Sincerely, Sandy Sherman. Senior Director of Vendor Compliance & Quality Assurance. Destination XL Group, Inc.

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1 2018 social compliance program 2010

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3 2018 d x l g r o u p s o c i a l c o m p l i a n c e p r o g r a m All Destination XL Group, Inc. (DXL Group) vendors are required to take part in the DXL Group social compliance program. The goals of the DXL Group social compliance program are to engage in fostering good citizenship and protect the fundamental human values and rights in the workplace by demonstrating adherence to applicable international standards and local laws. As a partner with DXL Group, we are confident that you share our commitment to protecting worker s rights. By working together, we have no doubt that we can produce our products in a fair and humane working environment. Thank you for your continued partnership and support. Sincerely, Sandy Sherman Senior Director of Vendor Compliance & Quality Assurance Destination XL Group, Inc. 3 Insite Compliance Services

4 d x l g r o u p s o c i a l c o m p l i a n c e p r o g r a m 2018 Contents 1.0 Introduction DXL Group Registration DXL Group Program External Review The Social Compliance Audit... 7 Box Follow-Up Audit Fees Scheduling the Audit Vendor Collaboration Program Alignment Sharing Audits Follow-Up Frequently Asked Questions DXL Group Code of Conduct Compliance with Applicable Laws Overview Audit Process Opening Meeting / Management Interview Facility Tour Confidential Worker Interviews Document Review Closing Meeting Reporting Insite Compliance Services 4

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6 d x l g r o u p s o c i a l c o m p l i a n c e p r o g r a m Introduction This booklet, a supplement to the Destination XL Group, Inc. Vendor Manual, was created to provide vendors with additional information concerning DXL Group s social compliance program. The DXL Group requires that all vendors manufacturing goods for DXL Group or Big and Tall partake in the DXL Group social compliance program. To this end, Destination XL, Inc. (DXL Group) has partnered with Insite Compliance, a third party social compliance service provider, to assist our vendors in meeting the DXL Group social compliance requirements. Insite provides companies with the support, tools, and resources to effectively manage their social compliance programs. For more details on Insite Compliance, please click on this website link: DXL Group Registration As a requirement of the DXL Group social compliance program, all suppliers producing goods for DXL Group and Big and Tall must undergo an annual social compliance audit. Key Requirements: Step1: Vendor must provide the contact information, of the individual(s) responsible for ensuring that the company is meeting the DXL Group social compliance requirements, directly to Miriam Negron, by at m.negron@insitecompliance.com by phone at , Compliance Manager at Insite Compliance for DXL Group. She is the contact for any questions concerning DXL Group social audit program. (See below for more information on Insite). Step 2: (If not already completed) Insite will send you an that will contain two PDF Documents (Vendor / Factory form and Ctpat form), which you will fill out online, and send back to Miriam at m.negron@insitecompliance.com 3.0 DXL Group Program Insite Compliance Services 6

7 2018 d x l g r o u p s o c i a l c o m p l i a n c e p r o g r a m After a factory is registered with the DXL Group, the factory will be contacted by Insite to conduct a social compliance audit. In some cases, an annual audit may be waived based on specific criteria. See Box 1 on the right for this criteria. In addition, DXL Group requires that all vendors currently producing for DXL Group Retail Group register their facility information with Insite Compliance. As a first step towards meeting this requirement, you must provide the contact information for the person at your company who is responsible for ensuring that your company is meeting the DXL Group social compliance requirements. This contact information, as well as any questions concerning DXL Group s social audit program, should be directed to Miriam Negron, DXL Group s compliance manager at Insite. Miriam can be reached by at m.negron@insitecompliance.com or by phone at Please note that we value the partnership we have with our vendors; however, failure to comply with DXL Group s social compliance requirements may result in your status as an active vendor for DXL Group to be placed on hold. 3.1 External Review The Social Compliance Audit We believe that this external review process serves as a credible means in which to demonstrate social accountability which is aligned with industry standards and the standards of the DXL Group Retail Group. The social auditing process consists of two separate visits: the initial audit, and the follow-up audit. The initial audit consists of the following components: a facility tour, document review, Criteria for Waiving an Audit If a supplier has undergone a social compliance audit within the last six months with another assessment firm, DXL Group may, after reviewing the report, accept the report as meeting the supplier s annual audit requirements (see 3.2 for followup audit information). If there are less than 5 employees employed at the facility, DXL Group may allow the annual audit requirements to be waived. Box 1 confidential worker interviews, and an opening and closing meeting with key management. The follow-up audit is a shortened version of the initial audit, focusing on smaller sample sizes and the status of the issues found in the initial audit. For more information on the audit process, please refer to Section 7. Please be advised that unrestricted access to the production facility and applicable records is necessary, as well as the supplier s full cooperation with Insite s compliance specialists during 7 Insite Compliance Services

