TACE IWAY Working Method Supplier version

Edition: 1 Issued by: Katarzyna Iwanek Valid from: 2014-04-01

Replaces: - Approved by: Eva Mal Belusk Applied to: TACE Suppliers


Page 1 of 6

1. Purpose

The purpose of this document is to inform IKEA Home Furnishing Suppliers and
subsuppliers which are in the scope of IWAY implementation (see point 3) about the
IKEA Working Methods related to IWAY. It is valid for IWAY Standard version 5.1 and
next versions until further notice.

2. The IWAY process summary

Steps What? Who? When?
1 Communication of IWAY
related documents
IKEA Before business contract is signed
2 Initial IWAY assessment IKEA Before business contract is signed
3 Fulfillment of IWAY Must Supplier Before business contract is signed
4 IWAY Compliance
Commitment (ICC)
signed
Supplier Before/at the time business
contract is signed
5 Implementation of all
IWAY standard
requirements
Supplier As agreed with IKEA, but not
longer than 12 months from the
first delivery
6 IWAY approval audit IKEA Latest 9 months after first delivery
to secure that corrective action can
still be implemented before
implementation deadline is
reached.
7 IWAY Audit report IKEA Within maximum 5 working days
from the audit date
8 Corrective Action Plan Supplier Within maximum 14 calendar days
from the date of the audit report is
received.
9 Implementation of
corrective actions
Supplier As agreed with IKEA. Not longer
than 60 days from date of Audit
10 Verification of corrective
actions
IKEA Method of verification is decided by
the IKEA Auditor
11 IWAY Maintenance Supplier
IKEA
Continuously during cooperation
with IKEA
Monitoring and support
12 Re-audit IKEA As agreed unannounced and
announced audits not less frequent
than every 24 months (12 months
in Asia).

3. Scope of IWAY implementation

The scope of IWAY implementation and verification differs within the IKEA value chain:
Full IWAY Scope:
All suppliers, with which IKEA has a legal contract/Purchase Agreement (PuA)
including all its production units producing for IKEA (including majority owned sub-
suppliers)
All permanently present on-site sub-suppliers (>18h per week, on sub-supplier level)
All on-site contracted Labor directly involved in the production


TACE IWAY Working Method Supplier version



Edition: 1 Issued by: Katarzyna Iwanek Valid from: 2014-04-01
Replaces: - Approved by: Eva Mal Belusk Applied to: TACE Suppliers


Page 2 of 6

Sub-Suppliers with a general agreement (nominated sub-suppliers)
Sub-Suppliers that cover the main part of the production (supplier only covers the
very final stages of production, e.g. labeling and packaging). These sub-suppliers shall
be registered as Production units connected to the main supplier

Limited IWAY scope:
Critical Off-site sub-suppliers (IWAY Must)
Non critical off site sub-suppliers (IWAY communication)

4. IWAY at sub-suppliers

4.1 General requirements

The IKEA supplier registers at least all 1st tier sub-suppliers involved in the production
of IKEA articles in a system provided by IKEA (Sub-supplier tracking system, SSTS).

IKEA suppliers are responsible to communicate the IWAY requirements including the
document The IKEA Way on Preventing Child Labor, to all its 1st tier sub-suppliers
involved in providing products, materials or services for IKEA (Recruitment Agencies
included).

IKEA supplier registers Recruitment Agencies that provide Agency Workers to supplier
in a system provided by IKEA (Sub-supplier Tracking System, SSTS) and communicate
the IWAY requirements including the document The IKEA Way on Preventing Child
Labor to them as well.

4.2 Critical sub-suppliers

Sub-suppliers are defined as critical, if processes performed are considered to be
potentially highly harmful to the environment, health or safety of the workers, or are in
an industry or supply setup that is prone to child Labor or forced & bonded Labor. When
registering a sub-supplier in SSTS, the system will inform the Supplier whether a sub-
supplier is critical or not.

IKEA does not accept any practice of corruption or bribery in relation with IKEA
suppliers and IKEA. The requirement 1.3 Business Ethics in the IWAY Standard shall
however not be part of the IKEA suppliers IWAY Must verification at critical sub-
suppliers.

