Modern Slavery Transparency Statement

MODERN SLAVERY TRANSPARENCY STATEMENT FOR
FISCAL YEAR ENDED JANUARY 31, 2021


This statement is made pursuant to Section 54 of the U.K. Modern Slavery Act and the California Transparency in Supply Chains Act and outlines the efforts Victoria’s Secret & Co. has taken and is continuing to take to ensure that modern slavery is not present in our supply chain.

Victoria’s Secret & Co. has a zero-tolerance policy regarding modern slavery. Modern slavery includes forced, child, prison, indentured, bonded and slave labor as well as labor obtained through human trafficking. Human trafficking is defined as the recruitment, transportation, transfer, harboring or receipt of persons, by means of threat or use of force or other forms of coercion, of abduction, of fraud, of deception, of the abuse of power or of a position of vulnerability or of the giving or receiving of payments or benefits to achieve the consent of a person having control over another person, for the purpose of exploitation.

We are committed to operating ethically and with integrity and transparency in all our business dealings and to putting effective systems and controls in place to safeguard against any form of modern slavery taking place within our supply chain.

STRUCTURE AND SUPPLY CHAIN

Victoria’s Secret and Victoria’s Secret PINK are two powerful brands that are a part of Victoria’s Secret & Co. that inspire and empower our customers. We are the world’s largest specialty retailer offering a wide assortment of modern, fashion-inspired collections including signature bras, panties, lingerie, casual sleepwear and athleisure, as well as award-winning prestige fragrances and body care.

We are committed to providing superior quality merchandise and services to customers. As part of our corporate culture and values, we strongly believe the quality of our merchandise begins with the treatment of the people who create our products.

Victoria’s Secret & Co. only works with suppliers that share our commitment to ethical and responsible business practices. This commitment is embedded in the many measures by which we evaluate supplier partners and has been part of our comprehensive and proprietary approach to how we do business for decades.

Victoria’s Secret & Co. sources goods from approximately 259 factories around the world — the vast majority of which are located in Vietnam, Sri Lanka, Indonesia, India and China.

Suppliers are selected based on their ability and commitment to meet our safety and quality standards as well as follow our strict ethical, labor and environmental standards.

GOVERNANCE AND OVERSIGHT

Victoria’s Secret & Co. is fully committed to ensuring our products are ethically sourced. This commitment starts with our executive leadership team and cascades throughout our organization.

Sourcing Risk Council

Victoria’s Secret & Co. has a Sourcing Risk Council comprised of senior executives from various company divisions and functions that meet quarterly to discuss core business, sourcing, purchasing practices and approve policies as required. Executive representation includes:

  • Communications
  • Finance
  • Government Affairs
  • Independent Production Services (IPS)
  • Legal
  • Logistics
  • Regulatory and Quality Assurance
  • Production and Sourcing

The Council assesses current risks, including geopolitical, social compliance and associated supply risks and sets policies related to responsible sourcing, including locations from which we will source materials or produce goods as reflected in our Sourcing Country Policy The Sourcing Risk Council operates under the guidance and oversight of the Board of Directors’ Audit Committee. The Chair of the Sourcing Risk Council reports to the Audit Committee on a regular basis, and the Audit Committee updates the Board of Directors.

Our Sourcing Risk Council upholds the company’s code of conduct and sourcing standards by helping avoid sourcing in high-risk countries and supporting the development of risk mitigation tools where some level of risk does exist. The Sourcing Country Policy is a primary tool established through the Sourcing Risk Council to ensure the necessary levels of due diligence are completed for all potential sourcing relationships, especially in areas where risks associated with forced labor and human trafficking are reported.

Independent Production Services (IPS)

IPS, a compliance function within Victoria’s Secret & Co., publishes a Compliance Guidebook (Guidebook) and distributes it to all of our suppliers worldwide. The Guidebook is a collection of policies and standards with which our suppliers are expected and legally obligated to comply. The Guidebook provides additional clarification to supplier partners and their factories regarding a broad range of compliance standards and requirements that we are committed to as an enterprise and expect our suppliers to follow. Included in the Guidebook are the Victoria’s Secret & Co. Supplier Code of Conduct, compliance standards related to forced labor and human trafficking, the cotton policy and the conflict minerals policy, among others.

