Ethical Audit Report

Transcription

1 Client Anonymous Client AI Service No R-us Supplier Glasses Factory Ltd. Auditor Billy Huang Factory Glasses Factory Ltd. Date 10-11/Jun/2015 Industry Homeware & Gardenware Country China Factory Overall Score 5.8 of a possible 10 Factory Overall Score Your suppliers average Country average Industry average N/A Audit Rating Red Follow up audit required Critical NC Major NC Minor NC Score out of 10 Health & Safety, Hygiene 35% Waste Management 20% Child Labor 15% Hours, Wages & Benefits 20% Labor Practices 10% Total NC: Non-Compliances Valid until: 10-Jun-2016 Page 1 of 79

2 Description of audited plant 1. This full audit was conducted by AsiaInspection. One auditor assessed and verified the facility s operations against the Client's Company Regulation Code, SA8000 Standard and Local Legislations on a sampling basis in two days. At 7:40am, auditors entered the facility then held an opening meeting according to the Client's Company Regulation Code; the facility management Mr. LZ Qing / HR manager, Mr. YY He / Operation major-domo (H&S director), Mr. LW Quan / Standard Manager, Mr. Q Fei / Production Vice GM, Mr. D Ban / HR director and Mr. YD Yan, Ms. KR Ming / Worker representatives were present in the opening meeting and the closing meeting. They stated that they would be cooperative with this audit. 13 employees (5 individual workers and 2 groups of 4 workers each) were randomly selected to participate in the interviews, including 9 males and 4 females. 2. The main products of this factory are glasses, and the main production processes were accessories making - painting printing - assembly - checking packaging finished goods. 3. The factory uses one 6-storey building as production plant, warehouses, offices and showroom, as well as an another 7- storey building as dormitory, kitchen and dining room. Important remarks Part 1 Health, Safety And Hygiene 1. Good condition in dormitory, canteen and kitchen. 2. Good chemical control in the factory. 3. Sufficient fire equipments (except fire smoke detector) were installed in the factory. 4. Weak production facilities, ventilation facilities and pest control facilities management in the factory. 5. Insufficient building control in the factory. 6. Insufficient perfect PPE control for workers (such as no goggles for all polishing workers). 7. Weak electrical system control in the factory. Part 2 Waste Management 1. The factory obtained a valid approval report from local environment protection bureau before beginning operations. 2. Good chemical waste control in the factory. 3. The factory established valid industrial waste water equipments. 4. Documents of waste provided by the factory for audit were insufficient (ie. no inventory records of all hazardous wastes, waste water and air emissions) Part 3 Child Labour 1. All employees personal files with ID cards copies were provided for review. No child labor or young workers were identified during this factory audit. 2. The factory signed labor contracts with all employees and gave a copy to each employee. Part 4 Working Hours, Wages and Benefits 1. Payrolls and attendance records of past 12 months were provided for review. 2. All employees were paid as per local legal requirements. Paid leaves were properly provided. 3. Paid statutory holidays (e.g. maternity leave, annual leave, public holidays, etc) were provided for all employees. 4. No monetary deductions were identified during this factory audit. 5. One day off in seven was guaranteed and maximum working hours is 52 hours per week. But excessive monthly overtime hours was identified. 6. Insufficient social insurance coverage for all employees was identified. Part 5 Labour Practices 1. No violations regarding discrimination/forced labor/prison labor were identified. 2. No monetary deduction as disciplinary practices were identified. Page 2 of 79

3 Home Workers and Subcontractors Is there any home workers used by factory? No If yes, description: Is there any subcontractor used by factory? Yes Description: One subcontractor in electroplating process was used by factory, following is the subcontractor s information: Factory name: Electroplating Factory Ltd. Factory address: Anonymous Location Factory Tel#: Factory Contact Person: Mr. Lv RB / Factory Manager. The subcontractor has been notified and has agreed to comply with Client's Corporate Social Responsibility Code of Conduct and Guidelines, and the factory conducted social audit once per year for the subcontractor. Subcontractor social audit reports Subcontractor SA compliance letter of commitment Page 3 of 79

4 Content : A. OBSERVATION & QUESTIONS BASIC FACTORY PROFILE...19 PART 1 HEALTH & SAFETY, HYGIENE General Building Safety Fire Safety Machines/Installations Hazardous Materials Canteen and Dormitories (if Applicable) PART 2 WASTE MANAGEMENT Legal Authorizations Solid and Hazardous Wastes Waste Water, Air Emissions and Noise Energy and Water reduction PART 3 CHILD LABOUR Child Labour Young Workers PART 4 WORKING HOURS, WAGES AND BENEFITS Working Hours Wages and Benefits PART 5 LABOUR PRACTICES Ability for Workers to be represented towards management Forced Labour Discrimination Disciplinary Practices B. EMPLOYEE S INTERVIEW C. CORRECTIVE ACTION PLAN Page 4 of 79

5 Number of days spent: 2 Auditor 1: Billy Huang Supervisor: Mona Xie Departure time from home / office Arrival time at Factory Departure time from Factory 10-Jun :10 11-Jun :40 7:40 8:00 17:30 17:20 Map Factory Gate Page 5 of 79

6 Factory name Factory address Factory Building of productions and warehouses Factory Building of kitchen and dormitory Production Line-carve Production Line-punching and cutting Page 6 of 79

7 Production Line-welding Production Line-polishing Production Line-roll polishing Production Line-punching Production Line-CNC Production Line-inspection Page 7 of 79

8 Production Line-assembly Production Line-assembly Production Line-polishing Production Line-carve Production Line-welding Production Line-welding Page 8 of 79

9 Production Line-mould making Production Line-laser Production Line-welding Production Line-cutting lens Production Line-glasses frame Production Line-polishing Page 9 of 79

10 Production Line-polishing Production Line-inspection Production Line-welding Production Line-assembly Production Line-repairing Production Line-polishing Page 10 of 79

11 Production Line-assembly and packaging Production Line-packaging Production Line-cutting legs Production Line-small pressing Production Line-carve Production Line-carve Page 11 of 79

12 Production Line-roll polishing Production Line-roll polishing Production Line-assembly Production Line-packaging Production Line-accessories cutting Production Line-welding Page 12 of 79

13 Production Line-roll polishing Production Line-cutting Production Line-cutting Production Line-assembly Production Line-assembly Production Line-packaging Page 13 of 79

