New Balance believes in the importance of regular and constructive worker-management dialogue in the workplace. The New Balance Code of Conduct requires suppliers to respect fundamental human rights, including the right of employees to freedom of association and collective bargaining. Where freedom of association and/or the right to collective bargaining is restricted by law, employees shall be free to develop parallel means for independent and free association and collective bargaining. In 2019, around 27% of New Balance suppliers (excluding those located in China and Vietnam) had independent, democratically elected unions.

In Indonesia, New Balance joined the Freedom of Association (FOA) Protocol in 2013, a national-level multi-stakeholder initiative comprised of brands, suppliers, non-governmental organizations (NGOs), trade unions and union federations. New Balance actively participates in the Protocol National Committee meetings where current challenges and opportunities related to industrial relations in Indonesia have been discussed. In 2018, the Protocol completed a supplier survey on Protocol implementation and achievements to date. The survey returned positive and constructive feedback regarding the protocol, Collective Bargaining Agreement (CBA) negotiations and workers’ understanding of FOA. The feedback received is being incorporated into the protocol.

In countries like Vietnam and Jordan, which have state-sponsored unions, we encourage suppliers to work with the ILO/IFC Better Work program to establish Performance Improvement Consultative Committees (PICCs), which are comprised of worker representatives and factory management. The role of the PICC in the workplace is to serve as an established channel for raising workers’ concerns to factory management as well as to discuss the remediation process for compliance audit findings. During the establishment of PICCs, workers also receive training through Better Work on FOA rights and principles.

Better Work Jordan. ©Better Work, ILO/IFC

In China, which also has a state-sponsored union, New Balance assisted one of our former footwear suppliers to pioneer the democratic election of union representatives in 2012-2013, when regional regulations changed to encourage the direct election of worker representatives. More recently, in 2018, New Balance launched a workplace cooperation project with six suppliers in China to provide training for suppliers to improve industrial relations and workplace communication. Establishing effective worker-management dialogue was one of the most common needs raised by workers in workplace surveys. The project also interested factory management because of the potential to raise worker satisfaction and more efficiently resolve problems in the factory. New Balance worked with a third-party implementing partner who helped the factories to improve their understanding of worker engagement and establish workplace cooperation committees comprised of worker representatives elected by their peers and factory management. The program helped to evaluate the effectiveness of existing grievance mechanisms and communication within the factories, and to identify and solve problems raised by workers ranging from production challenges to canteen improvements. In one factory, workers successfully negotiated for a higher piece rate for a complex style.

Learnings from this program helped to inform of the development of the workplace dialogue module of our Beyond Compliance program. For more information, see Beyond Compliance in our Working with Suppliers section.

The New Balance Code of Conduct requires suppliers to develop and implement effective mechanisms to resolve workplace disputes and employee grievances. Suppliers may not retaliate against workers who voice concerns. Suppliers must also protect worker confidentiality if requested. New Balance assesses the availability and functionality of local grievance mechanisms as part of our regular audits, both by reviewing grievances reported as well as interviewing workers about their access to and understanding of a supplier’s grievance process.

Ideally, grievances should be raised and addressed appropriately within the workplace. That said, New Balance seeks to ensure that any worker or third party may contact New Balance directly if needed through the email address (CSR@newbalance.com) printed on the New Balance Code of Conduct. In addition to contacting New Balance, concerned parties can also reach out directly to our Compliance team during audits or other factory visits or use third-party grievance mechanisms, such as the Fair Labor Association’s third-party complaint mechanism.

GRIEVANCE MANAGEMENT PROCESS

If and when the New Balance Compliance team receives an external complaint or concern, whether via email, phone call, letter or from an in-person meeting during an audit, we evaluate the communication to determine whether it is a grievance related to social or environmental violations by New Balance or a supplier, licensee or contractor working with New Balance. The grievance may come from a worker, union representative, supplier, or any third party or civil society organization. If the reported issue is more of a question or request for clarification and does not rise to the level of a grievance, we will record it and then forward to the relevant department or party to review and respond.

