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Cintas will come clean on compliance details

January 2005

Cintas, North America’s largest uniform maker, is to report publicly for the first time on how its suppliers perform against its ethical code of conduct.

The US-based company’s decision follows pressure from shareholder activists who tabled a resolution on the issue at last year’s annual meeting.

The company opposed a similar resolution in 2003 and had until recently said it could not report publicly on supplier performance as this might involve divulging ‘detailed wage and benefit data, operational information and other competitive data’. It says it has now found a way of reporting without compromising confidentiality. The first compliance report covering the fiscal year 2005 will summarize corrective actions taken by suppliers and contracts ended due to code violations.

The move may mark the beginning of a thaw in previously frosty relations between the company and shareholder activists. Last year Cintas filed a libel suit against Tim Smith, senior vice president at Walden Asset Management, after he accused the company of using a dubious supplier in Haiti (EP5, issue 11, p12).

In an out-of-court settlement recently agreed by the two parties, Smith, who is also head of the US Social Investment Forum, apologized for describing the Haiti supplier as a ‘poster child for sweatshops’.

Smith said he had based his remarks on reports from undisclosed sources. However, after Cintas had privately shown him audit results for the supplier he concluded that ‘based on these materials, I would not have described this facility as a sweatshop, and I regret any harm that may have been caused to Cintas’. Both sides described the settlement as amicable.

Cintas said the decision to produce a compliance report did not represent any radical change of heart but reflected its progress ‘in finding a way to provide the information in a public report while protecting our suppliers’ confidential information’.

The decision has been welcomed by SRI specialists, who say all parties will benefit from timely and accurate information on suppliers’ performance.

Adam Kanzer, shareholder advocacy director at Domini Social Investments, said: ‘We hope the company will ... produce a meaningful report, and that the report will specifically address conditions at factories ... in Haiti.’

The 11-point Cintas code of conduct sets working hours, requires wages and overtime to be in line with local regulations, forbids employment of anyone under 16 and, unusually, requires suppliers and vendors to guard against illegal drugs shipments. The code is backed by an annual 119-point third-party audit of the company’s largest suppliers by Fair Labor Association and SA8000 certified auditors.

Cintas, which provides uniforms for airlines, fast food restaurants, hotels and industrial and service workers, has 28,000 employees and turned over $2.8billion (£1.45bn) in the year to May 2004.


Further Information
http://www.cintas.com
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