Audit Company: Bureau Veritas Report Reference: 60419670 Date: 16 and 17 April 2015 1 Audit Company Name: Report Owner (Payee)

Supplier name: Dolcificio GI&SSE SRL Site country: Italy Site name: Dolcificio GI&SSE SRL Parent Company name (of the site): Dolcificio GI&SSE SRL SMETA Audit Type: 2–Pillar 4–Pillar Date of Audit 16 and 17 April 2015

Audit company: Bureau Veritas Report reference: 60419670 Date: 16 and 17 April 2015 1 Audit Company Name: Report Owner (payee):

Bureau Veritas Dolcificio GI&SSE SRL

Sedex Company Reference: S: 000000046714 (only available on Sedex System)

Sedex Site Reference: P: 000000096933 (only available on Sedex System)

Audit Conducted By

Commercial Purchaser

NGO Retailer

Trade Union Brand Owner

Multi–stakeholder Combined Audit (select all that apply)

Auditor Reference Number: Not applicable (If applicable)

SMETA Declaration

I declare that the audit underpinning the following report was conducted in accordance with SMETA best practice guidance version 5.0. Any exceptions to this are recorded here:

(1) A SMETA audit was conducted which included some or all of Labour Standards, Health & Safety, Environment and Business Ethics. The SMETA Best Practice Methodology v.5.0 Dec 2014 was applied. The scope of workers included all types at the site e.g. direct employees, agency workers, workers employed by service providers and workers provided by other contractors.

(2) The audit scope was against the following reference documents 2-Pillar SMETA Audit - ETI Base Code - SMETA Additions o Management systems and code implementation, o Entitlement to Work & Immigration, o Sub-Contracting and Home working,

Audit company: Bureau Veritas Report reference: 60419670 Date: 16 and 17 April 2015 2 4-Pillar SMETA o 2-Pillar requirements plus o Additional Pillar assessment of Environment o Additional Pillar assessment of Business Ethics The Customer’s Supplier Code (Appendix 1)

(3) Where appropriate non-compliances were raised against the ETI code / SMETA Additions & local law and recorded as non-compliances on both the audit report, CAPR and on Sedex.

(4) Any Non-Compliance against customer code shall not be uploaded to Sedex. However, in the CAPR these ‘Variances in compliance between ETI code / SMETA Additions/ local law and customer code’ shall be noted in the observations section of the CAPR.

Any exceptions to this must be recorded here (e.g. different sample size): NA

Auditor Name(s) (please list all including all interviewers): Lead auditor: Maurizio Giangreco Translator: Federica Ricci. Team auditor: None Interviewers: Maurizio Giangreco

Date: 16-17 April 2015

Audit company: Bureau Veritas Report reference: 60419670 Date: 16 and 17 April 2015 3 Non–Compliance Table

Area of Non –Conformity (Only check box when there is a non–conformity, Record the number and only in the box/es where the non–conformity of issues by line*: Issue can be found) (please click on the issue title to go direct to the appropriate audit results by clause) Additional NC Obs GE ETI Base Elements Local Law Code (i.e. not part of ETI code )

0 Management systems and code 1 implementation

1 Employment Freely Chosen

2 Freedom of Association

3 Safety and Hygienic Conditions 2 1

4 Child Labour

5 Wages and Benefits 1

6 Working Hours

7 Discrimination

8 Regular Employment

8A Sub–Contracting and Homeworking

9 Harsh or Inhumane Treatment

10A Entitlement to Work

10B2 Environment 2–Pillar NA NA NA

10B4 Environment 4–Pillar

10C Business Ethics 1

*Please note the table above records the total number of Non compliances (NC), Observations (Obs) and Good Examples (GE). This gives the reviewer an indication of problem areas but does not detail severities of each issue – Reviewers need to check audit results by clause.

Audit company: Bureau Veritas Report reference: 60419670 Date: 16 and 17 April 2015 4 Summary of Findings

Summary of main findings: (positive and negative) (Please give a short summary of the main findings per clause)

NC1 There is no formal communication of ETI code to workers. NC2 There is no recorded training for safety supervisor for night shift. Structured training is scheduled but not yet performed NC3 General Risk evaluation document does not consider risk of stuffing hands in boiling oil during frying operations or passing near to frying line. Operator at frying line wears PPE and risk is low but not absent. OBS1 There is not a written and formalized Business Ethic Code.

