responsibility 2021 - nordstrom supplier

15/14/2021

©2015 Nordstrom, Inc. Confidential

2 0 2 1RESPONSIBILITY

PROGRAM MANUAL FOR GLOBAL THIRD-PARTY SERVICESSTANDARD OPERATING PROCEDURE

May 2021

S O C I A L

25/14/2021


SECTION PAGE(S)

Table of Contents 2

Forward 3

Introduction to Nordstrom 4

Introduction to Nordstrom Product Group (NPG) 5

Introduction to NPG Social Responsibility 6

Social Audit Procedure 7

Audit Types 7

Audit Scheduling 8

Payment Instructions 9

Audit Components 10

Audit Reporting 12

Follow-up Audits 16

Follow-up Audit Reporting 17

Appendix

Factory Guide to Implementing the Nordstrom Partnership Guidelines

I.

Fire Evaluation Log II.

24 Hour Alert Notification Template III.

Draft Finding Template IV.

Final Report Template V.

TABLE OF CONTENTS

35/14/2021


For additional information, please contact:

Nordstrom Social Responsibility

1617 6th Avenue, Suite 1000

Seattle, Washington 98101

USA

[email protected]

FOREWORD

This document offers third party guidance on effectively implementing the Nordstrom’s Social Responsibility

Auditing Program. This document should be used in conjunction with the Factory Guide to Implementing the

Nordstrom Partnership Guidelines (Appendix I).

©2021 Nordstrom, Inc., all rights reserved.

CONFIDENTIAL: This document contains proprietary, trade secret, and confidential information which are the

property of Nordstrom, Inc. This document and the contents may not be duplicated or disclosed to any other

party without express authorization of Nordstrom, Inc.

mailto:[email protected]

45/14/2021


BACKGROUND

INTRODUCTION TO NORDSTROM

Nordstrom is a leading fashion specialty retailer in the United States and Canada offering

a wide variety of quality apparel, shoes, accessories and home décor through multiple channels, enabling

customers to shop anywhere, any time.

• Founded in 1901 by John W. Nordstrom as a small shoe store in downtown Seattle

• By the 1950s, the store held more pairs of shoes than any other store in the country

• Expanded into apparel with the purchase of Best Apparel in 1963

• Nordstrom, Inc. is made up of 5 business units:

1. Full Line Stores (FLS)

2. Rack Stores

3. Nordstrom Product Group (NPG)

4. Nordstrom Direct

5. Nordstrom Credit

55/14/2021


NPG PRIVATE-LABEL BRANDS

INTRODUCTION TO NORDSTROM PRODUCT GROUP

(NPG)

NPG is comprised of brands and support teams who run the day-to-day business of creating Nordstrom’s

own products. This is an evolving list and will be updated on an annual basis.

65/14/2021


SOCIAL RESPONSIBILITY TEAM

INTRODUCTION TO SOCIAL RESPONSIBILITY

All communication should be sent to [email protected] only unless otherwise requested.

Title Name Contact Info.

Project Specialist Kellee Lear [email protected]

Director of Corporate Social Responsibility & Quality Assurance –Nordstrom Product Group

Angela Rhea [email protected]

Sr Customs Compliance Specialist Emili Kishi [email protected]





75/14/2021


AUDIT TYPES

SOCIAL AUDIT PROCEDURE

New Factory Audits: • A new factory audit is a full comprehensive audit that should be conducted within 4 weeks of

receiving pre-payment from the paying entity. Draft finding report must be submitted to the NPG SR team within 24 hours of the audit. Full audit report should be submitted to the NPG SR team within 7 days of the audit

Annual Audits: • An annual audit is a full comprehensive audit; annual audits are scheduled quarterly and must be

completed within the specified 3-month window. Audits should be conducted and reported no later than the last day of each quarter (April 30, July 31, October 31, January 31). Draft finding report must be submitted to the NPG SR team within 24 hours of the audit. Full audit report should be submitted to the NPG SR team within 7 days of the audit

• Paid by the factoryC-TPAT Audit:

• A C-TPAT audit is a security audit that should be scheduled and paid for by the factory at the same time as the social audit if requested.

