At Staples, doing right is just as important as doing well. We know that a strong foundation of ethics and governance is comprised of both a clear and comprehensive Code of Ethics (the “Code”) and conduct which demonstrates an uncompromising commitment to that Code. Both are essential to build the trust of our customers, investors and other stakeholders. That’s why we hold all Staples associates, from the boardroom to the store floor to the supply chain, to the highest standards of honesty, fairness and integrity – and why we work hard to ensure that all members of Staples’ community know, understand and abide by our ethical standards.
Ethics begin at the top. Staples’ Chief Compliance Officer and Vice President of its Global Ethics & Compliance Office is responsible for defining and monitoring ethical standards. The VP works in the General Counsel’s office, which reports directly to the CEO. The Governance and Audit Committees of our Board of Directors also oversee governance and ethics issues.
The Global Ethics & Compliance Office, in turn, works closely with groups throughout the company. For example, they work with department heads in tailoring ethics communications and training to support daily operations, and with the finance group on compliance and controls. Senior leaders across the company are also accountable for implementing program requirements in their locations.
Our emphasis on ethical action extends to suppliers, particularly those who manufacture Staples® brand products. Staples’ Supplier Code of Conduct outlines the company’s expectations regarding labor standards, human rights and environmental performance, and is the basis for our monitoring and auditing programs.
Ensuring Sound Governance
In 2011, we continued our corporate governance outreach program, which helps us understand and respond to shareholder concerns in a timely fashion. Through this initiative, senior management meets regularly with a variety of shareholders and proxy advisory groups to discuss the governance issues that are most important to them and also discuss our executive compensation program. Management then briefs the Board of Directors and its relevant committees and takes action as appropriate. To learn more about these discussions, please visit the Stakeholder Engagement section of this site.
We also continually monitor our business, our competition, legislative and regulatory changes and current developments in governance practices at other companies. When changes are in the best interest of Staples and our shareholders, we do not hesitate to update our practices. For example, in our 2012 proxy materials, we encouraged shareholders to amend our restated certificate of incorporation to allow shareholder action by majority written consent. We also recently made several changes to our executive compensation program and updated our Corporate Political Contributions and Government Activity Policy Statement to include enhanced disclosures of the political activities of trade associations with which we are affiliated and our lobbying activities. The additional disclosures will appear on our website in early 2013 in our political contributions annual report covering fiscal year 2012. On the other hand, we openly oppose changes we believe are not in the best interests of our company or our shareholders.
To learn more about our current corporate governance principles and to review our Corporate Governance Guidelines, committee charters, Corporate Political Contributions and Government Activity Policy Statement and other significant policies, please visit Staples’ Corporate Governance Web page.
Twelve members, including Chairman and CEO Ronald Sargent; three women; two Asian Americans and one African American.
Four directors have served on the Staples Board for more than fifteen years, while six Directors have served five years or less, creating a mix of individuals with long-term institutional knowledge and new voices providing a fresh perspective.
In 2012, Dr. Drew Faust, President of Harvard University, was elected to our Board of Directors. We believe that the composition of our Board of Directors, including our newest Director, combines institutional knowledge and understanding our business model, products and services and historical growth strategies and is balanced with an influx of new ideas and exposure to alternative approaches to business process, thereby promoting lively Board discussion and effective oversight and problem solving.
Elected annually for a term of office to expire at the next annual shareholders meeting (subject to the election and qualification of their successors).
Audit, Nominating and Corporate Governance, Compensation, Finance and Executive.
Other than the Chairman, all Board members are independent, including all members of the Audit, Nominating and Corporate Governance, Compensation and Finance Committees. The only compensation they receive is for service on the Board and its committees; no independent consulting fees or other payments are provided.
Every year, the Board evaluates its leadership structure and, based on a recommendation from the Nominating and Corporate Governance Committee, determines whether there should be an independent chairperson of the Board or an independent lead director. There is currently a combined CEO-Chairman and an independent lead director. There were no major changes to the Board's leadership structure in 2012.
A Culture of Integrity
At Staples, we’re committed to building a company culture of the highest integrity – one associate, one decision and one task at a time. It takes hard work and sustained focus. That’s why we created our Global Ethics Office (now Global Ethics & Compliance Office) in 2004 and why we issued an updated and strengthened Global Code of Ethics in 2010.