The Guidebook is made available to all suppliers and associates involved in the production and purchasing process and outlines the requirements each must meet to work with Victoria’s Secret & Co.

OUR POLICIES

Victoria’s Secret & Co. has several policies in place which have been approved by the Sourcing Risk Council to ensure that we conduct business in an ethical manner and modern slavery is not present in our supply chain. Our policies are developed in alignment with International Labour Organization (ILO) standards, industry best practices and relevant laws and regulations. These policies address identified risks in our supply chain and include:

  1. Supplier Code of Conduct
    To ensure that our expectations are clear, our standards are specifically outlined in the Victoria’s Secret & Co. Supplier Code of Conduct. These standards and all relevant laws, regulations and conventions in all countries in which the supplier and factory operate must be adhered to and must be communicated to all workers and posted prominently in the workplace in English and the native languages of factory employees who work with our products. IPS publishes the Supplier Code of Conduct in more than 20 languages and provides it to all in-scope factories.
  2. Sourcing Country Policy
    Victoria’s Secret & Co. will not source product from any country prohibited or restricted by law as sanctioned by the U.S. Office of Foreign Assets Control. In addition, some countries with potential geo-political or social risks may pose a risk to our supply chain, and, as a result, require pre-approval from Victoria’s Secret & Co. executive leadership with a plan for compliance oversight before production can begin.

    Any associate who violates this policy is subject to disciplinary action, including, but not limited to, termination of employment.
  3. Foreign Migrant Worker Policy
    The Victoria’s Secret & Co. Supplier Code of Conduct clearly states that prison, indentured, bonded, involuntary or slave labor or labor obtained through human trafficking shall not be used. Experts report that foreign migrant workers who travel across country borders to obtain employment are most vulnerable to modern slavery. Therefore, we have established a policy to ensure that we minimize any risk of modern slavery in our supply chain. The policy requires an executive approval process to use a factory that employs foreign migrant workers. Approval will be contingent on positive results found during a specialized audit developed in accordance with the International Labour Organization’s handbook on Combatting Forced Labour. Factories that employ foreign migrant workers are closely monitored to ensure workers are treated in accordance with the law, no worker pays for their job or incurs a debt related to the recruitment process, workers retain control of their travel documents, workers have full freedom of movement and workers are informed of the basic terms of their employment before leaving their home country.

    Any associate who contracts a factory that uses foreign migrant workers without executive approval is subject to disciplinary action, including, but not limited to, termination of employment.
  4. Cotton Policy
    Victoria’s Secret & Co. is committed to ensuring that modern slavery of any kind is not used in the manufacturing of our products. Because of the reports documenting systemic use of forced labor (including the worst forms of child labor) in the harvest of cotton in certain parts of the world, we have adopted a policy that prohibits the sourcing of cotton in the manufacturing of any of our products until the respective governments in these regions end the practice of forced labor, including child labor, in the cotton sector. These regions are determined through the Sourcing Risk Council process discussed above. Until the elimination of these practices is independently verified, we will maintain this commitment and will collaborate with other stakeholders to raise awareness of this very serious concern and advocate for its elimination.

    In January 2021, we introduced a new cotton policy and required all suppliers to certify compliance with it, which requires cotton fiber used in our products must originate from one of the following countries:

    • Australia
    • Benin
    • Brazil
    • Burkina Faso
    • Egypt
    • India
    • Mali
    • Peru
    • Turkey
    • U.S.A.
    • Vietnam

    In 2021 we began conducting chain of custody audits on cotton products to ensure cotton fiber and cotton yarn is from an approved country in the Cotton Policy.

