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California Transparency Act

    California Transparency Act

    Last Updated August 2022

    Introduction

    ‘Modern Slavery’ is the phrase used to describe the crimes of human trafficking, slavery and slavery-like practices such as servitude, forced labor, forced or servile marriage, the sale and exploitation of children, and debt bondage. A common thread runs through all of these offences—they involve one person depriving another person of their liberty in order to exploit them for personal or commercial gain.

    Sadly, the impact of the Covid-19 pandemic on the progress of eradicating forced labor has been momentous. Manufacturing across the globe was drawn to a halt, resulting in canceled orders, disruption to supply, workers at risk of losing their livelihoods, and restrictions on movement of both workers and visitors—limiting the efforts of anti-slavery organizations.

    “As with previous economic crises, the sharp increase in unemployment rates brought about by the COVID-19 pandemic is likely to increase trafficking in persons, particularly from countries experiencing the fastest and most persistent drops in employment. Job seekers from these countries are likely to be more willing to take high risks in the hope of improving their opportunities.” - UNODC, Global Report on Trafficking in Persons 2020

    Finding a reliable way to measure the full magnitude of forced labor is a complex and challenging issue—with no one source being able to identify a single number of measurement. The varied nature and definitions of forced labor are vast, and the sophistication of the systems developed to ensure that those who facilitate these horrific crimes remain undetected is sadly increasing.

    38% of detected modern slavery victims were trafficked for forced labour

    -UNODC, Global Report on Trafficking in Persons 2020

    While some forms of Modern Slavery are overt, there are also much more subtle forms of coercion and control. Situations where a victim’s vulnerability or lack of choice has been abused—where there is a hold over their family through debt or where the threat of deportation—deprives them of any real freedom and choice.

    Our Transparency in Supply Chains Statement has been published in accordance with the California Transparency in Supply Chain Act (SB657). This Act requires large retailers and manufacturers doing business in California to disclose on their websites their efforts to eradicate slavery and human trafficking from their direct supply chain. The law applies to any company doing business in California that has annual worldwide gross receipts of more than $100 million and that identifies itself as a retail seller or manufacturer on its California tax return.

    This statement details what Lush is doing to combat the risks of modern slavery and human trafficking within our own business and our supply networks. It outlines Lush’s commitments both locally and globally towards mitigating the risk of modern slavery in our supply networks and business going forward.

    Our Business - Organizational Structure

    Lush Handmade Cosmetics Limited and its subsidiaries, Lush USA Inc and its subsidiaries, and Lush Internet Inc (“Lush”, “we”, “our” or “us”) are entities registered within North America. We recently became part of the Lush Group of companies with the ultimate parent company being Lush Cosmetics Limited, a private company registered in the UK.

    Lush was started in 1995 by a close-knit team who have continued to work together for over 40 years. The first Lush shop opened at 29 High St, Poole in April 1995, with products being made in a small space above the shop. Lush places emphasis on the benefits of using the finest quality fresh, natural ingredients in our products for their nourishing effects on the body and mind. We strive to ensure our products reach our customers in the freshest condition when they are most potent and effective—it’s at the heart of our philosophy. We use ingredients such as fruits and vegetables, herbs, flowers, butters and essential oils—organic wherever possible—and with minimal synthetic preservatives. All products are vegetarian, with the majority being vegan.

    Lush’s global expansion, while rapid, has been carefully controlled. More than 25 years on, Lush has over 100 stores in the UK, 900+ stores worldwide and is present in 47 countries, with manufacturing operations in 6 countries (UK, North America, Germany, Croatia, Japan and Australia). Lush also employs around 14,000 people during peak production. North American entities purchase their product from Lush Manufacturing Limited, a subsidiary of Lush Handmade Cosmetics Limited, who purchases raw materials from UK registered Lush Ltd as well as a network of global suppliers and local suppliers.

    We are very proud to offer a range of fresh, handmade cosmetic products which are all manufactured in house and sold through our retail shops, digital channels and collaborative partners.

    The Lush business is run in accordance with a set of founding ethical principles written by our founders at the very beginning of Lush’s life, commonly known as our ‘We Believe Statement’. These principles underpin all that we do and run through every vein of our business.

    Globally, Lush further sets out its core values and principles in the Lush Ethical Charter.

    Our Business & Our Supply Networks

    Lush products are for sale in our shops and on our website. They are invented by Lush UK in-house and manufactured in our own factories. The Creative Buying team manages the supply networks of our product and raw material suppliers who are selected based on ethical, sustainable and commercial criteria, and are supported by the integrated Ethical Compliance team.

