Primark – Update on Ethical Trading, Monday 14 July 2008

Primark notes the comments of various non-governmental organisations (NGOs’) following its announcement on 16th June that it had stopped buying from three factories in southern India for breaking its Code of Conduct.

Primark makes the following points:

• Primark is an ethical organisation with a clear and strict Code of Conduct which it expects all its suppliers to follow.
• Primark’s relationships with its suppliers are based on trust and transparency and it will not tolerate systematic deceit. Many suppliers have traded with Primark over very many years.
• Suppliers regularly share their issues with our independent auditors and advisers. Suppliers comment positively upon the business stability they are assured by the large Primark orders and the fact that, unlike some of their other customers, payments are always prompt.
• Primark monitors its supply base against its Code of Conduct and the laws of the sourcing region, whichever is the higher standard. Unlike many of its high street competitors, and in support of these developing countries, Associated British Foods plc pays for all assessments (including regular follow-up).
• Primark totally refutes any of the recent allegations that it “cut and ran” when it announced that it was ceasing to trade with three suppliers. It is absolutely the last resort for Primark to stop buying from a supplier. Primark works with in excess of 400 suppliers around the world and is currently working with just over half of these to improve standards and conditions. Primark was already working with the three suppliers before the Panorama programme, in some cases for more than one year. Primark decided to stop sourcing from the suppliers because it was unable to rely on the integrity of the information received. Primark is not able to continue relationships where trust has broken down.
• Over the last year Primark achieved a 75% improvement rate on the first re-inspection. Primark has only ever stopped buying from one other factory for breaking its Code of Conduct and failing to meet its strict ethical standards. This decision was made in line with advice from our own team, the ETI and trade union specialists.
• Recognising the issues around sub-contracting, Primark has monitored its suppliers’ supply chains and had begun sub-contractor mapping. It is recognised that this is an enormous task which inevitably takes time.
• Primark improves the standard of living and quality of life of some two million people in the developing world through its supply contracts worth £700 million. Primark is establishing the ‘Primark Better Lives Foundation’ which will provide financial assistance to organisations devoted to improving the lives of young people.
• Primark is sympathetic to the NGOs’ backing for properly conducted and controlled home working to bring economic benefit to a wider section of the local community. It continues to believe that unauthorised and unmonitored sub-contracting is detrimental to workers’ interests. Primark already works in Bangladesh with an NGO specifically supporting women’s issues and education.
• Primark is developing a home working policy and is an active member of the Ethical Trading Initiative Home Working Group in India as a prelude to its implementation. A major requirement for the success of the implementation is complete transparency of our suppliers’ full supply chains.

• Download Primark – Update on Ethical Trading, Monday 14 July 2008 (PDF format 60kb)

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Primark’s right to reply to Panorama, Monday 23 June 2008

It is NOT acceptable for children to produce or work on garments for sale to Primark under any circumstances whatsoever.

Primark is an ethical, principled and responsible organisation. Under our Code of Conduct, children are expressly forbidden to work on clothes produced for us and none of our suppliers has our permission to sub-contract production. These rules are strict and are intended to ensure that our high ethical standards are met by any factory that wishes to sell to us.

Production of the garments identified by the BBC was sub-contracted without Primark’s knowledge or consent by the factories concerned to third parties using unauthorised home workers, including children.

As soon as we had verified the facts we acted immediately by cancelling all new orders with them and withdrawing all the items from sale. The affected garments represent 0.04 % of Primark’s worldwide sourcing.

Primark rarely takes such severe action with the factories it buys from and prefers to work with them to improve standards. However, Primark will not tolerate a relationship which isn’t based on trust and transparency.

Primark already has clearly defined compliance procedures including its own factory inspections and unannounced visits. It also uses independent third party audits. Any breaches will be discovered quickly and dealt with appropriately. We will now supplement these measures by appointing a highly reputable NGO as a partner to act as our eyes and ears on the ground in Southern India. We have already summoned suppliers to meetings to reinforce our stringent trading code and to emphasise that we will not tolerate unethical behaviour. This is all part of a process to further tighten control of our suppliers.

Primark’s prices are low because we don’t rip off our customers. Most of our clothes are bought from the same factories as other fashion retailers and people producing them are paid exactly the same whatever the label and whatever the price in the shop. We are able to offer good value and good quality because of low mark-ups and big volumes. We use simple designs, our overhead costs are extremely low and we don’t run expensive advertising campaigns.

The issues highlighted by Panorama are industry wide and that is why Primark works with governments, leading campaigners, retailers and industry bodies to try to solve them. Primark has been singled out because of its success.

