Responsible Sourcing Policy

Our company’s founder, George Dayton, was well known for his strong sense of business ethics. Today, we still hold ourselves to the highest ethical standards — no matter where we do business— and we expect our business partners around the world to do the same. Our partners include vendors, manufacturers, contractors and suppliers who provide merchandise, supplies and support for our new-store construction.

In our quest to bring Target guests high-quality products at a great value, Target Sourcing Services (TSS) sources owned-brand merchandise from all over the world, directly importing about 30 percent of our products.

The TSS team’s expertise helps us balance our sourcing around the globe to ensure that we’re able to anticipate issues and mitigate any potential risks while making the best decisions for our business. We continually evaluate the mix of countries from which we source and adjust for many factors, including production quality and capacity, speed to market and pricing. All of our products are clearly labeled to indicate the countries where they are manufactured, in full compliance with regulations established by U.S. governmental agencies.

Target Compliance and Production Services (TCPS) is a division of TSS that partners with vendors to achieve outstanding quality for our owned-brand products. The TCPS mission is to validate that our vendor partners operate efficient, safe and ethical factory environments that are capable of producing safe, reliable, high-quality product. Teams at headquarters focus on setting policy, creating procedures, administration and enforcement, while overseas teams execute our processes. Teams include Social Compliance, Quality Assurance, and TCPS Operations.

Social Compliance Role & Program Components

Since it was established in 1998, the role of the Social Compliance department within TCPS has been to protect the Target brand by ensuring our products are produced ethically and in accordance with our Standards of Vendor Engagement (SOVE), Vendor Conduct Guide and local laws. We do this through:

• Vendor Education & Compliance Program Development: Social Compliance educates vendors about our expectations for strong vendor and factory compliance programs.
• Factory Registration: Vendors are required to register all primary and subcontracted factories used in the production of our merchandise. By registering a factory, a vendor is taking ownership of its compliance with our SOVE and local laws, as well as authorizing unannounced audits by Target.
• Unannounced Audits: Each year, our team of auditors conducts approximately 2,200 random, unannounced, mandatory audits at factories producing owned-brand products in more than 40 countries. Our audit results verify the results of the vendor’s compliance program. Vendors receive a financial penalty if a factory denies access to our team members or third-party auditors.
• Corrective Action Plans: If issues are identified during an audit, our headquarters team partners with the vendor to ensure corrective actions are appropriate.
• Vendor Scorecard: Social Compliance provides vendor performance information to our sourcing partners to help inform their business decisions.
• Stakeholder Engagement: We collaborate with Non-Governmental Organizations (NGOs), investors and other stakeholders to work toward mutual goals and encourage ethical business practices in the retail industry.

Snapshot of a Social Compliance Audit

A Social Compliance auditor or third-party auditor arrives unannounced at a factory that has been registered by a vendor that produces Target owned-brand product. The auditor provides identification and then meets with factory management to explain the purpose of their visit.

Accompanied by the factory manager, the auditor walks through the factory, observing health and safety practices. During the factory tour, the auditor points out immediately correctable issues.

Next, the auditor interviews employees and managers separately—asking questions about working conditions in the factory. Following the interviews, the auditor cross-checks information gathered by extensively reviewing personnel, wage and time records. To conclude the audit, the auditor reviews merchandise and records for country-of-origin information. In total, the auditor answers up to 400 questions using Target’s standardized, electronic audit form. The auditor recaps findings and corrective actions with factory management.

After the audit, our headquarters-based analyst asks for a corrective action plan from the vendor, and a follow-up audit determines whether corrective actions have been taken. If a factory isn’t in compliant by the third audit, Target will not allow production in that factory for at least a year. To keep our auditors safe, any severe violations — e.g., bribery, illegal transshipment, corporal punishment, country of origin or underage labor — that would cause immediate termination of a factory relationship are not disclosed to the factory manager by the auditor.

Vendor Education: In Depth

We educate our vendors about how Target standards apply to their operations. We invite new vendors to a training session at headquarters or overseas. An audio version of this training course is also available online in five languages. In addition, vendors can access a document on our vendor Web site called Applying the Standards of Vendor Engagement in Factories, available in 13 languages, which provides specific guidance on our standards and best practices. In addition, an advanced online training curriculum to help vendors build effective internal social compliance programs is available. Furthermore, Target Compliance and Production Services (TCPS) has developed a Factory Education manual to assist vendors in educating their factory supplier partners on topics including Social Compliance and Quality Assurance.

