Making Things Better

Making things better

Pentland Group Corporate Responsibility review 2016

Contents

Introduction Who we are and what corporate responsibility means to us 02

Building brands with social purpose Using our brands to make a positive difference 14

Future-proofing our supply chain Continuing to reduce the impact of our products across our supply chain 22

Respecting human rights and tackling inequality Continuing to conduct business ethically and fairly, respecting everyone involved in making our products 34

UN Global Compact: Ten Principles Reporting in line with the UN Global Compact’s Ten Principles 46

Introduction Who we are and what corporate responsibility means to us

01 02 We raised 2016 Highlights % This page summarises some of the 47 £10,000 year’s key achievements: MITRE of our spend was with vendors is using environmentally friendly inks we have worked with for for our charity partners through our across all its training balls MORE THAN 10 YEARS partnership with Africa Shoes

We reduced Every area of the business 40% GREENHOUSE GAS EMISSIONS Pentland Brands worked with % OF BERGHAUS’ RANGE LANCASTER UNIVERSITY 6 PARTICIPATED IN GIVE BACK DAY now carries the Made Kind™ swing tag to develop a modern slavery risk in the UK year on year – a day of volunteering in the community assessment tool

% 90 % ZERO 100 596

OF LACOSTE’S & NO ZERO We used WE DONATED SURPLUS BERGHAUS’ LEATHER PRODUCTS TO 596 CHARITIES TOLERANCE ISSUES 100% RENEWABLE ENERGY comes from Leather Working Group through our partnership with In Kind Direct found as part of our factory at Pentland Brands sites across the UK medal-rated tanneries social audit process

32,500

We sent SPEEDO WORKERS AT SUPPLIER FACTORIES ZERO WASTE We were named as one of the launched its H2O Active range made BEST LARGE WORKPLACES with recycled fishing nets in Southeast Asia are covered to landfill at Pentland Brands HQ, the Glover by the Better Work programme Distribution Centre and Berghaus HQ by the Great Place to Work® Institute

03 04 Introduction Introduction

1.1 Continuously evolving Reporting in line with the UN Global Compact Ten Principles If you want to see how our our approach activities align with the UN Global Compact, see page 47.

Building a sustainable A note from our Chairman Consumer interest in how products are made, business has never been how long they last and how they end their life 2016 marked another successful year for is at an all-time high. This is why Pentland more important. It’s also Pentland Group across its three business Brands initiatives like Speedo’s H2O Active the right thing to do, and groups: Pentland Brands, JD Sports Fashion range, made using recycled fishing nets, are our stakeholders expect it. and our Ventures Division. so important. Not only do they deepen our relationships with consumers, but they reduce As a family company, people are at the heart the impact that these products have on of what we do. We work hard to create a the environment. working environment that inspires and nurtures, where everyone feels welcome to contribute I am proud of the way we have continued ideas on how we can do things better. In this to commit to doing business responsibly. spirit, I’m pleased to report that, once again, We hold ourselves to high standards of ethics Pentland Brands has been named as one of and corporate responsibility, especially those the Best Large Workplaces by the Great Place outlined in the United Nations Global Compact. to Work® Institute. We are delighted to renew our commitment to this initiative and its Ten Principles, which set We’ve continued our long history of collaborating a clear framework on how business can help with others to improve factory working conditions. to address the world’s prevailing issues. In 2016, Pentland Brands’ activities included developing a toolkit to prevent modern slavery R. Stephen Rubin and making our due diligence in Thailand even Chairman better. Meanwhile, JD Sports Fashion continued Pentland Group to work with suppliers to reduce chemical use and the JD Foundation raised over £1 million for eight youth charities.

05 06 Introduction Introduction 1.2 Who we are

We’re in business to Pentland Group plc PENTLAND BRANDS This report focuses on build great brands and A family business Pentland Brands make great products for This report provides an overview people to love, generation Pentland Group plc is a family-owned company operating in the areas of sports, outdoor and of activities that relate to Pentland after generation. fashion. As a family business, honesty, fairness, Group plc and its three business respect and hard work run through everything * areas. It focuses especially on we do. Pentland Brands. This is because * we fully own this business and therefore have more opportunity Our three divisions * Footwear Licensee to influence positive change Pentland Brands across the supply chain. JD SPORTS FASHION PLC Our brand management division, Pentland You can find more information Brands, is made up of 12 sports, outdoor and about JD Sports Fashion plc’s fashion brands. activities in its annual report. We refer to its report throughout JD Sports Fashion plc this review. Our retail division comprises of the JD Sports Fashion plc group, one of Europe’s leading retailers of aspirational branded sportswear, fashion wear and outdoor clothing and equipment. For a full list of outlets and brands visit the JD Sports Fashion plc website We hold a 57% share in the company, which has approximately 1,200 outlets. INVESTMENTS AND Pentland Ventures Division TRADING SUBSIDIARIES

We also take equity in other businesses across a variety of industries.