  5. Conflict Minerals Policy
    Victoria’s Secret & Co. prohibits its suppliers from using conflict minerals which may directly or indirectly finance or benefit armed groups in the Democratic Republic of the Congo and its adjoining countries in accordance with the Dodd-Frank Conflict Minerals Provisions. Conflict Minerals Reports filed by Victoria’s Secret & Co. can be viewed as part of our SEC filings.
  6. Independent Production Services (IPS) Compliance Guidebook
    The IPS Compliance Guidebook is a tool used to communicate policies to our supplier partners that they and their factories are expected and legally obligated to comply with. The IPS Compliance Guidebook lists relevant policies and provides clarification to supplier partners and their factories about the compliance standards and requirements we are committed to as an enterprise and expect our suppliers and their factories to follow. Included in the IPS Compliance Guidebook are the Victoria’s Secret & Co. Supplier Code of Conduct, compliance standards related to modern slavery, our foreign migrant worker policy, our cotton policy and our conflict minerals policy, among others.

CONTRACTUAL OBLIGATIONS

Victoria’s Secret & Co. suppliers are required to sign a Master Sourcing Agreement that explicitly states that the supplier and their factories will comply with all applicable laws and Victoria’s Secret & Co. policies, including but not limited to each of the policies listed above. We require all of our suppliers to certify that they have received, read and understand our no forced labor policy and we conduct regular re-certification processes.

PURCHASING PRACTICES

Victoria’s Secret & Co. realizes that responsible business practices start with partnering with suppliers and factories that have an excellent compliance track record and share our core values. To that end, all of our associates involved in the production and purchasing process must understand the critical role they play in that process. The company is committed to providing these associates with ongoing training and educational opportunities to keep teams vigilant and fully engaged. The company also has an Associate Code of Conduct that outlines our standards and expectations and addresses the consequences of noncompliance.

Associates who influence decisions in Victoria’s Secret & Co. supply chain take a course called “Preventing Modern Slavery in Our Global Supply Chain” to ensure that they are aware of the risks of modern slavery in our supply chain, can recognize the warning signs and know what tools are available to report any concerns of forced labor or human trafficking in the supply chain. The training was developed in alignment with the ILO Indicators of Forced Labour. In the sourcing periods following participation in the awareness training, fewer factories utilizing foreign migrant workers were requested for pre-production authorization. During the last calendar year, there were no sites with foreign migrant workers added for production. Foreign migrant workers continue to account for less than 1% of our overall worker population because of sourcing partners taking an active role in helping screen suppliers for potential indicators of forced labor.

TRACEABILITY AND RISK ASSESSMENT

Traceability

Victoria’s Secret & Co. has mapped its tier 1, tier 2 and tier 3 supply chain for our core apparel products using Sourcemap. Cotton fabric has been traced back to the cotton fiber origin, validating the origin through chain of custody audits to ensure compliance with our Cotton Policy.

The online system that IPS utilizes to manage Victoria’s Secret & Co. social compliance program allows our suppliers, auditors and associates to access critical information such as policies, guidance tools, supplier/factory information, audit reports, corrective action plans and remediation status at any time.

Risk Assessment

We recognize that there are elevated risks of modern slavery in certain countries, factories and product categories. Therefore, IPS conducts continuous risk assessments of all suppliers and factories to prevent involvement in high-risk business ventures. We use resources such as the U.S. State Department’s Trafficking in Persons report and the U.S. Department of Labor’s reports on international child labor and forced labor to determine countries and product categories with heightened risks of human trafficking and forced labor.

We have a detailed risk assessment process to ensure we are working with business partners that are willing and able to comply with our standards.

About the risk assessment process:

  1. An initial supplier verification and risk assessment is conducted before production commences to prevent involvement with high-risk suppliers and to ensure the factory can meet our standards before production can begin.
  2. Once a supplier has passed the risk assessment, the relationship between Victoria’s Secret & Co. and a qualified supplier begins with a written master sourcing agreement wherein the supplier certifies that its factories and any facility that it may contract with will strictly adhere to Victoria’s Secret & Co. Supplier Code of Conduct, including policies and any applicable laws pertaining to slavery and human trafficking. No subcontracting is permitted without prior approval.
  3. Each supplier must agree to allow Victoria’s Secret & Co., or an independent third party hired by Victoria’s Secret & Co., to conduct an audit of their production locations without prior notice. IPS or a third-party auditing firm conducts announced or unannounced audits of each of our approved factories at least annually to ensure compliance with our Supplier Code of Conduct and supply chain standards. We may conduct more frequent reviews of factories located in countries designated as high risk by the U.S. State Department's Trafficking in Persons Report or identified through the company’s annual risk assessment process. Certain exemptions from annual audits may be granted to highly compliant factories with consistent and robust compliance programs.