Standards of Vendor Engagement

We will not knowingly work with any company that does not comply with our ethical standards. We benchmark our standards against those of other companies, and we work closely with Non-Governmental Organizations that focus on social responsibility.

• Our business partners must provide safe and healthy workplaces that comply with local laws. If our partners provide residential facilities for their workers, these must be safe, healthy and in compliance with local standards.
• No forced or compulsory labor. We will not knowingly work with business partners who use forced labor in the manufacturing of products.
• No physical or mental punishment used against employees.
• While we respect cultural differences, we believe workers should be employed based on their abilities, and we encourage our business partners to eliminate workplace discrimination based on race, gender, personal characteristics or beliefs.
• We seek business partners who offer reasonable working hours and overtime, and whose work weeks do not exceed local laws or business customs. We encourage our partners not to require more than a 60-hour work week on a regularly scheduled basis (except for overtime compensated in compliance with local laws).
• Fair wages and benefits must be provided in compliance with local laws; in addition, we encourage our partners to improve wages and benefits to address the basic needs of workers and their families.
• No child labor, which we define as being below the local minimum working age or age 14, whichever is greater. We make an exception for legitimate apprenticeship programs.
  • In support of this commitment, Target does not knowingly buy or sell products which contain Uzbek cotton or which are sourced from any country that condones the use of forced child labor. We are requesting that our business partners also refrain from using cotton from countries with a known record of forced child labor and we are sharing our position with the U.S. Government, Non-Governmental Organizations and other industry leaders who have similarly voiced their concern.
• We will not work with business partners who use deceptive practices to deliberately misrepresent country of origin to evade quota or import restrictions or duties on products that will be sold in our stores.
• In addition, Target is committed to sourcing products which contain diamonds, gold, or other precious metals and gemstones only from vendors who engage in responsible mining practices. Specifically, as a member of the No Dirty Gold campaign, Target has signed the Golden Rules, which are social, human rights and environmental criteria for more responsible mining of gold and other precious metals. We reinforce our commitment through vendor education efforts as part of our Social Compliance program.

Vendor Contracts

We require our vendors to warrant that all goods are made in compliance with all applicable laws — both U.S. laws and the laws of the country in which the goods are produced. This warranty includes the Fair Labor Standards Act of 1938, which governs how employers pay and treat their employees. To be in compliance with this contract term, our vendors must confirm that their business partners are also in compliance with the law. In addition, we establish similar basic minimum requirements in certain countries where labor laws are not yet well developed. If a vendor violates our agreement, penalties range from the loss of the contract or order to the loss of all future business with Target.

Quality Assurance Tools and Processes

The Quality Assurance team validates the safety, reliability and quality of our products by using systems and processes, including:

• Factory evaluations conducted by an overseas manufacturing technician. This process validates a factory’s quality processes and manufacturing capabilities before it ever begins producing owned-brand products for Target.
• Placement and pre-production meetings, which provide a step-by-step guide for overseas team members to use when verifying that vendors execute all pre-production activities properly. These meetings are for products sourced directly by Target.
• Product testing, which begins early and continues through a product life-cycle. Tests validate that owned-brand products meet or exceed safety and regulatory requirements, as well as standards for labeling, packaging quality and end-use performance. (Continue on to ‘Product Testing’ section below for more information.)
• Product inspections, used to validate that owned-brand products meet testing requirements and acceptable quality standards.
• Field Assessment Tool (FAS-T), a system that automates field activities and creates a data repository for product inspections, factory evaluations and social compliance audits.
• Training and documentation for all Quality Assurance requirements are available through Partners Online.

Product Safety: A Top Priority

Providing safe products is a top priority at Target. We not only ensure products meet mandatory government safety standards, we also voluntarily test our products periodically to meet more stringent standards than state and federal laws require—and we place special emphasis on children’s products, including toys. We make every effort to ensure a product’s performance and safety meets our high standards before being sold in our stores.

Product Testing

We rigorously test our owned-brand merchandise before it arrives at our stores or at Target.com. First and foremost, we test products to validate that they meet or exceed safety and regulatory requirements; we also test labeling and packaging quality, and a product’s end-use performance.

We require satisfactory third-party product tests. If the product doesn’t pass initial testing, the vendor must improve and resubmit the product until it meets requirements. If a product does not meet requirements after it is resubmitted, it is not approved for shipment.

Multi-stage testing catches potential quality and safety issues before and during production. Testing by a third-party lab occurs during the initial production run and at random intervals during ongoing production. We’ve used multi-stage testing on our owned-brand apparel merchandise since 2005. We began performing multi-stage testing on all children’s owned-brand products as well as other high-risk Hardlines owned-brand products beginning in 2006.

