Safeguarding Employees

The health and safety of our employees are paramount, and the company is committed to providing a safe and injury-free workplace. To achieve this, employees are engaged in ongoing safety training and awareness, risk assessments, inspections and safety committees.

A review of overall safety performance in 2010 identified that 84% of our facilities (170 out of 203) achieved a zero injury status for the year. This total included 79 manufacturing sites, 60 distribution centers and warehouses, 28 offices and three research centers. Safety performance is measured by the U.S.-defined recordable incident rate (RIR), which is a ratio of the number of occupational injuries and illnesses to the number of work hours. In 2010, we reached an all-time best global recordable incident rate of 0.62.

Promoting Fair Labor Practices

As a global company with manufacturing facilities in more than 50 countries, we are committed to operating according to internationally accepted minimum standards for employment. Our Employment Standards address fair compensation, non-discrimination, work hours and freedom of association for employees of our facilities.

We created Global Supplier Standards and ask that all our critical suppliers follow these standards. We do not tolerate child or forced labor. In addition, because employment norms vary across the globe, we are engaged with Business for Social Responsibility (BSR) and their Mills and Sundries Working Group to set consistent expectations and to achieve fair, safe, healthy, and environmentally friendly working conditions.

Avery Dennison is also actively participating in the International Labor Organization's (ILO) Better Work Vietnam program. This program, which became operational in 2009, is a collaborative effort between the ILO and the public and private sectors that is designed to improve labor standards and competitiveness in Vietnam's export sectors.

Social Compliance Program

Third-party audits of social compliance are conducted at the majority of our facilities in emerging markets, as required by our customers. In addition, we monitor our facilities as well as in select suppliers' facilities through a risk-based internal audit program. Facilities are selected based on a number of factors including the prevailing labor conditions in the country where the facility is located and past audit performance. This enables us to focus our efforts where we can have the greatest impact. The objectives of our audit review are to identify noncompliance with our Employment Standards, identify best practices, observe improvements on identified issues from previous audits and rate facilities' overall compliance levels.

In 2010, 53 on-site audits of our facilities were completed for a total of 129 third-party audits since 2007. Our monitoring, training and education initiatives have reduced the average number of issues identified per audit from 22.7 in 2009 to 6.7 in 2010. The key social compliance issues for 2010 were related to health and safety, wages and benefits and labor hours at sites primarily in Asia Pacific. Our audit results also indicate that our facilities are not at significant risk for incidents of child or forced labor. In addition, none of our operations were identified that put collective bargaining at risk.

• Providing social compliance training for our local managers and employees aimed at increasing their knowledge about health, safety and labor practices

• Increasing the number of certified and trained auditors to expand our internal auditing capacity

• Externally reporting on our social compliance performance in our sustainability reporting

• Responding to customer requests for information and external audits

• Continuously reviewing our policies and practices relating to human rights

• Participating in collaborative initiatives with a broad range of stakeholders to enhance the effectiveness of our social compliance program