child labor in cotton fields, VF does not

authorize any sourcing from Uzbekistan.

It is VF’s intent to treat all suppliers in a fair and honest manner, and to build

a foundation for a long-term relationship, so we will help suppliers reach VF’s

manufacturing standards to the best of our abilities.


2010 VF-Owned Manufacturing

Philippines & Australia

North America

South America

Central America & Caribbean

Nicaragua (2)

Argentina (2)

Chile (2)

Mexico (16)

United States (5)

Honduras (2)

201 factories / 165 audits

23 factories / 25 audits92 factories / 119 audits


South America

Nicaragua (2)

Mexico (16)

United States (5)

Honduras (2)

North America201 factories / 165 audits

Philippines & Australia23 factories / 25 audits


VF Manufacturing and Audits by Region

VF-Sourced Manufacturing Facilities and Audits**Audits do not include outside certifi cation (SA8000, WRAP)

Chile and Poland facilities were closed at the end of 2010

Europe

Middle East / North Africa

Northeast Asia

Southeast Asia

South Asia

Sub-Saharan Africa

Turkey (1)

Poland (1)

Egypt (1)








The majority of our audited facilities receive “Accepted” or “Accepted to be Upgraded”

ratings after inspection. As described above, those facilities that do not meet our

standards are given a “Rejected” rating, at which time we terminate our relationship

with that supplier. Listed below is an overview of the components of the

compliance audit:

• Introductory meeting with facility management

• Facility walk-through

• Auditing the personnel records

• Auditing the time records

• Auditing the payroll

• Reviewing the policies and procedures

• Interviewing employees

• Audit recap with management

• Follow-up

As the accompanying chart illustrates, our supplier audits do reveal a variety of

violations of our Global Compliance Principles at those facilities that received

“Rejected” and “Accepted to be Upgraded” designations. While these violations are

distributed across all regions in which we operate, certain violations are more common

than others — and certain regions are home to the greatest number of facilities where

code violations are detected. The numbers show frequency of violations found, rather

than severity of violations, and give an overall sense of the pattern of violations.

As we described earlier, we will work with a supplier for a period of time to allow

them to improve their compliance if they demonstrate a commitment to improve.

However, we will not rate a factory as “Accepted” until it complies with all of our

Global Compliance Principles.

The following chart provides samples of defects found by region during 2010. The

most common overall violation we observed in our supplier audits is a failure to limit

work and overtime hours to 60 hours per week, followed by a lack of emergency

evacuation drills. In addition, we have seen a failure to comply with legally mandated

minimum wage or prevailing wage standards; a tendency among suppliers to ignore

the labor, health and safety laws of the countries in which they are located; and to

not properly compensate their employees for overtime. However, we also often find

factories eager to do business with VF and willing to upgrade their practices and

comply with our requirements.

Audit Defects by Region


General PrincipleDoes the facility comply with all applicable laws of the country in which they are located?

Hiring Practices

Wages and Hours

Worker Management Communication

Working Conditions

Treatment of Workers

Aggregate Latin America North America Southeast Asia Europe South Asia Paci�c

Africa

China

Does the facility obtain and retain proof of age for each employee?

Does the facility comply with juvenile / young worker regulations?

Does the facility have proper voluntary overtime practices? Is forced labor not allowed?

Does the facility utilize any improper employee deposits or withholding payment practices?

Does the facility treat employees with respect and dignity?

Does the facility respect women's rights?

Are employee records securely maintained on-site?

Are workers informed of VF's Compliance standards?

0 - 10%

10 - 25 %

25 - 50%

>50%

EnvironmentHas the facility documented applicable national and local laws and regulation relating to the environment?

Does the facility comply with all environmental permit requirements?

Is there proper storage and management of solid waste?

Is wastewater treated either onsite or offsite?

Are air emission sources equipped with pollution control devices?

Are workers allowed to join or form worker's organizations without penalty?

Does the factory have an employee-management communication system?

