For the Fiscal Year ended December 31, 2023
Fanatics, LLC (including its subsidiaries, “Fanatics”) is committed to improving fair labor practices throughout its business and supply chain by ensuring that it complies with all applicable laws related to forced labor, slavery, and human trafficking (collectively referred to herein as “modern slavery”), and child labor. We have published this statement pursuant to California’s Transparency in Supply Chains Act, the UK Modern Slavery Act, and the Canadian Fighting Against Forced Labour and Child Labour in Supply Chains Act (together as, the “Acts”). Not all of the entities in our consolidated group are subject to each of the Acts. However, we have prepared this statement on a consolidated basis due to the global nature of Fanatics’ business practices and policies to address modern slavery and child labor.
In this report, “Fanatics Brands” refers to our Fanatics Commerce apparel business, which produces Fanatics goods on behalf of licensing partners, including universities, major sports leagues, and other apparel companies. Fanatics also has other apparel business lines in addition to Fanatics Brands. Our Sustainability Team mentioned throughout this report resides within and reports directly to the President of Fanatics Brands and is responsible for developing and deploying programming related to modern slavery and child labor. The Sustainability Team engages with each of the Company’s consolidated businesses at different levels. While some of our Sustainability efforts currently focus on the Fanatics Brands source base, we hope to include further Sustainability updates with respect to our other businesses over the next several years.
Fanatics possesses an innovative vertical commerce business model that allows the company to quickly design, manufacture, and distribute high quality fan gear, jerseys, lifestyle and streetwear products, headwear, and hardgoods. Through this model, Fanatics better serves the real-time expectations of leagues, teams and fans living in today’s mobile-first, on-demand culture. Fanatics offers the broadest assortment of first and third-party fan merchandise and memorabilia worldwide, whether manufactured in-house, sourced from preeminent fan apparel brands, or available via drop-ship. Fanatics also purchases apparel, headwear, accessories, and other products from third parties, which Fanatics sells through its online, direct-to-consumer business.
Fanatics’ manufacturing efforts primarily sit within Fanatics Brands, which is part of our Fanatics Commerce business. Fanatics Brands produces goods on behalf of licensing partners, including universities, major sports leagues, and other apparel companies. In addition to our global supply chain of approximately 140 Tier 1 cut, sew, and embellishment contract facilities (cumulatively, the “Fanatics Brands Suppliers”) as of December 31, 2023, Fanatics owns and operates manufacturing facilities in the U.S.
Fanatics is committed to supporting the aims of the Acts and sets high standards in acting ethically and with integrity in its business and commercial relationships.
In its entirety, Fanatics ‒ including the Fanatics Board of Directors (Board) and its standing Audit and Compensation Committees, Fanatics Senior Leadership, the Environmental, Social, and Governance (“ESG”) Executive Committee and Working Group, and the Information Security Governance Committee ‒ is committed to maintaining a strong focus on governance, including ESG and accountability. Our Fanatics ESG Executive Committee and Working Group have the mandate to further develop our ESG priorities, commitments, and paths to achievement, and to further solidify our commitment to ESG governance and accountability. The ESG Executive Committee meets quarterly and includes the Fanatics Holdings Chief Financial Officer, Chief People Officer, Chief Legal Officer, and Chief of Corporate and Governance Affairs. The Working Group meets monthly and includes cross-functional representatives from our Sustainability Team, which leads our supply chain human rights work, as well as our Human Resources, Legal, Communications, Global Impact and Inclusion, Philanthropy and Community Engagement, and Internal Audit Teams. Our Board and Audit Committee are updated by key executives on the ESG Executive Committee and Working Group on our initiatives and progress.
Fanatics employs an internal Sustainability Team, which reports into Fanatics’ leadership. The Sustainability Team develops labor, environment, and traceability goals and targets in alignment with guidance from industry multi-stakeholder initiatives, as well as Fanatics’ key partners and suppliers. On a regular cadence, Fanatics’ leadership reviews progress toward key sustainability goalsand targets (See Measuring Effectiveness for details).
In addition, Fanatics Brands has established cross-functional working groups to provide updates to internal stakeholders including Sourcing, Product Development, Trade Compliance, Legal, and Enterprise Risk Management Teams on risks related to modern slavery and child labor, to develop strategy and allocate resources for proactively mitigating these risks, and to escalate to relevant leadership team members when executive decision-making on corrective action is required.
All Fanatics employees are required to comply with Fanatics’ Code of Conduct and Business Ethics and to conduct business in a legal and ethical manner. In addition, employees and management who support Fanatics’ vertical manufacturing functions are expected to follow procedures regarding notification of suspected modern slavery or child labor. Failure to comply with these requirements may result in disciplinary action.