8 d x l g r o u p s o c i a l c o m p l i a n c e p r o g r a m 2018 the course of the audit. Insite s personnel should be treated as representatives of the DXL Group for the purpose of conducting each audit in a confidential and objective manner. Any restrictions on access to any relevant documentation, workers, or areas of the facility will be considered an access denied and listed on the audit report. 3.2 Follow-Up Audit In most cases, after an annual audit has been performed, DXL Group vendors will also require a follow-up audit to ensure that the issues found within the facility have either been fixed, are being fixed, or have become more serious. The timing of the follow up audit is determined by the type of issue found; for example, a follow up audit may be scheduled within three weeks after the initial audit if lack of proper employee documentation was cited in the corrective action plan, or three months after the initial audit if the factory is required to add an additional emergency exit door. In some cases, scanned documents or photos showing that the violation has been corrected will be accepted in lieu of a follow-up audit. The follow-up visit will be much shorter one day as only the issues found in the initial audit are reviewed. In the event that the initial audit was not performed by us and we received an audit report from another assessment firm (see box 1 for audit waiving requirements), an initial audit will need to be conducted on the facility six months after the date on that audit report, not a follow-up audit. 3.3 Fees The expenses for a standard social compliance (SC) audit are as follows: SC Audit [2 man-days]: USD travel expenses SC Audit + CTPAT Assessment [3 man-days]: USD travel expenses Follow-up SC Audit [1 man-day]: USD travel expenses CTPAT Assessment alone [1 man-day]: USD travel expenses Vendors are not required to conduct pre-assessments, but may choose to do so when evaluating a new supplier). For factories with a thousand workers or more, additional man days are required; if extra days are required, Insite will send you an independent price quote for approval. Travel expenses associated with the audit are charged at cost. If travel costs exceed USD in Asia, USD in Latin America, or USD in North America or EMEA (Europe, the Middle East, and Africa), Insite will send you an independent expense quote for approval prior to conducting the audit. Insite recognizes ongoing efforts to reduce costs, and therefore utilizes every resource to ensure that expenses remain as low as possible. Insite Compliance Services 8

9 2018 d x l g r o u p s o c i a l c o m p l i a n c e p r o g r a m 4.0 Scheduling the Audit Once your production facility is registered in the platform, Insite will contact the facility to schedule the social compliance audit. Audits are typically scheduled to occur two to four weeks after you have entered your facility s information into Insite s CMS. Therefore, it is strongly recommended that you communicate to your suppliers that someone from Insite will be contacting them to schedule an audit. Insite will take into consideration requests by suppliers to postpone an audit due to peak production periods and other valid business reasons. However, requests for a postponement of an audit cannot exceed two weeks without approval from the vendor and DXL Group. Once the audit has been scheduled, you will receive an automatic advising you of the scheduled audit date. DXL Group understands the need for vendors to budget for their audits from both a cost perspective and a resource perspective. Though vendors are required to register all of their facilities in the system, vendors with more than five facilities have the option to request an audit date within the platform (the steps for doing this are listed in the User Manual). Audits will then be scheduled within three weeks of this requested audit date. 5.0 Vendor Collaboration DXL Group recognizes that collaborating on audits can reduce costs and time on vendors, as well as factories, and has therefore asked Insite to develop a process to facilitate the working relationship between vendors seeking to collaborate on audits. 5.1 Program Alignment Vendors with the potential to collaborate together may not know that they can collaborate, or do not have the resources or time to manage such compliance efforts. Insite will provide the guidance and support to all collaborating vendors to ensure a consistent approach throughout the process, and provide the expertise and resources to align these companies in their auditing and follow-up strategies. This can also include other brands or companies working with Insite that are not affiliated with DXL Group, but meet DXL Group s standards of compliance. 5.2 Sharing Audits 9 Insite Compliance Services

