Corporate Governance

Global Compliance Program
for Merchandise Vendors and Factories

Global Compliance Program for Merchandise Vendors and Factories (PDF)

Dear Sears/Kmart Vendor:

For several years, Sears and Kmart have had formal Labor Compliance or Human Rights programs to help ensure merchandise vendors and factories adhere to the requirements of the Sears Buying Policy and Kmart Code of Vendor Conduct on such issues as child labor, wages, benefits, health and safety. In light of the recent merger between Sears and Kmart, we have harmonized our respective Buying Policies and vendor/factory compliance programs. We have also made several changes or amendments to the combined program to help simplify existing policies and encourage higher compliance levels among our vendors and their factories.

The following document outlines the Sears Holdings Management Corporation (hereunder abbreviated as Sears Holdings) Global Compliance Program for vendors and factories. While much of the new company’s program is similar to the former Sears and Kmart programs, there are a number of key changes that warrant your attention. They include:

• The adoption of the Sears Holdings Code of Vendor Conduct (formally Sears Buying Policy and the Kmart Code of Vendor Conduct);
• The inclusion of private label hardlines and vendor branded or licensed merchandise exclusive to Sears or Kmart stores into the program scope;
• Movement to all unannounced audits;
• A stronger emphasis on continuous improvement;
• The introduction of the Sears Holdings Vendor Owns Compliance (VOC) Program; and
• The harmonization of audit protocols to include Labor Compliance and Factory Security (CTPAT).

Some of the benefits of the new Global Compliance Program will be fewer or less frequent audits for vendors and factories with high compliance performance and effective internal systems to manage compliance. Other benefits include harmonization of policies and procedures and a stronger emphasis on ways that Sears Holdings Global Compliance can support remediation and continuous improvement within the Sears and Kmart supply chain.

We are pleased to present the new combined Global Compliance Program for our vendors and factories. If you have questions or comments, please feel free to contact the Sears Holdings Global Compliance Department at laborc@searshc.com.

Thank you very much for your continued support.

Sincerely,

Sears Holdings Management Corporation’s Global Compliance Department

Global Compliance Program for Merchandise Vendors and Factories (PDF)