RIGHT

DETAIL FROM OUR HISTORY WALL

07 08 Introduction 1.3 Our approach to Pentland Brands corporate responsibility strategy corporate responsibility

Respecting human Building brands with Future-proofing our We have three pillars Management and governance We endeavour to persuade other companies rights and tackling that guide our efforts in which we have non-controlling stakes to social purpose supply chain Our standards and policies guide the way comply with these polices. inequality to make our business we work. They also provide a template for more sustainable. They our employees and suppliers. They include At Pentland Brands, all new starters receive make sure we go beyond guidance on how to do business ethically with training that sets out our corporate responsibility integrity and with respect for our stakeholders, priorities and shows what we expect of people FOCUS AREAS FOCUS AREAS FOCUS AREAS the boundaries of our and include our standards on anti-bribery. and suppliers. business and contribute to the UN Sustainable We require all Group companies in which we hold 50% or more of the share capital to align Using our brands to make a Responsibly managing our Tackling modern slavery Development Goals. with these policies and procedures. Our central positive difference in society use of chemicals CR team sets standards, monitors compliance and drives our strategic approach. Paying living wages Supporting causes that matter Reducing exposure to climate and water risk Understanding workers and Volunteering and giving back giving them a voice Reducing the environmental impact of supply chain operations

Using better materials and contributing to the circular economy

CONTRIBUTING TO THE UN SUSTAINABLE DEVELOPMENT GOALS

09 10 Introduction

The Ethical Trade Initiative AFIRM Group bluesign® system

The Ethical Trade Initiative (ETI) is an The AFIRM Group is an industry collaborative The bluesign® system works to reduce the 1.4 Partnerships alliance of companies, trade unions and effort to reduce the use and impact of harmful exposure of consumers, workers and the voluntary organisations collaborating to substances in the apparel and footwear environment to harmful chemicals. It eliminates and collaborations improve the lives of workers. We were a supply chain. In 2016,we adopted the substances posing risks from the beginning founding member. AFIRM Restricted Substance List (RSL) of the supply chain while also promoting helping to promote the harmonisation of safe production standards and the responsible restricted substances management in the use of resources. Berghaus is a bluesign® University College London (UCL) shared supply chain. system partner. We continue to work with UCL to offer a Global Public Policy masters scholarship. Responsible Down Standard Better Work The programme offers talented young Working with industry professionals from the southern hemisphere The Responsible Down Standard (RDS) is This scheme aims to achieve lasting groups, academic a chance to study at two of the world’s top an independent, voluntary, global standard, improvements to working conditions while universities – with teaching split between which companies can use to certify that the creating a more profitable business model institutions and UCL and NYU – as well as an internship with down in their products has been sourced for factories. In 2016, we collaborated with non-governmental Pentland. This year’s programme saw a large responsibly. In 2016, 100% of Berghaus Better Work in 12 factories, across Vietnam, organisations means we number of applicants, with the scholarship down jackets were certified to the RDS. Cambodia and Indonesia. being awarded to an impressive community are aware of best practice organiser from sub-Saharan Africa. and we can make positive ACT Living Wages Verité change happen at scale. The Pentland Centre for Action, Collaboration, Transformation In 2016, we started working with Verité, Sustainability in Business (ACT) brings together brands and retailers, supply chain specialists, to take action on manufacturers and trade unions to address modern slavery. We worked with them to In 2015, we launched the Pentland Centre the issue of living wages in the textile and develop a suite of training modules and a with Lancaster University. The centre tasks garment supply chain. We were a founding factory investigation process. businesses and academics to find practical member. In 2016 we joined the payment solutions to real-world social and environmental practices working group and have started WFSGI challenges. In 2016, we worked with them improving our payment terms in line with to develop a toolkit to prevent modern slavery. best practice. The World Federation of the Sporting Goods Industry (WFSGI) is an independent non-profit The Sustainable Apparel Coalition The Leather Working Group association, representing the global sporting goods industry. It promotes responsible This industry alliance focuses on developing The Leather Working Group (LWG) aims business practices and encourage more tools to improve and standardise the to improve the environmental compliance people to become involved in sport. Pentland reporting of environmental impact across and performance capabilities of tanners Group Chairman Stephen Rubin is Honorary the supply chain. In 2016, Berghaus and promotes sustainable business practices President of the WFSGI and Pentland participated in the Higg Index SME pilot, within the leather industry. Brands’ Chairman Andy Rubin is European helping to make sure the tool is accessible Vice President and an active board member. for smaller brands. This includes creating alignment on environmental priorities, bringing visibility to best practices and the assessment of Homeworkers Worldwide and CIVIDEP ® OEKO-TEX tanneries against a medal rating system. We’re currently working with Homeworkers 90% of Lacoste’s and Berghaus’ leather OEKO-TEX® is an auditing and testing Worldwide, a NGO supporting home-based is from medal-rated tanneries. system for detecting harmful chemicals workers around the world, and CIVIDEP, in the supply chain. All Speedo swimwear to understand the role and situation of the meets the OEKO-TEX® 100 standard. homeworkers in our supply chain in India.