IKEA suppliers take the responsibility to implement and verify compliance of IWAY
Must requirements at all critical sub-suppliers, which are identified by SSTS and
confirmed by IKEA. Suppliers shall inform IKEA before starting a verification activity to
avoid double work (see below). It is possible to use 3rd party auditing companies
approved by IKEA for verification.

IKEA will inform supplier whenever several IKEA suppliers share the same sub-
supplier. In such a situation the responsibility for implementation and verification of
IWAY Must will be decided by IKEA.

The verification of IWAY Musts at critical sub-suppliers shall be repeated every 24
months (12 months in Asia). New IKEA Suppliers have max. 3 months from first delivery


TACE IWAY Working Method Supplier version



Edition: 1 Issued by: Katarzyna Iwanek Valid from: 2014-04-01
Replaces: - Approved by: Eva Mal Belusk Applied to: TACE Suppliers


Page 3 of 6

to register sub-suppliers in SSTS and 9 months from first delivery to verify IWAY Must
compliance at all critical 1st tier sub-suppliers.

4.3 New sub-supplier

If the Supplier has a new Sub-supplier involved in the production of IKEA articles,
Supplier has maximum 2 weeks for registering it in SSTS

If the Supplier starts up a new Sub-Supplier that is defined as critical, IWAY Must
compliance shall be verified within 6 months from start of deliveries. The result of the
verification shall be registered in SSTS.

4.4 IWAY Must violation

If an IWAY Must violation has been detected at a critical sub-supplier the Supplier
shall:
- Immediately report it to IKEA (Business Developer)
- Register the audit result and follow steps in SSTS
- Secure a corrective action plan from sub-supplier within 14 calendar days
- Follow up the corrective action and verify compliance within a period of maximum 90
days
- If the violation cannot be corrected after maximum 90 days IKEA shall be informed in
order to agree on the next steps.

4.5 Nominated sub-suppliers

If a sub-supplier is nominated by IKEA it shall be from an IWAY perspective -
regarded as regular IKEA supplier, the full IWAY scope applies and IKEA is responsible
for implementation and follow up.

Nominated sub-supplier registers 2
nd
tier sub-suppliers involved in the production of
IKEA articles in a system defined by IKEA and follows all above points as a regular
supplier.

5. Procedure for handling and follow up Child Labour violation.
In case Child Labour is found or suspected in the supplier or the sub-supplier production
units, the following steps must be followed:

1. Collect facts about the suspected violation and document the finding
2. Inform IKEA (Business Developer)

If Child Labour is confirmed:
3. Agree on Corrective and Preventive Actions
4. Make spot checks
5. Follow up on the progress of children under violation cases




TACE IWAY Working Method Supplier version



Edition: 1 Issued by: Katarzyna Iwanek Valid from: 2014-04-01
Replaces: - Approved by: Eva Mal Belusk Applied to: TACE Suppliers


Page 4 of 6

5.1 Collect facts about the suspected violation and document the finding.
Interview the child
Very informally break ice with the child by showing interest in his/her work. There should
not be any indication to the child that there is something wrong and child is responsible.
Instead try to approach the situation calmly and establish a rapport with the child. The
place where conversation should be carried out should be an area where child can feel
comfortable and not threatened. Do not let the supervisor be present during your talk
with the child and take care not to frighten the child.
The initial few minutes should be spent creating a comfortable atmosphere, by asking
general questions in a friendly manner like:

1. The name of the Child,
2. Where is she/he from, which part of the city/village
3. Fathers name and family whereabouts,
4. Who taught him the work
5. Has the child ever been to a school/non-formal education
6. Encourage the child to talk about himself and his work, such as by asking about
siblings and daily work routines

After a reasonable comfort level is reached ask more specific questions e.g.
7. How long have you been working in the factory?
8. Do you do any other kind of work besides the work being done at that instance?
9. Do you have any relatives working in the same factory?
10. Do you come to work every day?
11. Where do you stay- address?
12. What is your age?
13. How much do you earn?

At this stage, pictures of the child should be taken in a friendly manner preferably along
with the interviewer. It would be best not to take down notes in front of the child,
however, if necessary do it as discretely as possible.