14 Production Line-painting Production Line-painting Production Line-painting Production Line-painting Production Line-painting Production Line-oven of painting Page 14 of 79

15 Production Line-washing Production Line-roll polishing Vacancy area during audit Accessories warehouse Packaging materials warehouse Finished products warehouse Page 15 of 79

16 Sample Room Factory Manager Office Office Page 16 of 79

17 Business License Workers on site Page 17 of 79

18 Raw material in the factory Final products Factory plat Production processes chart Page 18 of 79

19 Communication equipment Ethical Audit Report A. Observation & Questions Basic Factory Profile Item Finding Comments 1 Date of formation Nil 2 Legal status Limited Company Nil 3 Location Anonymous Location Nil 4 GPS Location Anonymous Location Nil 5 Area (m2) m2 Nil 6 Owner Mr. CC Guo Nil 7 Total staff in the factory Total office staff 112 Nil 9 Total Management staff 88 Nil 10 Number of workers 794 Nil 11 Factory Manager Mr. YY He Nil 12 Health and Safety Manager Mr. YY He (Factory Major-domo) Nil 13 Main products Glasses Nil 14 Main markets USA and Europe Nil 15 Annual turnover 2014: USD 35 million Nil 16 Business license Date of issue: Business License Number: Expiry date: The factory provided payrolls of May- 17 Payroll records of all employees 2014 to Apr-2015 for all employees for Nil review. 18 Time cards for all employees The factory provided working hour records of 1-May-2014 to 10-Jun-2015 Nil for all employees for review. 19 Subcontractors 1 subcontractor in electroplating process Nil Telephone Nil Fax Nil 20 Computer 100 sets Nil Internet ADSL Nil Homepage Nil Digital camera 15 sets Nil Page 19 of 79

20 Part 1 Health & Safety, Hygiene 1. General Item No Requirement Result Comments 1.1 Is a risk analysis conducted to identify the risks associated with production and is this risk analysis reviewed regularly and updated when necessary? Risk analysis was conducted to identify the risks associated with production and updated regularly. 1.2 Is there a senior management representative for Health & Safety? 1.3 Does the factory arrange health and safety training for new workers and for everyone who changes working roles? 1.4 Does the factory have a working environment that is well-ventilated, comfortable temperature, decent lighting, clean, tidy and enough room for each worker? If there are any possible issues that would impact the health of the worker, please give details. 1.5 Are all serious work-related accidents reported and recorded and corrective actions taken to prevent recurrence of work-related accidents? Major Factory appointed Mr. YY He (Factory Major-domo) as the health & safety representative and health & safety appoint sheet and the certificate for safety production were available during audit. The factory arranged health and safety training for all workers. Factory had a working environment that has good ventilation, comfortable temperature, decent lighting, clean and tidy workspace for each worker. Some fly-killer lamps were installed in dining room. The factory provided Occupational Health examination for all related workers. The factory conducted yearly Occupational Health Assess Report of air and dust quality and noise level in related workshops. Based on factory tour: 1. It was noted that all ventilation facilities (such as exhaust fans, packaged air conditioner and fans) in all workshops were not clean during audit based on factory tour. 2. It was noted that no pest control equipments (such as fly-killer lamps and mousetraps) were installed in all workshops and warehouses, and no records of pest control and clean were maintained as well. Factory established production safety policy in place, and provided work-related accident/injury records for review during audit. 1.6 Is appropriate and adequately maintained personal protective equipment (PPE) provided by the factory? 1.7 Have workers been trained in the use of PPE and are using provided equipment correctly? Major Based on factory tour, cotton mask, carbon mask, cotton glove, rubber glove, goggles, ear plugs and etc. were provided for polishing, painting, welding, printing, chemicals using, punching, cutting and etc. workers in workshops. Based on factory tour, it was noted that all polishing workers did not wear goggles during working hours. The workers had been trained in how to use the PPE and provided training records for review during audit. Page 20 of 79

21 1.8 Do workers have access to an adequate amount of fresh drinking water? The factory provided clean drinking water to workers, and the valid drinking water quality test report was available during audit. 1.9 Are there an adequate number of first aid kits? Appropriate first aid kits (total 26 first aid boxes) were available in the workshops, warehouses, kitchen, dormitories and office Are first aid kits easily accessible and clearly marked and the content within the expiry date, applicable and replaced when used? 1.11 Are adequate workers trained on first aid? Specify the number of trained personnel at the factory First aid kits were easily accessible and clearly marked based on on-site observation. 15 first aiders with valid license were available in the factory, and they were distributed to each floor Are lavatory and or washroom facilities, clean, well maintained, adequate in number, separated by sex, and with relevant privacy? Minor There were 48 toilet stalls for women, 60 stalls for men, separated by gender, the lavatory and washroom facilities were ventilated based on on-site observation. Based on factory tour, it was noted that the toilets were not clean during audit. Picture(s) Appropriate PEE for related workers Appropriate PEE for related workers Page 21 of 79

22 Appropriate PEE for related workers Appropriate PEE for related workers Appropriate PEE for related workers Appropriate PEE for related workers Appropriate PEE for related workers Appropriate PEE for related workers Page 22 of 79

23 Purified drinking water spot Purified drinking water spot First aid kit First aid kit Toilets Washing facility Page 23 of 79

24 Toilets were separate by gender Fly-killer lamp in kitchen and dining room Risk analysis control procedure and reports Drinking water test report First aiders certificates EHS control procedure Page 24 of 79

25 Health & Safety training records for all employees PPE using training records Work-related accidents records Occupation health risk (noise level, air and dust quality) monitoring reports in related workshops (passed) Occupation health risk (noise level, air and dust quality) monitoring reports in related workshops (passed) Workers training plan Page 25 of 79

26 Occupation health examination reports for related workers (passed) Occupation health examination reports for related workers (passed) Occupation health examination reports for related workers (passed) Occupation health examination reports for related workers (passed) Health and Safety control team and meeting records Health and Safety director appointment sheet Page 26 of 79

27 Safety production certificate Toilet not clean No goggle for polishing worker No goggle for polishing worker Ventilation equipment not clean Ventilation equipment not clean Page 27 of 79