Does the facility comply with legally mandated minimum wage standards or the prevailing wage, whichever is higher?

Are all employees receiving at least the minimum wage?

Are employees properly compensated for all overtime?

Are accurate time records maintained for employees?

Does the facility provide an understandable wage statement?

Does the facility keep regular working hours and days?

Is a day of rest allowed in each seven day work period?

Does the facility limit hours worked to 60 hours on a regular basis?

Are first aid supplies available?

Are emergency evacuation plans posted?

Can alarms be heard throughout the factory?

Are emergency evacuation drills conducted?

Are emergency exits adequate?

Are exits unlocked and kept clear?

Are aisles kept clear of obstructions?

Is emergency lighting in place?

Are fire detections and firefighting equipment installed?

Are fire extinguishers available and clearly marked?

Is machinery equipped with safety devices?

Do employees use appropriate protective equipment?

Is the workplace free from electrical / mechanical hazards?

Is potable water provided with individual drinking containers?

Is work surface lighting sufficient?

Are sanitary toilet areas available in sufficient quantity?

Does the dormitory have sanitary and sufficient toilets and showers segregated by gender?

Are sanitary canteen facilities provided?

Are hazardous and combustible materials stored securely and safely disposed of?

Are Material Safety Data Sheets maintained?

Are heavy machinery inspections conducted?

Audit Defects by Region


The colors

indicate the

level of defects

found in our

audits

We are proud of the work VF has accomplished with our global compliance program

and the progress achieved throughout the management of our supply chain. Even

though we set forth lofty goals in our last report, most have been met and surpassed,

as have been described in various sections throughout this report. As we look to the

future, there are many more challenges that we face due to the evolving regulatory

landscape, changes in the global economy and the expanded complexities of supply

chain management, along with the resource scarcities and environmental challenges

developing throughout the world. Moving forward, we are dedicated to continually

improving in the following areas.

Continue dedicated work with partners, brands and associations to evolve our

factory compliance program. No longer can factory compliance be managed by a

single brand, as many industry-wide issues require continued collaboration. For this

reason, our next report will be a fully integrated Corporate Social Responsibility (CSR)

report addressing the environmental, social and financial impacts of our business,

expected to be released in 2014.

Track, measure and communicate key performance indicators. We intend to use

the Global Reporting Index — the global standard for sustainability reporting — to

track key performance indicators. This will require a greater level of stakeholder

engagement throughout our entire value chain, including industry peers, wholesale

customers, NGOs, regulatory agencies, suppliers, associates and customers. Reporting

to this standard will require a deeper level of supply chain oversight and review —

something we are committed to expanding in light of the extensive complexities

in our industry.

Adopt consistent and stringent global standards to streamline the audit and

compliance process throughout the supply chain. While we have always maintained

high standards with our Global Compliance Principles and the Ideal Plant Model, a

more complex and globalized supply chain requires greater collaboration with other

brands and companies, in order to avoid confusion from suppliers and customers.

Therefore, we will continually adopt best practices established through our industry

peers, while leveraging the experience and best practices of acquired businesses.

More work remains ahead. We take a great deal of pride in what we have

accomplished, but we know there will always be more work to be done. We are

excited about what the future holds for us and our brands, and we look forward

to further expanding our influence to elevate the global responsibility of the entire

apparel and footwear industry.

Looking Forward


The social compliance landscape is complex and ever-changing. With almost 2,000

factories used to produce footwear and apparel around the world, it will remain a

constant challenge to encourage the introduction and consistent use of industry-

leading best practices. By working with other industry groups and NGOs, our

programs have evolved greatly over the years and will continue to evolve as our

knowledge expands.

Every day, we are faced with challenges such as factory safety, freedom of association,

sandblasting and animal husbandry. We face these issues with the values we put forth

for our company and try to work toward a fair and just solution for all parties. Below

are some of the bigger issues we faced recently and how we are responding. For more

information please visit our website, www.vfc.com, where we will continue to update

our approach to these and other issues as they arise.