In 2019, 107 pre-production audits were conducted for new factories, which resulted in eight factories not approved because they did not meet our standards. The approval rate for pre-production audits in 2019 was 93 percent. In 2020, 64 pre-production audits were conducted for new factories, and all factories met our standards. The pre-production audit approval rate for 2020 was 100 percent.

We also conduct additional focused risk assessments on specific commodities, regions and groups such as migrant workers. In addition, all suppliers are required to certify that they have received, read and understand our no forced labor policy.

Vietnam is an example of where risks of forced labor and human trafficking are known to exist. As a risk mitigation tool, Victoria’s Secret & Co. has supported a partnership with the Pacific Links Foundation. The Pacific Links Foundation leads counter-trafficking efforts in areas of highest risk in Vietnam, including industrial parks and along the bordering provinces of Cambodia, China and Laos, where victims are twice as likely to be trafficked than those in developed countries. Victoria’s Secret & Co. established a partnership with the Pacific Links Foundation in 2007, focusing specifically on their scholarship and awareness programs. In addition to supporting the scholarship program, Victoria’s Secret & Co. was the first partnering company to sponsor Pacific Links’ Factory Awareness to Counter Trafficking program (FACT) and continues to actively support its expansion. The FACT program provides awareness and prevention workshops about trafficking among workers, managers and factory owners throughout the supply chain, helping to establish ethical practices in worker recruitment and retention and serving as a source for information and resources.

DUE DILIGENCE

To ensure compliance with our standards, IPS has implemented an internal audit process and is committed to providing our suppliers with opportunities for learning and development. To identify and evaluate the potential risks of modern slavery or violations of other local labor standards and standards that may be unique to Victoria’s Secret & Co. and our business, we conduct our own ongoing, internal verification of our supply chain. The resulting information helps to ensure that our suppliers are in compliance with the Victoria’s Secret & Co. Supplier Code of Conduct.

Monitoring

IPS has been supporting global compliance for more than two decades, enabling improvement in labor standards and workplace conditions, supply chain security, trade compliance and brand protection in our supply chain through monitoring, remediation, capacity building and training.

Our list of qualified suppliers is established and maintained in accordance with specific qualification standards and protocols developed by IPS.

Each supplier must agree to allow IPS, or an independent third party hired by Victoria’s Secret & Co., to conduct an annual audit of the supplier's business without prior notice. Certain exemptions from annual audits have been granted to factories with a record of consistent and rigorous compliance. We may conduct more frequent reviews of factories located in countries designated as high-risk by the U.S. State Department's Trafficking in Persons Report or identified through our annual risk assessment process.

These audits may be announced or unannounced and cover all areas of the Victoria’s Secret & Co. Code of Conduct, including our No Forced Labor policy , as well as all related laws and Victoria’s Secret & Co. policies. The International Labour Organization’s Guiding Principles to Combat Forced Labor were used to develop the applicable Victoria’s Secret & Co. standards.

In 2019, we implemented a new Supplier Ownership program. Under this framework, qualified low-risk suppliers will be exempt from routine audits. Instead, they will provide real-time factory operations and internal social compliance audit reports on a periodic basis. IPS will monitor those reports and follow up on any “red flags” that may indicate a compliance opportunity.

A specialized assessment is conducted for factories that employ foreign migrant workers as experts believe those workers are most at risk for modern slavery.

All factories are required to have a grievance mechanism for workers to file questions or complaints without fear of punishment or reprisal. The factory must adequately demonstrate that a system is available, and workers’ complaints are responded to and recorded timely.

All audited factories are assigned a risk level, and additional follow-up actions are taken according to the level of risk.

ACCOUNTABILITY AND REMEDIATION

Accountability

Victoria’s Secret & Co. maintains policies and procedures for associates and suppliers that govern the consequences of noncompliance with Victoria’s Secret & Co. sourcing and labor standards.