11 12

Building brands with social purpose Using our brands to make a positive difference

13 14 Building brands with social purpose Building brands with social purpose 2.1 Building brands with social purpose

It’s important that our Berghaus gets people brands play a positive role outdoors on Black Friday in society. From sunrise to sunset on 26 November, Berghaus crews planted flags and prizes in four top secret UK locations – inspiring consumers to ditch the tired Black Friday paradigm and head into the outdoors instead.

Our aim was to help consumers experience the joy of spending more time outdoors. Over 350 people did just that – wild camping, sleeping in caves, hiking up hills – all in a bid to find the Berghaus flag.

Berghaus supports mountain “Berghaus are a highly committed, long term supporter of the John footpath repairs Outward Bound Trust Muir Trust. We share a passion for The John Muir Trust campaigns to keep wild Berghaus also supports the Outward Bound Trust, an enabling people to experience wild places unspoiled by inappropriate development, educational charity that uses places and through partnership restores damaged natural habitats and helps the outdoors to help develop people reconnect with the outdoors. young people from all work to protect them. walks of life. With Berghaus’ sponsorship the Trust won Being associated with a trusted a European-wide competition for £18,000 of brand like Berghaus helps us to funding for essential footpath repairs on Suilven, Sometimes in life you experience connect with a shared audience one of Scotland’s most dramatic mountains. moments that take your breath of people who love wild places.” The repair of this footpath is now underway. away. This was one of them. #TheGetOutGame #Berghaus Stuart Brooks, Chief Executive John Muir Trust OPPOSITE The Get Out Game participant via social media SUILVEN MOUNTAIN

15 16 Building brands with social purpose Building brands with social purpose

Speedo employees contribute 2.2 Brand-specific activities during drowning prevention week Speedo Swim Generation partners Speedo believes everyone, everywhere has the right to swim. In 2016, Speedo used Drowning Prevention Week as an opportunity to engage employees.

People got involved in various activities to educate, engage and fundraise for the Royal Life Saving Society (RLSS) UK:

As the name behind some • ‘Speedo swims the Channel’: a sponsored Canterbury brings the benefits swim covering 22 miles in seven days Speedo inspires thousands of of the world’s biggest “This is our third year as Official of rugby to school children Partner of the All Schools • ‘Save a Baby’s Life’ workshops people to swim sports and outdoor • Outdoor activities delivered by RLSS Canterbury continued to support the All Schools programme – something we are • Raffle ticket sales Speedo’s Swim Generation programme provides brands, we want to get programme with England Rugby, to encourage extremely proud to be part of. essential swimming skills to the people that more state secondary school children to play more people benefiting The Royal Life Saving Society need it most. Speedo supports 11 projects as rugby and new players to join local clubs. I know the students felt immense from being active. Commonwealth Presidents Award part of this programme, which together have: pride in wearing a shirt that they Canterbury ran a kit design workshop with • Made at least 9,800 children safer in the water 100 schools. Each child had the opportunity designed at such a huge game. Speedo UK is supporting RLSS Nottinghamshire • Provided over 156,000 free water to design their own kit for their school. The Hopefully some special memories branch to deliver its goal of providing water safety lessons winning design from each workshop was then safety education to all school children in the were made.” • Trained 64 new lifeguards and swim instructors used to create a rugby kit for their school team, county. In November 2016, we were awarded the Royal Life Saving Society Commonwealth and the winners were invited to wear their Chris Stephenson, Global President, The programme is active in Bangladesh, Presidents Award in recognition of Speedo’s winning designs at an England game in front Active Division, Pentland Brands Northern Ireland, Cambodia, Bulgaria, invaluable contribution to its work. of an 82,000 crowd. Sri Lanka and England.