Audit company: Bureau Veritas Report reference: 60419670 Date: 16 and 17 April 2015 5 Audit Details

Audit Details

A: Report #: 60419670

B: Time in and time out Day 1 Time in: 9.00 Day 2 Time in: 9.00 Day 3 Time in: (SMETA Best Practice Guidance and Day 1 Time out: Day 2 Time out: Day 3 Time out: Measurement Criteria recommends 9.00–17.00 18.00 13.00 hrs. if any different please state why in the SMETA declaration )

C: Number of Auditor Days Used: 1,5 days - one auditor (number of auditor x number of days)

D: Audit type: Full Initial Periodic Full Follow–up Partial Follow–Up Partial Other – Define

E: Was the audit announced? (AAG Announced recommends a window of three weeks for semi– Semi – announced: Window detail: weeks announced, this gives optimum results) Unannounced

F: Was the Sedex SAQ available for Yes review? No

If No , why not? Not Applicable (Examples would be, site has not completed SAQ, site has not been asked to complete the SAQ.)

G: Any conflicting information SAQ/Pre- Yes Audit Info to Audit findings? No If Yes , please capture detail in appropriate audit by clause

H: Auditor name(s) and role(s): Maurizio Giangreco – Lead Auditor

I: Report written by: Maurizio Giangreco

J: Report reviewed by: Prasad Lohar

K: Report issue date: 23 rd April 2015

L: Supplier name: Dolcificio GI&SSE SRL

M: Site name: Dolcificio GI&SSE SRL

N: Site country: Italy

Audit company: Bureau Veritas Report reference: 60419670 Date: 16 and 17 April 2015 6 O: Site contact and job title: Simonetta Scarabelli– Owner

P: Site address: Via Crevalcore 3/20; 40017 San Giovanni in Persiceto (BO) (Please include full address)

Site phone: +39 (0) 51 822729

Site fax: +39 (0) 51 6810081

Site e–mail: [email protected]

Q: Applicable business and other legally VAT number 02622021208 required licence numbers: for example, business license no, and liability insurance

R: Products/Activities at site, for example, Fried cakes garment manufacture, electricals, toys, grower

S: Audit results reviewed with site Yes management?

T: Who signed and agreed CAPR Simonetta Scarabelli– Owner (Name and job title)

U: Did the person who signed the CAPR Yes have authority to implement changes?

V: Present at closing meeting (Please state Simonetta Scarabelli – Owner name and position, including any workers/union reps/worker reps):

W: What form of worker representation / Union (name) union is there on site? Worker Committee Other (specify) None

X: Are any workers covered by Collective Yes No Bargaining Agreement (CBA)

Y: Previous audit date: Not applicable

Z: Previous audit type: SMETA 2– SMETA 4– Other pillar pillar

Full Initial

Periodic

Full Follow–Up Audit

Audit company: Bureau Veritas Report reference: 60419670 Date: 16 and 17 April 2015 7 Partial Follow– Up

Partial Other*

*If other, please define:

Audit company: Bureau Veritas Report reference: 60419670 Date: 16 and 17 April 2015 8 Audit Scope/Actual Results

Criteria Local Law Actual at the Is this part of a (Please state legal Site Collective requirement) (Record site results Bargaining against the law) Agreement?

A: Standard/Contracted work hours: Legal maximum: 40h/week Yes (Maximum legal and actual required working hours excluding 40h/week No overtime, please state if possible per day, week and month)

B: Legal Overtime hours: Legal maximum: 13h per month Yes (Maximum legal and actual overtime hours, please state if 250 hour per No possible per day, week and month) year; 5 per day

C: Legal age of employment: Legal minimum: 21 hired at 20 (Minimum legal and actual minimum age at site) 16 year year

D: Legal minimum wage for standard/contracted hours: Legal minimum: 1477,83€ per Yes (Minimum legal and actual minimum wage at site, please state 1477,83€ per month gross No if possible per hr, day, week and month) month gross wage wage

E: Legal minimum overtime wage: Legal minimum: OT rates are 45% Yes (Minimum legal and actual minimum overtime wage at site, 30% for extra work No please state if possible per hr ,day, week and month) during working days; 50% for statutory and rest days ; extra time during night shift 30%

Audit Scope (Please select the code and additional requirements that were audited against during this audit)

2–Pillar Audit

10B4: Environment 4–Pillar

10C: Business Ethics

All groups of workers are included in the scope of this audit such as; Direct employees, Casual and agency workers, Workers employed by service providers such as security and catering staff as well as workers supplied by other contractors.