28 Item No 2. Building Safety Requirement Result Comments 1.13 Are legal construction certificates (building structure) available? Factory provided buildings construction inspection certificates for review Are all site buildings, including dormitories maintained in good condition without posing a threat to the health of workers? Major Both buildings were maintained regularly, and no structure safety hazards were identified during audit. Based on factory tour: 1. It was noted that the steel bars were installed on 90% windows of first floor in the workshops, warehouses and office. 2. It was noted that the decorative face of the inner walls of 3F to 7F of dormitory building have peeled off. Picture(s) Building construction inspection certificate Building construction inspection certificate Page 28 of 79

29 The decorative face of the walls of 3F to 7F of dormitory building have peeled off The decorative face of the walls of 3F to 7F of dormitory building have peeled off Steel bars were installed on 90% windows of first floor Steel bars were installed on 90% windows of first floor 3. Fire Safety Item No Requirement Result Comments 1.15 Does the factory have adequate unblocked fire exits for every factory workshop/floor? There were at least 2 exits for the workshops, warehouses, dormitory and dining room, and fire exist were open during working Has the factory been certified by the local fire bureau, and made efforts to comply with recommendations from audits? The factory had obtained fire inspection acceptance certifications of both buildings from the local fire bureau Are there an adequate number of fire extinguishers and or other fire extinguishing systems in each building (including the dormitories)? 1.18 Is all fire extinguishing systems (including fire hoses) inspected, maintained properly and ready to use at all times? There was adequate number of fire extinguishers in the building.the factory isntalled 425 fire extinguishers and 77 fire hoses and maintained in good condition. All fire extinguishing systems (including fire hoses, fire alarms, fire extinguishers and etc.) were inspected, and maintained (1 time / month) in good condition Are fire drills conducted regularly? Based on workers interview and documents review, fire drills were conducted twice one year. 2 times drill date was on 20-May-2015 and 20- Nov Are there fire alarms on each floor and adequate emergency lighting above exits and in working order? Major 33 fire alarms were installed in the factory and adequate emergency and exit lightings were above mass exits and maintained in good condition. Based on factory tour, it was noted that no fire exit lightings and emergency lamps were installed on the exits of kitchen and 1F accessories warehouses. Page 29 of 79

30 1.21 Are there fire/evacuation procedures in place with relevant evacuation plans posted in every workshop? Evacuation plans were posted in each floor of workshops, warehouses, dining and dormitories Are smoke detectors/sprinklers installed in all workshops/warehouses? Minor Smoke detectors were installed in dormitory, raw materials and finished products warehouses. Based on factory tour, it was noted that no smoke detectors were installed in all workshops, accessories warehouse, packaging materials warehouse, kitchen, dining and office (but no legal requirement for this type factory). Picture(s) Fire inspection acceptance certification Fire extinguishers Smoke detector in dormitory Smoke detector in finished products warehouse Page 30 of 79

31 Valid label on all extinguishers during audit Fire extinguishers in switch board room Maintenance records for fire equipments Fire hydrant Fire alarm Emergency light and exit sign Page 31 of 79

32 Fire drill Fire drill Evacuation plan Evacuation plan No fire exit lightings and emergency lamps on the exits of kitchen no fire exit lightings and emergency lamps on the exits of 1F accessories warehouses Page 32 of 79

33 Nil No smoke detectors were installed in all workshops, accessories warehouse, packaging materials warehouse, kitchen, dining and office Item No 4. Machines/Installations Requirement Result Comments 1.23 Does the factory have appropriate maintenance/inspections for boilers, elevators, pressure vessels and other equipment per local regulation? 2 sets elevator and 4 sets vessel were used in the factory, and the elevator and vessel operators were with valid inspection reports Is adequate guarding or devices installed for moving/rotating parts of machine, pulleys and belts or any other dangerous parts of machines? 1.25 Are all electricians, welding operators and forklift drivers and other employees who operate special equipment trained and qualified per local regulations? 1.26 Are all electrical wires in the facility adequately protected? Critical Critical Safeguards were installed for 12 out of 26 sets of punching machines and all polishing machines and they were effective during audit based on on-site observation. Based on factory tour: 1. It was noted that no safeguards were installed for 14 sets punching machines (total 26 sets of punching machines were used in punching workshop). 2. It was noted that no safeguards were installed for 1 set of cutting steel machine (1 set of cutting steel machine was used in punching workshop). 3. It was noted that no safeguards were installed for all small pressing machines (total 9 sets of small pressing machines were used in 4F assembly workshop). 4. It was noted that one work flat (1.5F roll polishing workshop) was over 2 meters' high from the ground, but no handrail was installed. Electrician, elevator operators and vessel operators all have certificates. All electrical wires in workshops, warehouses, kitchen and dining room were adequately protected in the facility based on on-site observation during the audit. Page 33 of 79

34 1.27 Are there appropriate warning signs and written instructions for the operators of machinery? Based on factory tour, it was noted that 90% of the circuit breakers in dormitory were exposed and without insulation board. There were appropriate warning signs and written safety operation instructions on the work sites during audit Do operators of machinery get training about safety regulations and operating procedures? Operators of machinery got professional training on safety regulations and operating procedures based on workers interview and training records. Picture(s) Elevator / vessel operators certificates Electrician certificate Elevators inspection report Vessels inspection report Page 34 of 79

35 Workers training records Vessels Elevator Safety cover for circuit breaker Safety cover for circuit breaker Safety cover for circuit breaker Page 35 of 79

36 Safety cover for circuit breaker Written instructions for all machines Warning sign for all machines Safeguard for punching machine Safeguard for polishing machine Safeguard for punching machine Page 36 of 79

37 No safeguards were installed for 14 sets punching machines No safeguards were installed for cutting steel machine No safeguards were installed for all small pressing machines One work flat (1.5F roll polishing workshop) was over 2 meters' high from the ground, but no handrail was installed 90% circuit breakers in dormitory were exposed and without insulation board 90% circuit breakers in dormitory were exposed and without insulation board Page 37 of 79