Sandblasting:

The sandblasting of jeans has become a concern as improperly protected operators

using silica-based sand can develop silicosis (a respiratory disease caused by inhaling

silica dust).

VF is encouraging its suppliers to ban the sandblasting process from all their

production. When this is not possible, the factory must provide all the necessary

personal protective equipment to the workers involved in this process and they must

be provided with specific health care checks to avoid any damage to their lungs.

In 2010, we committed to eliminate all sandblasting from within our entire supply chain

in our jeans production by the end of 2011. Our production managers have confirmed

that no sandblasting process is used in any of our owned facilities worldwide.

VF joined the International Textile, Garment and Leather Worker’s Federation

(ITGLWF) and other brands and retailers to issue the following Call to Action

urging a ban on sandblasting.

Call For A Global Ban On Apparel Sandblasting

The International Textile, Garment and Leather Workers’ Federation (ITGLWF) and

global apparel buyers and manufacturers issue this joint Call to Action urging an

industry-wide ban on the practice of sandblasting in the garment industry.

Apparel sandblasting involves projecting fine sand with compressed air to create a

worn look on denim and other garments. Sandblasting can be extremely damaging to

the health of workers if proper safeguards are not followed, and can lead to a disabling

and potentially fatal lung disease called silicosis.

In July 2010, after the impact of sandblasting on workers’ health had come under

scrutiny in Turkey, the ITGLWF called for a ban on this process. The ban is an important

step toward ensuring that no worker — in any garment factory — faces the threat

associated with exposure to crystalline silica.

VF on the IssuesIn September 2010, as a commitment to the health and safety of workers across the

apparel industry, Levi Strauss & Co. and Hennes & Mauritz AB (H&M) became the

first to implement a global ban on sandblasting in their supply chains. In so doing,

these companies went beyond the ban which the Turkish Ministry had imposed within

Turkey and extended the ban to all operations globally. Since then a number of other

leading brands and retailers — such as Aurora Fashions, Bestseller, C&A, Carrefour,

Esprit, Inditex, Karen Millen, and New Look — have also announced the elimination of

sandblasting in their supply chains.

The aim of this Call to Action is to ban sandblasting throughout the global garment

industry. Signatory companies agree to:

• Ban the practice of sandblasting throughout their supply chains including but not

limited to the use of aluminium oxide, aluminium silicate, silicon carbide, copper

slag and garnet for abrasive blasting;

• Work with their suppliers in a transition towards alternative methods, after having

established the risks and their means of control;

• Take the necessary measures to ensure that the ban is effectively applied

throughout their whole supply chain.

This Call to Action is signed and supported by the ITGLWF and the following brands

and retailers:

• Aurora Fashions

• Bestseller

• C&A

• Carrefour

• Esprit

• Hennes & Mauritz AB (H&M)

• Inditex

• Karen Millen

• Levi Strauss & Co

• New Look

• VF Corporation

Bangladesh Fire

On December 14, 2010 a fire at one of our contractors, That’s It Sports Wear in

Bangladesh, tragically resulted in 29 deaths and many injuries.

While the final fire investigation report has not yet been made available, it appears

that a short circuit in a breaker box on the 9th floor was the cause of the fire. A

number of workers taking lunch in a break area on the 10th floor did not, or could

not, evacuate as necessary.


To prevent these types of accidents from happening, VF audits include a wide

variety of questions designed to ensure that our contractors are safe places to

work. Specifically, the audit questions we ask include:

• Have personnel been trained on safety and security issues?

• Is there a program for fire protection/prevention?

• Does the facility have emergency evacuation diagrams posted in conspicuous locations in the facility in the native language(s) of the workers?

• Can the emergency / evacuation alarm be heard in all areas of the factory?

• Does the facility conduct fire/emergency evacuation drills at least twice a year? If “Yes,” are there records noting date and details?

• Does the facility have an adequate number of properly located and clearly marked emergency exits available?

