Responsible Sourcing
Responsible Sourcing Program Overview
1. Code introduction
Best Buy adopts the Responsible Business Association (RBA)’s Supplier Code of Conduct. The latest version, Version 8.0, went into effect on January 1, 2024. We adopted this new Code, which provided additional provisions for workers on topics like equal pay for equal work, reasonable accommodation for workers with disabilities, and tightened requirements for facilities in creating a comfortable, safe and appropriate work environment.
Overall, the Code establishes standards to ensure that working conditions in the industry supply chain are safe, that workers are treated with respect and dignity, and that business operations are environmentally responsible and conducted ethically.
The Code is updated every three years by RBA to ensure its relevance to international norms and issues members may face in their supply chains. The Code review process is extensive and includes a thorough consultation process with members and stakeholders.
Before working with new suppliers, we provide an in-depth training on our code and program, including our expectations on critical risks such as human trafficking and forced labor.
2. Self-reporting
New suppliers are required to complete a self-assessment questionnaire (SAQ) in the supplier qualification process.
Existing suppliers assess their performance against the code by completing an annual SAQ. If priority concerns exist, further clarification will be conducted through remote or on-site assessment.
3. Monitoring
Once a supplier is chosen, we work cooperatively with each supplier through a process of capacity building that includes monitoring, training and addressing any identified non-conformances. This ensures ongoing and continuous improvement of working conditions within all our suppliers’ facilities throughout the duration of our business relationship with them.
We take a multi-pronged approach to monitoring suppliers based on risk to enable their adherence to code expectations in their own operations and in their next tier supply chain management:
- Risk Assessments: We conduct overall supply chain risk mapping annually to identify priority due diligence efforts. For example, we understand that forced labor conditions are higher risk in some sourcing regions, especially related to foreign migrant and other vulnerable workers.. We then apply increased due diligence for those suppliers accordingly.
- Audits: We conduct third-party audits at 100% of our potential supplier factories, which includes environmental and human rights screening criteria. If we identify any issues not in conformance with our code, we require the supplier to take corrective action. If there is a priority non-conformance violation found, it must be addressed immediately. Suppliers that are unwilling or unable to address priority violations are rejected.
- For existing suppliers, Best Buy conducts a full audit at least every other year to identify any gaps between suppliers’ performance and the code. We align our own audit protocol to that of RBA which are conducted by firms and auditors who have been trained and approved by the RBA. We also accept other approved third-party audits. Our audits include management and worker interviews, document review, and visits to all structures on the factory premises, including warehouses, dormitories and canteens. We not only assess their social and environmental performance, but we also review the management systems they have in place.
- Corrective Action and Remedy: Once a gap is identified between the Code and the factory management system, it is referred to as a non-conformance, and corrective action is required to remedy the issue within the required timeframe.
- We provide established guidelines for suppliers to take corrective action and remedy.
- We monitor corrective action and remediation progress and require evidence of the remediations.
- For the most severe findings, we require a third-party on-site assessment to verify and confirm the remediation and corrective actions.
- Responsible sourcing integration in business decisions: Business impacts occur if priority non-conformances are discovered during an audit.
When a non-conformance violation is discovered, we classify it by severity:
- Priority non-conformance is the highest-severity audit assessment finding, requiring escalation by the auditor and immediate attention by the supplier. Priority non-conformance consists of findings that represent:
- A serious non-conformance of the RBA code or applicable legal requirements;
- An immediate threat to life or health; or
- Risk of serious and immediate harm to the community or environment.
- The identification of any priority non-conformance (such as forced labor) automatically results in a failed audit. Suppliers must take immediate action to remedy all priority non-conformances through the priority non-conformance remediation process. If the factory is unable or unwilling to address the priority non-conformance, we will terminate the relationship.
- High-risk major non-conformance is a significant failure in the management system that affects the ability of the system to produce the desired results and/or satisfy legally mandated requirements. Two high-risk warnings for the same non-conformance finding within a single year is considered the equivalent of a priority non-conformance.
- Major non-conformance is a significant failure in the management system that affects the ability to produce the desired results.
- Minor non-conformance is an isolated or random incident which, by itself, does not indicate an inherent problem with the management system.
For all types of non-conformances, we follow up to determine if violations — whether priority, high-risk major, major or minor — are resolved. All instances of nonconformance require a corrective action plan, which we approve and monitor.
We believe continued dialogue with suppliers results in more meaningful improvements for supply chain workers, promotes healthy and safe working conditions, and reduces negative environmental impacts.
Therefore, whenever non-conformances are found during an audit, we expect our suppliers to identify the root cause of the issues and indicate how they intend to improve the issue and measure progress. The suppliers then must close the non-conformances according to Best Buy’s timelines and provide the supporting evidence. Due to the nature of issues related to working hours and social insurance, we allow factories to provide longer-term risk mitigation plans with phased targets, maintaining continuous dialogue to foster transparency and accountability.
While we recognize the time and effort it takes suppliers to address non-conformances, we believe we can make a stronger impact on remediation efforts by implementing a monitoring mechanism. We require an additional third-party audit if the supplier does not submit a CAP or if they do not remediate the non-conformance within the reasonable timeframe allowed.
4. Capacity Building and Communication
We are committed to transparency with our suppliers on our priorities, our monitoring approaches, audit assessment steps, code requirements, key elements of a supply chain sustainability management system, and the steps to improve their adherence to our requirements. We host our annual supplier meeting and leverage virtual trainings to deliver this content and deepen our relationship and engagement with our suppliers. We frequently leverage RBA’s training resources available to all suppliers to improve factory performance.