38 Item No 5. Hazardous Materials Requirement Result Comments 1.29 Are hazardous materials / chemicals properly stored, with relevant container and secondary container? 1.30 Does the factory have MSDS and warning / "No Smoking" signs for each chemical product? All chemical materials (such as acetone, solvent, sulphuric acid reagent, antipyonin, nitron, carbinol, inks, curing agent, thinners and paintings) were stored in separated dedicated room, and the chemicals warehouse room was installed with sufficient ventilation system, and with secondary container for all chemicals during audit. There was MSDS posted on chemicals warehouse and using sites for all chemicals (such as acetone, solvent, sulphuric acid reagent, antipyonin, nitron, carbinol, inks, curing agent, thinners and paintings) Are these materials only accessible to competent employees? 1.32 Are the designated employees properly trained for the handling of these hazardous materials? All chemical materials (such as acetone, solvent, sulphuric acid reagent, antipyonin, nitron, carbinol, inks, curing agent, thinners and paintings) were stored in separated dedicated room with locked and only chemicals management person has key. The operators of chemicals got training for the handling of these hazardous materials based on workers interview and training records. Picture(s) Chemicals in warehouse with 2 nd containers Chemicals in warehouse with 2 nd containers Page 38 of 79

39 Eye washing equipment on site Ventilation fans in chemicals warehouse Explosion-proof light in chemicals warehouse explosion-proof switch in chemicals warehouse Chemicals warehouse with 2 nd container MSDS on site Page 39 of 79

40 Chemicals were used in workshop with 2 nd containers Chemicals were used in workshop with 2 nd containers Chemicals were used in workshop with 2 nd containers Chemicals were used in workshop with 2 nd containers Chemicals were used in workshop with 2 nd containers Chemicals were used in workshop with 2 nd containers Page 40 of 79

41 Chemicals were used in workshop with 2 nd containers Eye washing equipments in workshops Explosion-proof exit light and emergency lamp in chemicals warehouse and chemicals using workshops MSDS on site Chemicals using and MSDS training records Training records for chemicals leakage emergency treatment Page 41 of 79

42 Nil Chemicals list Item No 6. Canteen and Dormitories (if Applicable) Requirement Result Comments 1.33 Are the factory kitchen and canteen clean and hygienic with adequate facilities and the required permits and certificates, including canteen staff health certificate? 1.34 Are workers dormitories separated from production's building and/or warehouse? Major The factory provided valid food permits and 7 canteen stuff health certificates for review during audit. Based on factory tour, it was noted that the food refrigerated cabinet in kitchen was not clean during audit. Based on on-site observation, workers dormitories were separated from production's and warehouse's building Are all exits unblocked and unlocked at all times for emergency evacuation in dormitories? Based on on-site observation, all exits were unblocked at all times for emergency evacuation in dormitories Are workers free to exit & re-enter dormitory freely? Please provide details of any limitations. Based on workers interview, the workers were free to exit & re-enter dormitory Does each worker have adequate living space? Please indicate the space per worker and number of workers per room. Bedrooms were separated by sex. Each bedroom occupied over 20 square meters (not included toilets and balcony), and 4 workers in one bedroom Are the dormitories clean? Are there adequate toilets with hand basins available to workers at adequate distance at dormitory? Are there adequate bathrooms available to workers at dormitory? Are sanitary areas clean and hygienic with available washing facilities? Based on on-site observation: The dormitories were clean. There were adequate toilets with hand basins available to workers at adequate distance at the dormitory. There were adequate bathrooms available to workers at the dormitory. Page 42 of 79

43 Sanitary areas were clean and hygienic with available washing facilities Are there recreation areas for the workers? Recreation areas (such as reading room, billiards room, internet room, KTV, basketball court and etc.) were provided to workers at the dormitory. Picture(s) Food service permits Health certificates Dining room Dining room Page 43 of 79

44 Kitchen dormitory Bedroom First aid box in dormitory Bath room Toilet facilities in dormitory Page 44 of 79

45 Washing facilities in dormitory Evacuation plan in dormitory Fire extinguishers in dormitory Fire hose in dormitory Exits lighting in dormitory Fire alarm in dormitory Page 45 of 79

46 Recreation areas at the dormitory Recreation areas at the dormitory Recreation areas at the dormitory Food refrigerated cabinet in kitchen was not clean Special Remarks on this section 1. Good condition in dormitory, canteen and kitchen. 2. Good chemicals control in the factory. 3. Sufficient fire equipment (except fire smoke detector) was installed in the factory. 4. Weak management of production facilities, ventilation facilities and pest control facilities in the factory. 5. Insufficient perfect building control in the factory. 6. Insufficient PPE control for workers (such as no goggles for all polishing workers). 7. Weak electrical system control in the factory. Critical NC Major NC Minor NC Score / /10 Page 46 of 79

47 Part 2 Waste Management Item No 1. Legal Authorizations Requirement Result Comments 2.1 Does factory have a valid Environmental Impact Assessment (where applicable)? Factory has a valid Environmental Impact Assessment form before starting operations, including Solid Wastes, Hazardous Wastes, Waste Water, Air Emissions and Noise. 2.2 Does factory have a valid Approval Report of Environmental Impact Assessment, or relevant legal document to start operations? 2.3 Does factory maintain a valid Pollutant Discharge Permit or equivalent, where applicable? The factory obtained valid reports of Environmental Impact Assessment for Approval and Acceptance of environmental protection from local Environment Bureau. Valid Pollutant Discharge Permit was provided for review during audit. Picture(s) Environmental Impact Assessment Environmental Impact Assessment Page 47 of 79

48 Environmental Impact Assessment Environmental Impact Assessment Approval Report of Environment Approval Report of Environment Approval Report of Environment Approval Report of Environment Page 48 of 79

49 Pollutant discharge permit Pollutant discharge permit Item No 2. Solid and Hazardous Wastes Requirement Result Comments 2.4 Does factory inventory all solid wastes, including kind, sources, and quantities? The factory provided disposal and inventory records of all solid wastes including kind, sources and quantities for review. 2.5 Does factory adequately separate recyclable from non-recyclable wastes in workshops/warehouses? Major Based on factory tour, no adequately separation of recyclable from non-recyclable wastes was maintained in the factory. 2.6 Can factory prove that they have taken actions to reduce/recycle/re-use solid wastes as much as possible? 2.7 Does factory inventory all hazardous wastes, including kind, sources, and quantities? 2.8 Does factory store hazardous wastes in a relevant ways, closed, with control access and ensure it cannot spill? 2.9 Is factory able to prove that hazardous wastes are transferred to 3rd party with relevant certifications, and keep records of wastes transfer including quantities? Major N/A The factory had taken actions to reduce/recycle/reuse solid wastes as much as possible. It was noted that no inventory records of all hazardous wastes including kind, sources, and quantities were available during audit. Based on factory tour, no hazardous wastes were identified during audit (the factory manager and hazardous wastes management person claimed all hazardous wastes had been transferred by qualified 3rd party). The factory signed hazardous wastes transfer contract with qualified 3rd party with relevant certifications, and kept all records of wastes transfer including kind and quantities. Picture(s) Page 49 of 79

