Disclosure Statement on Modern Slavery

In compliance with the regulations of the California Transparency in Supply Chains Act (SB 657) and the UK Modern Slavery Act of 2015, the following document discloses Li & Fung’s policies and actions relating to modern slavery and human trafficking in business and the supply chain.

Modern Slavery

Modern slavery is a broad term used to encompass the offences of slavery, servitude and forced or compulsory labor and human trafficking. The ILO’s Forced Labour Convention (No. 29) of 1930 defines forced labor as, “all work or service which is exacted from any person under the menace of any penalty and for which the said person has not offered himself voluntarily.” It is estimated that 45.8 million people are subject to some form of modern slavery in the world.

The UK Modern Slavery Act was passed into law in March 2015. The law requires companies operating in the United Kingdom to publicly disclose the steps taken to ensure modern slavery and human trafficking are not taking place in any of their supply chains or in any part of their business.

The California Transparency in Supply Chains Act (SB 657) went into effect in January 2012 and requires companies selling or manufacturing goods in California to report on their actions to eradicate slavery and human trafficking in their supply chains.

Li & Fung Disclosure Statement

  1. Li & Fung is a leading consumer goods design, development, sourcing, and logistics company serving major retailers and brands around the world. Li & Fung is a public company. We manage complex and unique supply chains in over 40 economies around the world for our customers. At present we work with 15,000+ suppliers throughout the world, with the largest sourcing countries being China, Vietnam and Bangladesh.
  2. Li & Fung has set forth internal policies to address human trafficking and modern slavery in our supply chain. We have developed and issued a code of conduct to our direct suppliers that states “Forced, bonded, inden tured, slave and prison labor are prohibited.” The code of conduct supporting guidance document details the recruitment processes, financial payments as well as other key identifying factors of modern slavery.Human trafficking is considered a Zero Tolerance issue for Li & Fung. If evidence of forced, bonded, inden tured, slave and/or prison labor is found, Li & Fung reserves the right to examine the specific situation and develop the best possible strategy for resolution. If cases of non-compliance are not resolved within a timely manner, Li & Fung may terminate the business relationship.
  3. At Li & Fung we conduct due diligence to maintain and enforce internal accountability for our direct employees, ensuring that company standards against human rights and modern slavery are met. Given the global nature of our business it is important that we are vigilant to modern slavery.
  4. At Li & Fung we conduct risk assessment in our supply chain. We assess suppliers through onsite audit or desktop review of an industry standard audit report to evaluate their compliance against our and our customers’ standards. Onsite audits are unannounced or announced and are performed by a qualified third party.

According to the Global Slavery Index published in 2016 the countries with the highest numbers of people living in modern slavery are China, India and Pakistan, and people working in garment factories notably in Bangladesh and Vietnam. Moving forward, as Li & Fung is operating in these markets, we will be correlating this information and other respected sources, with our sourcing data to make sure that we target where we have the most influence for change and where we identify risks .

  1. Li & Fung conducts internal training for employees who have responsibility for supply chain management on our code of conduct’s anti-slavery and human trafficking policies to create awareness of the issues and indicators to look for amongst our various sourcing groups. We have been conducting such awareness sessions since 2015 and will continue to do conduct such training for Li & Fung employees across all countries that we source from, with adaptations for local context.
  2. Li & Fung also conducts training for personnel of new factories on our code of conduct’s anti-slavery and human trafficking policies, with a particular focus on mitigating risks. In 2017, we continued to conduct training on “Forced Labor and Human Trafficking Awareness” to suppliers in key production countries.
    In addition, we developed an e-learning program for Li & Fung suppliers. This e-learning provides best practice tips for preventing and remediating forced labor in the manufacturing sector and will allowLi & Fung to deliver forced labor due diligence within our supply chain at broader scale going forward.

    For countries with a higher risk of modern slavery and/or human trafficking, Li & Fung offers additional capacity-building training programs. We guide and support factories to set up an effective infrastructure to prevent, detect and address modern slavery in their operations.

  3. Li & Fung through industry collaboration continues to map trends and drive improvements to add to our antislavery and human trafficking actions.In 2017, we continued active participation in the Mekong Club , a Non-Governmental Organization working to eradicate modern slavery. Through this organization we work in collaboration with other industry brands and retailers to further develop guidelines and tools to address modern slavery issues in our supply chains, including its new Legislative Tool on Modern Slavery. In addition, Li & Fung joined the Ethical Trade Initiative as a Foundational Member, and we are actively engaged in the ETI’s efforts to identify and eradicate forced

    labor. We also fully support our customers’ initiatives and steps to help to eradicate modern slavery.

Li & Fung will continue to evaluate the effectiveness of our human trafficking and slavery eradication efforts,
to look for new industry collaboration and to equip our factories with tools that help them identify and/or prevent modern slavery in our and our customers’ supply chains.

This statement has been approved and is fully supported by the Board of Directors.

William Fung Spencer Fung

Group Chairman Group CEO