If determined to be a grievance, we will evaluate its severity based on the level of impact and type of issue reported and forward to the appropriate regional or country compliance manager to investigate the issue as necessary. High-severity issues are reported to the head of Global Compliance and tracked from the New Balance corporate office. The assigned manager at the country or regional level will implement and monitor a resolution, working with the supplier and all affected parties. High-severity issues are targeted to be resolved within no more than 30 days (and potentially even sooner for the most serious cases), and medium or low issues within 45 days. The complainant(s) will receive a final response in writing from New Balance or via a documented in-person meeting. If the complainant does not accept or agree with the resolution, the complainant can file a complaint again or contact a third-party organization, such as a local civil society organization, the Fair Labor Association, etc.

LOCAL WORKER HOTLINES

Grievance mechanisms are most effective when they are localized and easily accessible to workers. New Balance works with third-party service providers in China, Vietnam and Indonesia to implement locally-based worker hotlines in supplier facilities in these countries, which represent the majority of our sourcing volume. The local hotline providers train the workers on the hotline system and maintain multiple channels, such as phone, text and mobile apps, for reporting grievances as well as raising concerns or asking questions. Factories are also required to train workers on grievance mechanisms and publish the hotline access numbers for workers throughout their facilities. The third-party providers receive the questions that come in and, as appropriate, refer them back to the factory for resolution. For high-risk issues, New Balance is informed immediately and, depending on the nature of the grievance, we may also conduct our own investigation to determine how best to address the issue.

2018 ISSUES REPORTED

In 2018, workers initiated more than 4,000 enquiries in China, Vietnam and Indonesia through the third-party channels. The vast majority who contacted the hotline were seeking assistance on personal issues or had basic questions related to working hours, factory management, payment of wages and benefits, or employment contracts. Of the total enquires received in 2018, only seven were classified as serious. Two were related to wages and benefits concerns, four were related to working hour violations and forced overtime, and one was related to unauthorized subcontracting. All of these grievances have been closed and remedial actions have been verified.

New Balance believes, and research suggests, that good working conditions lead to higher productivity in factories*. To understand worker needs and priorities more clearly, New Balance has facilitated a series of workplace surveys. In 2016-2018, we conducted surveys at eight factories in China, Vietnam and Indonesia. Through the surveys, workers are empowered to voice confidentially the workplace issues that matter most to them. Participating suppliers receive the survey results in an aggregated report highlighting strengths and weaknesses and are encouraged to use the information to prioritize investments in training and communication.

The surveys have revealed interesting findings. For example, at one factory in China, the survey demonstrated an awareness gap between workers and supervisors around production targets. While supervisors and factory management believed everyone understood the production targets, only 29% of workers said they understood them. Surprised, factory management immediately took steps to clarify the targets, which has since improved workplace relations on the production floor and increased production efficiencies.

In China, the top priorities for workers surveyed included improving communication between supervisors and workers, female worker empowerment (such as more opportunities for career advancement, understanding their rights, and work-life balance) and programs for children of workers who do not live with their parents who work away from home. In Indonesia, 80% of workers indicated that they felt comfortable speaking up about an issue, problem or suggestion, and over half of the workers surveyed felt that their feedback would be taken seriously by management. However, a third of workers reported experiencing or witnessing cases of supervisors yelling. In Vietnam, 90% of supervisors cited training workers to be the most challenging aspect of their job, and more than half of workers felt that additional support is necessary to improve productivity.

This information has helped New Balance discuss priority issues with suppliers and assess ways to improve problem solving, workplace cooperation and skills development.

In late 2017, New Balance joined a group of apparel, footwear and retail brands to exchange information and insights about worker engagement and worker well-being programs, and explore opportunities for alignment, coordination and enhanced impact in the future. Through this group, we are working to establish a set of worker engagement principles to help guide our work and collaboration in this area.

Our Commitment

New Balance is committed to ensuring that the people who make our products are treated with dignity and respect. Our commitment includes fair compensation, the principle that workers are entitled to remuneration for work during a regular work week that allows them to meet their basic needs and provides for some discretionary income.

As stated in our Code of Conduct, New Balance suppliers are required to pay at least the minimum wage or the industry prevailing wage, whichever is higher, and all legally mandated benefits. Suppliers are also prohibited from utilizing temporary work arrangements where the sole purpose is to avoid payment of legal benefits.