50 No adequately separate recyclable from non-recyclable wastes No adequately separate recyclable from non-recyclable wastes Waste control procedure Solid wastes callback contract and inventory records Hazardous wastes transfer contract with qualified 3rd party Hazardous wastes qualified 3rd party with relevant certifications Page 50 of 79

51 Nil Hazardous wastes were transferred to 3rd party Item No 3. Waste Water, Air Emissions and Noise Requirement Result Comments 2.10 Does factory inventory all waste water, including domestic waste water and industrial waste water, with sources and quantities? 2.11 If applicable, is factory able to demonstrate that waste water is treated adequately before discharge, with relevant equipment and trained staff? Major Based on factory tour, industrial waste water sources were from washing and painting processes, domestic waste water sources were from dormitory and kitchen. The factory did not inventory all waste water, including domestic waste water and industrial waste water with sources and quantities. The factory established industrial waste water treatment equipments, and all industrial waste water was treated before discharge, and provided professional training for related staff Is factory able to demonstrate that waste water at discharge point is meeting the local standards requirement (through lab testing reports)? 2.13 When observing waste water discharge point, does water seem to have color or odor on audit day? 2.14 Does factory inventory all air emissions, with sources and identification of treatment needed? 2.15 Is factory able to demonstrate that air quality at factory's boundaries is meeting the local standards requirement (through lab testing reports)? 2.16 On audit day, is there any smell, fog, or dust observed by auditor on factory's direct environment, linked to factory's activity? Major The factory conducted annual waste water monitoring, and from the monitoring reports, the waste water discharge point was meeting the local standard requirements. Based on on-site observation, no color and odor at waste water discharge point was identified on audit day. Based on factory tour, waste air sources were from kitchen, painting and polishing processes. The factory did not inventory all air emissions, with sources and identification of treatment needed. The factory conducted air quality yearly monitoring, and from the monitoring reports, the factory's boundaries waste air emission was meeting the local standard requirements. On audit day, there was no smell, fog, or dust observed by auditor on factory's direct environment. Page 51 of 79

52 2.17 Is factory able to demonstrate that noise level at factory's boundaries is meeting the local standards requirement (through lab testing reports)? Based on factory tour, the noise sources were from roll polishing, polishing and punching processes. The factory conducted annual noise level monitoring, and from the monitoring reports, the factory's boundaries noise level was meeting the local standard requirements. Picture(s) Factory's boundaries waste air emission monitoring report (passed) Factory's kitchen air emission monitoring report (passed) The waste water discharge point monitoring report (passed) Factory's boundaries noise level monitoring report (passed) Page 52 of 79

53 Waste water treatment equipments Waste water treatment equipments Item No 4. Energy and Water reduction Requirement Result Comments 2.18 Can factory demonstrate that energy use is monitored and that actions have been taken to reduce energy use? Based on factory manager interview and on-site observation, factory took some actions for Saving energy (electricity), but without plan or records Can factory demonstrate that water use is monitored and that actions have been taken to reduce water use? Based on factory manager interview and on-site observation, factory took some actions for Saving water, but without plan or records. Special Remarks on this section 1. The factory obtained a valid approval reports before starting operations from local environment protection bureau. 2. Good chemicals waste control in the factory. 3. The factory established valid industrial waste water. 4. Documents of waste provided by the factory for audit were insufficient (ie. no inventory records of all hazardous wastes, waste water and air emissions) Critical NC Major NC Minor NC Score / /10 Page 53 of 79

54 Part 3 Child Labour Item No 1. Child Labour Requirement Result Comments 3.1 Does the factory comply with the legal minimum age? Please note the age of the youngest worker found. Legal minimum age was 16 years old, and the youngest worker was 18 years old, who born on 7- Mar-1997 and employed on 13-Mar-2015 in the factory. 3.2 Does the factory have effective procedures such as verifying suspected young worker documents to confirm the correct age of the worker at the time of recruitment? 3.3 Does the factory sign contracts with all workers and keep copies or records of ID documents of workers or similar way to check age? 3.4 Does the factory have understood the requirements of laws and regulations on child labour and young workers? If so, is there a written child labor policy? The factory had a hiring procedure and child labor procedure to confirm the correct age of the worker at the time of recruitment. The factory signed labor contracts with all workers and keep copies or records of ID documents of workers. The factory established a valid written child labor and young workers policy according to the requirements of local laws in place, and provided trainings for related workers. 2. Young Workers Item No Requirement Result Comments 3.5 Are young workers exempted from hazardous work? N/A The youngest worker was 18 years old in the factory. 3.6 Are young workers exempted from night shift? N/A The youngest worker was 18 years old in the factory. 3.7 Are young workers exempted from overtime? N/A The youngest worker was 18 years old in the factory. 3.8 Are young workers registered and given annual health checks? N/A The youngest worker was 18 years old in the factory. Picture(s) Page 54 of 79

55 Employees roster Employees file with ID copy Recruitment rules Child labor and Young workers policy Labor contract Labor contract Page 55 of 79

56 Special Remarks on this section 1. All employees personal files with ID cards copies were provided for review. No child labor or young workers were identified during this factory visit. 2. The factory signed labor contracts with all employees and gave a copy to each employee. Critical NC Major NC Minor NC Score / /10 Page 56 of 79

