Social and Ethical Audit Report

Labour practices in our global supply chains

Factory X has a long-held commitment to upholding safe and fair conditions for workers in its global supply chain.

The current ethical sourcing policy was developed with assistance from an external consultant. It provides a framework for communicating our ethical standards to our manufacturers and their subcontractors. Using the Ethical Trading Initiative Base Code as provided by the Ethical Trading Initiative as a guide, it references local labour laws, the International Labour Organisation (ILO) conventions, principles of the United Nations Universal Declaration of Human Rights and the Modern Slavery Act 2018 (Cth).

The Policy

The policy addresses key criteria for the following areas:

  • Labour rights/ Freedom of employment
  • Freedom of association and the right to collective bargaining
  • Safe & hygienic working conditions
  • Regular employment
  • Child labour
  • Fair wages
  • Reasonable working hours
  • Harsh or inhumane treatment
  • Bribery & corruption
  • Non-discrimination
  • Fair and equitable treatment
  • Environmental compliance
  • Human trafficking
  • Forced labour
  • Debt bondage
  • Forced marriage

The Procedures

Factory X expects our manufacturers to implement and maintain systems for meeting the requirements stated in our Ethical Sourcing Policy and Environmental Policy.

We also expect our suppliers to provide details of their outsourcing arrangements and ensure that they provide our Ethical Sourcing Policies to all suppliers in the Factory X supply chain.

Failure to comply with any point on either our Social & Ethical Policy or Environmental Policy results in establishing a corrective action plan to correct the issue. This is agreed upon with the local manufacturer, initiated and a randomly scheduled external audit follows to ensure that the corrective action takes place in the manner and timeframe agreed.

Our Audit Process

Factory X conducts regular audits with suppliers and has an in-house certified team.

The audit process covers over 100 questions and auditors speak to both management and employees. Click here to find out more about the information gathered through our audit process. All our auditors use the following scoring system to communicate results to check:

1Meets or exceeds Factory X Ethical Policy Requirements
2Meets the majority of Factory X Ethical Policy Requirements, with a corrective action plan developed that includes one or more minor issues
3Meets the majority of Factory X Ethical Policy Requirements with a corrective action plan developed that includes one or more major issues
4Failed to meet Factory X Ethical Policy Requirements, with major corrective plan required and immediate action agreed
5Failed to meet Factory X Ethical Policy Requirements with a critical action plan developed and immediate action required
6Failed to meet Factory X Ethical Policy Requirements with a zero-tolerance issue included in the critical action plan and immediate action required
7Failed to respond to corrective plan in a reasonable timeframe resulting in cessation of trading
8Failure to respond to a critical action plan that includes a zero-tolerance issue; immediate cessation of trading due to major contract breach

Annual External Audits

We instruct annual external audits on factories and suppliers, conducted by a professionally qualified and experienced third-party certification body, to supplement and ensure the accuracy of our internal audits.

To monitor compliance, upgrade our audit process and improve the quality of our production and social environmental responsibility we have increased the levels of CSR audits and included Environmental and Chemical Risk Audits, across Tier One and 2021 commencing with Tier Two.

5 Types of Audits

  1. Factory X Audits
  2. External CSR Audits
  3. Living Wage Audits
  4. Environmental Audits
  5. Chemical Risk Audits

Factory X’s results 2017/2018

Factory X produces its range in 49 first tier factories. We have also traced 18 factories in our second-tier supply chain. One factory in our 2nd tier supply chain was audited in 2018.

51% of our first-tier factories have undergone either a 3rd party audit by Qualspec or an audit by a trained Factory X auditor.

The chart below provides an overview of the audit results from the 25 audits conducted:

This table below provides an overview of the number of questions in each audit category in our audit questionnaire.

The issues identified pertaining to environment, bribery and corruption, harsh and inhuman treatment, safe and hygienic working conditions, freedom of association and freely chosen employment were resolved within the specified timeframe. We are still working with factories to resolve some issues related to working hours and wages.

Maintaining consistent relationships

Factory X is committed to maintaining, long-term relationships with our manufacturers. The table below provides information about the length of time we have been working with our factories.

In 2018, Factory X used 49 first tier factories and we traced 14 second tier suppliers. With the exception of socks (Taiwan), and leather goods (Pakistan) all our products are made in China (5 regions) & India (2 regions).

A list of our factories is available here.

The Pie Chart below shows the proportion of products made in each country.

Factory X’s results 2018/2019

Factory X produces its range in 43 first tier factories. We have also traced 18 factories in our second-tier supply chain. One factory in our 2nd tier supply chain was audited in 2018. (Audit is valid 2 years)

67% of our first-tier factories have undergone either a 3rd party audit by Qualspec or an audit by a trained Factory X auditor. which is an overall increase of 16% more than last year.

The chart below provides an overview of the audit results from the audits conducted:

This chart below provides an overview of the number of questions in each audit category in our audit questionnaire.

The issues identified pertaining to environment, bribery and corruption, harsh and in human treatment, safe and hygienic working conditions, freedom of association and freely chosen employment were resolved within the specified timeframe. We are still working with factories to resolve several of the issues related to working hours and wages.

Maintaining consistent relationships

Factory X is committed to maintaining, long-term relationships with our manufacturers. The table below provides information about the length of time we have been working with our factories.

In 2019, Factory X used 43 first tier factories and we traced 14 second tier suppliers. With the exception of socks (Taiwan), and leather goods (Pakistan) all our products are made in China (5 regions) & India (2 regions).

A list of our factories is available here.

The Chart below shows the proportion of products made in each country.

Factory X’s results 2019/2020

Factory X produces its range in 36 first tier factories, the % of Factory X suppliers audited in 2019 -2020 was 86%. We have also traced 18 factories in our second-tier supply chain. With 16.7% so far undergoing audit. We are continuing to check further down the line to Tier 3 through our buying partners and stakeholders.

Last year we have introduced Living Wage Audits which we are repeating again this year. 2021 we commenced professional Environmental Management and Chemical Management Solutions Audits, alongside the regular Social Compliance Audits. 86% of our first-tier Factory X factories have undergone either a 3rd party audit by professional external auditors or an audit by a trained Factory X auditor, which is an overall increase of 28% more than last year.

The chart below provides an overview of the audit results from the audits conducted:

This table below provides an overview of the number of questions in each audit category in our audit questionnaire:

Maintaining consistent relationships

Factory X is committed to maintaining, long-term relationships with our manufacturers. The table below provides information about the length of time we have been working with our factories.

In 2020 Factory X used 36 first tier factories and we traced 18 second tier suppliers with the exception of socks (Taiwan) all our products are made in China (5 regions)

A list of our factories is available here.

The Chart below shows the proportion of products made in each country:


If you have any further questions or concerns, then please contact us at contactus@lurv.com.au.