In cases where workers are unable to meet their basic needs and take home some discretionary income in a regular work week, New Balance is committed to working with suppliers and external stakeholders to find practical ways in which fairer compensation can be progressively realized. We recognize that compensation is a complex issue involving macro- and micro-economics, social and cultural norms and political priorities. We are engaging with workers, factories and civil society to tackle this issue from a variety of angles, including creating a working environment that enables constructive worker-management dialogue around wages, promoting effective legal wage-setting mechanisms, considering public policy advocacy and exploring improvements to factory efficiency and productivity during the regular work week through value-added manufacturing and skills training.

Our Work

Central to New Balance’s approach to fair compensation has been our work with the Fair Labor Association (FLA). In 2015, the FLA launched a strategy on fair compensation that began the development of the FLA’s Fair Compensation Dashboard and wage data collection tools. The tools enable us to benchmark current wage levels, understand high-risk compensation issues and compare compensation across countries, factories and against benchmarks like poverty lines and living wage estimates. New Balance has utilized FLA’s fair compensation tools and research in our wage benchmarking, strategic planning and measurement of progress.

Since 2016, New Balance has collected wage data from more than 30 suppliers, representing about 20% of our global supply chain. Analyzing this wage data, drawn from suppliers across 10 different countries, helped us develop our fair compensation blueprint, a roadmap for meeting our commitment to fair compensation. In addition to analyzing wage data, we considered factors like country risk, potential impact, sourcing strategy and supplier relationships in setting our fair compensation direction and goals. Developing the fair compensation blueprint was a consultative process involving internal stakeholders including our Costing and Sourcing teams, and external stakeholders, namely the FLA. In 2020, we adopted a three-part approach to demonstrating progress toward achieving fair compensation at strategic and high-risk country suppliers that is outlined in our blueprint:

1. The foundation of our approach is to ensure minimum legal compliance at all suppliers. We track, monitor, and remediate high-risk and zero tolerance wage and benefits issues through our basic compliance program and quarterly wage and benefits scorecard.
2. To maximize impact, we chose to focus our efforts on supporting strategic footwear suppliers located in Vietnam in working toward the Global Living Wage Coalition’s (GLWC) Living Wage Estimate where estimates exist. To date, we have engaged seven of eight targeted suppliers in fair compensation discussions.
3. In countries where wages may be insufficient to meet workers’ basic needs, we are progressively collecting and analyzing supplier wage data to better assess the risk in our supply chain. Based on these findings, we will continue to inform our strategy and areas of priority for supplier engagement and industry collaboration.

In 2020, New Balance identified and resolved two zero-tolerance wage violations at suppliers in China. One supplier failed to pay two workers the legal minimum hourly wage due to use of a piece-rate system. Another supplier underpaid two workers, failing to meet the legal minimum wage at the daily rate because of misunderstanding of local minimum wage requirements. Our team worked with management at both suppliers to ensure they paid workers the correct wages owed, that regulations were understood, and systems were put in place to prevent inaccurate payment or underpayment of wages in the future.

In addition to the work that we are doing with suppliers to remediate violations, benchmark wages and build action plans, there are other efforts underway that complement or contribute to fair compensation progress. Promoting worker dialogue and supporting education and training programs for personal and career development are two critical components of our work. We are also working with our Costing and Sourcing teams to assess and strengthen purchasing practices and improve the way we work with suppliers to create a business environment that promotes fair compensation.

New Balance expects suppliers to maintain the highest standards of workplace health and safety, based on the US Occupational Safety and Health Act (OSHA) standards or equivalent international standards, combined with local laws and regulations.

Our audit assesses more than 60 different measures related to health and safety. Some of these include: structural safety and building permits, fire safety and prevention systems, use of personal protective equipment, machinery and electrical safety, injury prevention and first aid, working conditions (including indoor air quality, ergonomics and cleanliness), chemical management and conditions in the factory canteen and dormitories.