17 18 Building brands with social purpose Building brands with social purpose 2.3 Volunteering and giving back to local communities

In 2016, every part of our Pentland Brands gives back We also work with In Kind Direct, the UK’s business took part in an leading redistribution charity, to donate surplus In 2014, Pentland Brands asked a group of products to those in need. employee Give Back Day, its emerging leaders to select three charities taking time to volunteer across themes that are relevant to the Last year, 596 UK charities benefited from in their local community. business. Then, in 2015, we asked everyone stock donations from Mitre, Boxfresh, Berghaus, in the business to vote for the specific projects Red or Dead and Kickers. they wanted to support. JD Foundation supports The winning projects were: youth charities • A clean water project in Kenya with the The JD Foundation focuses on youth charities British Red Cross and since its launch a year ago has raised over • A project to empower girls in India with £1,000,000 for eight selected youth charities. International Inspiration • A project to protect the Javan rhino in One of these charities is Cardiac Risk in the Indonesia with WWF Young. JD will hold screening days in April and June 2017 and screen over 220 of its TOP LEFT In 2016, our employees raised money for head-office staff. There will be seven additional DURING FUNDRAISING our global charity partners through Fundraising screening days in the North West by the FORTNIGHT, OUR Fortnight. All funds raised were match funded PHOTOGRAPHY STUDIO end of this year, meaning JD will have OFFERED TEAM PHOTOS by Pentland. FOR A DONATION screened just under 1,000 young people for We were able to donate a further £10,000 potentially life threatening cardiac conditions. TOP RIGHT to our projects through our partnership with The Foundation is also working with THE FACILITIES TEAM Africa Shoes – a social enterprise redistributes HELP OUT AT BELMONT the Salford Foundation on its mentoring CHILDREN’S FARM products to entrepreneurs in Africa for repair programme, providing career advice and and resale. We receive a small fee for any personal development support to young BOTTOM LEFT products donated, all of which we donated to people in schools and colleges. TEAM IN BANGKOK our charity partners. PLANT 150 TREES IN LOCAL PARK

BOTTOM RIGHT

GROUP MARKETING DONATE THEIR TIME AT SWEET TREE FARM

19 20

Future-proofing our supply chain Continuing to reduce the impact of our products across our supply chains

21 22 Future-proofing our supply chain Future-proofing our supply chain 3.1 Future proofing our supply chain

Our business footprint Mapping our supply chain JD Sports Fashion plc has mapped all of its tier Throughout 2016, Berghaus took part in the goes beyond the boundaries 2 suppliers and risk assessed them. See JD’s SME Brand Pilot Project to help the SAC gain annual review for more. insights into the specific needs of smaller of our own operations. Understanding our supply chain is the first step towards monitoring standards. In 2016, brands and to be able to tailor SAC support It is essential that we and tools to address those needs. Pentland Brands had full visibility of its tier Trialling the Higg Index to 1 production and assembly sites (where our think about the entirety Employees attended workshops with other products are finished and assembled). We monitor sustainability across of our impact to make brands involved in the pilot to share feedback, also started a project to map all of our tier 2 our supply chain and best practice. The pilot will continue into sure our business is suppliers (those that produce materials and 2017 with the focus moving to Berghaus’ component parts) – we hope to continue the robust and sustainable The Sustainable Apparel Coalition is the suppliers and the Factory Environmental good progress in 2017. for the long term. apparel, footwear and home textile industry’s Module (FEM), which allows factories to foremost alliance for sustainable production. measure and share information on: In 2016, Pentland Brands published a list of tier The Coalition’s main focus is on building 1 suppliers which is available on Pentland.com. the Higg Index, a standardised supply chain • Environmental Management systems Being transparent about who we source from measurement tool to help brands understand • Energy use and greenhouse gas emissions helps us work in a more constructive, open and the environmental and social impact of making • Water use collaborative way with our suppliers, other and selling their products and services. • Wastewater/effluent brands, NGOs and civil society. • Emissions to Air The Brand Environmental Module in particular • Waste management has been an important tool in the development • Chemical use and management MAPPING TIER DEFINITION STATUS of the Pentland Brands’ corporate responsibility strategy, allowing us to identify gaps and areas Berghaus is currently connected to over 30 Production and of opportunity on which to focus. The module factories and as part of the pilot will continue 1 100% assembly sites measures the impacts of the brand’s activities to work with more of its suppliers to complete throughout product life cycles, including: factory modules. 2 Specialist processing sites Majority • Material sourcing Material/component • Product design 3 Partial production process sites • Manufacturing • Packaging 4 Chemical suppliers Limited • Distribution • Care and repair • End of use programmes 5 Raw materials Limited LEFT BERGHAUS PRODUCTS ON DISPLAY