Employees of Fanatics may raise questions, concerns, or suspected violations regarding ethics, compliance, and working conditions via our company-wide Fanatics Global Compliance Helpline (the “Helpline”), which includes a toll-free number that is available 24 hours a day, seven days a week, 365 days a year, and is staffed by live operators who can connect to translators to accommodate multiple languages. The Helpline is operated by a third-party provider, which allocates responsibility for handling the concerns to the appropriate function within Fanatics. As a general matter, our Fanatics Holdings Chief of Corporate and Governance Affairs and our Fanatics Holdings SVP, Audit & Risk Management share responsibility for reviewing concerns expressed through the Helpline and are responsible for ensuring that such concerns are handled appropriately. Fanatics direct employees may also report concerns through managers, the Fanatics Holdings Chief of Corporate and Governance Affairs, the Fanatics Holdings Chief People Officer or, alternatively, to any member of the Fanatics Legal or Human Resources Teams.
Fanatics Brands Suppliers are required to maintain their own effective internal grievance mechanisms for their workforce. In addition, the Sustainability Team also provides Fanatics’ production employees and supplier partner production workers with a grievance channel email address for reporting of any violations of Fanatics’ policies and applicable law, including any instances of modern slavery or child labor. Any reports submitted via this grievance channel are received and appropriately addressed directly by the Sustainability Team.
In 2023, Fanatics also launched a new third-party grievance mechanism platform, Ulula, to complement our existing email channel (described in the paragraph above). Fanatics chose to partner with Ulula for this initiative because their grievance management system aligns with best practices and regulations as defined by the United Nations Guiding Principles.
Fanatics Brands Tier 1 strategic suppliers are required to participate in our grievance channel program supported by Ulula. Through this partnership, Fanatics has provided this communication option to roughly 40,000 workers at certain Fanatics Brands strategic suppliers globally. For more information on the implementation of the Ulula program, see the Leveling the Playing Field section of our 2023 Global Impact Report.
Fanatics is committed to supporting the aims of the Acts and sets high standards in acting ethically and with integrity in its business and commercial relationships.
Our Fanatics Brands division is affiliated with the Fair Labor Association (“FLA”), an organization that brings together brands, suppliers, civil society organizations, and universities dedicated to advancing responsible labor practices throughout supply chains. In June 2021, Fanatics became an FLA Accredited Company. As the highest level of programmatic evaluation by the FLA, Accreditation recognizes that Fanatics Brands has corporate systems in place to identify and remediate unfair labor practices in its global supply chain. Fanatics’ Accreditation included evaluation against the FLA Principles of Responsible Sourcing & Principles of Responsible Production. The multi-year process included headquarter level visits, regional office evaluations, shadowing of Fanatics’ nominated auditors and FLA assessments within Fanatics Brands factories. Certain Fanatics subsidiaries are affiliated with the FLA as Participating Companies and/or Collegiate Licensees.
Fanatics Brands Suppliers are obligated to comply with Fanatics’ Workplace Code of Conduct (“Our Supplier Code”), which aligns with the FLA Workplace Code of Conduct, a set of global factory working condition standards developed by the International Labor Organization (ILO). Our Supplier Code and our detailed set of Compliance Benchmarks, with which is incorporated into Our Supplier Code, may be found here. Our Supplier Code defines the standards to which we hold ourselves and our Tier 1 Fanatics Brands Suppliers, including their facilities, accountable. These standards are designed to protect workers’ rights and prohibit, amongst other things, all forms of modern slavery and the employment of anyone under the age of 15 or the age for completion of compulsory education, whichever is higher. Our Compliance Benchmarks also stipulate protections for workers under the age of 18and compliance with all laws and regulations applicable in the jurisdictions in which workers are employed. We require every Fanatics Brands Tier 1 facility to post Our Supplier Code, along with our brand-level grievance channel, in the local language and in a conspicuous location that is visible to all workers. We leverage Our Supplier Code and the Compliance Benchmarks to evaluate working conditions through our social audit program (see Due Diligence and Monitoring described below) and collaborate with factories and suppliers if improvements are required.
Since 2018, Fanatics has been a signatory to the American Apparel and Footwear Association (“AAFA”)/FLA Apparel and Footwear Industry Commitment to Responsible Recruitment. In 2023, we reaffirmed our commitment to working with our partners to create conditions where no worker pays for their job, workers retain control of their travel documents and have full freedom of movement, and where workers are informed of the basic terms of their employment before joining the workforce.