The Global Code of Ethics empowers associates and holds them accountable by setting clear standards, describing the right way to do business and outlining a clear process for taking action when ethical questions or concerns arise.
As set forth in our Code of Ethics, everyone working at or for Staples must follow our standards for ethical business conduct – all associates, officers and directors of Staples and our affiliates worldwide, as well as agents, consultants, joint venture partners and other third-party representatives when they are acting on our behalf.
The Staples Global Code of Ethics is the foundation of our commitment to ethical business practices and conduct. Recently updated and translated, the Code is available in the 17 major languages spoken by Staples associates worldwide. It explains core expectations regarding ethical conduct and business practices and includes guidelines to help associates deal appropriately with a broad range of issues, from insider trading to customer privacy to discrimination or harassment. The Code also explains the many options available for asking questions and voicing concerns about ethics issues and how reported violations are handled.
Previously organized according to legal risk areas, the Code has been restructured to serve specific functions in a more user-friendly and relevant way. Associates can identify what they need to know and do, quickly and easily, according to their job responsibilities. Additionally, we have developed streamlined versions of the Code for particular functional areas – such as fulfillment, distribution and call centers – with a more limited set of possible ethical issues and situations.
The Staples Code of Ethics can be downloaded here.
Associates receive ethics training early in their employment at Staples and typically receive a copy of the Code of Ethics with their offer letter. They also participate in a live ethics training module as part of the new hire orientation. Managers across the company also receive additional training based on situations they’re most likely to face on the job, and, in 2012, we will continue to embed additional ethics content into existing management and leadership training.
Our ethics and compliance training programs for associates are designed to focus the company’s resources on the areas where we can have the greatest impact. We use a risk-based approach to define minimum company-wide requirements based in part on the unique risks associated with particular geographies and levels within the organization. For example, we use Transparency International’s Corruption Perception Index to identify those regions and operating areas that are most likely to face corrupt business practices and ensure that those locations and functional areas receive the most training in anti-corruption.
The importance of ethics and compliance is regularly reinforced company-wide through awareness campaigns, newsletters, internal Web sites and communications from company leaders. We also use the recently developed Leader’s Guide to Ethics at Staples and an online ethics quiz to help executives and managers understand their roles in driving ethics awareness and accountability throughout the company. The guide concisely describes what leaders can do to instill an ethical culture at Staples.
Staples, a global, multicultural organization, strives to provide effective training to all of its associates. Thus, we have begun to roll out new monitoring and measurement tools to further evaluate our training efforts.
Company-wide ethics require company-wide engagement. Our approach to the challenge of ensuring proactive participation is to make sure all associates feel comfortable speaking up, asking questions, and taking an active role in understanding, discussing and exploring ethics issues. In this way, we can be sure to flag and address minor issues or concerns before they become significant problems.
Additionally, open dialogue among associates and managers helps Staples to capture and act upon valuable ideas, suggestions and innovations. Speaking up benefits not only Staples’ ethics performance, but also helps the company meet its overall objectives and create a winning culture.
That’s why, company-wide, we put a premium on open, honest communication and work hard to maintain a culture where each person can feel comfortable asking questions and raising concerns.
Our CEO, Ron Sargent, in his letter to all associates emphasized Staples’ commitment to open and honest communication as follows:
“As a company, we must foster an environment where issues and concerns can be raised freely, no matter how small. And the Code of Ethics is designed to help you make the right decisions when it comes to a variety of situations: how to handle a situation when the easy way out is wrong. Or speaking up, even when it’s uncomfortable, to help protect Staples’ best interest and our global brand.” – Staples’ Global Code of Ethics
Our Ethics Helpline, Staples EthicsLink, is available in multiple languages in every Staples location worldwide, online and by telephone. Hosted by a third party but administered by our Global Ethics & Compliance Office, Staples EthicsLink serves as a 24/7 “ethics resource” for Staples associates. Through the Helpline, associates can ask for guidance on ethical and compliance issues and report suspected ethics violations. All reports are relayed to the Global Ethics & Compliance Office for follow-up.
Where it is legally permitted, including in the United States, associates can report concerns and contribute to investigations anonymously. Many European Union countries, however, limit both the types of issues that can be reported to Staples EthicsLink and the rights of reporting individuals to remain anonymous. Staples complies with all applicable requirements.