23 24 Future-proofing our supply chain Future-proofing our supply chain 3.2 Chemical management

We are committed We aim to eliminate Berghaus continues to work Mitre aims to be solvent-free to removing harmful harmful substances with bluesign® by 2017 substances from our Pentland Brands runs a restricted substances In 2016, Berghaus continued to work with the Mitre is aiming to switch solvent-based glues supply chain. management programme which is designed bluesign® system – designed to reduce harmful for water-based ones across its entire range to meet demanding requirements in terms of substances in the supply chain, by working with by the end of 2017. hazardous substances regulations, worker and chemical suppliers, textile mills and component consumer safety and environmental protection. suppliers. Berghaus is working systematically It has also expanded its use of volatile to increase the number of factories which are organic compound-free inks across all its key We require all of our suppliers to comply with bluesign® certified. Currently over 70% of their training balls. These products are safer for our restricted substance list (RSL) which outlines fabric suppliers are bluesign® system partners. factory workers and better for the environment. chemicals banned or restricted in the manufacture of our products. Our RSL is aligned to that of the Speedo is accredited Testing JD suppliers AFIRM group. Our suppliers are required to: ® by OEKO-TEX All JD’s material, component and product • Certify their compliance against our RSL suppliers must take part in compliance and • Provide evidence of compliance against All Speedo swimwear is accredited to the ® testing programmes. JD also does its own our RSL OEKO-TEX 100 standard. So every product is due diligence testing. In 2016, it launched its designed, developed and delivered meeting strict own chemical compliance programme with We follow up with testing where appropriate. industry guidelines. We are continuously growing its top 10 suppliers in China and India. the number of our suppliers covered by bluesign and OEKO-TEX® certifications. This will be rolled out over the coming 12 months. It has also mapped its tier 2 suppliers and risk assessed them. See the JD Sports Fashion annual report for more.

T O P

SPEEDO PRODUCT HANDLING

BOTTOM LEFT

BERGHAUS PRODUCT IN USE

BOTTOM RIGHT

MITRE FOOTBALL

25 26 Future-proofing our supply chain 3.3 Better materials

We aim to design Responsibly sourced leather Speedo launches H2O Active products with Pentland Brands is a member of the Leather range made with eco fabric sustainability in mind. Working Group (LWG), an independent Speedo’s new H2O Active Swimwear range organisation that audits environmental standards is a new workout collection for women made in tanneries. using chlorine-resistant PowerFLEX Eco fabric – so it can be worn in and out of the water. In 2016, over 90% of Berghaus’ and Lacoste’s ® leather was sourced from LWG gold, silver and It includes 78% ECONYL yarn, a nylon fibre bronze rated medal tanneries. made from regenerated plastics, including abandoned fishing nets that might otherwise harm animals in the ocean.

PowerFLEX Eco is also built to last twice as long as standard swimwear fabrics – meaning its environmental impact per wear has the potential to be much lower. IN 2016 90% OF

LACOSTE’S & BERGHAUS’ ADDITIONAL PRODUCTS from Speedo’s current range have been... LEATHER

TRIALLED came from LWG RIGHT AND GOLD, SILVER LEATHER MATERIAL TESTED SAMPLES & BRONZE RECYCLED medal-rated producers with POLYESTER OPPOSITE

SPEEDO H20 ACTIVE SWIMWEAR RANGE

27 28 Future-proofing our supply chain

Berghaus’ Made Kind™ range BELOW Speedo Swim Generation BERGHAUS BERGHAUS PRODUCT Berghaus’ Made Kind™ range is aimed at DISPLAY partners MADE KIND™ RANGE reducing the environmental impact of the production of the brands’ products. Launched in RIGHT

2015, the Made Kind™ range continues to grow, BERGHAUS CAMPAIGN with over 40% of the 2017 ranges now covered. PHOTOGRAPHY

OVER The new spring/summer collection, is on % track to save over 30,000 tonnes CO2 and 40 nine million litres of water from the use of Colourkind™ fabrics alone, while the winter of 2017 ranges carry the collection will also include synthetic insulation Made Kind™ swing tag made from recycled plastic bottles.

