Responsible Manufacturing of REI Branded Gear

REI branded gear and apparel represents approximately 20 percent of the items sold by the co-op. We have a responsibility to ensure that appropriate, safe and humane working standards are upheld in the contract factories where our products are made.

Because REI does not own any manufacturing facilities, it is essential that we have strong and trusting relationships with our contract factory partners.

Our Process for Pursuing Compliance

Before contracting with a new factory, we require the factory to provide a self evaluation of its compliance with REI's policy for labor and workplace practices. If the factory reports that it has systems in place and a track record of performance sufficient to win our business, we schedule a full audit. This step is completed by a REI compliance team member or a third-party auditor in which they inspect the factory, interview workers and review payroll and other appropriate records. It is our policy that if violations are found, a corrective program is implemented.

Given the growth of our business and number of new REI products being developed, we need to engage with factories that we previously have not had a relationship with. This puts us at the starting point of building a trusting relationship with a new facility, getting to know how it operates, and learning about its labor and safety practices.

By the end of 2006, REI had completed a full audit of more than 50 percent of its contract factories, representing 94 percent of the dollar value of the REI products. We learned that infractions occur and range from minor issues, such as a malfunctioning water cooler, to more serious problems like the failure to pay overtime at legally mandated rates.

At any workplace, domestic or international, infractions are often found. Most infractions tend to be minor and, when identified, can easily be remedied.

When major problems are discovered, REI is committed to working with our factory partners to remedy issues and determine if progress can be made. Improving a factory's compliance is a process of education that can take a number of years, yet it's an approach that ultimately serves the best interests of those who make our products.

In cases when more serious violations are uncovered. The company's corrective action program requires re-audit and demonstrated improvement. If there is no indication of improvement, REI may consider this to be cause for terminating business. An example of a major violation is when a factory does not provide sufficient employee documentation, which REI considers necessary for verifying all workers are of legal age.

In the past few years we have seen an increase in audit findings, primarily minor violations. Generally these results do not raise concerns at factories where we have long relationships. We have found that our improved audit process over time has revealed more non-conformances. We are also finding that as we expand the REI brand business and begin relationships with new factories outside of the apparel "cut and sew" industry (i.e. light manufacturing) we tend to find more need for corrective action.

We believe this is driven by the fact that these factories are not as familiar with our standards and the process. We have found that as we establish our relationship with these factories we see significant improvement.