10 d x l g r o u p s o c i a l c o m p l i a n c e p r o g r a m 2018 Once shared facilities have been identified, Insite will manage all the steps of the process, identifying any inconsistencies and ensuring that the participating vendors (and the facilities) are notified of the audit approach, scheduled date, and any associated costs. Insite will then conduct the audit and report the results to each vendor and DXL Group, noting that all parties involved have satisfied their audit requirement. Insite will also manage the invoicing of the shared audit, which includes sending the split costs to each party in the collaboration. (Please note that each vendor participating in a shared audit will be charged an additional management fee of USD 50.00). 5.3 Follow-Up One of the benefits of vendor collaboration is the ability to better allocate compliance dollars wards addressing non-compliance issues through the follow-up process. If requested, Insite will not share the follow-up actions of any given vendor in the collaboration group, though we strongly encourage vendor collaboration on follow-up steps, as it is the stage that the collaboration can have the most impact. To facilitate collaboration on follow-up remediation steps, Insite will employ the same process as outlined in sections 5.1 and 5.2 Insite Compliance Services 10

11 2018 d x l g r o u p s o c i a l c o m p l i a n c e p r o g r a m Frequently Asked Questions Q. I submitted a report for an audit that was conducted at one of my facilities within the last six months with the request that the audit be waived, but my request was denied. Why? A. There are many reasons why an audit waiver may be denied. For example, Insite may have the facility categorized as a potential high-risk supplier, or local unrest may be occurring in the city or township where the facility is located that was not occurring at the time of the initial audit, or the initial audit may not have been conducted to DXL Group s standards. In any of these scenarios, Insite would share this information with DXL Group, and DXL Group would decide whether or not an audit can be waived. Q. What happens if the audit is rated Needs Improvement? Does this mean I can no longer use this facility to produce goods for DXL Group? A. The DXL Group social compliance program is not based on a policing model. Rather, it is about encouraging vendors to take ownership of their compliance efforts and take steps towards continuous improvement. Pulling production from a facility does not benefit the workers and may result in the workers finding new employment under worse conditions. It is only in the most critical cases that we would recommend pulling production from a facility. Examples of critical cases would be systemic child labor, slave labor, or critical health and safety issues that the facility is not willing to correct. Q. Why do I still have to fill out a PDF form if a facility has had the audit waived? A. To establish the transparency that the DXL Group social compliance program requires, the Insite CMS system needs to be updated with the most complete and current information regarding its vendor and supplier base. This includes correct vendor and supplier contact information, production information, facility compliance status, and audit reports. Q. I submitted a report for an audit that was conducted at my facility within the last six months, and the request to waive the audit was approved. Why is this facility now required to undergo a follow-up audit? A. If a high risk finding was noted in the initial report, Insite may recommend to DXL Group that a follow-up audit be conducted to verify that the finding has been corrected. 11 Insite Compliance Services

12 d x l g r o u p s o c i a l c o m p l i a n c e p r o g r a m DXL Group Code of Conduct DXL Group Retail Group, Inc. ( DXL Group ) is committed to fostering good corporate citizenship among its business partners. As such, DXL Group requires that its Vendors, including Vendors outside the United States, conform to standards of business practices which are consistent with this principle. More specifically, DXL Group expects its Vendors to comply with the following standards. 6.1 Compliance with Applicable Laws All Vendors shall comply with the legal requirements and standards of their industry under the national laws of the countries in which the Vendors are doing business, including the labor and employment laws of those countries, and any applicable international laws. Should the legal requirements and standards of the industry conflict, Vendors must, at a minimum, be in compliance with the legal requirements and standards of the countries in which the products are manufactured. If, however, the industry standards exceed the country s legal requirements, DXL Group will favor Vendors who meet such industry standards. Vendors shall comply with all requirements of all applicable governmental agencies. 6.2 Employment Standards Child Labor: DXL Group will not tolerate the use of child labor in the manufacture of products it sells. DXL Group will not conduct business with Vendors that utilize in any manner child labor in their contracting, subcontracting or other relationships for the manufacture of their products. No person shall be employed at an age younger than 15 or younger than the age for completing compulsory education in the country of manufacture where such age is higher than 15. Freedom of Association: Vendors must respect the rights of employees to exercise their lawful rights of free association and collective bargaining, and to join or not join the organization of their choice, without penalty or interference. Compensation and Benefits: Vendors shall fairly compensate their employees by providing wages and benefits which are in compliance with the national laws of the countries in which the Vendors are doing business or which are consistent with the prevailing local standards in the countries in which the Vendors are doing business, if the prevailing local standards are higher. Deductions from wages as a disciplinary measure shall not be permitted. Vendors shall only use subcontractors who comply with this standard, if applicable. Forced Labor: All forms of forced, prison or bonded labor will not be tolerated by the DXL Group. Vendors shall maintain employment on a voluntary basis. DXL Group will not accept products Insite Compliance Services 12