SAVING MILLION LITRES 9 OF WATER and

tonnes 30,000

of CO2 saved using

FABRICS

The 2017 winter collection uses SYNTHETIC INSULATION made from

RECYCLED PLASTIC BOTTLES

29 30 Future-proofing our supply chain Future-proofing our supply chain 3.4 Managing climate change, water and waste

In 2016, we reduced our Our own operations At our factories group CO2 emissions by In 2016, we reduced the Pentland Group UK PENTLAND GROUP We aim to work with factories which are 6% compared with the 2 CO emissions by 6% compared with the previous CO2 EMISSIONS proactive in managing their environmental previous reporting period. reporting period – from 37,329* tonnes to 35,002 impact. For example, a number of Lacoste’s tonnes. This was achieved through a variety assembly factories made environmental of measures, including using more efficient improvements in 2016. These included waste boilers at our Pentland Brands London HQ. reduction programmes, water treatment CO2 EMISSIONS (tonnes) programmes and lowering energy consumption. We did not send any waste to landfill at our 50,000 offices in London, Nottingham, Sunderland Reducing climate and water risk and Stockport; distribution centres in Blackburn,

Sunderland and Wakefield; or JD’s main UK 40,000 A number of Pentland Brands’ suppliers are distribution centre, Kingsway. located in areas of high climate change or water risk. In 2017, we plan to start mapping our Overall our UK sites created 367.28 tonnes 30,000 exposure, to aid our future sourcing decisions. of waste – 64.63 tonnes less than last year. Of this, 85% was either recycled or used to 20,000 generate energy. In 2016, Berghaus removed disposable cups from its drinks machines, saving over 10,000 cups. 10,000

2014 42,234 tonnes

2015 37,329* tonnes

2016 35,002 tonnes

LEFT

LACOSTE’S ASSEMBLY *We overstated our emissions in our 2015 CR Review, FACTORY producing 37,329 tonnes, not 39,294 tonnes.

31 32

Respecting human rights and tackling inequality Continuing to conduct business ethically and fairly, respecting everyone involved in making our products

33 34 Respecting human rights and tackling inequality

PENTLAND BRANDS SOURCING COUNTRIES 4.1 Tackling inequality and In 2016, Pentland Brands published a list of its tier 1 protecting human rights suppliers which is available on Pentland.com.

Our business is heavily Auditing factories in line with reliant on people, and Our Standards PROPORTION OF OUR has great potential to SPEND BY FACTORY We expect all Pentland Brands’ manufacturers to RELATIONSHIP LENGTH contribute significantly comply with our Code of Employment Standards to economic and for Suppliers. This adheres to the ETI Base social development. Code and International Labour Organization conventions, as well as regional legislation.

We reviewed and updated our Code in 2014. It requires manufacturers to make sure:

• Living wages are paid • Working hours are not excessive • Working conditions are safe and hygienic • Child labour is not used • Employment is freely chosen • No discrimination is practised • There is no harsh or inhumane treatment • Freedom of association and the right to collective bargaining are respected • Regular employment is provided • There is no unauthorised subcontracting

Our standards are available in 14 languages. JD Sports has a similar set of standards. LESS THAN 5 YEARS 36% Read more in its annual report. 5 – 9 YEARS 15%

Building lasting relationships 10– 19 YEARS 39%

We foster long-term relationships with suppliers MORE THAN 20 YEARS 10% and work with them to improve workers’ rights. We’ve worked with nearly half of our suppliers for over 10 years. The tier 1 supplier list includes all factory sites assembling our finished goods for retail, inclusive of approved subcontractors performing assembly processes such as cutting and/or sewing. All factories listed were active on the date of publication. The list does not include suppliers to our licensed partners, not-for-retail product, or suppliers and producers beyond tier 1.

35 36 Respecting human rights and tackling inequality

FACTORY REVIEW PROCESS BREAKDOWN OF VISITS PER COUNTRY How do we categorise breaches We have a series of policies and processes to help us of our Code of Employment monitor and improve conditions at our factories. Standards for suppliers?

Zero tolerance CHINA 33% An issue that has an unacceptable impact on worker rights or conditions. It could lead us to suspend or even end a supplier relationship if they do not immediately engage in sustainable STARTING A RELATIONSHIP EUROPE 17% improvement.

JAPAN 2% Critical

They must be approved We carry out a social audit We conducted 30 initial An issue of serious concern that could turn into before our brands can place of new factories. audits in 2016. a zero tolerance issue. any orders with them. SOUTHEAST ASIA Minor 24% SOUTH ASIA 22% Less significant breaches. Alone, they can be quickly tackled. But in clusters they can identify MONITORING STANDARDS a need for improved management practices.