57 Part 4 Working Hours, Wages and Benefits Item No 1. Working Hours Requirement Result Comments 4.1 Do the working hours of individual workers comply with local regulation? Do the working hours exceed the international recommendation of 60 hours / week? 4.2 Do workers have 1 day off within 7 days (or 2 days off within 14 days where applicable)? 4.3 Does the factory record the working hours of individual workers in a reliable manner? 4.4 Are workers given reasonable times for lunch and rest breaks? 4.5 Are workers assigned overtime on a voluntary basis? Minor The factory provided working hour records of 1-May to 10-Jun-2015 for all employees for review. Workers' overtime hours were 0~2 hours per day, 0~12 hours per week, 2-34 hours per month for Feb and Mar But it was noted that 42.5~52 overtime hours per month (>36 hours per month from PRC Labor Law) for May-2014 to Jan-2015, Apr-2015 and May-2015 for 90% production workers were identified based on working hour records. All workers had at least 1 day off within 7 days based on workers interview and working hour records (the factory provided working hour records of 1-May to 10-Jun-2015 for all employees for review). The factory had IC card electronic attendance system to record the working hours (the factory provided working hour records of 1-May-2014 to 10-Jun-2015 for all employees for review). The employees worked from 7:30 to 11:30 and from 13:20 to 17:20 per day based on workers interview and working hour records (110 minutes for lunch and rest, the factory provided working hour records of 1- May-2014 to 10-Jun-2015 for all employees for review). Based on workers interview, the workers were voluntary to overtime. 4.6 Do workers have legal vacation, national holidays and paid leave? All workers had legal vacation, national holidays and paid leave based on workers interview and working hour records (the factory provided working hour records of 1-May-2014 to 10-Jun-2015 for all employees for review). Picture(s) Page 57 of 79

58 Working hour record system Workers paid leave rules Workers swiping IC card Workers swiping IC card Page 58 of 79

59 42.5~52 overtime hours per month for 90% production workers Page 59 of 79

60 42.5~52 overtime hours per month for 90% production workers Page 60 of 79

61 42.5~52 overtime hours per month for 90% production workers Item No 2. Wages and Benefits Requirement Result Comments 4.7 Is there any evidence that the legal minimum wage is not paid for regular working hours? Please specify Local legal minimum wage was RMB1470 per month (equal RMB 8.45 per hour) since 1-Jan-2013, RMB1650 per month (equal RMB 9.48 per hour) since 1-Aug % employees were equal or above minimum wage (actual Min base wage was RMB 1650 per month, the factory provided payrolls of May-2014 to Apr-2015 for all employees for review). 4.8 Are overtime hours paid with legal premium? Overtime hours were paid with legal premium (the factory provided payrolls of May-2014 to Apr-2015 for all employees for review). 150% of normal wages for weekdays 200% of normal wages for rest days 300% of normal wages for holidays Page 61 of 79

62 4.9 Does the factory have written employment conditions on compensation, compensation methods and benefits that is communicated to and understood by all workers? 4.10 Is the payment paid at a reasonable and legal frequency (monthly), and in a form convenient for workers (cash, bank )? 4.11 Do workers receive a pay slip to sign that has information that will allow them to confirm their wages and see all deductions and bonuses? 4.12 Are deductions fair, reasonable and legal (such as social insurance or other tax)? 4.13 Are all workers provided social insurance as per local legal requirements? If no, please specify what the percentage of employees without social insurance scheme is Is maternity and paid leaves paid as per regulations? 4.15 If deductions as disciplinary practices are used, are they falling under regulatory rules? Major The factory have written employment conditions on compensation, and indicated on employee manual to all workers. The payment was paid before 30th of the next month by cash, and based on workers interview, payment was never delayed. The workers received a pay slip to sign to confirm their wages, and based on workers interview, they understood all details (such as base wages, overtime wages, bonuses, deductions and etc.). No any deduction from workers' wages, and factory paid the workers' part of social insurance based on workers interview and payrolls (the factory provided payrolls of May-2014 to Apr-2015 for all employees for review). The factory only provided 5 types social insurance (including retirement insurance, unemployment insurance, maternity insurance and medical insurance) for 210 employees (21.1%), and provided employment injury insurance for all employees (total 994 employees were employed in the factory). Maternity and paid leaves were paid as per regulations (the factory provided payrolls of May to Apr-2015 for all employees for review). Never deductions as disciplinary practices were used based on workers interview and payrolls (the factory provided payrolls of May-2014 to Apr-2015 for all employees for review). Picture(s) Payrolls Payrolls Page 62 of 79

63 Payrolls Local Min wage documents Working time and wages control procedure Social insurance receipts Nil Social insurance name list (Insufficient coverage of social insurance) Page 63 of 79

64 Page 64 of 79

65 Special Remarks on this section 1. Payrolls and attendance records of past 12 months were provided for review. 2. All employees were paid as per local legal requirements and provided paid leaves. 3. The paid statutory holidays (e.g. maternity leave, annual leave, public holidays etc) were provided for all employees. 4. No monetary deductions were identified during this factory visit. 5. One day off in seven was guaranteed and Max 52 hours working per week. But excessive monthly overtime hours was identified. 6. Insufficient social insurance coverage for all employees was identified. Critical NC Major NC Minor NC Score / /10 Page 65 of 79

66 Item No Part 5 Labour Practices 1. Ability for Workers to be represented towards management Requirement Result Comments 6.1 If applicable by Local Law, do workers have the right to join or for trade unions and bargain collectively, without interference of employer? 6.2 If there is no union, are there fair and effective parallel means to resolve grievances of workers (workers representatives )? 6.3 Is there evidence that workers cannot efficiently communicate grievances to management out of direct supervisors? There was a trade union in factory, and the workers have the right to join trade unions without interference of employer. There were 2 worker representatives in factory based on workers interview, and factory provided worker representative control procedure, electing and meeting records for review during audit. There was suggestion box available in factory, and per workers interview, workers were free to express their complaint directly to factory management. Picture(s) Suggestion box Freedom policy Page 66 of 79

67 Worker representative control procedure and electing records Trade unions meeting records Nil Trade unions rules and electing records Item No 2. Forced Labour Requirement Result Comments 5.4 Is there evidence that work is conducted in voluntary basis, with no threat of penalty or sanctions, and the factory do not use forced, bonded or involuntary prison labour? 5.5 Is there evidences that factory do not require workers to lodge deposits or original documents such as work permits/id papers, cards, training certificates, etc.? 5.6 Are workers free to quit their jobs within the legal framework and without debts forcing them to continue working for the factory? 5.7 The factory doesn't withhold any part of workers salary or benefits in order to force such worker to continue working for the factory? 5.8 Are workers allowed to leave the factory compound after work at any time and freely move about during a shift (attend to hygiene etc)? If not, please specify. Employees' work is conducted in voluntary basis, with no threat of penalty or sanctions, and the factory did not use forced, bonded or involuntary prison labour. The factory only kept employees' copy of ID cards, copy of training certificates. The workers were free to quit their jobs within the legal framework. The factory paid salary and allowance to employees each month. The factory didn't withhold any part of workers salary or benefits. All workers were allowed to leave the factory compound after work at any time and freely move during a shift. Picture(s) Page 67 of 79