If we find a supplier or factory is not in compliance with our Supplier Code of Conduct or supply chain standards, we will partner with them in an attempt to bring them into compliance. Victoria’s Secret & Co. has a robust remediation system where a corrective action plan (CAP) is automatically created for all non-compliance findings, and suppliers are automatically notified when they need to complete a CAP. It is the supplier’s responsibility to submit all CAPs within 30 days. All corrective actions are expected to be completed within 90 days of receiving notification. All corrective action correspondence and support evidence is thoroughly documented in the system.

If a factory does not make improvements in a timely manner, we have an escalation process in place which includes a warning letter to the supplier, reduction of business or ultimately loss of business. Victoria’s Secret & Co. will not work with suppliers and factories that are unwilling or unable to work with us to achieve our compliance standards. The company also has a more accelerated escalation process to be used if a case of forced labor is suspected or identified so action can be taken immediately.

In many cases, IPS conducts unannounced follow-up visits to the factories to ensure the supplier has implemented all new procedures and processes accordingly.

Remediation

During fiscal 2019, more than 18,937 labor standards and workplace conditions audit findings were evaluated across our supply chain through our standard auditing process, and approximately 9.5 percent of those findings required corrective action. Less than one percent of those were considered major violations; the majority of which concerned unauthorized use of subcontracting. The overwhelming majority of violations were successfully remediated by the factories in partnership with IPS, and those that were not resulted in the factory being removed from the Victoria’s Secret & Co. approved factory list.

In 2020, more than 9,043 labor standards and workplace conditions audit findings were evaluated across our supply chain through our standard auditing process, and approximately 10 percent of those findings required corrective action. Less than one percent of those were considered major violations. The labor standards and workplace conditions audit findings were successfully remediated by the factories in partnership with IPS, and those that were not, resulted in the factory being removed from the Victoria’s Secret & Co. approved factory list.

For major violations, IPS issues a warning letter and, in most cases, it includes a financial penalty. We provide the supplier with the option of waiving the penalty and continuing to work with us but only if they invest the money into building a robust and sustainable compliance program. If the factory agrees, we provide access to a third-party labor standards consultant who works in concert with the factory to identify the root cause of an issue and helps the factory build up their compliance program and management systems to ensure issues do not reoccur.

We have a dedicated corrective action management team that reviews CAP submissions daily. Once evidence has been provided to support full compliance or continuous improvement towards full compliance can be demonstrated, CAP submissions are approved.

TRAINING

As Victoria’s Secret & Co. continues to foster strategic relationships with suppliers, we maintain a commitment to supplier education. We have extensive training programs that include annual global group supplier trainings, one-on-one trainings, online trainings and collaborative efforts to mitigate the risk of modern slavery in our supply chain.

For suppliers, factory management and associates who have direct responsibility for supply chain management, we host annual awareness and training sessions on all compliance standards in multiple countries around the world. The training includes modern slavery awareness as well as steps to mitigate that risk within our supply chain. In 2020, we hosted a virtual training session where various internal subject matter experts presented on the below current key topics:

  • Emerging Forced Labor Legislation
  • Supply Chain Mapping through Sourcemap
  • COVID-19 Impact & Preparedness

The virtual training session was held over two days with 100% of our core and strategic lingerie & apparel suppliers in attendance and 63% of our core accessory & gifting suppliers in attendance. We continue to hold quarterly virtual training sessions.

We also use one‐on‐one training in conjunction with factory monitoring visits and corrective action plans to continuously educate our suppliers and factories on the prevention of modern slavery and reinforce our Supplier Code of Conduct.

Associates who influence decisions in Victoria’s Secret & Co. supply chain take a course called “Preventing Modern Slavery in Our Global Supply Chain” to ensure that they are aware of the risks of modern slavery in our supply chain, can recognize the warning signs and know what tools are available to report any concerns of forced labor or human trafficking in the supply chain. The training was developed in alignment with the ILO Indicators of Forced Labour. In 2021, we are in the process of working towards updating the training and developing a delivery schedule. Additionally, IPS meets with key stakeholders from the Production and Sourcing teams regularly to discuss supply chain risks and supplier and factory compliance as well as to remind them about our policies and standards related to modern slavery.