People in the developing world benefit from the ability to trade with companies like Primark: the result for them is a higher standard of living and a better quality of life. Primark supports some 2 million people through its supply contracts. Primark also recognises that further progress must be made to improve working conditions in developing nations. As part of its contribution, the company has already announced its intention to establish the ‘Primark Better Lives Foundation’, which will provide financial assistance to organisations devoted to improving the lives of young people including those identified by Panorama. In addition to the initial funding Primark is endowing the Foundation with any profits made from the affected garments.

• Download Primark’s right to reply to Panorma, Monday 23 2008 (PDF format 62kb)

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Press statement, Monday 16 June 2008

Primark is announcing today (June 16th 2008) that it is to stop buying clothes from three factories in Southern India for breaking Primark’s Code of Conduct by failing to meet its strict ethical standards.

Detailed investigation has found that these factories had sub-contracted embroidery and sequin work on a small number of designs to unapproved sub-contractors without Primark’s consent or knowledge. The affected garments represent 0.04% of Primark’s worldwide sourcing. The sub-contracting involved home working and in some instances children were also found to be working at home. The investigation was carried out immediately after receiving information from the BBC.

Primark is an ethical business that demands the highest standards from its suppliers. It has a strict Supplier Code of Conduct which expressly bans the use of child labour. In addition none of our suppliers is permitted to sub-contract without our specific consent and agreement. None of these suppliers is permitted to use home working. Under no circumstances would Primark ever knowingly permit such activities whether directly through its suppliers or through third party sub-contractors. Primark does not tolerate serious breaches of its fundamental principles.

As soon as Primark was made aware of the facts the company acted immediately, cancelling all new orders with the factories concerned and withdrawing from sale the embroidered garments involved.

The company’s system of audits has to date proven very robust and extremely effective at raising supplier standards. Primark uses third party audits, including SGS, a world-renowned audit firm. As a result, Primark takes this lapse in standards in its embroidery supply chain very seriously indeed. In addition to sacking the factories at fault, Primark has taken urgent steps to further tighten control of suppliers. The company has already summoned suppliers to meetings to reinforce the stringent trading standards it expects and to emphasise that it will not tolerate this type of sub-contracting.

Primark will also appoint a highly reputable NGO in Southern India as a partner to act as its eyes and ears on the ground, continually investigating how and where garments are made, to identify any unauthorised sub-contracting. Discussions are at an advanced stage and an announcement will be made in due course. Primark will continue its own factory inspections and unannounced visits and those of SGS.

Primark’s prices are low because we don’t overcharge our customers. Most of our clothes are bought from the same factories as other fashion retailers and people producing them are paid exactly the same whatever the label and whatever the price in the shop. We are able to offer good value and good quality because of low mark-ups and big volumes. We use simple designs, our overhead costs are extremely low and we don’t run expensive advertising campaigns.

People in the developing world benefit from the ability to trade with companies like Primark: the result for them is a higher standard of living and a better quality of life. Primark supports some 2 million people through its supply contracts.

However, Primark also recognises that further progress must be made to improve working conditions in developing nations. As part of its contribution to this process, the company is announcing today its intention to establish the ‘Primark Better Lives Foundation’, which will provide financial assistance to organisations devoted to improving the lives of young people. In addition to the initial funding Primark is endowing the Foundation with any profits made from the affected garments.

For further information

Associated British Foods
Geoff Lancaster
Tel: 020 7399 6500

Citigate Dewe Rogerson
Jonathan Clare/Chris Barrie/Sara Batchelor
Tel: 020 7638 9571

Notes to Editors

1. Primark has a strict Code of Conduct to which all suppliers must adhere and which forms part of the terms of their contract. This Code is enforced by a programme of rigorous inspection and an audit process of its global suppliers.
2. To enforce this Code, Primark carries out hundreds of audits (i.e. special inspections to ensure stringent standards are being met) every year by Primark’s own regional based Ethical Trade Managers and by SGS (an independent, third party, world renowned auditor). More than one-third of audits are unannounced. After the initial audit, Primark’s ethical trade specialists work with the suppliers to support them through a remediation process that is designed to bring about enduring improvements in working practices. Training is offered to suppliers at regular intervals. Follow-up audits are carried out 3 months after the initial audit.
3. Primark reports on its activity to the Ethical Trading Initiative, the organisation set up by retailers, NGOs and trade unions to promote ethical trading. This initiative is supported by the British government. The ETI’s most recent assessment of Primark’s activity acknowledges “you (Primark) are implementing a higher rate of improvement actions on most Code provisions than your sector averages”.
4. Unlike many companies operating in developing economies, Primark pays its suppliers on 30 days.
5. Last year, Primark spent £700 million on goods produced in the developing world.
6. For further information, see Primark’s website at www.ethicalprimark.co.uk and /or www.Primark.co.uk

• Download our press statement, Monday 16 June 2008 (PDF format 77kb)