• C-TPAT audits are added on as the third day to the two-day new factory audit • E-mail violations and forms relating to US and Canada Customs, including C-TPAT audits, directly to

Nordstrom’s Custom Compliance team ([email protected] ) instead of including them in the XML. Custom Compliance should only receive C-TPAT related reports. Social Audit related reports should not be sent to Custom Compliance.

• The Third-Party Monitor (TPM) will cross reference the requested audit location with NPG’s C-TPAT required country list; the TPM will receive this list annually from Customs Compliance

Rush Audits: • A rush audit is a descriptor used to classify an audit that needs to be conducted within a 2-week

window from the date of receiving pre-payment. Draft finding report must be submitted to the NPG SR team within 24 hours of the audit. Full audit report should be submitted to the NPG SR team within 7 days of the audit

Follow -Up Audit: • Follow-up audits are conducted when requested by NPG on a case-by-case basis. Follow-up audits

may be conducted as a Critical Issue Audit or a Comprehensive Re-Audit (Refer to the Follow-Up Audits section for additional information)

Peer Audit Collaboration: • A peer audit is a descriptor used to classify an audit conducted between NPG and one or more peer

companies• All new factory audits and every 3rd annual audit must be conducted by NPG. These audits may be

shared with peers as long as they are shared using the Nordstrom template and are conducted by NPG’s designated TPMs

• Peer audits will not be accepted for new factories • Auditors shall remind the factory the report will be shared with multiple brands• Depending on the requirements of each peer, additional reports may need to generated. This issue

will be discussed on a case-by-case basis

85/14/2021


AUDIT SCHEDULING


Process Responsibility Timing Details

Annual Audit Announcement

NPG ~ February~ May~ August~ November

• TPM will receive annual audit schedules quarterly

• TPM does not schedule annual audits until requested by factory

• TPM will communicate any anticipated difficulties to NPG as soon as possible

New Factory Audit Request

Factory Ongoing • TPM will receive Audit Request Form from factory

Confirmation TPM 2 Business Days • TPM will inform NPG SR and Customs Compliance that the factory has requestedan audit, and the type of audit

• TPM will give NPG 2 business days to put the factory on hold if necessary

• If the TPM has not heard from NPG within 2 business days, TPM should consider audit request confirmed

• If TPM cannot conduct the audit, TPM should inform NPG as soon as possible to discuss next steps

Payment (Factory must pay prior to Audit)

TPM 2 Weeks for New Factories

5 Weeks for Annual Audits

• TPM will invoice the factory for the audit• If factory has not paid TPM within a

reasonable timeframe of audit request (2 weeks for New Factories and 5 weeks for Annual Audits), TPM will contact NPG

Scheduling TPM On-going • Once payment is received TPM will schedule a semi-announced audit (2-week window) with the factory

• NPG reserves the right to schedule random unnounced audits as needed

• TPM will communicate any scheduling difficulties to NPG as soon as possible to allow for additional support

• TPM will remind factory of NPG’s fire drill policy

95/14/2021


PAYMENT INSTRUCTIONS


For those audits or services (e.g., Projects) paid by NPG, submit the invoice by the 5th of the following month (e.g., invoice for February assessments to be submitted by March 5th), send invoice by email to: [email protected]

NordstromP.O. Box 91000

Attention: Accounts Payable / NPG Social Responsibility Seattle, WA 98111

USA

DO1. You may send in any of the following files: PDF, Microsoft Word, Microsoft Excel, and TIFF files as attachments2. You may send one invoice with its backup behind it per attachment (i.e., you can have 1 invoice with multiple

pages, but they need to be included in the same attachment)3. Send backup for an invoice within the invoice attachment. It needs to be behind the invoice within the

attachment not in a separate attachment4. Multiple attachments within one email are allowed. Each attachment will be uploaded as a separate invoice5. Place any routing instructions directly on the invoice