In addition to our private label suppliers, we train our internal private label teams including product managers, sourcing and the leadership team.
5. Reporting
Each year we publicly disclose our suppliers’ compliance against our Code of Conduct in our Corporate Responsibility and Sustainability Report, which can be found in our Resource Library.
Forced Labor Not Acceptable
In alignment with the Universal Declaration of Human Rights, the International Labor Organization Core Conventions, and the International Labor Organization Declaration on Fundamental Principles and Rights at Work, Best Buy is committed to respecting human rights as outlined in the United Nations Guiding Principles on Business and Human Rights, including forced labor.
As an active member of the Responsible Labor Initiative (a sub-group initiative of the RBA) to address identified forced labor risks in the supply chain, drive supplier accountability, and implement corrective measures, we understand that forced labor conditions are a risk in some of the regions in which we source our private label products, especially for foreign migrant and other vulnerable workers. Therefore, we conduct both country-level risk assessments and an annual factory-level risk assessment that considers both business and social risks to help us identify where additional due diligence may be needed.
For country-level forced labor risks, we leverage data from:
- The Worldwide Governance Indicators Project
- The U.S. Trafficking in Persons Report
- The Global Slavery Index
We conduct factory-level risk assessments annually based on our suppliers’ annual self-assessment questionnaire and their previous priority non-conformances related to forced labor.
We make our expectations on forced labor clear for our suppliers in a variety of ways, including:
- Provisions prohibiting forced labor are standard in our vendor contracts
- 100 percent of our private label vendors receive training on our Supplier Code of Conduct
- Before working with new suppliers, we provide an in-depth training on our Code and program, including our expectations on critical risks such as human trafficking and forced labor, and we deliver this content annually at our supplier meeting as well as leverage virtual trainings related to this content.
- Supplier responsibility is a requirement of our Code and supplier audits. We require and train our suppliers to disseminate the Code in their supply chain through a cascade approach.
- We require our relevant suppliers in high-risk countries who rely on foreign migrant workers and their associated labor recruitment agencies to have additional training on responsible recruitment courses, including methods and tools to eliminate recruitment fees
- We also provide specific training to our suppliers in China on student workers. We partnered with an NGO and created a toolkit for the factories we contract with in China to help identify and prevent forced labor conditions among student workers. We continue to send the Student Worker Management Toolkit and alert to our suppliers during summer holidays and winter holidays to guide them on the proper use of student workers. For those suppliers who hire student workers, they are required to finish the Self-Assessment for Student Worker Hiring Management System as well as participate in worker interviews twice a year.
- In addition to our private label suppliers, we train our internal private label teams, including product managers, sourcing and the leadership team.
Beyond training, we ensure our private label suppliers are complying with our expectations through a rigorous monitoring program. In fact, we conduct due diligence on each factory in multiple ways including:
- A pre-contract audit for 100 percent of potential private label factories
- For existing suppliers, Best Buy conducts a full audit at least every other year
Our audits include assessments of the factory and dormitories, review of numerous documents and policies, and interviews with factory management and workers. Auditors look for any conditions that indicate a potential for forced labor (for example: withheld passports, restricted movement, recruitment fees and withheld pay), and interview workers, either directly or via worker surveys, to better understand their working conditions.
If we do find conditions of forced labor, we immediately take action to hold our supplier accountable including, but not limited to
- Requiring the specific action(s) to cease immediately
- The supplier must complete a Corrective Action Plan (CAP) that is approved by Best Buy
- Workers are paid their due wages, including the reimbursement of all recruitment fees, which is verified through spot checks and ultimately 3rd party audits
- The supplier must establish a policy preventing all conditions of forced labor and conduct a training on the policy for all relevant employees
- We leverage partners with expertise on foreign migrant workers and forced labor to conduct a required training so factory management and staff fully understand our requirements
- Moving forward, the supplier is designated as high-risk and is subject to additional due diligence.
If the supplier refuses to comply and does not complete a Best Buy approved Corrective Action Plan (CAP), we will terminate the relationship with the factory.
Our team spends substantial time building trust with workers to effectively deploy the grievance mechanism. We require suppliers post the Best Buy grievance hotline in the facility in the language of the workers. If any case is reported, we investigate and follow up.
To empower workers to voice their opinions and concerns in the workplace and beyond, we launched our Worker Voice program in FY22, which enables supply chain workers to answer customized survey questions through their personal mobile devices. Workers are surveyed anonymously and remotely in their native language.
Beyond direct suppliers, we also respond to allegations of forced labor in raw material sourcing and engage smelters who may be sourcing from mines where forced labor may be present. In these cases, we assist in industry efforts to engage the smelters in question to determine what actions they are taking to verify and, if necessary, address conditions of forced labor at the mine. By partnering with industry peers, we build leverage that is then applied to the smelters so that they increase their engagement and improve their oversight of source mines.
Our focus on eliminating conditions of forced labor is just one example of how Best Buy seeks to ensure the responsible sourcing of our private label products. We are dedicated to driving continuous improvement of our sourcing practices and our vendor’s working and environmental conditions and we firmly believe one of the best means to further our responsible sourcing efforts is through engagement and collaboration with stakeholders, including suppliers, peer companies, investors, academics and civil society organizations.