In addition to the trainings that Victoria’s Secret & Co. and IPS provide and support, the IPS team regularly attends industry events and trainings hosted by organizations such as Worldwide Responsible Accredited Production, Bureau Veritas, Responsible Sourcing Network, Elevate Global Limited, The Mekong Club, Retail Industry Leaders Association, the American Apparel and Footwear Association, National Retail Federation and the U.S. Fashion Industry Association to ensure that the team stays updated on new risks and industry best practices.

PARTNERING FOR IMPROVEMENT

About Our Sourcing and Labor: Building Capacity

We have been actively engaged in the development of initiatives and best practices that enhance the capacity of local governments to improve legal compliance and the capacity of our suppliers to comply with our Supplier Code of Conduct. We have undertaken these initiatives in collaboration or consultation with other leading companies, non-governmental organizations, labor groups, international organizations and multi-stakeholder initiatives.

Stakeholder Engagement

Victoria’s Secret & Co. engages with a broad range of non-governmental organizations, academics and other stakeholders to obtain perspectives and information necessary to manage risks in the countries from which we source. We are members of the Responsible Minerals Initiative (RMI), an industry group that assists member companies like Victoria’s Secret & Co. to investigate and mitigate risks of conflict minerals that may be used in our supply chain. We are members of the United States Fashion Industry Association (USFIA), National Retail Federation (NRF) and the Mekong Club.

Since 2013, Victoria’s Secret & Co. has supported a training project with the Pacific Links Foundation called Factory Awareness to Counter Trafficking (FACT). FACT reduces human trafficking risks by educating factory management and workers in Vietnam about the risks and prevention of human trafficking and working with employers to implement good labor recruitment and retention practices. The Pacific Links Foundation has educated more than 38,000 factory workers and managers in Vietnam since 2013. Victoria’s Secret & Co. continues to support the FACT program annually.

Through the Pacific Links Foundation, Victoria’s Secret & Co. has also sponsored the Girls Empowerment Mekong Scholarships (GEMS) since 2007. This provides girls access to education and life skills development. The girls sponsored are among the most vulnerable: living in trafficking hotspots along the Vietnam-Cambodia border with high risk of dropping out of school.

EFFECTIVENESS

Victoria’s Secret & Co.’s Supplier Code of Conduct, our Ethics Hotline, training and our compliance standards help to prevent the use of modern slavery in our supply chain. Our Master Sourcing Agreement, IPS Compliance Guidebook, due diligence, monitoring, remediation and training ensure that our suppliers are aware of our policies and have the tools to implement our standards in their processes to minimize the risk of modern slavery. We ask our suppliers to continuously make improvements in their compliance performance and educate their factories and subcontractors further up the supply chain.

Victoria’s Secret & Co. is also committed to making continuous improvements in our own compliance standards. If we find deficiencies or gain new insights, we update our policies accordingly and update our training materials to reflect lessons learned and/or align with industry best practices.

COMMITMENTS FOR IMPROVEMENT

In 2021, Victoria’s Secret & Co. plans to take the following actions to improve our efforts to eliminate modern slavery in our supply chain. We caution that any forward-looking statements involve risks and uncertainties and are subject to change.

  • Continue to increase our focus on supply chain traceability further upstream to identify and mitigate modern slavery risks. We have engaged Sourcemap to assist us in formally mapping our supply chain.
  • Continue to enforce the Employer Pays Principle ensuring factories producing for us do not charge recruitment fees to workers or use debt bondage or irregular, delayed, deferred or non-payment of wages.
  • We will continue conducting chain of custody audits on cotton products to ensure cotton fiber and cotton yarn is from an approved country in the Cotton Policy.
  • We will update and relaunch “Preventing Modern Slavery in our Supply Chain” training for all associates responsible for supply chain management to further educate them on how to identify modern slavery, how to mitigate risks and how to immediately report any potential concerns of modern slavery in our supply chain.
  • We will continue collaborating with industry peers, non-governmental organizations and trade organizations to address systemic issues at the root of modern slavery.

APPROVAL FOR THIS STATEMENT

This disclosure statement covers the 2020 fiscal year, and the disclosure was approved by the Victoria’s Secret & Co. Board of Directors on July 16, 2021.

Signed by:

Martin Waters
Chief Executive Officer