New Balance encourages factories to develop policies and management systems to ensure health and safety standards are met on the factory floor every day. Management systems should include procedures for communicating standards and training employees to identify and deal with workplace hazards, reporting systems to manage problems as they arise, and methods for keeping up-to-date on best practices for minimizing the hazards inherent in the factory’s specific manufacturing processes.

FIRE SAFETY

New Balance takes fire safety very seriously in our supply chain. Fires can result in property loss, business interruption and, in the worst cases, injury or loss of life. As part of our supplier compliance audit process, we conduct annual inspections of supplier factories for fire hazards and other safety concerns. Our auditors check that factory buildings are safe for occupancy, have functional fire alarms and extinguishing equipment and maintain unobstructed exits and evacuation paths. They also assess factories’ fire readiness, making sure staff is trained on basic fire safety measures, including how and where to evacuate, whom to contact in an emergency and how to operate extinguishers. To further emphasize the importance of fire safety and to incentivize best practices across our supply chain, fire safety is also a focus area within our Beyond Compliance program.

Fires in factory settings can often be caused by unsafe electrical systems. Compliance auditors do not typically have the skills and equipment to assess non-visual electrical fire risks. In 2018, New Balance launched an electrical safety audit program in Vietnam to assess electrical system safety conditions and identify risks. Working with a qualified third party, certified professionals conducted electrical audits in Vietnam Tier One footwear suppliers. Out of all the points inspected in the audits, the accessors found nearly 20% to be critical or high-risk findings. As of mid-2019, 100% of the critical issues and over 60% of the high-risk issues have been resolved by suppliers participating in the program. The program was expanded in 2019 to cover footwear suppliers in Indonesia and China.

CHEMICAL SAFETY

New Balance strives to eliminate and minimize the use of hazardous chemicals in manufacturing. Where hazardous chemicals are necessary and no alternative exists, New Balance works with suppliers to protect the health of workers through responsible chemical management practices. Chemicals that are known to be toxic, corrosive, flammable, reactive, or pose other potential risks to human health must be carefully managed.

The New Balance Chemical Management program requires:
• Knowing the risk – during factory audits, New Balance verifies that all chemicals used on factory premises adhere to local laws and New Balance’s Restricted Substances Manual (RSM), which includes a list of chemicals prohibited from use in manufacturing. Suppliers are required to maintain updated Chemical Inventory Lists (CIL) and all necessary chemical legal registrations and permits. Our auditors review the CIL as well as the Material Safety Data Sheets (MSDS) that specify handling and storage instructions, hazards and safety information for each chemical. We confirm that MSDSs are available in local languages to workers in the areas where those chemicals are used or stored.
• Taking precautions – in factories where potentially harmful chemicals are used, suppliers are required to maintain eye wash stations and showers so that effects of any accidental exposure can be quickly countered. Suppliers must store chemicals in a well-ventilated, temperature-controlled space and ensure that any necessary personal protective equipment is available to workers who come into contact with chemicals.
• Remediation - when a prohibited chemical is found in a factory, or when legal or regulatory violations are found related to the storage and handling of chemicals, New Balance works with suppliers to document the violation and make the changes necessary to align supplier practices with New Balance’s chemical management standards and local law. Remediation may include removing a prohibited chemical and substituting a new alternative in a manufacturing process, or improving engineering controls and implementing safer work practices to address risks posed by authorized chemical use.

Click here for more information on New Balance Restricted Substances and Product Chemistry.

New Balance seeks to invest in programs that benefit people both in the workplace and beyond. Such programs focus on topics ranging from worker health and education to ways to balance the demands of work and home life. In addition to having a positive impact on workers’ lives and local communities, these programs help retain a skilled workforce and increase worker satisfaction.

We recognize the importance of programs that specifically address the needs of women, given that women comprise the majority of the workforce in the global footwear and apparel industry. In many developing countries, women have lower education levels than men and many also lack basic knowledge related to personal health and finances. Furthermore, we believe – and research supports – that investing in women is also an investment in the wellbeing of children, families and communities.

WOMEN'S HEALTH

Women make up over 80% of the workforce at our footwear supplier factories, and we are collaborating with industry-leading programs to support implementation of the United Nations (UN) Sustainable Development Goals, including Goal #3 on Good Health and Well Being and Goal #5 on Gender Equality.