DON’T1. Do not send emails without attachments as they will cause errors and rejects2. Do not send emails with anything attached that you don’t want to create an invoice for. Every attachment will

create an invoice record.3. Do not include barcodes in the attachments as the mailboxes are designed to route the invoices to the correct

queues 4. Do not have any additional attachments on the email (i.e., company logos) as this will cause the email to be

rejected 5. Do not send emails within emails, zip files, files with macros, files that are password protected, or invoices in

the email body (they must be attachments)6. Do not send in invoices captured by a camera7. Do not include any messages in the body of the email including routing instructions or question regarding

payment as these emails are not read

For invoice related questions, please contact [email protected]



105/14/2021


AUDIT COMPONENTS


Auditors: Whenever possible, the audit should be conducted by two individuals (ideally one male and one female) If the factory has less than 50 employees, Nordstrom will approve a one-man day audit. The TPM must inform NPG of all countries in which the auditing firm retains one auditor (or any associated changes in resources) on an annual basis

Sampling Requirements: Scope of employees includes all workers in the facility not just the garment workers (ex: janitorial staff, security staff, etc.) However, contract workers are out of scope .

a. Employee Interviews1. At least 20% of workforce must be interviewed at factories that employ under 100 workers2. At least 20 interviews must be conducted at factories that employ more than100 workers3. If group Interviews are conducted:

1. A combination of one-on-one interviews and group interviews can be used2. Group interviews can account for no more than 50% of interviews3. A total of 25 interviews should be conducted if group interviews are part of the interview

matrix4. If suspicions or concerns are uncovered during the audit, interview additional employees to

determine whether the suspicions or concerns are substantiated. The number of additional interviews to be conducted in such a scenario is determined at the discretion of the auditor. Include all details related to interviews in the audit report. For example:

1. Number of employees interviewed2. Number of employees who reported concerns3. The department in which the interviewed employees work4. The month any noted violations occurred

b. Employee Files1. At least 20% of workforce files must be reviewed at factories that employ under 100 workers2. At least 20 files of workforce must be reviewed at factories that employ more than 100 workers3. If suspicions or concerns are uncovered during the audit, review additional employee files to

determine whether the suspicions or concerns are substantiated. If the suspicions or concerns are substantiated, inquire with management to identify the root cause of the issue. The number of additional records reviewed in such a scenario is to be determined at the discretion of the auditor

c. Hours of Work and Payroll Review1. At least 20 employees’ timecards and payroll records must be reviewed for a minimum of 3 pay

periods2. At least half of the records formally reviewed must belong to workers interviewed 3. The review period should cover the last 12 months4. Skim several timecards/ records in order to check for excessive hours of work5. If excessive hours of work are uncovered during the review, review additional employee timecards

and payroll records to determine the degree and breadth of the violation, and follow-up by inquiring with management to identify the root cause of the issue. The number of additional records reviewed is determined at the discretion of the auditor

115/14/2021


AUDIT COMPONENTS


Photos: Photographs should be taken to support findings. All health and safety findings should be accompanied by a photo that clearly illustrates the violation and the area in which the violation was discovered. The factory’s work environment should also be documented in photographs. See the list of required photos in the Final Report section for additional details

Opening Meeting: Present NPG’s Transparency Letter and Transparency Video to the audience. Highlight that The Nordstrom Partnership Guidelines are intended to protect factories from potential threats to their business based on non-compliance findings. NPG values full transparency and cooperation from factories, and views non-compliance findings as an opportunity for NPG and the factory to work together to continuously improve working conditions