    Product supply networks are complex, involving several different processes—and Lush’s supply networks are no exception. Although we try wherever possible to buy as direct to source as we can, most supply networks are made up of several tiers stretching over numerous countries. Globally, Lush sources around 1400 materials from more than 80 countries, with an annual buying spend of $98m CAD for the North American arm of the company.

    In North America, we work with over 146 raw material suppliers and over 35 local packaging suppliers.

    Lush has many supply networks that contribute to the operation of our business and as the Lush business continues to grow, so do the number of suppliers. This number continues to evolve as we discover new materials, meet new suppliers and source materials to meet the growing business needs.

    As a business, we realize that can have both a positive and negative impact through our business operations. Due to this, we have aspired to maximize the benefit of our actions—relying on positive and open relationships with our suppliers and producers to find a path to a truly ethical and sustainable business that will last into the future.

    Our vision is that every ingredient we purchase is contributing to a positive future. Globally, Lush is building a web of like-minded pioneers who want to be a part of the solution. Through the ingredients we buy and through the people we meet and partner with, we are finding that some of these answers come through reciprocal trade. That means finding ways in which we can grow, produce, manufacture and ship our goods that are truly sustainable. In fact we have ceased to aim for just sustainable, but wish to reach beyond that to regenerative—making sure that our purchases put back more into the soil, the community and the natural world than they take out—while at the same time, providing a profitable and viable business for all of us. We want to leave the world lusher than we found it.

    The Impacts of Covid-19 on Modern Slavery

    The rapid spread of Covid-19 in 2020 prompted shutdowns of industries around the world and while most consumers were in lockdown, lower demand for certain products and inability to access them significantly reduced the need for production of some products.

    As a maker of soap products, Lush manufacturing was classed as an important industry, but sadly our retail outlets were not. Therefore, while our stores intermittently closed, we focused our efforts on serving our customers via our digital channels.

    Without the ability to visit our suppliers, we had to think of ways that we could connect with our supply network without physically being there.

    Lush Foundations

    Lush Foundations establishes minimum performance expectations and continuous improvement benchmarks for our suppliers. The Foundation is based on Lush’s values, and ethical and sustainability commitments, and it is aligned with international principles, standards and best practices. Lush expects all suppliers to take every measure to adopt and exceed behaviors that are in line with clauses set out in the policy.

    The policy covers a wide variety of topics in line with our values—focusing on human rights, environmental impact and animal welfare. Specific clauses that contribute to our commitments to eradicating slavery within our supply chains are:

    1.2 HUMANE TREATMENT

    Lush suppliers shall maintain a workplace free of any form of harsh or inhumane treatment. The use or threat of physical or sexual violence—harassment and intimidation of any kind against a worker shall not be allowed. Lush suppliers shall commit to treating all their workers with dignity and respect —have zero tolerance of corporal punishment, or mental or physical abuse.

    1.3 HUMAN TRAFFICKING, FORCED & COMPULSORY LABOR

    Lush strictly prohibits human trafficking in all our suppliers’ operations. Lush suppliers shall not subject their workers to any form of forced, compulsory, bonded, or indentured labor. All work must be voluntary and workers shall have the freedom to terminate their employment at any time without penalty, upon giving reasonable notice, and according to national laws and regulations.

    1.4 CHILD LABOR

    Lush suppliers shall not engage in any employment of child labor. Child labor refers to work that is mentally, physically, socially, morally dangerous or harmful to children or that improperly interferes with schooling needs as per ILO Conventions 138 and 182. Should suppliers become aware of any child labor taking place, Lush expects them to support transition programs away from harmful working environments and/or avenues to support the child back into education.

    1.5 FREEDOM OF MOVEMENT AND PERSONAL FREEDOM

    Lush suppliers shall not unreasonably restrict their workers’ freedom of movement. Workers’ identity papers or travel documents shall not be confiscated. Workers shall not be physically confined to their workplace or related premises; nor shall any other coercive means be used to restrict workers’ freedom of movement or personal freedom.