In 2019 New Balance launched the P.A.C.E. program at two supplier footwear factories in Vietnam employing more than 15,000 women. The P.A.C.E. program began in 2007 to support Gap Inc.’s commitment to help transform the lives of one million women and girls by 2022 and operates in 16 countries.

The P.A.C.E. program has demonstrated that investing in women’s education not only brings benefits to workers, but also benefits businesses through higher retention and productivity levels. Participating workers take courses in effective communication, problem solving, time and stress management, financial and legal literacy, and general and reproductive health, among other topics. After the initial launch, we plan to grow training and education activities for the women workers in the supply chain each year.

In March of 2019, New Balance and one of our footwear suppliers in Vietnam completed implementation of the HERHealth program in partnership with BSR and LIFE Centre. Through the program, 30 women at the factory attended paid training to become Peer Health Educators, who then trained other women in the factory on important health-related topics and how to access available health services. During the approximately two-year period, the program reached an estimated 2,000 female workers.

Participating workers surveyed at the start and end of the program showed improved knowledge on nutrition, reproductive health, pre- and post-natal care and the importance of ergonomics and stretching in the workplace. Workers also adopted healthier behaviors in these areas. Notably, the factory reported decreased sick leave during the final six months of the program, from 1.7 days to 1.02 days. While this program has ended, the factory remains committed to empowering workers to lead healthy lives.

CHILDCARE

Finding quality and affordable childcare is a challenge for working families all around the world. In Central America, New Balance has been working through the Americas Group to facilitate national, multi-stakeholder dialogue on childcare and other issues, which has included several public discussions in which factories have shared both success stories and challenges about providing childcare for workers and how such initiatives have benefited their workforce. In 2018, the Americas Group surveyed workers at apparel suppliers throughout El Salvador to better understand their childcare needs and preferences. We are continuing to explore possible models and ways to address this issue with our suppliers as well as looking for collaboration opportunities.

Psychological Well-being

The garment industry in Jordan relies heavily on the employment of foreign migrant workers, many of whom come from South Asia. One current topic of discussion between suppliers and stakeholders in Jordan is the psychological well-being of workers and their ability to manage the stress and challenges that come from working away from home in a foreign country. In 2018, New Balance engaged with a new supplier in Jordan. The pre-sourcing audit identified improvements to be made to the dormitories, which presented an opportunity to explore ideas with the supplier that would take into consideration the workers’ psychological well-being as part of the dormitory improvements. As a result, the supplier implemented an art program for the workers to paint pictures and murals on the walls of their dormitory. The program was a way for workers to express their culture and feelings, but also to lighten the mood in their living quarters and give them a sense of ownership of the dormitory. This program is only a small step, but it was received well by the workers and highlights the importance of thinking about workers beyond the production floor.

The International Labor Organization (ILO) estimates that about 152 million children are victims of some form of child labor.* While this number has been decreasing since the year 2000, child labor remains a problem in the global textile and footwear industries.

New Balance enforces a strict zero tolerance policy for child labor in our supply chain. Factories manufacturing New Balance products are prohibited from employing workers under the age of 16 (or 15, where governing laws allow). Factories are also expected to take reasonable steps to verify workers’ ages before hiring them to ensure documentation has not been falsified to make a candidate appear older than his or her true age.

New Balance compliance audits include a rigorous review of documentation in employee files as well as interviews with employees. If an underage worker is identified, factories must arrange for the child to return home and pay for the child’s education until the age at which school is no longer compulsory or the legal working age, whichever is greater. Once the child is of legal working age, he or she must also be offered employment at the factory. Suppliers must also ensure that any vendors or subcontractors they work with follow the same hiring and employment standards.

For an example of how New Balance worked to remediate a case of child labor in Vietnam, please see the Fair Labor Association 2018 New Balance Reaccreditation Report.

The New Balance Child Labor Response Procedure is included in the New Balance Supplier Standards Manual.

In the footwear and apparel industry, human trafficking and slavery risks are greatest where there are migrant workers. In many cases, suppliers may not recognize that withholding of passports, often cited for security reasons, or using labor brokers who charge recruitment fees can lead to forced labor risks.

