Cintas is proud to be the first company in the uniform industry to issue a Vendor Code of Conduct Report.

Cintas Vendor Compliance Program and Report
August 2008

1. Corporate Commitments
A dozen years ago we established a formal Vendor Code of Conduct, which we believe is the first and most stringent program within the American uniform industry. This program defines our expectations of suppliers as they manufacture apparel for Cintas. Over the years, we’ve continued to improve and strengthen the program to ensure the responsible production of products, and to help meet the expectations of our customers, shareholders, employee-partners and communities.

For example, we instituted an annual independent-audit program of apparel contractors – also believed to be the first in our industry – as one way to monitor compliance. We require that suppliers formally adopt and endorse our Vendor Code of Conduct, to reaffirm that they will operate in a socially responsible manner. And in keeping with the most progressive views in the marketplace today, we strengthened the audit program to not only identify specific problems, but to identify management procedures that help ensure continual compliance and reach best-practice improvement.

We also established a pre-screening protocol for potential suppliers, to identify corrections or improvements that facilities must make to be even considered as a Cintas apparel supplier. And we remain the first – and still the only – company in our industry to publish an annual report on supplier compliance, to document for stakeholders our commitments and successes in responsible manufacturing.

Last year, we noted our early concentration on ensuring compliance with basic fundamentals. Today, our focus continues on sustainable improvement by working with suppliers, trade associations and other organizations so that exemplary compliance becomes standardized within our supply chain. For example, we are implementing social-responsibility training modules at key suppliers and contractors to further improve workplace-compliance consistency.

As before, we include short vignettes from different suppliers and their experience in leveraging compliance auditing as a tool to achieve ongoing improvement within their companies. We hope that these testimonies provide insight and encouragement to other suppliers as they embrace auditing as a continuous-improvement management tool for their own businesses.

2. Vendor Code of Conduct Program Summary
Cintas not only manufactures some of its own apparel, but also purchases goods each year from qualified suppliers and vendors. In some situations, the Company contracts directly with suppliers for the manufacture of apparel that is unique to Cintas. To continue as an approved apparel contractor of products unique to Cintas, Cintas requires adoption of Cintas’ Vendor Code of Conduct. Contractors meeting the program’s criteria also are required to participate in an annual audit of supplier facilities by independent third-party firms that are well-experienced and practiced in the guidelines of Fair Labor Association (FLA), Worldwide Responsible Apparel Production (WRAP), Social Accountability SA8000, International Labor Organization (ILO), C-TPAT guidelines to prohibit the shipment of contraband, and the laws of the countries in which facilities are located.

For fiscal year 2007, 92 apparel contractors met Cintas’ requisite criteria, resulting in a reduction in the number of contractors utilized by Cintas to improve manufacturing and monitoring efficiencies. All apparel contractors adopted Cintas’ Vendor Code of Conduct, and all participated in annual audits by independent compliance-verification firms for Cintas – as well as independent audits conducted on behalf of their other customers.

In addition to these apparel contractors, Cintas purchases stock items from general suppliers that are the same products available to any other general customer. For these vendor-stock suppliers, we require adoption of Cintas’ Vendor Code of Conduct and request a Statement of Audit, which is proof that the supplier has successfully completed an independent compliance audit of its operations within the prior 12 months. This requirement applies to situations in which Cintas might purchase only a limited amount of product from a given vendor each year – usually representing a minute fraction of the suppliers’ overall business – making the realities and economics of separate third-party audits cost-prohibitive to the supplier. For this purpose, Cintas recognizes qualified third-party audits conducted under standards consistent with local laws and ILO conventions.

3. Audit Summary and Findings
Independent firms commissioned by Cintas use a standardized 310-point audit guideline, so that consistent evaluations can be made of all facilities. In some aspects, Cintas’ Vendor Code of Conduct and audit guidelines require social-compliance standards that are more stringent than local laws – for example, setting the minimum working age in any supplier facility at 16, even if local laws permit a younger age. The Company has long believed that such guidelines are good not only for the long-term protection of shareholder value, but are also consistent with the ethical commitments that form our core values.

Cintas’ 92 apparel contractors operated 148 facilities in 23 countries that manufactured products for Cintas, all of which were audited by independent firms during the fiscal year.

In fiscal year ‘07, one contractor refused to sign Cintas’ Vendor Code of Conduct, and consequently this vendor relationship was terminated. Over the past three years, Cintas has terminated 13 supplier relationships – four due to the audit process, and nine because of failure to adopt Cintas’ Vendor Code of Conduct.

Of the facilities audited in fiscal 2007, 24 percent received exemplary commendations with no corrective actions identified – compared with only 14 percent in fiscal 2005. We continue to believe this is an indicator of sustainable compliance and improvement that can be achieved as more suppliers embrace social responsibility philosophies.

Comprehensive audits at the remaining 112 supplier facilities identified at least one required corrective action to ensure continued approved-vendor status with Cintas. These facilities were required to file a “Corrective Action Plan” that details schedules for the completion of items defined by the auditors. Of these 112 facilities, 92 percent satisfactorily completed their Corrective Action Plans by fiscal year-end and completion was verified; the remaining nine facilities were in the process of completing improvements at fiscal year-end.