After rolling out the revised Code of Ethics in 2010 and providing enhanced training, we carefully monitored the volume of calls to Staples EthicsLink throughout 2011 and will continue to do so in 2012 and beyond. As anticipated, as associates are becoming more aware of the available resources, we are seeing an increase in the volume of questions and reporting of issues.
For more information, please visit Staples EthicsLink.
The Staples Anti-Corruption Policy is designed to prevent corruption and promote compliance with anti-corruption laws that apply to our global operations, including the U.S. Foreign Corrupt Practices Act (FCPA), the UK Bribery Act, the Organization of Economic Cooperation and Development (OECD) Convention Combating Bribery of Foreign Officials and many others. While some people believe that corruption is inevitable in certain countries, Staples does not accept this as an excuse for behaving unethically, failing to comply with our policy or violating the law. Staples prohibits all bribes and kickbacks, whether offered or accepted directly by our associates or indirectly using a third party – period.
We’ve conducted anti-corruption training in many of our overseas locations since 2006. In 2009, after identifying corruption as a strategic risk to Staples’ international growth, we established a more comprehensive Anti-Corruption Program, including a formal anti-corruption policy, risk-based training requirements and stronger internal controls. In addition to educating all senior leaders on our anti-corruption policy, we provide online training and/or instructor-led workshops for more junior associates, as needed, depending on their role and geographic location. In general, extra training is provided to those associates who work in or travel to countries deemed by Transparency International’s Corruption Perception Index to have higher levels of risk for corruption. In 2010, online anti-corruption training was rolled out to high-risk international locations and specific functions within the United States and Canada that have a heightened need to know our requirements. In 2011, we conducted additional anti-corruption training for key roles and locations and provided training to local “ethics liaisons” to increase awareness of potential ethics and compliance issues and help ensure they are escalated to the right people. We also continued to partner with Finance and Internal Audit to strengthen internal controls.
We are confident that the programs we have in placeÑlike our Code of Ethics, ethics and compliance training, and EthicsLink-are helping to ensure that all of our associates throughout the company act in an ethical and responsible manner. In 2011, we created a multi-prong monitoring and measurement framework to assess how well we are preventing, detecting and responding to ethics and compliance risks. As part of this framework, we embedded ethics questions into the HR global engagement survey and have established monitoring reporting tools to track how we are doing and communicate this information to our leadership team.
In today’s business world of vast networks and enormous volumes of data, confidential personal and financial information is a precious and invaluable asset. As such, it must be carefully managed and guarded to preserve the trust of customers, employees and shareholders — and, of course, to comply with a growing number of laws and compliance regulations around the world. Our Global Privacy and Information Management (PIM) Policy governs how Staples handles and protects all customer, associate and business information.
To preserve our customers’ confidential data (such as credit card numbers and contact information) from falling into the wrong hands, we continually educate and train all Staples associates in how to handle such information wherever it is held and whenever it needs to be transmitted. We recognize, however, that despite our best efforts, no system is 100 percent secure. Accordingly, we’ve developed a comprehensive plan for responding quickly and responsibly in the event of a security breach of any magnitude.
Staples is committed to providing customers reasonably priced Staples® brand products that not only meet or exceed performance expectations, but are also manufactured responsibly.
To produce Staples® brand products, we partner only with factories that meet Staples' standards for cost and quality on the one hand and labor rights, safety and environmental standards on the other. Requirements for responsible operation are outlined in the Staples Supplier Code of Conduct and serve as the basis for the Social Accountability audits we undertake at supplier sites. If a current or potential partner consistently fails to meet either Staples' quality or ethical requirements, Staples discontinues the relationship. For all other products, Staples strongly recommends that its vendors comply with the Staples Supplier Code of Conduct (or a similar code of its own), and Staples may terminate its relationship with that supplier if the supplier fails to do so. Finally, Staples requires suppliers to comply with applicable international (in the countries in which the parties are doing business) and U.S. laws and regulations and industry standards when selling us products.
The Supplier Code of Conduct is included as an appendix to each manufacturing agreement and forms an integral part of every contract we enter into.
In general, the Code outlines for Staples' suppliers our expectation that workers making Staples® brand products are treated fairly and with dignity and respect. The Code also helps ensure that the factories with which we contract operate in an ethical and environmentally sustainable manner. The Supplier Code of Conduct was recently updated with the addition of standalone environmental and business ethics sections. Several existing sections were also reinforced with additional material.