If we find an issue in our supply chain, we will aim to work with the factory to improve We regularly re-audit In 2016, we made 38 factory conditions. This is in the best interests of all every factory. visits as part of this process. FACTORY ASSESSMENTS BY TYPE involved, including the workers. We will only end a relationship if a factory shows a lack of willingness to improve.

IMPROVING STANDARDS Performance in 2016

In 2016, we completed 71 factory audits to FOLLOW-UP ONGOING assess working conditions and compliance with AUDITS 15% REVIEWS 48% our business standards. We’ve also completed If we find areas for improvement, we make four factory assessments with Better Work. recommendations, agree an action plan and follow up to check on progress. We encourage • We discovered no zero tolerance issues manufacturers to include workers in the process We regularly invite an independent local and to consult them on the changes. interviewer to join our visits and speak in 2016 directly with factory employees about In 2016, our in-house teams made 12 factory working conditions. • Critical issues increased 22% on the visits to check up on improvement progress, previous year understand the root causes and gauge the impact on workers. • Minor issues decreased 34% on the INITIAL AUDITS previous year 38%

37 38 Respecting human rights and tackling inequality Respecting human rights and tackling inequality

Working with Better Work Supporting industry-wide

Reviewing working conditions We partner with the Better Work programme, living wages OUR PARTNERSHIP at JD’s warehouse WITH BETTER WORK an International Labour Organization and A living wage is generally defined as a wage In December 2016, following International Finance Corporation initiative. that covers basic needs and provides some media allegations about working discretionary income. practices in the Kingsway It makes ethical trade assessments and distribution centre of JD Sports runs programmes to make sure factories Pentland Brands is active in addressing the We collaborated with Fashion plc, a team of specialists Better Work in from Deloitte were appointed meet labour standards. issue of living wages at an industry level to conduct an independent through our membership of the ACT Foundation investigation into those allegations. In 2016: – a partnership of brands, retailers and the Their report concluded that, • We collaborated with Better Work global union IndustriALL. on the basis of their review FACTORIES in 12 factories across Vietnam, conducted in January 2017, ACT aims to improve wages by establishing 12 the issues alleged in the media Cambodia and Indonesia did not represent a balanced collective bargaining in key garment and textile characterisation of policies and • We estimate Better Work made sourcing countries, supported by world-class across practices there. a positive impact on over 32,500 manufacturing standards and responsible VIETNAM, They nevertheless identified workers in our supply base purchasing practices. areas for improvement requiring CAMBODIA AND management attention and also We are part of the purchasing practices INDONESIA observed that plans were in working group and began a review of our place, some already implemented, which pre-dated the allegations purchasing practices to make sure they don’t being made or the commencement inadvertently have a negative impact on of the review. suppliers’ ability to provide workers with a living wage. Currently 85% of our suppliers are paid within 30 days of receipt of export documents. To find out more about ethical In terms of our own employees, we’re committed trade at JD, see its annual report. to providing living wages to all our employees.

We estimate that Better Work made a

POSITIVE IMPACT

on over 32,500 WORKERS

RIGHT in our supply base ONE OF OUR WAREHOUSES

OPPOSITE

FACTORY IN SHENZHEN

39 40 Respecting human rights and tackling inequality 4.2 Preventing modern slavery Key activities in 2016

Modern slavery and Human trafficking and modern slavery are In 2017 Pentland Brands and JD Sports Launching a four level Developing a supplier Running a pilot human trafficking are criminal acts that can be sophisticated and Fashion plc will produce their first modern training programme RISK Assessment Tool investigation programme difficult to detect. slavery statements, detailing what they’re increasingly prevalent doing to prevent modern slavery and human issues within modern We are in the process of widening and trafficking in their supply chains. deepening the scope of our existing supply We launched a modular We ran a pilot investigation program at a supply chains. chain monitoring to be increasingly diligent We developed a and capable in the detection of human TRAINING trafficking and modern slavery. SUPPLIER HIGH RISK LEVEL4 PROGRAMME RISK FACTORY ASSESSMENT in Thailand TOOL

We trained on aspects of HUMAN During this visit we TRAFFICKING ...in collaboration with discovered a number of 49 AND MODERN LANCASTER UNIVERSITY employees SLAVERY ! RISK FACTORS People in supplier-facing roles to assess relating to were taught how to MODERN MODERN SLAVERY OR SLAVERY RISK IDENTIFY AND RESPOND HUMAN TRAFFICKING to risk indicators

at every one of our We’re now working closely with the Corporate responsibility practitioners factory to address these... and auditors were trained on the technical skills needed to TIER ASSEMBLY ...and looking to roll out the DETECT AND REMEDY SUPPLIERS investigation process across all high risk factories the various forms modern slavery 1 RIGHT and its root causes

FACTORY WORKER

41 42 Respecting human rights and tackling inequality Respecting human rights and tackling inequality 4.3 Partnering to effect regional change

We take a regional approach to ethical trade, focusing on specific issues depending on the social and political context.

