Responses from Puma

Proposal A1:

Require suppliers to issue 'Right to Organize' guarantees to workers.

Puma says that “setting the proper atmosphere for the responsible exercise of freedom of association is our main role, and as such we do not initiate the formation of unions in factories but we do ensure that the workers’ right to form association will not be hindered.” However they do not require suppliers to issue Right to Organize Guarantees and question the applicability of this provision in their “main sourcing countries” where freedom of association is restricted by law.”

Full response

"While some PUMA suppliers have strong worker representation systems in place and follow collective bargaining agreements, in the majority of our main sourcing countries, these enabling rights are restricted either by law or are impeded by strong cultural biases from both factory management and workers themselves. In our experience, legal frameworks that promote unionism do not result in a mature culture of workplace engagement in and of itself. Even where local regulations allow freedom of association and collective bargaining we recognize that the negative perceptions of factory management against any collective workers’ action are deeply embedded.

"In PUMA we have always maintained that setting the proper atmosphere for the responsible exercise of freedom of association is our main role, and as such we do not initiate the formation of unions in factories but we do ensure that the workers’ right to form association will not be hindered."

Proposal A4: Provide an accessible complaints process for workers.

Puma says that it has a third party complaint system in place and has supported various grievance management improvement programs at the local level.

Full response

On the provision of accessible complaints process for workers, PUMA's complaints process for the workers has been in place for a long time as it is a requirement for becoming a member of the Fair Labor Association. PUMA’s 3rd party complaint system has been proven to work at a global level. We remediated numerous complaints that were raised through this channel from Turkey and China. In Cambodia, PUMA supports the decisions that were made by the national arbitration system. Although we established grievance hotlines in key countries such as China, we believe that employers and employees must be given the capacity to manage and resolve disputes internally. For this reason, PUMA supports various grievance management improvement programs at the local level in key sourcing countries such as China, Turkey, Romania and Vietnam.

Proposal A9: Require suppliers to sign union access agreements.

Puma says that “Given that the trade union movement in major sourcing countries is immature according to international union standards, we are not inclined to enforce mandatory access to our suppliers to these kinds of unions…”

Full response

"We have been involved in various projects such as the JO-IN Initiative in Turkey and a pilot project of the German Roundtable on Codes of Conduct in Romania and Bulgaria, wherein freedom of association was addressed and local as well as international unions actively participated. Though these projects are broad and innovative, the results of the initiatives still need to be adjusted to the local specifications and cultural context of other sourcing countries in order to be effective. Our current work on the Human Resource Management System (HRMS) collaboration as mentioned above is at this stage.

"We are often reminded that we are not the appropriate party to provide worker education on freedom of association and collective bargaining, and in accordance with the recommendations of the ILO, our suppliers are not tasked with this in the interest of impartiality and fairness. Given that the trade union movement in major sourcing countries is immature according to international union standards, we are not inclined to enforce mandatory access to our suppliers to these kinds of unions for worker education purposes. However, we continue to support training from credible NGOs and international industrial relations organizations in Romania, China and in a number of other countries."

Proposal B2: Eliminate third-party employment schemes.

Puma expects its suppliers to be responsible for the terms and conditions of recruitment and employment, but does not commit to eliminating third party employment schemes across the board.

Full response

On the elimination of third party employment schemes, PUMA communicated clearly to its suppliers that they are immediately responsible for all terms and conditions of recruitment, employment and workplace environment, including any subcontract work that is being carried out in their facilities. As PUMA sources from countries where there is a heavy use of foreign labor such as in Malaysia and South Korea, the monitoring of recruitment agency practices is also expected to be taken care of by the suppliers themselves. We have recently started auditing a percentage of the total number of second and third tier suppliers, which are essentially materials and process subcontractors of our first tier suppliers. Through this, we have strengthened the standards for subcontractor monitoring of our first tier suppliers.

Proposal B3: Eliminate short-term contracting.

Although PUMA claims that “the vast majority of our indirect employees are hired on unlimited-period working contracts,” the company will not commit to the elimination of short-term contracts, their clearly defined use, providing same salary and benefits to short-term contracts, or automatic open-ended contracts for workers after 2 fixed term contracts or two years’ employment. According to the company “labor flexibility remains one of the key components to ensure that individual companies survive and grow...”

Full response

"Given that labor is only one component of production, labor flexibility remains one of the key components to ensure that individual companies survive and grow. Conditions in the supply chain do not exist in a vacuum, but are affected by local and global economic and social circumstances. We understand that individuals cannot be fully flexible in the global economy; hence PUMA supports legal and extra-legal measures to ensure that worker welfare is addressed. It is guaranteed within PUMA’s Code of Conduct that all worker income must be paid on time and in accordance with local labor law. Each PUMA supplier must provide a copy of a formal working contract to employees and the vast majority of our indirect employees are hired on unlimited-period working contracts to ensure that they have continued access to benefits that accrue over the length of their service. In countries where fixed-term contracts do not impede the accrual of tenure-based benefits or rights, we do not strongly enforce open-ended contracts. We believe that there is no need to do this, as the factories themselves would want to keep their workers who have already acquired certain skills. However, we do investigate against any unlawful termination. We have also strengthened our policies and monitoring regarding apprenticeship schemes and have in fact been able to stop a few cases of questionable apprenticeship programs as part of our compliance auditing routine."