Factory Tour: Fire drill must be conducted, and Fire Evaluation Log completed (Appendix II) unless a fire drill was conducted within the last six months and can be verified. If factory cannot conduct the fire drill due to local law, auditor should inquire as to how often fire drills occur and when the last drill occurred. Auditor should also leave a copy of the Fire Evaluation Log with the factory for them to complete and send to NPG (along with photographic verification) after their next fire drill. If the factory will not allow a fire drill to be conducted during the audit, please note this in the Assessment Summary Report and the Corrective Action Plan

Closing Meeting:a. At the conclusion of the audit, the auditor must review the Draft Findings Report with factory

management, ensuring each finding and the respective target completion dates, are discussed1. Auditor must be careful not to reveal the identity of any workers interviewed

b. Factory management is required to sign the Draft Findings Report1. If the factory refuses to sign the Draft Findings, the auditor shall reiterate the fact that

the management’s signature is intended to be an acknowledgement that the audit was conducted, and the draft findings were discussed with management; the signature does not imply management’s agreement with the findings

2. If factory management refuses to sign the draft findings after the explanation, TPM must alert [email protected]

c. Auditor leaves a hard copy of Draft Findings Report with management; reiterate that this is not the final draft report, and that NPG reserves the right to edit and/or update the CAP upon its review of the Draft Findings Report

1. Auditor shall convey that remediation should not begin until final CAP is received from NPG


125/14/2021


AUDIT REPORTING


Access Denied: If the TPM is denied access to the facility to conduct the audit, an alert is to be sent within 24 hours of the incident to [email protected]

Critical Alerts: Critical Alerts should be sent to NPG contacts ([email protected], [email protected]). These alerts should detail management attitude, factory cooperation/willingness to remediate findings, photographic evidence of findings, and next step recommendations from the TPM for:

a. Zero Tolerances - Critical non-compliance. The TPM should send NPG an alert within 24-hours of uncovering such violations

b. Demands Immediate Action - Critical non-compliance. The TPM should send NPG an alert within 24 hours of uncovering such violations

See Appendix III for more details




135/14/2021


AUDIT REPORTING


Report Observations:a. Auditor should note the supporting details of each finding, including the source of the finding

(e.g., management comments, worker comments, any of the auditors’ visual observations, past history of the factory, etc.)

b. Auditor should report subcontractors noted by the factory; include information on the nature and capacity in which the subcontractors work. [Update Note : Any unauthorized subcontracting for sewing, finishing, and packaging facilities or if the factory states are labels are in that facility should be categorized with a DIA risk rating. All other subcontractors should be listed as a NMI risk rating.]

c. Auditor should report different methods of worker paymentd. Auditor should report the frequency with which workers are paide. Auditor should report other brand names that are viewed on the production floor while

conducting the visual tourf. Auditor should repot the factory’s disciplinary policy

Inconsistent Records:a. Inconsistency (refers to unsatisfactory documentation) is categorized as Needs Major

Improvement. If inconsistencies are noted during the course of an audit through document review, this information should be included as such in the CAP and the leave -behind Draft Findings Report. Issues of inconsistent records/incomplete documents should be captured under Documentation in each affected category

b. Inconsistency can be discussed during the audit in an endeavor to encourage factory management to become transparent. This issue can also be discussed during the closing meeting as an issue cited in the audit. However, if the inconsistencies are discovered through employee interviews only, this information SHOULD NOT BE DISCUSSED WITH MANAGEMENT AT THE CLOSING MEETING as this may implicate the employees who reported the inconsistency.