Forced labor is a zero tolerance issue for New Balance. New Balance has approached forced labor with a two-pronged approach – through awareness raising and by conducting due diligence. We have worked with our Tier One suppliers to increase awareness on forced labor by incorporating training materials into supplier summits and workshops. Also, any supplier that employs foreign or domestic migrant labor undergoes additional scrutiny for potential forced labor risks during the compliance audit. Detailed guidance is provided in our Supplier Standards Manual, including requirements related to foreign worker contracts, access to passports and personal identification documents and prohibition of recruitment fees.

In 2018, New Balance became a signatory to the AAFA/FLA Apparel and Footwear Industry Commitment to Responsible Recruitment. The commitment reinforces our work with suppliers that employ migrant workers to create conditions so that:

• No workers pay for their job;
• Workers retain control of their travel documents and have full freedom of movement; and
• All workers are informed of the basic terms of their employment before leaving home.

For more information, please see our most recent New Balance Human Trafficking and Modern Slavery Statement.

The humanitarian crisis in Syria has caused more than 4.5 million people to be displaced throughout North Africa and Europe. The exodus of people from the war-torn nation has left many refugees living in precarious conditions in other countries, with little to no financial support or employment opportunities. Two of the major host countries for Syrian refugees, Turkey and Jordan, are home to significant apparel production. We recognize that refugee workers may be particularly vulnerable to unethical recruitment practices, unfair pay, child labor and other risks. New Balance has taken specific steps to help protect the rights and support the needs of refugee workers in Turkey and Jordan.

New Balance prohibits harassment and discrimination of any kind. As issues of harassment and discrimination continue to take worldwide prominence, we recognize that these issues must be examined closely in the global supply chain, too.

Sexual and other forms of harassment and discrimination can be hard to detect in factories – as they are in most workplaces – due to lack of evidence or fear of retaliation. New Balance looks closely for any indications of harassment and discrimination during our audit process, including during on- and off-site worker interviews and reviews of a supplier’s policies and procedures. New Balance suppliers are required to maintain effective grievance channels where employees can report violations, and must train employees on the grievance process.

In El Salvador, New Balance has worked with the Americas Group (AG) to survey apparel factories to assess their capability to combat sexual harassment in the workplace and identify potential gaps. The group also commissioned a guidance document for suppliers to adopt policies and systems that will help prevent and address sexual harassment and other forms of workplace violence against women. In September of 2019, New Balance and other AG brand members invited local suppliers to participate in a discussion on best practices when addressing sexual harassment within apparel factories.

For more information on how New Balance addresses issues related to harassment and discrimination, please see the New Balance Supplier Standards Manual.

The New Balance Code of Conduct requires suppliers to comply with national laws on working hours. Weekly hours should not exceed a regular workweek of 48 hours plus 12 hours of overtime, or the maximum hours permitted by national law, whichever is less. Suppliers must also provide workers with one day of rest in every seven-day period.

For our footwear suppliers, we have an Overtime Application Policy that requires suppliers to seek New Balance approval for any working hours beyond the 48-hour standard workweek (or less, depending on national law). Our goal is to ensure not only that we have visibility to overtime worked, but also to explore whether there are alternatives to working overtime in specific situations, such as pushing back delivery dates. Only in extraordinary circumstances will New Balance authorize excessive overtime – and this requires approval by the heads of both Footwear Sourcing and Global Compliance. Footwear suppliers that work unauthorized excessive overtime will not only be cited for compliance violations, but will also have points deducted from their supplier scorecard for on-time delivery performance.

Despite our policy, as well as widespread industry alignment between global apparel and footwear brands and retailers on working hour standards, compliance with working hours remains a challenge. Most suppliers produce for many brands at one time, which limits the visibility of any one brand and can create unforeseen bottlenecks and scheduling conflicts. Moreover, laws are not strictly enforced in some countries, which has resulted in long-standing cultural practices of long workweeks. Workweeks in excess of our Code requirements continue to be the most frequent issue that we identify during our supplier audits. We continue to address excessive working hours in our supplier training and by promoting open communications with our sourcing teams.

For more information on how we address working hour violations, please see Responsible Purchasing Practices.