• Are exits easily accessible, kept clear, and kept unlocked during working hours?

• Are aisles kept clear from obstructions at all times?

• Are emergency lights placed above exits and stairwells?

• Is adequate fire-detection and fire-fighting equipment installed in all areas?

• Are appropriate fire extinguishers available, accessible and clearly marked?

• Are manual fire extinguishers regularly inspected and marked on tags?

• Do the employees know how to use fire-fighting equipment?

• Is the local fire department acquainted with the facility?


Since the fire we have been working with the other brands that had production in

this facility to ensure that all legally required benefits for the deceased and injured

have been administered. The stakeholders have contributed more than $500,000 to

a humanitarian fund for the deceased families and injured workers. In addition, the

brands ensured that these families and workers will receive:

1. Full coverage of funeral costs of the deceased workers

2. Full coverage of medical care - provided by private hospitals for the critically injured

3. Full salary for employees under medical care for injuries incurred during the fire

4. Full salary to families of deceased workers through the time of the compensation payment

5. Offers of modified work positions for returning injured workers based upon post-recovery capabilities along with supportive counseling

6. Commitment to payment of education costs for the children of deceased workers

7. Employment opportunities for family members of the deceased workers

To further fire safety opportunities in Bangladesh, we have:

1. Expanded our electrical training for our Asia Compliance Auditors

2. Met with our contractors in Bangladesh to assure their commitment to maintaining safe working environments

3. Worked with other brands in producing safety videos for Bangladeshi workers

4. Made plans to expand our training efforts to include our contractors’ plant electricians, plant safety committees and operators as well as conducting electrical reviews of our contractors

In addition, we have created a policy that has been communicated to our direct fabric suppliers:

For more information and updates on these issues, please visit

www.vfc.com/corporate-responsibility

VF Corporation: Policy on Cotton Fiber Sourcing from Uzbekistan

There have been ongoing concerns regarding the use of government backed forced

child labor during the cotton picking season in Uzbekistan. Uzbekistan is the third

largest exporter of cotton in the world and responsible for approximately 10% of

world cotton trade. As a result, VF has been participating in a coalition with other

leading brands and retailers, industry associations, socially responsible investors and

non-governmental organizations to raise awareness of this very serious issue and to

convince the Uzbekistan government to eliminate this practice. Until this matter is

resolved, we are asking all VF vendors and licensees to cease sourcing cotton from

Uzbekistan.

We understand that the cotton supply chain is complex and that tracing the origin

of cotton in finished products is very difficult. However, we are asking our vendors

and licensees to make their best efforts to trace their cotton sources and ensure that

Uzbek cotton is not used in any VF product.

VF and individual brands may take a more concerted effort to request cotton sourcing

information from suppliers and/or proof of due diligence of raw material country of

origin in order to further pursue this matter.

We greatly value your partnership in this endeavor and look forward to communicating

with you on this issue and others in the future. Thank you for your cooperation with

our efforts.


We, the undersigned companies are working to ensure that forced child labor does not

find its way into our products. We are aware of reports documenting the systemic use

of forced child labor in the harvest of cotton in Uzbekistan. We are collaborating with

a multi-stakeholder coalition to raise awareness of this very serious concern, and press

for its elimination.

As a signatory to this pledge, we are stating our firm opposition to the use of forced

child labor in the harvest of Uzbek cotton. We commit to not knowingly source

Uzbek cotton for the manufacturing of any of our products until the Government

of Uzbekistan ends the practice of forced child labor in its cotton sector. Until the

elimination of this practice is independently verified by the International Labor

Organization, we will maintain this pledge.