Rankings:a. See Factory Guide to Implementing the Nordstrom Partnership Guidelines for detailed

breakdown of violation ranking

Draft Findings: a. All audits, regardless of the type, should have a Draft Findings Report. It should be sent directly

by the auditor to [email protected] within 24 hours of the audit execution (Appendix IV) b. Draft Findings should include the signed copy of draft findings without violation ratings; and a

typed copy of the draft findings with ratings and full details on the legal or guideline violation


145/14/2021


AUDIT REPORTING


Quality Assurance:Conduct checks on all reports and documentation prior to submission to NPG. All substantiated violations (not suspicions) listed in the written reports should be included as a violation in the CAP form; the violations should be communicated in clearly understood language

Final Reports: Completed report should be sent to [email protected] within 7 days of audit execution in provided template (Appendix V and VI) and in PDF format to the factory. Final Report must include:

a. Corrective Action Plan (CAP)/XML1. Each finding should be rated per NPG Ratings Levels (ratings should not be shared

with factories in Draft Findings Report). See Partnership Guidelines for further guidance on how to determine violation risk level

2. Cite and summarize each law or Partnership Guideline violation. Any citation that is not linked to a county law violation or Partnership Guidelines violation should be cited as a “recommendation” in the CAP

3. Finding descriptions should detail all applicable supporting information (in addition to the violation) such as who, how, what, where, and why

b. Supplemental Data Sheet (not sent to the factory)1. PDF document that contains a report of all the confidential information, including all

interviews and a full list of inconsistenciesc. Scanned copy of the Signed Draft Findings Reportd. Assessment Summary Report

1. Written assessment summarizing the audit; the summary should focus on the findings, and their respective root causes and recommendations, as well as how many employees are affected by the findings

e. Photo Form1. These images, which should be separate from those in the CAP, should illustrate:

i. Factory Exteriorii. Factory Nameiii. Factory Gateiv. Production Buildingv. Warehousevi. Canteen (if applicable) vii. Cutting Section (if applicable) viii. Sewing Section (if applicable) ix. Pressing Section (if applicable) x. Inspection and Packing Sectionxi. Health and Safety Findings

f. Fire Log


155/14/2021


AUDIT REPORTING


Final Reports (continued):g. XML File

1. The XML is a reporting document that must be populated for each audit and will be sent to the Third-Party Monitor (TPM) as soon as the factory is set up in NPG’s internal system. The XML is typically sent to the TPM before the audit is conducted

2. The XML file can be opened using the “audit_form.v06.06.08.htm” file. NPG will provide this document to the TPM directly. To use this document, open with Internet Explorer, allow blocked content (scripts and ActiveX controls), browse to the XML file then open. Populate and Save to retain all changes.

3. There should be one XML for each audit conducted4. In cases when the XML is provided after the audit has been conducted or, in rare

cases, after the final report was submitted, the TPM must still complete the XML form and return to Nordstrom.

h. XML Instructions1. Open the .xml CAP template provided by NPG2. For each violation identified, select the appropriate category and violation from

the drop-down list3. Enter the relevant violation description, resolution, and legal reference4. Find the NPG requirement in Nordstrom’s Factory Guide to Implementing the

Nordstrom Partnership Guidelines that corresponds to the violation selected in step 2

5. For all violations relating to documentation, refer to the documentation and inspection requirement regardless of category

6. Select the established risk level for the violation in parentheses from the drop-down lists

7. E-mail violations related to US and Canada Customs, including C-TPAT audits, directly to Nordstrom’s Custom Compliance team ([email protected]) instead of including them in the XML. The Custom Compliance team should not receive any components of the Social Audit.


165/14/2021


FOLLOW-UP AUDITS


Follow-up audits will be conducted when requested by NPG on a case-by-case basis. A follow-up audit will be conducted either as a Critical Issue Audit or a Comprehensive Re-Audit.

