Outcome: Successfully withdrawn following the company’s commitment to disclose the progress it has made to curtail human rights violations in its supply chain by the end of the second quarter of 2016.
Whereas: Recent tragedies at apparel and garment factories, such as the Rana Plaza building collapse in Bangladesh that killed over 1,100 people, have raised awareness and increased scrutiny of factory working conditions. This heightened scrutiny brings additional risk for companies that rely on factories in countries with weak enforcement of building and health and safety standards; important risks include litigation, reputational damage, supply chain disruptions and financial impacts.
Nordstrom, like many of its peers, has adopted Partnership Guidelines that outline its requirements for suppliers around employment practices, workers’ rights, environmental standards, work environments and applicable local laws. Nordstrom also conducts audits to ensure verification that its Partnership Guidelines are being met. However, adoption of a supplier code of conduct and basic audits is only the first step in effectively managing human rights risks. Companies must assess risks to shareholder value of human rights practices in their operations and supply chains to translate principles into protective practices.
Nordstrom’s audits reveal the company is at risk when it comes to human rights issues at the factories where it sources Nordstrom Product Group (NPG) products. In fact, 46% of NPG’s volume in 2014 was sourced from factories that Nordstrom categorized as “At-Risk”. This is concerning as Nordstrom defines At-Risk as: “Factory was found to have complex, systemic challenges, as well as a lack of transparency.”
Despite acknowledgement of these risks, Nordstrom’s reported efforts to correct this situation are insufficient. The company states: “we launched program updates and a comprehensive tool kit to help our supplier partners comply with our partnership guidelines.” Beyond this, Nordstrom has not disclosed specific strategies for how it will improve conditions at its factories, nor has it set a target to reduce the percentage of NPG volume sourced from “At-Risk” factories.
The importance of human rights risk assessment is reflected in the United Nations Guiding Principles on Business and Human Rights approved by the UN Human Rights Council in 2011. These Principles state that “business enterprises should carry out human rights due diligence . . . assessing actual and potential human rights impacts, integrating and acting upon the findings, tracking responses, and communicating how impacts are addressed.”
Resolved: Shareholders request Nordstrom issue a report by October 1, 2016, at reasonable cost and omitting proprietary information, on the specific actions it has taken (above and beyond existing reporting) to identify and curtail human rights risk in its supply chain.
Supporting Statement: Items to be covered in the report can include:
Details of the strategies undertaken to reduce the number of At-Risk factories used
Methodology used to track and measure performance
How the results of the company’s human rights audits are incorporated into company policies and decision-making
Disclosure of quantitative human rights key performance data
Disclosure of the name and location of each factory that NPG uses
Consideration of the UN Guiding Principles Reporting Framework to prepare the report