The most prevalent corrective actions related to ensuring that necessary emergency safeguards are properly located throughout the facilities, and that there is a rigorous documentation process to ensure that they are appropriately mounted, adequately marked and routinely tested. Many corrective actions required more disciplined systems to document fire drills and evacuation plans. Additionally, as audit procedures are continually revised and updated, new focus is being placed on new compliance areas, such as requiring background checks on security shipping and packing personnel, and on ensuring that written drug interdiction policies are in place.

Over the past two years, audits have revealed significant improvement in compliance in key areas, such as:

• 67 percent decrease in findings related to the definition of “urgent business needs” as it determines the application of appropriate overtime for employees;
  
  
• 58 percent decrease in non-compliance related to non-manifested cargo safeguards, 38 percent decrease in violations related to inadequately identified personnel in shipping and packing areas, and 29 percent decrease in violations related to visitor control and site security;
  
  
• 50 percent decrease in non-compliance related to proper procedures and documentation for facility fire drills, 35 percent decrease in violations regarding the development, documentation, communication, testing and verification of facility evacuation plans, and 16 percent decrease in violations related to the proper placement, signage, testing and documentation of fire extinguishers; and
  
  
• 56 percent decrease in situations involving missing or incomplete environmental management programs.

Closing
Cintas is proud to have the most rigorous and documented audit program in the American uniform industry. We continue to encourage other companies in our industry to adopt vendor-compliance, verification and reporting programs that are as stringent and well-defined. Similarly, we encourage customers to incorporate appropriate standards in their bidder and vendors’ evaluation processes. Through this teamwork in adopting comparable compliance and auditing requirements throughout our respective supply chains, we can help improve responsible manufacturing standards around the world.

Case Study 1
“. . . a force for positive change”

One Cintas supplier in the Middle East reports significant long-term benefits as its employees now appreciate its Social Compliance Value Model as an excellent guide to positively change the overall work environment – including its ability to significantly decrease employee turnover. The program also helped the facility become one of the few WRAP-certified facilities in their country. “Government officials now recognize us as an outstanding model of industry, often inviting school children, college students and foreign investors to tour the facility,” one of its managers told Cintas. “We have seen first-hand how significant empowerment through knowledge can become a force for positive change.”

Case Study 2
“ . . . it helped us to create an open, pleasant, safe, and friendly working environment.”

A Cintas supplier in the Far East reports its Social Compliance Review program has become a foundation for change and improved morale not only among its workforce, but among its community. “Now, the word has spread in the community that we are an honest, fair wage-paying employer and we are having no problems hiring the best workers,” plant managers report. “Now everyone is so in-tune with the process that it has improved the overall safety and productivity in the plant.”

Guest Commentary 1:

“The belief that ‘the role of business is business’ is being challenged on numerous fronts. An ever-increasing population, stress on the environment, reduction in natural resources, increased energy costs and more are impacting business as never before. These dynamics are affecting the ability of businesses to survive and remain competitive. Enlightened managers clearly understand they must move beyond ‘products and profit’ and include ‘people and planet’, the 4 P’s of Tomorrow. Governments and civil society neither have the solutions nor the resources for all the challenges societies face. Like it or not, business now has new roles and responsibilities to help support healthy and sustainable communities around the world.

The ‘socially responsible’ business engages its entire supply chain in adopting best practices in the management of human resources, environment, health and safety, legal compliance and ethical behavior. Treating employees with dignity and respect, fairly and in compliance with the law not only improves employee morale, but productivity and profitably are positively impacted as well. Decreased employee turnover reduces training costs and product quality is improved. Factories that are WRAP (Worldwide Responsible Apparel Production) certified find that many of the best practices they seek are incorporated into the required self-assessment and management systems approach where change and new ways of thinking are managed 365 days per year. And, as WRAP moves toward increased acceptance by brands and retailers, the redundancy of wasteful, multiple audits is reduced and the entire apparel industry benefits by operating under one uniform ‘code of conduct.’

CINTAS’ support for WRAP certification demonstrates their support of legal, ethical and humane business practices providing an excellent example of how leading-edge thinking will help the company compete and thrive in the increasingly complex global market.”

Steven A. Jesseph
President and CEO
Worldwide Responsible Apparel Production (WRAP)

Guest Commentary 2:

“More and more companies recognize the benefits of being socially responsive corporations. The State Department views corporate social responsibility (CSR) as an important new tool for advancing human rights and good governance.

We have defined CSR broadly to include protecting human and worker rights; promoting the rule of law and transparency; fighting corruption; and implementing responsible environmental practices, community development, and public-private partnerships. To be effective, CSR requires the collective effort of governments, the private sector, and civil society, domestically and abroad.

The State Department’s approach to CSR relies on facilitating dialogue among stakeholders, recognizing achievements by corporations, and funding innovative programs. We have partnered extensively with NGOs, other governments, and companies around this issue. Key endeavors supporting CSR efforts include our Sweatshop Initiative, focusing almost exclusively on labor rights; establishment of the Global Internet Freedom Task Force to engage our partners on freedom of expression; and participation in the Voluntary Principles on Security and Human Rights.”

Jeffrey Krilla
Deputy Assistant Secretary
Bureau of Democracy, Human Rights and Labor
U.S. Department of State