Note: The main focus of this ethical audit is on the ETI Base Code and local law. The additional elements will not be audited in such depth or scope, but the audit process will still highlight any specific issues.

This report provides a summary of the findings and other applicable information found/gathered during the social audit conducted on the above date only and does not officially confirm or certify compliance with any legal regulations or industry standards. The social audit process requires that information be gathered and considered from records review, worker interviews, management interviews and visual observation. More information is gathered during the social audit process than is provided here. The audit

Audit company: Bureau Veritas Report reference: 60419670 Date: 16 and 17 April 2015 9 process is a sampling exercise only and does not guarantee that the audited site prior, during or post–audit, are in full compliance with the Code being audited against. The provisions of this Code constitute minimum and not maximum standards and this Code should not be used to prevent companies from exceeding these standards. Companies applying this Code are expected to comply with national and other applicable laws and where the provisions of law and this Code address the same subject, to apply that provision which affords the greater protection. The ownership of this report remains with the party who has paid for the audit. Release permission must be provided by the owner prior to release to any third parties.

Audit company: Bureau Veritas Report reference: 60419670 Date: 16 and 17 April 2015 10 Audit Overview

Audit Overview

Management Worker Representatives

Audit attendance Senior management Worker Committee Union representatives representatives

A: Present at the opening meeting? Yes No Yes No Yes No

B: Present at the audit? Yes No Yes No Yes No

C: Present at the closing meeting? Yes No Yes No Yes No

D: If Worker Representatives were not Worker representative was on shift during afternoon so he was not present please explain reasons why present at opening meeting. (only complete if no worker reps present)

E: If Union Representatives were not Company is not unionized. present please explain reasons why: (only complete if no union reps present )

F: Site description: Company takes about 2500 sqm in and industrial building in a small (Include size, location and age of site. Also town about 20 km away from Bologna in northern Italy. include structure and number of buildings) Building dates back to 1983 and is shared with other factories and company during its growth occupied some near units in the same building. Place has become narrow and since 2010 a new building has been planned, Unfortunately an earthquake took place in May 2013 that slowed down project. New building is scheduled to start in 2016.

Production Description Remark, if any Building no Building has 1 floor Floor 1 See above only Is this a shared yes Yes building?

G: Site function: Agent Factory Processing/Manufacturer Finished Product Supplier Grower Homeworker Labour Provider Pack House Primary Producer Service Provider Sub–Contractor

H: Month(s) of peak season: Summer months - July, August & September (if applicable)

Audit company: Bureau Veritas Report reference: 60419670 Date: 16 and 17 April 2015 11 I: Process overview: (Include products being produced, main operations, number of production lines, main equipment used)

Company produces fried donuts and krapfen through two lines of production . Production processes include kneading, shaping, leavening, drying, frying, filling, adding of sugar, pre-cooling, freezing, packaging, cold storage, delivery, main equipment used includes kneader, rolling machine, deep fryers, packaging.

J: Attitude of workers: (Include their attitude to management, workplace and the interview process. Both positive and negative information should be included) Note: Do not document any information that could put workers at risk

Very positive.

K: Attitude of workers committee/union reps: (Include their attitude to management, workplace and the interview process. Both positive and negative information should be included) Note: Do not document any information that could put workers at risk

No particular remarks, company is felt like a healthy one.