68 Nil Anti-forced labor policy Item No 5. Discrimination Requirement Result Comments 5.9 Is non-discrimination guarantee in term of employment, promotion, compensation, welfare, dismissal and retirement, etc. within the company based on criteria of race, birth, religion, national or social origins, sex, family responsibilities, marital status, handicap, sexual orientation or political opinions? 5.10 The factory doesn't insist on blood tests, pregnancy or virginity tests before hiring? No discrimination action was found in the factory. The factory did not require blood tests, pregnancy or virginity tests before hiring Is there a written anti-discrimination policy? There was a written anti-discrimination policy. Picture(s) Nil Page 68 of 79

69 Anti-discrimination policy Item No 6. Disciplinary Practices Requirement Result Comments 5.12 Is mental / physical /sexual coercion forbidden and avoided in the factory? If not, please give details of the situation Does the factory have documented disciplinary rules that are clearly communicated to all workers? 5.14 Does the company keep a record of fines/disciplinary actions? 5.15 Are the complaint and appeal methods defined and proved to be efficient? No mental / physical /sexual coercion action were found in the factory The factory had documented disciplinary procedure that was clearly communicated to all workers. No fines/disciplinary actions were found in the factory. The employees could express complaint through suggestion box. Picture(s) Anti-disciplinary policy SA system internal audit reports Page 69 of 79

70 Workers manuals Workers manuals Local laws Local laws Local Laws training records Anti-commercial bribe training records Page 70 of 79

71 Special Remarks on this section 1. No violations about discrimination/forced labor/prison labor were identified. 2. No monetary deduction used as disciplinary practices were identified. Critical NC Major NC Minor NC Score / /10 Page 71 of 79

72 B. Employee s interview Interview Nb Dept. Comments* Polishing Welding Punching Painting Packaging Painting Roll polishing Welding Polishing Washing Assembly CNC Cutting Satisfactory working environment, never delay paid, at least one day off every 7 days, signed labor contract, voluntary overtime, regularly training, appropriate PPE, free charge occupational health examination, free charge dormitory and etc. Satisfactory working environment, never delay paid, at least one day off every 7 days, signed labor contract, voluntary overtime, regularly training, appropriate PPE, free charge occupational health examination, free charge dormitory and etc. Satisfactory working environment, never delay paid, at least one day off every 7 days, signed labor contract, voluntary overtime, regularly training, appropriate PPE, free charge occupational health examination, free charge dormitory and etc. Satisfactory working environment, never delay paid, at least one day off every 7 days, signed labor contract, voluntary overtime, regularly training, appropriate PPE, free charge occupational health examination, free charge dormitory and etc. Satisfactory working environment, never delay paid, at least one day off every 7 days, signed labor contract, voluntary overtime, regularly training, free charge dormitory and etc. Satisfactory working environment, never delay paid, at least one day off every 7 days, signed labor contract, voluntary overtime, regularly training, appropriate PPE, free charge occupational health examination, free charge dormitory and etc. Satisfactory working environment, never delay paid, at least one day off every 7 days, signed labor contract, voluntary overtime, regularly training, appropriate PPE, free charge occupational health examination, free charge dormitory and etc. * Comments: During the interviews, if any data is found that contradicts findings of Audit Part A (such as: fake birth date or fake date of hire), the whole related section in Audit Part A must be scored 0. No details of employees interviews are available in report in order to protect employees confidentiality. It can provided upon request Page 72 of 79

73 C. Corrective Action Plan Item No Result Finding/Violation Corrective Action 1.4 Major Based on factory tour: 1. It was noted that all ventilation facilities (such as exhaust fans, packaged air conditioner and fans) in all workshops were not clean during audit based on factory tour. 2. It was noted that no pest control equipments (such as fly-killer lamps and mousetraps) were installed in all workshops and warehouses, and no records of pest control and clean were maintained also. 1. 工厂的所有通风系统不干净 2. 所有的仓库和车间没有防虫防疫设施 ( 例如灭蝇灯, 捕鼠器等 ), 并且也没有清洁和防虫防疫控制记录 1.6 Major Based on factory tour, it was noted that all polishing workers did not wear goggles during working hours. 巡厂期间, 发现所有的抛光工没有佩戴护 目镜 1.12 Minor Based on factory tour, it was noted that the toilets were not clean during audit. 工厂厕所不干净 1.14 Major Based on factory tour: 1. It was noted that the steel bars were installed on 90% windows of first floor in the workshops, warehouses and office. 2. It was noted that the decorative face of the inner walls of 3F to 7F of dormitory building have peeled off. 1. 发现车间, 仓库, 办公室 1 楼的 90% 窗户安装有永久性的铁栏杆 2. 宿舍内墙 3 到 7 楼的表面装饰面脱 落 1.20 Major Based on factory tour, it was noted that no fire exit lightings and emergency lamps were installed on the exits of kitchen and 1F accessories warehouses. 巡厂期间, 发现厨房和 1 楼辅料仓库没有 安装安全出口指示灯和应急灯 1.22 Minor Based on factory tour, it was noted that no smoke detectors were installed in all workshops, accessories warehouse, packaging materials warehouse, kitchen, dining and office (but no legal requirement for this type factory). 工厂所有车间, 辅料仓库, 包材仓库, 食 1. The factory should clean all ventilation facilities regularly. 2. The factory should install pest control equipments (such as flykiller lamps and mousetraps) in all workshops and warehouses, and keep all clean and pest control records. 1. 工厂应该定期清洁所有通风系统. 2. 工厂应该在所有的仓库和车间安装防虫防疫设施 ( 例如灭蝇灯, 捕鼠器等 ), 并且保存所有的清洁和防虫防疫控制记录 The factory should provide goggles for all polishing workers and well using during working hours. 工厂应该提供护目镜给所有的抛光工并且在工作期间应佩戴 The factory should clean the toilets regularly. 工厂应该定期清洁厕所 1. The factory should remove the steel bars for all windows. 2. The factory should repair the inner wall of dormitory building. 1. 工厂应该拆除所有的窗户永久性的铁栏杆 2. 工厂应该定期维修宿舍内墙装饰面 The factory should install fire exit lightings and emergency lamps were installed on the exits of kitchen and 1F accessories warehouses. 工厂应该在厨房和 1 楼辅料仓库安装安全出口指示灯和应急灯 The factory should install smoke detectors in all workshops, accessories warehouse, packaging materials warehouse, kitchen, dining and office. 工厂应该在所有的车间, 辅料仓库, 包材仓库, 食堂, 餐厅和办公 Factory estimated date for Completion 11-Jul Jul Sep Jul Jul Sep-2015 Page 73 of 79

