Collaboration with others Individual companies cannot easily influence established norms in a country. By combining Reebok’s voice with those of other like-minded companies, we can have a greater effect.

We work with others in the industry to develop an industry-wide consensus about the underlying causes of poor working conditions endemic in a particular country or region. With our peers, we engage with governments to discuss local labor laws and lobby for full enforcement. To promote better standards in the country, we partner with a network of local worker’s organizations and NGOs.

Compliance performance resolution In a recent change to our approach, when we identify a countrywide compliance problem, we focus attention on it with initiatives we call Compliance Performance Resolutions (CPRs).

Introduced late in 2004, CPRs are a formal process initiated by written communication from Reebok to all factories in a country that:

• Highlights a likely area of noncompliance across a country or region

• Explains the relevant Reebok standard

• Describes the systems that we require factories to implement in order to demonstrate compliance

• Establishes a deadline for proof of compliance to Reebok

In 2004 and 2005, CPRs were used in China, Guatemala, Spain and Portugal to respond to persistent noncompliance with our record-keeping standards. Many records in factories in these countries, particularly China, did not accurately represent working hours and compensation. Our CPR required factories to have internal systems to ensure exact records are kept. We informed all factories that the systems must be in place before Reebok would consider a factory for production.

The CPR resulted in some success and some frustration. Factories generally tried to respond, but we found that management sometimes lacked technical expertise and the policies and procedures they developed were often flawed.