Supply chain traceability is an essential part of how we monitor for modern slavery and child labor risks. Since 2018, Fanatics has been a signatory to the Apparel and Footwear Supply Chain Transparency Pledge, a multi-stakeholder initiative by human and labor rights organizations to improve transparency in garment and footwear supply chains. In alignment with the requirements of the Pledge, we have continued to publish a list of Fanatics Brands supplier facilities on our website.
In 2023, we launched our Supply Chain Traceability Policy for Fanatics Brands Tier 1 finished goods and Tier 2 main body fabric suppliers. This policy outlines our expectations for these suppliers pertaining to responsible management of upstream supply chains, raw material and product traceability, and transparent disclosure of related information. This policy applies directly to contracted manufacturers of Fanatics Commerce’s finished products and the parties that supply materials and components to those directly contracted manufacturers. These suppliers are required to:
· Maintain an accurate list of the facilities in their source base.
· Actively participate in training and due diligence activities.
· Cascade traceability requirements to their upstream suppliers.
· Commit to continuous improvement of their own traceability management systems.
· Disclose traceability-related information with Fanatics in a timely and transparent manner.
Since cotton is one of the primary commodities in our Fanatics Brands products, our Product Traceability work is focused on mitigating modern slavery risks in cotton procurement. In 2023, we continued our engagement with the Responsible Sourcing Network Yarn Ethically and Sustainably Sourced initiative (RSN YESS) to build the capability of mills and spinners to conduct their own due diligence related to modern slavery risks in the upstream supply chain by strengthening their internal risk identification and mitigation systems.
Fanatics has taken steps toward ongoing monitoring of the business and supply chains operated by Fanatics.
Once engaged, Private Label Suppliers are periodically, and at least annually, assessed against the Workplace Code of Conduct through announced and/or unannounced audits by both the sustainability team as well as independent third-party monitors that are retained by the sustainability team. As part
of these audits, Private Label Suppliers are expected to provide relevant records demonstrating compliance and to allow the sustainability team and/or independent third-party to interview the Private Label Suppliers’ personnel. The sustainability team works with Private Label Suppliers to remediate issues identified as part of such audits; if such issues cannot be remediated in a satisfactory and/or timely manner or if the Private Label Supplier fails to submit to the audit, then Fanatics may take action, up to and including termination of the relationship with the Private Label Supplier.
On an annual basis, the FLA conducts a comprehensive, programmatic evaluation, including an evaluation of Fanatics’ supplier monitoring program, and provides feedback to Fanatics on areas for improvement. Fanatics strives to incorporate the FLA’s feedback into our sustainability team’s work.
Fanatics Brands Suppliers are required to sign a Compliance Commitment Certification, certifying compliance with Our SupplierCode and all applicable laws, and must agree to maintain records that are sufficiently detailed to substantiate compliance with applicable modern slavery and child labor laws and produce such records upon request. As part of this Certification, suppliers and their facilities must also review and acknowledge other Fanatics Brands’ policies and regulations related to labor, human rights,and the environment. Tier 1 Fanatics Brands Suppliers contractually agree to adhere to all our standards, including our Tier 1 Sustainability Manual, which commits suppliers to participate in our broader sustainability program. This also includes our Restricted Jurisdiction Policy, which prohibits suppliers from sourcing inputs for Fanatics Brands’ goods from regions and countries that pose legal, compliance, and human rights or labor rights risks that undermine our commitment to sustainability. Anti-slavery and anti-human trafficking language is included in relevant contracts with our suppliers.
Fanatics will not conduct business with a new Tier 1 supplier until they confirm in writing they are willing and able to meet our labor standards. As a general matter, Fanatics has the right to terminate relationships with suppliers if Fanatics believes such suppliers are in violation of Our Supplier Code (if applicable) or applicable law.
Tier 1 Suppliers- An important part of our FLA Accreditation is our commitment to properly vet suppliers before placing orders. Fanatics’ Office of Foreign Assets Control (“OFAC”) Policy sets forth the components of our OFAC compliance program, which includes screening and re-screening customers against OFAC and other sanctions lists as part of the Know-Your-Supplier (“KYC”) process and reviewing potential matches, performing due diligence on third parties such as vendors, suppliers, and sponsorship partners to ensure they are not subject to sanctions, and complying with OFAC reporting requirements for blocked and rejected transactions.