74 堂, 餐厅和办公室没有安装烟感系统 1.24 Critical Based on factory tour: 1. It was noted that no safeguards were installed for 14sets punching machines (total 26sets punching machines were used in punching workshop). 2. It was noted that no safeguards were installed for 1 set cutting steel machine (1 set cutting steel machine was used in punching workshop). 3. It was noted that no safeguards were installed for all small pressing machines (total 9 sets small pressing machines were used in 4F assembly workshop). 4. It was noted that one work flat (1.5F roll polishing workshop) was over 2 meters high from the ground, but no handrail was installed. 1. 发现 14 台冲压设备没有安装安全防护 设施 2. 发现 1 台切钢板设备没有安装安全防 护设施 3. 发现所有小型冲压设备没有安装安全 防护设施 4. 发现 1.5 楼的高于 2 米的滚筒抛光车间 工作台面无防护栏 1.26 Critical Based on factory tour, it was noted that 90% circuit breakers in dormitory were exposed and without insulation board. 发现宿舍区 90% 电箱裸露没有绝缘隔板 1.33 Major Based on factory tour, it was noted that the food refrigerated cabinet in kitchen was not clean during audit. 发现厨房冷藏柜不干净 2.5 Major Based on factory tour, no adequately separation recyclable from non-recyclable wastes was maintained in the factory. 工厂的可回收和不可回收垃圾没有适当地 区分处理 2.7 Major It was noted that no inventory records of all hazardous wastes including kind, sources, and quantities were available during audit. 工厂没有建立危险化学品包括类型, 来源 和数量台账 2.10 Major The factory did not inventory all waste water, including domestic waste water and industrial waste water with sources and quantities. 工厂没有建立污水包括生活和工业污水来 源和数量台账 室安装烟感系统 1. The factory should install safeguards for all punching machines. 2. The factory should install safeguards for cutting steel machine. 3. The factory should install safeguards for all small pressing machines. 4. The factory should install handrail for 1.5F roll polishing workshop. 1. 工厂应该给 14 台冲压设备安装安全防护设施 2. 工厂应该给 1 台切钢板设备安装安全防护设施 3. 工厂应该给所有小型冲压设备安装安全防护设施 4. 工厂应该给 1.5 楼的高于 2 米的滚筒抛光车间工作台面安装防护栏 The factory should install safety cover and insulation board and locked for all circuit breakers in dormitory. 工厂应该给所有的电箱安装安全外罩和绝缘隔板并且在任何时候都是锁上的 ( 电工维修时除外 ) The factory should clean the food refrigerated cabinet regularly. 工厂应该定期清洁冷藏柜 The factory should adequately separate recyclable from nonrecyclable wastes. 工厂应该适当地区分处理可回收和不可回收垃圾 The factory should inventory records of all hazardous wastes including kind, sources, and quantities. 工厂应该建立危险化学品包括类型, 来源和数量台账 The factory should inventory all waste water, including domestic waste water and industrial waste water with sources and quantities. 工厂应该建立污水包括生活和工业污水来源和数量台账 18-Jun Jun Jul Jul Jul Jul-2015 Page 74 of 79

75 2.14 Major The factory did not inventory all air emissions, with sources and identification of treatment needed. 工厂没有建立废气排放包括来源和需要处理识别台账 4.1 Minor It was noted that 42.5~52 overtime hours per month (>36 hours per month from PRC Labor Law) for May-2014 to Jan-2015, Apr-2015 and May-2015 for 90% production workers were identified based on working hour records. 发现 90% 工厂员工 2014 年 5 月到 2015 年 1 月,4 月和 5 月超时加班是 42.5 小时到 52 小时 ( 超过了当地法律规定的每月最多加 班不超 36 小时的规定 ) 5.7 Major The factory only provided 5 types social insurance (including retirement insurance, unemployment insurance, maternity insurance and medical insurance) for 210 employees (21.1%), and provided employment injury insurance for all employees (total 994 employees were employed in the factory). 工厂仅提供 5 险 ( 包括养老, 医疗, 生育 和失业保险 ) 给 210 个员工, 工伤保险给 所有的员工 The factory should inventory all air emissions, with sources and identification of treatment needed. 工厂应该建立废气排放包括来源和需要处理识别台账 The factory should ensure the monthly overtime not exceed 36 hours for all employees. 工厂应该确保每月的超时加班不超过 36 小时 The factory should provide 5 types insurance for all employees. 工厂应该提供 5 险 ( 包括养老, 医疗, 生育, 失业保险和工伤保险 ) 给所有的员工 11-Jul Sep Jul-2015 Asia Inspection maximum suggested timings for implementation of Corrective Actions are: - 7 Days to submit Action Plan + 30 Days to book a follow-up audit for Critical NCs - Audit date + 30 days for Major NCs - Audit date + 90 days for Minor NCs Page 75 of 79

76 IMPORTANT NOTES THE ABOVE RESULT(S) REFLECT(S) ASIAINSPECTION LIMITED S FINDINGS AT THE TIME AND PLACE OF AUDIT. WITH REGARD TO THE RANDOM SAMPLE CHARACTER OF THE AUDIT, IT SHOULD BE NOTED THAT ADDITIONAL NONCONFORMITIES MAY EXIST, WHICH WERE NOT FOUND DURING THE AUDIT. THE AUDITOR'S FINDINGS DO NOT RELIEVE THE AUDITEE OF ITS RESPONSIBILITY TO ENSURE THAT THE REQUIREMENTS OF THE STANDARD ARE FULFILLED AND CONSTANTLY ADHERED TO. Factory Disclaimer Original signature of the Factory Representative accepting AsiaInspection policy including bribery issues. Page 76 of 79

77 Confirmation of Compliance with AI Code of Conduct Original signature of the Factory Representative confirming that auditor respected AI Code of Conduct. Page 77 of 79

78 Corrective Action Plan Page 78 of 79