Proposal B6: Establish long-term relationships with factories.

No response given.

Proposal C1: Adopt Responsible Transitions policies.

Puma is currently working on policies for managing closures taking into consideration the MFA Forum guidelines, but the company has not committed to making these policies public.

Full response

"We are also strengthening our policies on managing factory closures, taking into consideration the guidelines already established by the Fair Labor Association and the MFA (Multi-Fiber-Agreement) Forum. In this regard, the local governing bodies have more power in enforcing the law and we will be working with such bodies wherever we feel it would be most effective."

Proposal C3: Report publicly on length of factory relationships.

Puma says it has long-term relationships with 'key suppliers’ and that it can provide information on the length of relationships with strategic partners. However they cannot yet track information on licensee or subsidiary suppliers

Full response

"PUMA sources directly through WorldCat as well as through licensees and subsidiaries. Suppliers through licensees and subsidiaries are encouraged to apply to become WorldCat suppliers, which receive priority orders and key support in areas of quality, production and puma.safe compliance. We implemented a Strategic Partner Concept and Vendor Rating System in early 2005 for WorldCat suppliers, which essentially formalized the process in which supplier performance is rated. Key suppliers are reviewed against key strategic parameters, which are long term in nature, aside from Techical parameters of price, quality and delivery lead times. Adherence to puma.safe standards and commitment to PUMA are two key Strategic Criteria in the Vendor Rating System. PUMA maintains long-term relationships with key suppliers. Some suppliers in footwear have been manufacturing for PUMA for 20 years. By adding all suppliers to this rating system – including our long-term partners - we are able to apply an objective performance rating for each supplier. This helps them to identify areas of improvement which is a clear benefit of the Strategic Partnership. It is possible for PUMA to give accurate information on the length of our relationships with WorldCat suppliers. Information on licensee and subsidiary suppliers, however, is not available yet. "

Proposal C4: Report publicly on how suppliers are chosen and/or eliminated.

Puma will report on its supplier selection process in its upcoming Sustainability Report. The company makes no comment on its termination policy or strategy for managing impact of exiting factories.

Full response

"Both the VRS and our Strategic Partner concepts ensure that there is an objective basis for purchasing decisions based on equal consideration to price, quality, delivery, compliance and medium- to long-term investment commitment. We are constantly improving the implementation of our VRS and the Strategic Partner concept and we will be reporting on this in greater detail in our upcoming Sustainability Report. In our latest report, we have already provided information on the performance of direct and licensee sourcing in each country."

Proposal D1:

Make a commitment to paying a living wage.

Puma says the majority of suppliers pay above the minimum wage, however they have not committed to paying a living wage

Full response

"PUMA explicitly guarantees to work only with suppliers that provide compensation that is 'respectful of basic needs and all benefits mandated by law' within our Code of Conduct."

Proposal D3: Ensure prices are sufficient to pay a living wage.

PUMA “does not see itself in a position to determine which wage level would be sufficient to provide a “living wage” in over 50 sourcing countries,” and will not commit to a third-party review of prices paid to suppliers.

Full response

"While PUMA does not see itself in a position to determine which wage level would be sufficient to provide a “living wage” in over 50 sourcing countries, many of our suppliers already pay on average wages which are well above the minimum wages set by national law. PUMA announced in its 2008 Annual Shareholders Meeting that we increased the prices paid out to strategic suppliers to cover inflationary pressures in some sourcing countries. In turn, some of our Strategic Partners have granted seniority pay in recognition for the workers’ length of service. Some have provided additional cost of living and other allowances and bonuses in recognition of the increased cost of living for workers. A number of these arrangements were accomplished through the enterprise-level collective bargaining process."

Proposal D6: Take steps to improve workers’ wages.

Puma says it is actively looking at ways to improve worker welfare.

Full response

"We are currently following the discussion within the Fair Labor Association on the possibility of the inclusion of the living wage in the FLA Code of Conduct. However, because of the general lowered forecast of global demand for consumer goods next coupled together with the findings mentioned above, we believe that this is not the most appropriate time to strongly campaign for living wages. "In a decision by the U.S. Department of Justice on buyer collaboration to monitor compliance, parameters such as pricing, supply agreement terms and buyer-factory negotiations were identified as data that cannot be shared. Though PUMA is willing to share compliance information to third parties in the spirit of collaboration, these anti-trust limitations have to be considered prior to the sharing of commercial information that maybe accessed by competitors. We are actively looking at the wage ladder methodology developed under the Jo-In pilot project in Turkey to objectively identify the steps or rungs by which worker welfare can be improved. PUMA continues, however, to maintain that this ladder has to be benchmarked against the local industry and local best practices in order to be effective."

Response Key

The brand claims to implementing all components of this proposal or has agreed to implement them within Play Fair's proposed timeframe.

The brand is currently implementing or has agreed to implement some of the essential components of the proposal but has refused to implement, has overlooked, or has raised issues with one or more important components; or, the brand agrees to implement the proposal but not within Play Fair’s proposed timeframe.

The brand has refused to implement the essential components of the proposal.

The brand has misunderstood or failed to comment on the proposal; or the brand is considering the proposal, but has yet to make a decision.