(The above was compiled through the cooperation of the Responsible Sourcing

Network. More information is available at http://www.sourcingnetwork.org/cotton/)

Uzbekistan Cotton:

As a large consumer of textiles produced with cotton we are well aware of the child labor

issues in the cotton fields of Uzbekistan. As Uzbekistan is one of the world’s largest exporters

of cotton, we have pledged, along with many other brands, the following:


We interviewed a number of our auditors from around the globe about their

experiences auditing VF facilities. The following is a sample of select responses

edited for context:

1. What is the value of auditing to the factory?

We believe the value in auditing all owned and contracted factories is to assure

management is providing employees a good working environment regarding

safety, health and security, and that benefits according to contracts and local law

are given to employees. Additionally, it helps reduce the risk of turnover in how VF

sources and manufactures its products.

2. What are your biggest challenges as an auditor?

While there are many challenges we deal with regularly, a major effort is often

needed to ensure the accuracy of record keeping as many factories are becoming

smarter and better enabled to falsify their records. Additionally, while VF has

put significant effort into developing its Global Compliance Principles, Terms of

Engagement and factory oversight, challenges sometimes remain in addressing

and collaborating with factory management to improve issues revealed in the

factory audit.

Another common challenge auditors face in factories across the globe is

convincing management that they need to have a small budget in place for the

Compliance department so programs and training sessions are scheduled and

available to all employees.

3. What do operators think about the audit process?

In our experience, operators have expressed a range of opinions regarding the

factory audit process. In some cases, operators are truthful and forthcoming

when acknowledging issues and utilize the audit team to address inadequacies

and improve fairness. A majority of operators believe the audit process provides

a more safe and healthy working environment that also prevents abuse from

supervisors and top management.

Meanwhile, there is a smaller segment of operators that struggle to balance their

operations with compliance, in which case they often are less truthful and more

likely to try and cover up negative aspects of their operations and view auditors

more as policeman than partners.

Appendix

64 | 2011 Global Compliance Report | Appendix

4. Give an example of a factory that you’ve worked with that made significant progress (a success story).

Lee® Japan’s socks supplier in China is a great example of a factory that made

significant progress to earn an “Accepted” rating. In visiting this factory for its

initial audit in May of 2009, many violations were noted, including underpayment,

excessive work hours, no personnel files and a lack of social insurance.

Nevertheless, factory management was extremely willing and cooperative to make

the necessary improvements and incorporate the actions required as part of the

Corrective Action Plan (CAP). Finally, in January of 2011, during the third follow-up

audit, the factory was successfully upgraded to “Accepted.”

5. Where do you see Compliance in the next five years?

Since enterprises are continuing to strive for increased profits and production,

it becomes even more critical that they continue to take responsibility for their

consumers, employees and environment. As such, compliance — and universal

standards — must become a greater focus for the apparel and footwear industry,

particularly for companies such as VF and the factories it owns and contracts with

to ensure legal and ethical business performance to achieve their social value.

With universal standards for factory compliance, there should also be a self-

assessment tool that helps drive and promote improvements, rather than simply

treating abuses. To promote this improvement, more upfront education and

training is required to bring factories together to collaborate and share best

practices. Ideally, over time and through proper implementation, factories will

become more engaged in shaping and developing the compliance program.

Below is a sample of questions from the VF Facility and Suppliers Acceptance

Program questionnaire. For additional information on VF’s factory compliance and

audit policies and procedures, please visit www.vfc.com/corporate-responsibility.

Principle 1 – Legal and Ethical Business Practices

• Regarding wages and hours, does the facility obtain current information on local

and national laws and regulations?

• Regarding freedom of association, does the facility obtain current information on

local and national laws and regulations?

• Regarding minimum age for employment and related restrictions, does the

facility obtain current information on local and national laws and regulations?

Principle 2 – Child Labor

• Does the facility obtain and retain proof of age for each employee?

• Has the facility verified the employees’ stated age through the interview

process?

• Does the facility comply with juvenile / young worker regulations?

Principle 3 – Forced Labor

• Does the facility issue payment of wages directly to employees?

• Does the facility have service agreements for contract security guards and /

or job descriptions for employee guards that limit their task to normal security

matters such as protection of facility property or security for facility personnel?

• Do employees have freedom of movement that is not impeded except for the

protection of facility property and security of facility personnel?