Food Safety & Quality Assurance

We also are committed to delivering outstanding quality and uncompromising safety with every owned-brand food product. Our Food Safety & Quality Assurance (FSQA) team’s primary goals are to protect the guest and public health and to protect our brand. Key owned-brand food safety and product quality programs include:

• Vendor Audits and Assessments. Owned-brand vendor-manufacturing-facility approval by Target requires a comprehensive third-party audit of food safety, regulatory compliance and quality management systems. In addition, FSQA specialists conduct on-site vendor facility food safety assessments.
• First Production Review Program. Each new owned-brand food item is evaluated for product and packaging specification compliance, overall product quality performance consistent with guest expectations, and brand requirements prior to arriving in stores. Products are fully evaluated by a cross-functional development team to ensure all new products meet Target requirements before reaching our guests.
• Market Review Program. Owned-brand food products are retrieved from our stores to best represent what our guests actually experience. Using a well-defined process, the retrieved samples are evaluated from a guest’s perspective to determine overall product and packaging quality and performance. This information is used to make continuous product quality improvements.

Consumer Product Safety Commission

We believe that cooperation among regulators, manufacturers and retailers is the only way to find solutions to issues of quality assurance and product safety; we’re committed to being a productive part of that effort. Currently, we report to the Consumer Product Safety Commission (CPSC) any products that we’re investigating or removing from the market for safety related reasons. We collaborate with the CPSC on improved training for overseas vendors, particularly those in China.

Emerging Safety Concerns

Target has several efforts under way to reduce PVC in our owned-brand products. All of our owned-brand children’s utensils and lunch kits and many infant and toy categories are now made from materials other than PVC. And, several owned brand home items including shower curtains and liners, as well as placemats and table linens, are made from more viable alternatives.

Additionally, we’ve eliminated PVC in packaging materials for a number of products and continue to identify alternatives where possible.

Product Recalls

When a product is recalled, it’s our responsibility to execute the recall quickly and efficiently to ensure the safety of our guests. Our formal, rapid-response plan features multiple layers, including:

• Communicating immediately with store teams so items can be pulled from store shelves and Target.com
• Posting recall notices on store kiosks
• Adding a cash-register locking function so guests aren’t able to purchase recalled products
• Posting information at Target.com, with links to the CPSC and related Web sites
• E-mailing guests who have purchased recalled products online

Restricted Products

Our goal is to stock Target shelves with merchandise that appeals to a wide variety of guests, particularly parents and families. We want parents to feel comfortable with their purchasing decisions at Target, so we’ve instituted policies about whether and how we sell certain kinds of products.

• All video games and computer software titles sold at Target carry ratings by the Entertainment Software Rating Board (ESRB). We do not sell any AO-rated (Adults Only) products; since 2000, we’ve voluntarily restricted the sale of M-rated (Mature) games and software to guests age 17 and older. Our goal is to have all guests know and understand the ESRB system so they can make informed purchasing decisions. To inform guests about how video games and software are labeled and rated, we use communication vehicles, including:
  • Informational signage and a guest brochure
  • Information at Target.com
  • Messages in our weekly circular to encourage guests to “know their ratings,” plus oversized ratings graphics on M-rated video games advertised in the circular
  • Cashier training
• In 2005, even though our decision adversely affected our sales, we became the first national retailer to voluntarily place all cough, cold and allergy medications containing pseudoephedrine (PSE) behind the pharmacy counter. Found in cold and allergy remedies, PSE is the key ingredient in the illegal manufacture of methamphetamine. Sales of PSE are now governed by federal law; our policy enforces federal limitations and follows more restrictive state and local laws where applicable.
• Not only does Target not sell real guns, we stopped selling realistic toy guns in the early 1990s. Today, toy guns on our shelves are limited to those that are brightly colored or oddly shaped and couldn’t be mistaken for actual weapons.
• We stopped selling cigarettes in 1996, and don’t currently sell any tobacco products.

Supply-Chain Safety

Because Target is committed to supply chain security, in 2002, the company became a founding member of the Customs-Trade Partnership Against Terrorism (C-TPAT) – a collaborative government-business initiative that strengthens international supply chain and U.S. border security. As part of the partnership agreement, participating companies must be revalidated every three years to ensure their international supply chain processes continue to meet strict standards. In 2009, Target achieved C-TPAT revalidation at the highest security status based on our dedication to strong international supply chain management and security.