Introduction to Disney Audit (Disney International Labor Standards Program,简称ILS)

Disney, as a world-leading family entertainment and experiences company, has built its brand image on happiness, magic, and a commitment to families. To protect this valuable brand reputation and ensure its branded products are manufactured in a safe, fair, and humane environment, The Walt Disney Company has established and enforces a stringent set of corporate social responsibility audit standards—commonly known in the industry as the "Disney Audit" or "Disney ILS Audit." This system is not only a requirement for Disney's intellectual property licensees and sublicensees but also a core reflection of its practice of global citizenship.

I. Core Purpose and Philosophy

The fundamental purpose of the Disney audit is to ensure that factories worldwide producing Disney-branded products (including toys, apparel, accessories, home goods, etc.) comply with Disney's rigorous standards regarding labor rights, working conditions, environmental protection, and business ethics. Its philosophy is rooted in the core conventions of the International Labour Organization (ILO), the UN Declaration of Human Rights, and local laws and regulations, aiming to protect the legal rights of every worker in the Disney supply chain and eliminate any form of exploitation and injustice. Disney firmly believes that ethical sourcing and responsible manufacturing are not just legal requirements but the cornerstone of creating long-term business value and sustainable development.

II. Key Audit Standards and Content (FAMA & ILS Audit)

The Disney audit primarily involves two key documents: FAMA and the ILS Audit.

FAMA (Disney’s Facility and Merchandise Authorization): Facility and Merchandise Authorization. This is a prerequisite for a factory to receive Disney orders. The factory must submit a FAMA application to Disney, declaring that it has understood and committed to complying with Disney's Code of Conduct. Only after the FAMA is filed with and approved by Disney (typically based on passing the ILS audit) can the licensee place Disney orders with that factory.

ILS Audit (International Labor Standards Program): International Labor Standards Audit. This is the core execution part of the audit, conducted by Disney-approved third-party auditing firms (such as SGS, UL, BV, etc.). The audit primarily covers the following key areas:

• Child Labor: Strict prohibition of child labor. Verification of age documentation for all workers to ensure no workers under the legal working age or under 15 years old.

• Forced Labor: Ensuring all work is voluntary, prohibiting any form of forced labor, bonded labor, or involuntary overtime.

• Discrimination: The factory must not discriminate in hiring, compensation, promotion, termination, etc., based on race, religion, age, nationality, gender, etc.

• Harassment & Abuse: Prohibition of any form of physical, sexual, psychological, or verbal harassment and abuse towards workers.

• Freedom of Association & Collective Bargaining: Respecting workers' legal rights to form and join trade unions and to engage in collective bargaining.

• Health & Safety: Providing a safe and hygienic working environment, including fire safety, emergency preparedness, machine safety guards, chemical management, occupational injury prevention, etc. This is a top priority in the audit; serious fire or safety violations can lead to Zero Tolerance immediate termination.

• Working Hours & Wages: Ensuring working hours and overtime comply with local legal requirements, paying wages not less than the legal minimum standard, and paying overtime premiums as required by law. Time records and payroll are mandatory checks.

• Environmental Protection: Requiring the factory to comply with all relevant environmental laws and regulations and encouraging the adoption of environmental protection measures.

• Management Systems: The factory needs to establish an effective management system to continuously comply with ILS standards, including policies, procedures, training, internal audits, and corrective actions.

III. Audit Process and Results

• Audit Application: Initiated by Disney's Licensee on behalf of the factory.

• On-site Audit: Third-party auditors conduct an unannounced (surprise) or semi-announced on-site audit, gathering evidence through document review, facility inspection, and worker interviews (conducted separately with management and line workers).

• Audit Report: The auditor issues a detailed report listing all findings (non-conformities), categorized by severity into:

  Critical Violation: e.g., child labor, forced labor, serious health & safety threats. Usually results in audit failure and may lead to immediate termination of business.

  Major Violation: e.g., excessive overtime, insufficient wage payments, fire safety issues. Requires developing and implementing a Corrective Action Plan (CAP) and undergoing a re-audit within a specified period.

  Minor Violation: General documentation or management oversights. Needs improvement in subsequent audits.

• Audit Rating & Follow-up: Based on the severity and number of issues, the factory receives a rating (e.g., Acceptable, Follow-up Required, etc.). Factories with major issues must complete corrections and submit evidence within the stipulated time frame, undergoing a Follow-up Audit. Only factories that ultimately meet Disney's acceptable standards can obtain or maintain production authorization (FAMA).

IV. Significance and Challenges for Factories

Passing the Disney audit is both a challenge and an opportunity for factories. The challenge lies in its high standards and meticulous scrutiny, requiring factories to invest significant resources in management upgrades and improvements, particularly in fire safety, working hours, wages, and worker benefits. However, success means the factory's management system meets the standards of a leading international brand, significantly enhancing its market credibility and competitiveness. It not only enables the factory to receive Disney orders but also paves the way for orders from other international brands. It drives factories towards more standardized, humane, and sustainable development, ultimately achieving a win-win situation for both the business and its workers.