Principle 4 – Wages and Benefits

• Does the facility have practices to assure employees are compensated consistent

with their terms of employment and in accordance with the local laws and

regulations?

• Does the facility prominently post legal minimum wage rates, benefit policies

and maximum regular and overtime hourly policies in the native language(s) of

the facility workforce and management?

• Are all employees receiving at least the minimum wage?

Facility and SuppliersAcceptance Program Questionnaire


Principle 5 – Hours of Work

• Are facility workers, at the time of hiring, made aware of facility policies and

procedures and legal limitations on the maximum hours of work per day, week,

and month, both regular and overtime, and the maximum number of hours

worked by day and the employee’s acknowledgement?

• Does the facility have, utilize and retain time records that reflect the day and

date the employee worked, the number of hours worked by day and the

employee’s acknowledgement?

• Has the facility defined extraordinary business circumstances?

Principle 6 – Freedom of Association and Collective Bargaining

• Regarding freedom of association, does the facility obtain current information

on local and national laws and regulations?

• Does the factory have a recognized union?

• If yes, what percent of workers are members of the union?

Principle 7 – Health and Safety

• Does the facility have a written and posted safety and security program?

• Have personnel been trained on safety and security issues?

• Does the facility have a Health & Safety Committee including facility workers and

management that conducts regular meetings and keeps meeting minutes?

Principle 8 – Nondiscrimination

• Does the facility have a written, posted policy that fully complies with the

discrimination principle above?

• Has the facility been free of any discrimination charges filed by employees,

regulatory agencies or any outside agency, during the past two years?

• Does the facility communicate the requirements of the principle to third parties

that may recruit and screen applicants on their behalf?

Principle 9 – Harassment

• Is there a facility policy relating to harassment and abuse?

• Has the harassment and abuse policy been communicated to management,

supervision, workers and third party service providers?

• Does the facility encourage employees to report instances of harassment or

abuse through effective communication of the policy and timely resolution of

matters reported?

Principle 10 – Women’s Rights

• Does the facility have a written policy that fully complies with the women’s

rights principle?

• Has the policy been communicated to all employees?

• Are policies in place and benefits provided for maternity leave?

Principle 11 – Subcontracting

• Does the facility subcontract any VF production now?

• Does the facility have a written approval for using subcontractors for

VF production?

• Provide name and address information for all subcontractors used for

production for VF.

Principle 12 – Monitoring and Compliance

• Are employee records maintained on-site and in a safe and secure location?

• Are payroll records maintained on-site and in a safe and secure location?

• Does the factory agree to allow VF representatives to conduct either announced

or unannounced on-site inspections to monitor compliance with VF’s Global

Compliance Standards?

Principle 13 – Informed Workplace

• Does the facility comply with the principle as stated?

• Does the facility have a program that insures employees are aware of the

posted standards?

Principle 14 – Worker Residence (Dormitory)

• Are dormitory residents free to come and go?

• Are sleeping quarters segregated by sex?

• Does the living space per worker in the sleeping quarters meet the minimum

legal requirement and the local industry standard?

Principle 15 – Facility Security

• Does the facility have a written security policy?

• Is a security awareness and training program (documented) in place?

(Including challenging unauthorized persons, the recognition of internal

conspiracies, maintaining cargo integrity, and determining and addressing

unauthorized access)

• Do buildings protect against outside intrusion? (Physical security should include

perimeter fences, locking devices on external and internal doors/window/gates,

and adequate lighting inside and outside the facility)

Principle 16 – Environment

• Has the facility documented applicable national and local laws and regulations

relating to the environment?

• Does the facility comply with all environmental permit requirements (e.g. for

waste water, air emissions, solid waste)

• Does the facility record its energy use? (Note Kilowatt / Unit)


table of contents

Documents

vfs global compliance

global compliance reportvf

global compliance program

social compliance initiatives

bestknown brands

smartwool brands

brands operations

steadfast principles