In Practice
How we translate our values into practice.
As Penneys has grown, our record on ethical trading has come in for close scrutiny. People question how we can offer good quality fashion at low prices. Our success is based on big volumes, low mark-ups, and minimal advertising. We are a lean business which responds quickly in the marketplace, has short lines of management, good buying and excellent distribution. We believe we are firm but fair with our suppliers, and offer terms that compare favourably with those of our competitors.
In fact, we share more than 95% of our factories with other brands. We also share with our competitors many of the challenges confronting any retailer with a global supply chain. We do not always get things right, nor do we have all the answers. However, we are firmly committed to improving the ethical performance of our business and that of our suppliers and their factories. In the search for solutions to common problems we are keen to work with other parties, including other brands.
As with other retailers, in our experience, the key challenges in terms of endemic non-compliances remain control of working hours, unauthorised sub-contracting, minimum wages and the definition of a living wage. Working conditions are the most common cause of non-compliance but typically the easiest and quickest to address. We believe the root causes of such poor practice in the supply chain are complex.
Penneys has a four-fold strategy for supporting compliance with the Code and live up to our ethical standards:
See also Targets
Ernst & Young Assurance of Information on Penneys' Website
We were asked by the management of Penneys to provide assurance over selected ethical sourcing data presented on the 'in practice' page of their website. The purpose of our assurance engagement was to provide Penneys management with conclusions on the accuracy, completeness and consistency of the data presented in order to enhance confidence in the data and to support improvements in reporting on these matters.
Our activities were designed to provide a limited level of assurance over selected ethical performance data. We tested the following:
1) Has the data been drawn from a complete set of audit reports?
2) Have the guidance and processes for gathering data been applied consistently?
3) Are the claims supported by relevant documentation?
4) Has the data from ethical audit reports been accurately collated at Penneys level?
Our work included: interviewing specialists involved in ethical sourcing at Penneys and representatives from their supply chain auditors; reviewing documentation such as reporting tools and guidelines; and testing Penneys' data collation processes.
Where errors or inconsistencies have been identified during our work they have been amended by Penneys. For our assurance statement which provides our conclusions, please click here.
Ernst & Young LLP
December 2009