Please make sure, that all actions shall be in the best interests of the child and make
clear that we under no circumstances can accept that the child disappears during the
coming investigation. In case that this happens it will automatically lead to probation.
Check age proof records, ask for the age proof record of the child. In case there is a
reason to doubt the authenticity of the proof, then age of the child can be determined
through a medical examination. A reputed medical practitioner should conduct the
medical examination.

Document the finding
Summarise the findings in a report or similar, and ensure this report is signed by the
supplier/sub-supplier management representative. It is important that the views of both
parties are reflected in the report.
5.2 Inform relevant parties within IKEA
The (suspected) Child Labor case shall be reported to IKEA immediately, and no more
than 24 hours after the finding.


TACE IWAY Working Method Supplier version



Edition: 1 Issued by: Katarzyna Iwanek Valid from: 2014-04-01
Replaces: - Approved by: Eva Mal Belusk Applied to: TACE Suppliers


Page 5 of 6

5.3 Agree on Corrective and Preventive actions
As soon as the violation is confirmed, the supplier/sub-supplier must prepare a
Corrective and Preventive action plan. The action plan must be presented within 5
working days from the day when the Child Labour case was confirmed.

Corrective Actions - Corrective measures taken by the supplier/sub-supplier should be in
the best interests of the child. This shall include that the child receives regular full time
schooling, at least till the age of 14/15/16 years, depending on countrys legislation for
finishing mandatory schooling.
The supplier/sub-supplier must meet the cost of childs education (school fee, uniforms,
text and notebooks, meals etc) and any costs for the transport back to the childs home
town. If short time (never longer than 1 year) remains until the child reaches legal age
for working, the supplier/sub-supplier shall also pay salary to the child for this period.
The supplier/sub-supplier must also ensure that the child remains in the school and does
not drop out until end of mandatory schooling.

Preventive Actions The supplier/sub-supplier must analyse the circumstances that led
to the violation and take preventive actions to ensure that Child Labour violation is not
repeated again. Therefore included in the action plan, there must be a programme for
education/ training of childrens rights and the importance of eradication of child Labour.
UNICEF, Save the Children or other NGO can be of help in this work.

5.4 Make spot checks
It is important to ensure that suppliers/sub-suppliers action plan is being implemented.
Spot checks or unannounced visits at factories must be carried out to monitor the
progress of Action Plan. The main purpose here is to verify that no additional child
Labour is occurring.

5.5 Follow up on the progress of children under violation cases
The children under violation cases must be followed up to make sure they stay at school
or that an alternative is found (such as vocational training).

6. Environmental performance reporting

The Sustainability Information from Suppliers Tool (SISu) is the tool which IKEA uses
to collect sustainability data from its suppliers and nominated sub-suppliers. SISu
includes the focus areas; energy, water, raw material utilization and waste, and allows
IKEA to evaluate the sustainability performance of the suppliers.

In order to meet IWAY Standard requirement concerning environmental performance
reporting (4.5), IKEA suppliers are responsible to fill in the SISu tool with data according
to instructions enclosed in the tool.

The complete data from suppliers is collected annually and based on the calendar year.

The correctness of data is verified during IWAY audits.






TACE IWAY Working Method Supplier version



Edition: 1 Issued by: Katarzyna Iwanek Valid from: 2014-04-01
Replaces: - Approved by: Eva Mal Belusk Applied to: TACE Suppliers


Page 6 of 6

7. IKEA Compliance and Monitoring Group (CMG) and 3rd party audits

CMG and 3rd party companies perform unannounced IWAY audits in the IKEA supply
chain. The main purpose is to:
Monitor the implementation and maintenance of IWAY between the periodic audits
Ensure external credibility of the IWAY process
Provide feedback to IKEA Group on the implementation of IWAY

Participants at unannounced audits will include a 3rd party auditor/CMG specialist and a
representative of the IKEA Business Unit.

8. Non compliance and business consequences

Suppliers failing to meet full IWAY compliance within the agreed timeframe will be
phased-out

IWAY Must violations found at any of the suppliers production units will always lead to
an immediate delivery stop from the relevant production unit(s)

If a Supplier repeatedly fails to comply with IWAY Must requirements (more than once
within a 24 month period), the Supplier will be phased out.