Critical Issue Audits: a. Critical Issue Audits are used for both new and existing factories. The focus of a critical issue

audit is to ensure Zero Tolerance issues (ZT) are not present in the factory (i.e.: child labor, forced labor, abused workers, etc.)

b. Critical Issue Audits will be paid for either by the factory or by NPG on a case-by-case basis. c. The audit is a maximum of half-day and covers the following four areas:

1. Factory Tour (check for zero tolerance issues; and environmental, health and safety issues)

2. Documentation Review (check for zero tolerance issues)i. At least 10% of the workforce files should be reviewed at factories that

employ under 100 workersii. At least 10 workforce files should be reviewed at factories that employ more

than 100 workers3. Worker and Management Interviews

i. At least 6 one-on-one interviews should be conducted4. Hours of Work and Payroll Review

i. Review records for10 workers; 6 records should be reviewed from the most recent month, and 4 records should be reviewed from strategically selected months based on time since initial assessment

ii. At least half of the records that are formally reviewed must belong to those workers interviewed

iii. Several timecards/records must be skimmed in order to check for excessive hours of work. The number of timecards/records skimmed is determined at the auditor's discretion

175/14/2021


FOLLOW-UP AUDITS


Comprehensive Re-Audit:a. The focus of a re-audit is to ensure findings from the previous audit have been remediatedb. The scope of re-audits will only include newly-found issues or issues from the previous audit

that have not been closed. Re-audits are not intended to re-state issues previously found and closed from the previous audit

c. Comprehensive re-audits will be paid by NPG or factory as determined on a case-by-case basis. d. The re-audit should be 1 day and cover the following four areas:

1. Factory Tour 2. Documentation Review (check for zero tolerance issues)

i. At least 10% of the workforce files should be reviewed at factories that employ under 100 workers

ii. At least 10 workforce files should be reviewed at factories that employ more than 100 workers

3. Worker and Management Interviewsi. At least 6 one-on-one interviews should be conducted

4. Hours of Work and Payroll Reviewi. Review records for10 workers; 6 records should be reviewed from the most

recent month, and 4 records should be reviewed from strategically selected months based on time since initial assessment

ii. At least half of the records that are formally reviewed must belong to those workers interviewed

iii. Several timecards/records must be skimmed in order to check for excessive hours of work. The number of timecards/records skimmed is determined at the auditor's discretion

Follow-Up Assessment Reporting:a. The Corrective Action Plan should state only new non-compliance findings and open non-

compliance findings from the previous audit. However, the Assessment Summary should state the new non-compliance findings and all previous non-compliance findings regardless of their remediation status (i.e., regardless of whether the finding has been closed or is still pending)

b. Findings from a previous audit should be supplemented with a description of the corrective action that was taken by factory management; the action taken should be categorized as “Appropriate Action Taken” or “Appropriate Action NOT taken”

185/14/2021


APPENDIX

195/14/2021


FACTORY GUIDE TO IMPLEMENTING THE NORDSTROMPARTNERSHIP GUIDELINES

APPENDIX I.

Please see separate attachment

205/14/2021


FIRE EVACUATION LOG

APPENDIX II.

215/14/2021


24-HOUR ALERT NOTIFICATION TEMPLATE

APPENDIX III.

Send 24 hour alert notification as high importance

225/14/2021


DRAFT FINDING TEMPLATE

APPENDIX IV.

Digital Draft Finding Reports only needs to be sent to NPG

235/14/2021


FINAL REPORT TEMPLATES

APPENDIX V.

Full Audit Report template to NPG:

Partial Audit Report template to NPG and the Factory/Manufacturer:

All files included in the final report should be titled (Appendix VI):• Factory Name .TPM Name.Document Type.Date audit was conducted (Month.Date.Year).

245/14/2021


FINAL REPORT TEMPLATES

APPENDIX VI.

All files included in the final report should be titled:• Factory Name.TPM Name.Document Abbreviation.Date audit was conducted

(Month.Date.Year).

Use the below chart to determine the correct Document Abbreviation

Document Document Abbreviation

Improvement Plan IP

Signed Improvement Plan SignedIP

Supplemental Data Sheet SDS

Addendum Addendum

Photos Photos

Fire Log FireLog

Assessment Summary AS

Draft Findings DF

Signed Draft Findings SignedDF

XML XML

Performance Calculator (only applies to some TPMs)

PM

responsibility 2021 - nordstrom supplier

Documents