FLA’s Principles of Fair Labor and Responsible Sourcing Principle 5 on Monitoring requires that FLA affiliates conduct pre-sourcing assessments of contract facilities to review compliance with workplace standards. To ensure our suppliers align with Fanatics’ commitment to labor and human rights, Fanatics Brands conducts a pre-sourcing labor risk assessment for any potential Tier 1 factory that will be manufacturing our products. Each Tier 1 factory is assessed against Our Supplier Code (described above). We leverage third-party auditors who have been trained and accredited by Fanatics on Our Supplier Code and our audit methodology to conduct these assessments. These assessments are conducted onsite and include document review, facility walkthrough, and management and worker interviews. As a Better Work Partner and Social & Labor Convergence Program (“SLCP”) Brand Signatory, we also accept Better Work assessments and SLCP verified assessments in lieu of deploying our own Fanatics audits.
Only after a new Tier 1 factory is audited and shown to comply with our standards is the factory conditionally approved for production. The results from audits are presented and documented during a regular meeting with representatives from each relevant department across Product Development, Sourcing, and Sustainability, and the decision of whether to allow sourcing is documented. Once engaged, Fanatics Brands Tier 1 factories are assessed at least annually against Our Supplier Code through announced and/or unannounced audits by both the Sustainability Team as well as independent third-party monitors that are retained by the Sustainability Team. The supplier's future business with Fanatics Brands is conditioned on, among other factors, sustainability performance and a commitment to upholding working conditions that align with Our Supplier Code.
Additionally, Fanatics’ grievance mechanisms (as discussed above) provide access for workers at our Tier 1 factories to seek remedy for workplace violations of Our Supplier Code and enable Fanatics to identify and assess Tier 1 supply chain risks on an ongoing basis.
Beyond Tier 1- Through Fanatics Brands’ Traceability program, we strive to gain visibility to the entities and materials in our upstream supply chain so that we can partner with our suppliers to assess and mitigate regulatory, labor, environmental, and business continuity risks. We regularly require our Fanatics Brands Suppliers to disclose information on their upstream business partners, which enables us to conduct desktop due diligence to identify labor, regulatory, and sustainability risks, including those related to modern slavery and child labor. In 2023, we onboarded our global Fanatics Brands’ Tier 1 and Tier 2 main body fabric suppliers to a third-party software platform that enables us to expand and update our upstream supply chain mapping for cotton and polyester products up to the Tier 4 raw material supplier level and fiber country of origin. In 2023, we also launched an ongoing initiative to conduct chain of custody due diligence exercises with our Fanatics Brands’ Tier 1 suppliers and select Tier 2 main body fabric suppliers. Through this program, we collect and evaluate procurement documentation of product inputs – such as transaction, shipment, and production-related documents. We are actively working with our suppliers to identify areas for improvement in their product traceability management systems.
In addition, we leverage a third-party intelligence platform to conduct regular screening of our known Fanatics Brands source base to identify potential upstream connections to entities associated with modern slavery. In 2023, we formalized our internal procedure for escalating upstream supply chain risks with cross-functional teams so that we can act quickly to mitigate risks as they are identified.
Fanatics does not engage in direct sourcing of minerals from mines, smelters, or refiners. We conduct due diligence with select vendors to understand their sourcing practices related to tin, tungsten, tantalum, and gold, where applicable, in accordance with the disclosure requirements of our licensor and retail partners.
The Sustainability Team works with Tier 1 Fanatics Brands Suppliers to remediate issues identified in audits. If we identify violations of Our Supplier Code or local law, we require the supplier to identify the root cause of such violations and implement a comprehensive Corrective Action Plan (“CAP”) that includes issues to be addressed in the short-term, as well as preventative measures to ensure compliance for the long-term. The purpose of this approach is two-fold: immediate actions focus on removing risks to and/or restoring worker well-being in the short term, while preventive actions ensure a holistic, management systems-based approach to prevent a re-occurrence of the problem. The CAP development process requires suppliers to conduct a root cause analysis for each finding, along with identifying immediate and sustainable measures to prevent finding recurrence. Based on our standard operating procedures, our Sustainability Team escalates any facility that has achieved a certain severity of violation to leadership, who will determine next steps. If such issues cannot be remediated in a satisfactory and/or timely manner or if the supplier fails to submit to the audit, then Fanatics may take action, up to and including termination of the relationship with the supplier. Dependent on violations and leadership decision, responsible divestment of the relationship may occur in a manner that aims to minimize negative impacts on workers and vulnerable families connected to such work.
Internal Training- The Sustainability Team is trained on modern slavery and child labor laws and related matters. In addition, selected associates and management directly involved in the Fanatics supply chain and procurement functions receive training on Our Supplier Code, which includes a review of our prohibition against the use of modern slavery and child labor, indicators of modern slavery, and what actions Fanatics takes to communicate expectations to Fanatics Brands Suppliers and monitor for related risks. Fanatics conducts this training on an annual basis and tracks employee completion. In addition, selected management receive ad-hoc training on risks related to modern slavery in upstream supply chains and related escalation procedures as it relates to their job function.