The Director of Product Quality and Compliance, along with his team, oversees supplier screening, monitoring and auditing – in short, ensuring compliance with the Supplier Code of Conduct. Team members are trained on the application of the Code, with all audits carried out by external, independent third parties. The Director of Product Quality and Compliance works closely with the Vice President of Sourcing, Product Development and Manufacturing, who is in charge of producing goods, and with the Vice President of Import Supply Chain, who is in charge of shipping goods from the supplier to the end destination and maintaining compliance with all security provisions. Both individuals report up to the SVP for the Staples® Brand Group.
The processes Staples uses for ensuring compliance with the Code continuously evolve as the company gains a greater understanding of the risks it faces, how to best minimize those risks and which corrective actions are most effective. As a result, the scope of annual supplier audits has narrowed in some respects and expanded in other respects. For example, Staples no longer audits factories that produce Staples® brand products in the United States, Canada or Europe. The company does, however, audit every factory producing goods in countries deemed to be "at risk" for noncompliance (i.e., suppliers located in Asia or Africa).
All Staples® brand suppliers located in "at-risk" regions were audited in 2011. These suppliers constitute approximately half of all Staples’ own brand suppliers (237 of 490 suppliers making Staples® brand products).
Suppliers failing to meet minimum requirements are required to sign a Letter of Commitment, stating their intent to continuously improve and requesting a probationary period to implement the necessary changes. They are also required to complete a Corrective Action Plan documenting the timeline for the necessary improvements.
Follow-up audits are scheduled at regular intervals to ensure suppliers stay on track while on probation. In addition to initial certifications, all suppliers in at-risk geographies are required to be recertified every year. We plan to continue expanding the audit program as we grow our international presence.
|237 supplier sites in "at-risk" locations were audited in 2011
|(301 factory certification audits – initial, recertification and post-probation – were conducted in total)||218||19*|
|Facilities that required Social Accountability audits||237** in "at-risk" locations|
|41 inactive suppliers (no Staples branded products are currently being produced there)|
|Staples did not severe ties with any factories in 2011|
|Total # of Certified Facilities||489 in all locations|
*Suppliers on probation must complete corrective action to continue working with Staples. In addition to scheduled factory inspections, Staples conducts short-notice and unannounced audits.
**A total of 301 Social Accountability audits were carried out at 237 factories, as some suppliers were audited more than once.
|Business Unit||Products Delivered||Type of Audit Conducted|
|Staples stores and delivery worldwide||Staples® brand products||Suppliers in "at-risk" locations are audited.|
|Staples Promotional Products® (SPP)||Products bearing the customer's name and logo (e.g., hats, T-shirts)||Factories are reviewed on a "risk-management basis." Audits are completed on large suppliers that have long-term relationships with SPP, and when reviews are requested by the customer.|
*Follow-up audits: These are half-day audits focusing on specific violations areas, typically conducted at 30–60-day intervals when a factory has conditionally passed or is on probation, to determine progress against required corrective action.
**Post-probation audits: Comprehensive audits of the factory occurring within six months of the initial violation.
Note: If a factory either refuses to participate or fails to demonstrate progress on implementing corrective action, we will end our relationship with the factory.
Prior to Staples placing an order for a Staples® brand product, the product must undergo performance, safety and regulatory compliance testing by an independent testing lab. All products must pass testing before mass production can begin.
Between the time a supplier manufactures and ships the products, Staples has an independent agency inspect the products by sampling them to ensure that they meet material and performance specifications and all other requirements.
Finally, we have an independent lab retest Staples® brand product samples pulled from the first shipment and then annually after that to make sure they continue to meet specifications as well as safety and performance requirements.
As no system is perfect, we have an established product recall process. The process centralizes communication within the company for the recall of any product sold by Staples through any channel. The process also provides for a prompt and timely investigation of issues with Staples® brand products. Recall facilitators have been appointed in each business unit to ensure product recalls are executed quickly. The facilitators are responsible for keeping records regarding the execution of the product recall. Fortunately in 2011, we did not need to conduct a product recall on any of the Staples branded products sold.
Staples posts all recalls to its Warranty & Recall Web page so that consumers have information readily available regarding any brand of products we sell that have been subject to a recall – no matter the reason.