    1.18 COMMITMENT TO TRANSPARENCY & SUPPLY CHAIN VISIBILITY

    Lush expects suppliers to conduct their business in an open and transparent manner. We expect suppliers to disclose if they are engaging subcontractors in the production or processing of their goods and services. In addition, we expect suppliers to keep Lush informed of all practices and resources pertaining to: production of materials sourced, supplier traceability, and other aspects of their operations that relate to the expectations and requirements of this policy. 1 Lush believes in partnerships and collaboration, and we are willing to work with our suppliers to improve performance where necessary. As a result, we may conduct site visits and/or inspect working conditions, from time to time.

    Lush is committed to supporting the growth and development of our suppliers and, where appropriate, investing in capacity building to meet and exceed the expectations of this policy, generating a positive and sustainable impact.

    Our success, in part, has been due to the establishment of direct and close working relationships with our suppliers and the communities where they operate. As a result, we encourage suppliers to identify areas of opportunity and, where feasible, collaborate with Lush in the implementation of continuous improvement measures—addressing root cause issues and creating socially responsible, resilient and regenerative supply chains.

    Suppliers should not face obstacles or disadvantages to partnering with Lush because of the implementation of this policy’s requirements. We understand that the attainment and upholding of ethical and responsible practices is an ongoing, long-term commitment that requires collaboration for mutual and shared benefit.

    Assess - Understanding the Risks

    The risk of modern slavery lies everywhere—in all tiers of a company’s supply network and within their own operations. For Lush, one of the sources identified as being high risk was mica, which is why we have moved away from sourcing natural mica and consequently, made the decision to go completely natural mica-free as of January 2018.

    We utilize a variety of tools within the business to help us understand our supply chain risks.

    Where possible, we work directly with suppliers and producers. However, even without complex supply networks, we know that long distance relationships take work. This is why, under normal circumstances, we conduct regular visits to our overseas (and local) suppliers to see their operations. Due to the global pandemic this has not been possible to the same extent as previous years. But, as soon as travel restrictions ease, our buyers will take the information gathered from our online survey along with them to these visits, as it forms a good basis for an internal audit.

    Act - Taking Action

    VERIFICATION & SUPPLIER AUDITS

    We have a global network of in-house buyers who have been trained in social auditing standards within Lush that visit suppliers directly. These visits are designed for several purposes: to encourage a direct relationship and disclosure of challenges suppliers are facing, to learn about the material which we purchase and how it is processed or harvested, and to verify that the supplier is adhering to the Lush foundations.

    As Covid-19 restrictions ease around the globe, visiting a larger percentage of our supply network will be a key focus moving forward. We also accept verification in the form of 3rd party certification from Fairtrade bodies as detailed in the section below.

    Lush expects suppliers of raw materials to conduct their business in an open and transparent manner. We expect suppliers to disclose if they are engaging subcontractors in the production or processing of their goods and services. In addition, we expect suppliers to keep Lush informed of all practices and resources pertaining to: production of materials sourced, supplier traceability and other aspects of their operations that relate to the expectations and requirements of our Lush Foundations policy.

    Lush believes in partnerships and collaboration, and we are willing to work with our suppliers to improve performance where necessary. As a result, we may conduct site visits and/or inspect working conditions using either internal colleagues or a 3rd party service in line with risk analysis data where available.

    If Lush considers a partner to fall below their required standards and shows no intention to remediate, then it is likely that further action will be taken to review working relationships.

    CERTIFICATION

    Lush prefers transparency over certification, but will always strive to be compliant with all applicable laws and regulations relating to forced labor and human trafficking. Where possible we require direct supplier certification to be provided.

    Some of our raw materials, where appropriate, are certified by various Fairtrade bodies against international Fairtrade standards, which incorporates a holistic blend of social, economic and environmental criteria—including requirements that prohibit the use of forced and child labor. These standards contain both core requirements and development requirements aimed at improvements that benefit producers and their communities.

    Eliminating Modern Slavery is covered within the Fairtrade Producer Standards and Fairtrade Trader Standard. This requires everyone who buys, sells or processes Fairtrade certified products, from the raw commodity to packaging, to comply with these standards. They also require compliance with national law, key ILO and other relevant human rights conventions.

    INTERNAL ACCOUNTABILITY

    We are committed to ensuring transparency throughout our business and our approach is to tackle modern slavery by implementing effective systems to ensure modern slavery is not taking place anywhere in our own business or in any of our supply chains.

    Our Anti-slavery and Human Trafficking policy applies to everyone working for us or on our behalf in any capacity. This includes employees, directors, agency workers, seconded workers, volunteers, interns, agents, contractors, external consultants, suppliers, third-party representatives and business partners. This policy does not form any part of an employee’s contract of employment and we may amend it at any time.