Supplier Training- Fanatics conducts training on Our Supplier Code during the supplier onboarding process as well as annually in conjunction with our auditing process. The Sustainability Team deploys additional training to third-party agents and other partners along our supply chain as needed. On an annual basis, Tier 1 Fanatics Brands Suppliers are required to deliver training for their facility production workers on their rights under Our Supplier Code and on how to use Fanatics’ grievance channels. The suppliers are then required to certify to us that they have delivered this training at all relevant facilities, which is verified through the auditors’ evaluation. If it is determined that workers have not been trained on their rights, according to local law and Our Supplier Code, development and deployment of such training will be included as part of a CAP.
In 2023, we also trained our Tier 1 Fanatics Brands Suppliers and Tier 2 main body fabric suppliers globally on our Traceability Policy and provided one-on-one training with all Tier 1 Fanatics Brands’ Suppliers and select Tier 2 suppliers on traceability management systems and the documentation required to demonstrate chain of custody of product and material origins.
Internal Evaluation- In 2023, we established a quarterly meeting with Fanatics Brands leadership to review the progress of Sustainability initiatives, such as our Traceability due diligence program, and highlight trends and risks from our factory monitoring program. The Fanatics Brands vendor scorecard includes a section on sustainability that assigns a grade based on the vendors’ latest audit rating. This enables the Sustainability Team to influence our sourcing strategy by identifying those suppliers with a demonstrated track record of strong audit performance as well as those suppliers who have room for improvement. This information is also used by our cross-functional team when creating a growth strategy for suppliers,
As per FLA’s Principle 7: Collection and Management of Compliance Information, we are required to carry out an annual analysis of audit findings in order to identify and track noncompliance trends and ensure that our monitoring program focuses on those trends. This exercise is documented and submitted to the FLA as part of our annual evaluation, and we have found it effective in setting and meeting performance metrics around risk reduction.
We monitor global risks in apparel manufacturing and commodity supply chains and emerging regulation to adapt our due diligence activities in preparation for future expectations. In 2023, we continued to evaluate areas for improvement in our internal traceability-related procedures and data management, establishing tools to create timely visibility to source base entities for desktop modern slavery screening and procedures for escalation of risks. The Sustainability Team actively monitors partner contractual due diligence and reporting requirements related to traceability and modern slavery and child labor risks in upstream supply chains and proactively initiates supplier training and data collection activities in order to comply with these requirements. In 2023, we implemented cross-functional procedures to support compliance with partner requirements related to disclosure of mill and fiber origin information. We also established internal tracking of these requirements to monitor on-time completion.
External Evaluation- On an annual basis, the FLA conducts a comprehensive, programmatic evaluation, including an evaluation of Fanatics’ supplier monitoring program, and provides feedback to Fanatics on areas for improvement. Fanatics strives to incorporate the FLA’s feedback into our Sustainability Team’s work.
As a member of Cascale, Fanatics Brands completes the Higg Brand and Retailer Module (BRM). This is an annual sustainability assessment which establishes the global standard for the Apparel, Footwear and Textile Industry to measure and report on their ESG impacts and benchmarks their performance with clarity and transparency. The BRM covers the ESG issues that are distinct to the apparel, footwear and textile industry, providing an accurate assessment to measure, report and benchmark progress on sustainability. As the Higg BRM framework helps to standardize progress and reporting against leading frameworks and regulation, it reinforces the need for policies, procedures, and targets associated with topics related to mitigating risk in the supply chain, including child labor, modern slavery, and responsible purchasing practices.
Since 2019, Fanatics has partnered with The Better Buying Institute (“Better Buying”) an organization that fosters “the industry-wide transformation of buyer purchasing practices so that business relationships support buyers and suppliers in achieving their financial, environmental, and social sustainability goals.” Better Buying allows Fanatics’ suppliers to anonymously rate Fanatics Brands’ purchasing practices across key areas, focusing on areas known to cause downward pressure on labor and environmental conditions if not executed properly. For example, poor purchasing practices can result in last minute decisions or short lead times that can have adverse impacts on the supplier and increase risk of excessive overtime, unauthorized sub-contracting, forced and child labor.
In 2023, Fanatics Brands improved our performance on the Better Buying Purchasing Practices Index (“BBPPI”) across five of their seven categories and launched internal business stakeholder engagement on how best to use the insights from Better Buying scores to strengthen brand-level management systems that minimize unnecessary pressures placed upon suppliers and formalize accountability mechanisms for upholding responsible purchasing practices.