This disclosure is made in accordance with the California Transparency in Supply Chains Act (SB 567) which requires that companies disclose certain matters with respect to their efforts to ensure that their supply chains are free from slavery and human trafficking.
Masco Corporation and its subsidiaries have a longstanding commitment to the ethical and responsible sourcing of goods and supplies for Masco's family of companies. Masco's Supplier Business Practices Policy (SBPP), which is published at our Masco Global Supply Chain Internet Site, formalizes that commitment by requiring, among other things, that our suppliers respect our standards and those of our customers, including with regard to compliance with laws, human rights, child labor, human trafficking, slavery, wages and benefits, excessive working hours, corporal punishment, discrimination, safe and clean workplaces, and other labor and employment standards.
Verification of supply chains and auditing of suppliers to evaluate supplier compliance and address risks with respect to human trafficking and slavery.
Masco requires our operating units to have a formal system for reviewing and accepting new vendors. For vendors located outside the United States, Canada and Western Europe, this program requires a physical review of each new factory to ensure that it meets at least baseline requirements with respect to applicable laws and working conditions, including laws against human trafficking and slavery. Additionally, Masco's Purchase Order Terms and Conditions for Masco Companies (published at Masco Global Supply Chain Internet Site) requires compliance with applicable laws as well as the standards and requirements set forth in the SBPP.
In addition to the process for selecting new vendors described above, Masco engages in verification of the practices of its existing supplier base (other than suppliers located in the United States and Western Europe) through periodic announced audits to assess risks and ensure compliance with applicable laws and conditions, including laws governing human trafficking and slavery. These audits are conducted by Masco employees for suppliers in China, Taiwan, and Vietnam, and by third parties for suppliers located in other countries. If significant issues are raised by an audit, we may also conduct a follow-up unannounced audit to address the initial findings.
Masco maintains an internal scoring system with respect to its periodic audits of suppliers and records the results on an internal web site. Masco further investigates all reported instances of non-compliance and takes appropriate action to help ensure that our SBPP standards and applicable laws are observed. Masco's global compliance program is managed from Masco's Shenzhen, China office in conjunction with Masco's internal auditors located in Taiwan and Vietnam.
Masco selection and continued use of suppliers is based on the following standards with respect to all goods that we purchase described in our SBPP:
We will not knowingly work with suppliers that do not respect these standards and those of our customers. We will periodically assess our supplier's compliance with these standards and those of our customers. Any reported non-compliance will be investigated and appropriate action will be taken. These standards apply whether the supplier is a Masco company, an affiliate or a third party.
Masco's internal accountability standards and procedures for employees or contractors failing to meet company standards regarding trafficking and human slavery and training for employees and management who have direct responsibility for supply chain management.
Masco maintains internal accountability standards for employees through its legal and ethical compliance program (the "Code of Business Ethics"), which focuses on areas of ethical risk, and helps foster Masco's culture of honesty, accountability, and transparency. Further, the SBPP pledges that Masco will avoid working with suppliers that do not respect our standards and those of our customers. If an employee is in violation of our Code of Business Ethics or if a supplier is acting in violation of the SBPP, we will (in certain egregious situations) terminate such employee or supplier, or we will work with them to remedy the violation. If the effort to remedy the violation is unsuccessful, we will evaluate our business relationship with that supplier or employee and take appropriate corrective action. Corrective action may include cancelation of an affected order, prohibition on further use of a facility or supplier, termination of employment and reporting the violation to the proper authorities. If a supplier refuses access to our auditors, the relationship with that supplier will be terminated.
Masco believes that education and training are critical components to ensuring that our standards are met and that human rights within our supply chain are respected. All salaried employees, including those with responsibility for supply chain, are required to certify annually their compliance with the Masco Code of Business Ethics and complete on-line training. Masco's Code of Business Ethics includes the requirement to comply with all laws in all places where Masco does business, and a violation of the Code may result in penalties, including termination. Additionally, Masco periodically trains each of its employees and managers with responsibility for supply chain management with respect to the applicable requirements of, and compliance with, our SBPP, including with respect to human trafficking and slavery.