Improving rights to collective This FOA Protocol was signed by Indonesian Promoting social insurance The Chinese social insurance system is among ABOVE trade unions, suppliers and brands – facilitated the most difficult in the world for workers to FACTORY WORKERS bargaining in Indonesia by a local NGO. It establishes practical in China navigate. So we’re working with ETI China IN SHENZHEN The Freedom of Association (FOA) Protocol guidelines, tools and training for enabling Social insurance is a state programme and nine other brands to help Chinese factory is a voluntary initiative developed by a small collective bargaining in pursuit of better designed to provide benefits to employees workers to understand the benefits it offers. group of brands, local NGOs, trade unions working conditions. and their dependants through income for We’ll be promoting an educational video and and suppliers to improve FOA rights. This retirement, sickness, disability and other In 2016, we ran a session with 18 attendees in set of guidelines in 2017 to workers in our supply states that workers are free to form and join purposes. The social insurance programme collaboration with Oxfam, to encourage them chain to improve their awareness and encourage workers’ organisations such as trade unions, is funded through compulsory contributions to sign up. Pentland signed the FOA Protocol participation in the social insurance programme. worker associations and worker councils or by both employers and employees. on 6 June 2011. Since then, 86% of our suppliers committees for the promotion and defence of have signed and implemented the Protocol. occupational interests.

43 44 5

UN Global Compact: 10 Principles Reporting in line with the UN Global Compact’s Ten Principles

45 46 UN Global Compact: Ten Principles

5.1 UN Global Compact: Ten Principles

Human Rights 01 Businesses should support and respect the protection Respecting human rights of internationally proclaimed human rights; and and tackling inequality - p34

02 make sure that they are not complicit in human rights abuses.

Labour 03 Businesses should uphold the freedom of association and Respecting human rights the effective recognition of the right to collective bargaining; and tackling inequality - p34

04 the elimination of all forms of forced and compulsory labour; Introduction - p02

05 the effective abolition of child labour; and

the elimination of discrimination in respect of employment 06 and occupation.

Environment 07 Businesses should support a precautionary approach to Future-proofing our supply environmental challenges; chain - p22 Building brands with social 08 undertake initiatives to promote greater environmental responsibility; and purpose - p14

09 encourage the development and diffusion of environmentally friendly technologies.

Anti-Corruption 10 Businesses should work against corruption in all its forms, Introduction - p02 including extortion and bribery.

bluesign® is a registered trademark of Bluesign Technologies AG OEKO-TEX® is a registered trademark of OEKO-TEX® Association Great Place to Work® is a registered trademark of Great Place to Work® Institute Inc.

No Ordinary Shoes Limited is the worldwide Licensee for footwear under licence from Ted Baker plc and No Ordinary Designer Label Limited. Airborne Footwear Limited is the UK licensee for footwear under licence from Kickers International B.V. Pentland Chaussures Limited is the worldwide licensee for footwear under licence from Lacoste S.A. and its associated companies.

BERGHAUS and and BRASHER and are registered trade marks of Berghaus Limited. BOXFRESH and are registered trade marks of Boxfresh International Limited. CANTERBURY and are registered trade marks of Canterbury Limited. ELLESSE and are registered trade marks of Ellesse International S.p.A. KANGAROOS and are registered trade marks of Asco Group Limited. KICKERS is a registered trade mark of and used under licence from Kickers International B.V. LACOSTE and are registered trade marks and used under licence from Lacoste S.A. and its associated companies. MITRE and are registered trade marks of Mitre Sports International Limited. PROSTAR is a registered trade mark of Prostar Sports Limited. RED OR DEAD is a registered trade mark of Red or Dead Limited. SPEEDO and are registered trade marks of Speedo Holdings B.V. TED BAKER is a registered trade mark of and used under licence by Ted Baker plc and No Ordinary Designer Label Limited. PENTLAND is a registered trade mark of Pentland Industries Limited.

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