13 2018 d x l g r o u p s o c i a l c o m p l i a n c e p r o g r a m from Vendors who utilize in any manner forced labor in the manufacture or in their contracting, subcontracting or other relationships for the manufacture of their products. The DXL Group recognizes that cultural differences exist and different standards apply in various countries, however, we believe that all terms and conditions of employment should be based on an individual's ability to do the job, not on the basis of personal characteristics or beliefs. The DXL Group expects Vendors to have a social and political commitment not to discriminate against their employees in hiring practices or any other term or condition of work, on the basis of race, color, national origin, gender, religion, disability, or other similar factors. Hours of Labor: Vendors shall maintain reasonable employee work hours in compliance with local standards and applicable national laws of the countries in which the Vendors are doing business. In any event, except in extraordinary business circumstances, employees will not work in excess of 60 hours per week, including overtime, and shall be provided with at least one day off for every 7 day period. Overtime shall be voluntary. We will not use Vendors who, on a regularly scheduled basis, require employees to work in excess of the statutory requirements without proper compensation as required by applicable law. Employees should be permitted reasonable days off, breaks, lunch periods and bathroom breaks. Discipline, Harassment or Abuse: Vendors will provide a work environment free of harassment, abuse or corporal punishment in any form. Vendors may not deny workers their rights and dignity. Corporal punishment and physical coercion must not be used. Vendors must not engage in or tolerate sexual harassment, indecent or threatening gestures, abusive tone or language and undesired physical contact. Health and Safety The DXL Group maintains a safe, clean, healthy and productive environment for its employees and expects the same from its Vendors. Vendors shall furnish employees with safe and healthy working conditions. Factories working on DXL Group merchandise shall provide adequate medical facilities, fire exits and safety equipment, well-lighted and comfortable workstations, clean restrooms, and adequate living quarters where necessary. Workers should be adequately trained to perform their jobs safely. Concern for the Environment DXL Group believes it is our role to be a leader in protecting our environment. Vendors must comply with environmental laws, regulations and standards applicable to their industry. We encourage our customers and associates to always Reduce, Reuse, and Recycle. DXL Group encourages our Vendors to reduce excess packaging and to use recycled and non-toxic materials whenever possible. We will favor Vendors who share our commitment to the environment. 13 Insite Compliance Services

14 d x l g r o u p s o c i a l c o m p l i a n c e p r o g r a m 2018 Management Policies and Documentation Notification to Employees: Vendors shall notify employees of the terms of these standards and post the terms in the local language, in a prominent place accessible to all workers. Employment Records: Each Vendor commits to keep and maintain all payroll records in a complete and accurate manner as required by law, and to make such records available to their customers upon request. Implementation Practices: DXL Group s Vendors commit to develop implementation, training, third-party monitoring, and corrective action programs to effectuate the principles set forth in this Code of Conduct. Management System: Each Vendor shall designate one or more of its management staff to be responsible for implementation and monitoring for compliance with the standards laid out in this code of conduct within the manufacturing facilities, and the manufacturing facilities of its subcontractors. Right of Inspection: To further assure proper implementation of and compliance with the standards set forth herein, DXL Group or a third party designated by DXL Group reserves the right to undertake affirmative measures, such as on-site inspection of production facilities, to implement and monitor said standards. Any Vendor who fails or refuses to comply with these standards is subject to immediate cancellation of any and all outstanding orders, refusal or return of any shipment, and termination of its business relationship with DXL Group. 7.0 Overview Audit Process Once the facility information has been sent to Insite, Insite s local office will contact the facility to schedule an announced initial audit. (If any follow-up audits are to be scheduled, they will be unannounced; however, each annual audit will be announced.) The compliance specialist will notify Insite if there are any local issues that might disrupt or delay the audit, which will then be communicated to the vendor and DXL Group. 7.1 Verifying the Scheduled Date At the time of scheduling, the local office will verify the address of the facility, and check to see if any subcontracting is taking place at the facility. If any scheduling problems arise (the facility contact information is incorrect), Insite will contact the vendor. For any follow-up audits that are unannounced, Insite s local office will not contact the facility at all before the audit, but will provide an introduction letter from DXL Group authorizing Insite to conduct the audit upon the compliance specialist s arrival. Please note that if Insite s Compliance Specialists are denied Insite Compliance Services 14