    The prevention, detection and reporting of modern slavery in any part of our business or supply chains is the responsibility of all those working for us or under our control. All employees are required to avoid any activity that might lead to, or suggest, a breach of this policy.

    If our staff believe or suspect an instance of non-compliance with this policy has occurred, or may occur in the future, they must report their concerns in accordance with our Whistleblowing Policy as soon as possible.

    TRAINING

    In order for our teams to effectively identify and manage the potential indicators of forced labor, our Buying team has been provided with multiple training sessions to equip them with the skills required when visiting manufacturing sites.

    In addition to training some of our buyers to the SA8000 standard, we have historically partnered with Verite, an NGO (non-government organization) providing knowledge and tools to highlight the most serious labor and human rights abuses within global supply networks. While this training was unable to take place during the previous financial year, we will be conducting refresher sessions going forward to incorporate new starters .

    The Lush board of directors have overall responsibility for ensuring Lush's compliance with the California Transparency Act and that all those all those in partnership with us comply with it. Management at all levels is responsible for ensuring those reporting to them understand the issue of forced labour and comply with this policy.

    Lush also actively encourages suppliers to email “[email protected]” should they have any concerns relating to the treatment of those within the supply network.

    COVID-19 ADDITIONAL SUPPORT

    Covid-19 has had a profound impact on the world, including creating more challenges for people. It has increased vulnerability to slavery, worsened discrimination, increased risks for migrant workers and disrupted anti-slavery efforts. For example, when we look at India, human rights protections have been lower and a number of labor laws have been relaxed in response to the pandemic.

    The impact on supply networks was exacerbated further by the restrictions placed on the movement of people and by the inability of NGOs and retailers to maintain their presence within manufacturing sites. Workers, and especially migrant workers, may have personal and professional circumstances

    which do not allow them to socially distance, work from home or take a day off without pay, making them especially vulnerable.

    Globally, Lush wanted to understand the deep impact that Covid-19 had on our supply chains, and if there was anything that we could do to help alleviate some of the pressure. Lush worked to understand suppliers that were more vulnerable, and in some instances improved our payment terms or paid partially in advance. We also offered practical support where it was needed including funding PPE (mask & sanitation stations).

    Remedy - Provide a Solution For Victims of Slavery

    We have several channels through which we would receive potential violations or incidents for concern—via the Buying team, during our own investigations of our supply network, or through our whistleblowing hotline as detailed above.

    No instances have been raised to date—however, we wish to be prepared should an instance arise.

    In this financial year, our UK business launched a policy specifically designed to support potential victims of forced labor. This will be embedded throughout the global business in 2022-2023.

    Supporting Human Rights Charities

    At Lush, we like to look after those who look after others and we are committed to supporting small, grassroots groups and other non-profit human rights organizations.

    In FY2021( 1 July 2020- 30 June 2021), Lush North America made 74 donations to human rights groups from our Charity Pot sales (including groups supporting migrants, refugees and groups tackling slavery and human trafficking)—over US$735,000 and over $284,000 CAD was donated in total to these groups.

    (Breakdown of donations by cause)

    We encourage Charity Pot applications from all human rights organizations through our website. Please see our Charity Pot Guidelines for more information.

    Californian Transparency in Supply Chain Act Requirements

    This statement constitutes our Transparency in Supply Chain Statement for the period of 1 July 2020 – 30 June 2021 and contains reference to the key requirements of the Californian in Supply Chains Act including Verification, Certification, Audits, Internal Accountability and Training.

    This statement was approved by the members of the Boards of Lush Handmade Cosmetics Limited.

    Signed for and on behalf of Lush Handmade Cosmetics Limited

    Annabelle Baker Director Lush Handmade Cosmetics Limited

    Finding help in North America:

    If you or someone you know is being or has been exploited, or you are unsure if someone is in need of help, assistance and advice is available:

    USA

    International TIP (Trafficking in Persons) Line

    Tel. +1-802-872-6199

    USA

    National Human Trafficking Hotline (U.S. Department of State) - Run by Polaris Project

    Phone: +1-888-373-7888

    Text ‘ToBeFree’ 233733

    Online: https://polarisproject.org/our-work/

    Canada

    Canadian Human Trafficking Hotline

    Phone: +1-833-900-1010

    Email: [email protected]

    Online: https://www.canadianhumantraffickinghotline.ca/

    Homepage - California Transparency Act