15 2018 d x l g r o u p s o c i a l c o m p l i a n c e p r o g r a m access to the factory, the vendor will be responsible for the cost of the follow-up audit and all related travel expenses. 7.2 Opening Meeting / Management Interview Insite s compliance specialists will greet and introduce themselves to facility management, and then explain every aspect of the social audit to the facility management. The compliance specialist will ask questions to learn more about the general management policies held at the facility, and answer any questions facility management may have. The Insite compliance specialist protocol is to behave respectfully and show business courtesy to all employees of the facility, which includes facility management and production employees. 7.3 Facility Tour Almost all of the audit standards require visual observation of the facility; some standards, by the very nature of what they address, cannot be answered in a definitive and quantifiable manner. In observing the facility for compliance, Insite compliance specialists are instructed to draw upon their common sense and personal experience. The auditing teams will check all areas of the facility without exception; full access to the facility is required. If full access is not allowed, this will be reported as a violation. Examples of what the compliance specialists may look for during a facility tour: Clear, unblocked isles on the production floor Clear evacuation-exit diagrams posted on the walls Well stocked first-aid kits Machine guards and personal protective equipment such as safety glasses 7.4 Confidential Worker Interviews A representative sampling of workers by facility section will be interviewed confidentially (facility management will provide private rooms for the interviews to be conducted). The compliance specialist will start the interview by explaining who they are, the purpose of the interview, and the confidentiality of the interview (they will inform the worker that they do not represent management, and that any information the worker shares with the compliance specialist will not be attributed to the worker). 15 Insite Compliance Services

16 d x l g r o u p s o c i a l c o m p l i a n c e p r o g r a m 2018 At least 20% of the workforce for facilities under 100 workers will be interviewed; for facilities with more than 100 workers, at least 20 interviews will be conducted, and this sample size may increase. Facility management should allocate time accordingly. 7.5 Document Review The facility is to assemble the following documents for the compliance specialist to review (The documents are reviewed in strict confidentiality; reviewing documents is only for the purpose of the social audit]: Facility floor plan Labor contracts Employee handbook (terms and conditions of employment) Wages and hours policies Collective bargaining agreements A list of all the chemicals and solvents used onsite Permits, certificates of operations Government inspection reports such as sanitation, fire safety, structural safety, environmental compliance, etc. Machinery inspection service logs Policies and procedures on use of personal protective equipment Accident injury logs Emergency medical procedures Evacuation plans Timecard or other work-hour support Payroll records for the last six months (i.e. piece rate records) Support for overtime calculations Production records Insite Compliance Services 16

17 2018 d x l g r o u p s o c i a l c o m p l i a n c e p r o g r a m Individual employee files (including employment contracts) Documentation for age verification (national or regional IDs, educational certificates, certificates of good health, etc.) 7.6 Closing Meeting Insite s compliance specialists will sit down with facility management to answer any questions, to review and communicate any issues that have come up during the audit, and to express appreciation to management for allowing them access to their facility. Insite compliance specialists will leave a document called the Corrective Action Report at the facility; this report will include a list of audit findings (if any findings were discovered) and the corresponding corrective actions needed. The audit findings are simply observations gathered for the purpose of improving standards within the facility. Insite and their compliance specialists do not assign penalties or grade the facility, which will be communicated to facility management during the closing meeting. 7.7 Reporting Insite will forward the audit findings report to DXL Group by within five business days of the completion of the audit. The audit findings report will provide enough specific detail for DXL Group to understand the context of the finding, the severity, the frequency, and the location. For each finding there will also be a recommended corrective action step provided by the auditor. Example: We have noted that the facility is not in compliance with local law concerning minimum wage. 50% of the employees were paid wages which were all below the legal minimum wage: as low as RMB per month (RMB per hour) in [Month (s), Year] Facility shall ensure that all employees are paid at least RMB per month (RMB per hour) as required by the PRC Labor Law. The PRC Labor Law (Article 48) requires manufacturers to pay employees at least the recently implemented local minimum wage standard of RMB per month (RMB per hour). The minimum wage standard applies to all employees, including those performing the basic work requirements during the probationary, training or internship period. 17 Insite Compliance Services