L: Attitude of managers: (Include attitude to audit, and audit process. Both positive and negative information should be included)

Open and positive

Audit company: Bureau Veritas Report reference: 60419670 Date: 16 and 17 April 2015 12 Key Information

Key Information (click on the key information title to go to appropriate section of the report)

A: Do all workers (including migrant workers) Yes have contracts of employment/employment No agreements? (Go to clause 8 – Regular Employment)

B: Are maximum standard/contracted Yes working hours clearly defined in No contract/employment agreements? (Go to clause 8 – Regular Employment)

C: Were appropriate records available to Yes verify hours of work and wages? No (Go to clause 5 – Living Wage)

D: Were any inconsistencies found? Yes Poor record keeping (if yes describe nature) No Isolated incident (Go to Wages Table) Repeated occurrence

E: For the lowest paid production workers, Wages found: Please indicate the breakdown of workforce are wages paid for standard/contracted according to earnings: hours (excluding overtime) below or above the legal minimum? Below legal 0% of workforce earning under min wage (Go to clause 5 – Living Wage) min 10% of workforce earning min wage Meet 90 % of workforce earning above min wage Above

F: % of piece rate workers: 0% (if applicable)

G: Do the standard/contracted hours stated Yes in a contract/employment agreement exceed No the law or 48 hours per week? (Go to clause 6 – Working hours)

H: If yes, what are the standard/contracted ___NA__ Approx. 0% of ALL workers on these contacted hours per week as stated in the hrs/week hours contract/employment agreement? Not applicable (Go to clause 6 – Working hours)

I: Combined hours (standard/contracted plus Yes overtime = total hours) over 60 per week No found? (G o to Working Hours Analysis)

J: Are workers provided with 1 day off in Yes every 7-day-period, or 2 in 14-day-period No (where the law allows)? If ‘No’, please explain: Not applicable

Audit company: Bureau Veritas Report reference: 60419670 Date: 16 and 17 April 2015 13 K: Are the correct legal overtime premiums Yes paid? No (Go to Wages Table) N/A – there is no legal requirement to OT premium

L: Please state what actual OT is paid. Please give details of overtime premium as a % of standard wages: (As a percentage of the workers standard rate) 0% (Go to Working Hours Analysis) 1% – 115% 116% – 124% 125% – 199% 200%+ Please give details: OT rates are 45% for extra work during working days; 50% for statutory and rest days ; extra time during night shift 30%

M: Is there any night production work at the Yes site? No

N: % of workers living in site provided 0 accommodation (if applicable):

O: Age of youngest worker found: 21 - Born 19 November 2013 and hired 6 May 2013 (Go to clause 4 – Child labour)

P: Workers under 18 subject to hazardous Yes work assignments? No (Go to clause 3 – Health and Safety)

% of under 18’s at this site (of total workers) 0 %

Q: What form of worker representation/union Union (name) is there on site? Worker Committee (Go to clause 2 – Freedom of Association) Other (specify) None

R: Is it a legal requirement to have a union? Yes (Go to clause 2 – Freedom of Association) No

S: Is It a legal requirement to have a workers Yes committee? No (Go to clause 2 – Freedom of Association)

T: Is there any other form of effective Yes worker/management communication No channel? (Other than union/worker committee) Describe: Direct communication (Go to clause 2 – Freedom of Association)

U: Are there any External Processes? Sub–Contracting (Go to clause 8A – Sub–contracting and Home Homeworking working) Other External Process No external processes

Audit company: Bureau Veritas Report reference: 60419670 Date: 16 and 17 April 2015 14 Management Systems

Management Systems:

A: Nationality of Management 8 persons of which 7 Italian and 1 Chinese

B: Gender breakdown of Management + Male: 60 % Supervisors (Include as one combined group) Female 40 %

C: Majority nationality of workers Chinese

D: Number of workers leaving in last 12 7 % months as a % of average total number of workers on site over the year (annual worker turnover)

E: Were accurate records shown at the first Yes request? No

F: If No , why not? Not applicable

G: In the last 12 months, has the site been Yes subject to any fines/prosecutions for non– No compliance to any regulations? Please describe: Not applicable

H: Do policies and/or procedures exist that Yes reduce the risk of forced labour, child labour, No discrimination, harassment & abuse? Please describe: Policies exist that reduce the risk of forced labour, child labour, discrimination, harassment & abuse

I: If Yes , is there evidence (an indication) of No evidence of child labour, discrimination, harassment or abuse effective implementation? Please give emerged from interviews and documents check. details.

J: Have managers and workers received Yes training in the standards for forced labour, No child labour, discrimination, harassment & Please describe: there is not a structured training but ETI code is abuse? available and there is no evidence form interviews neither from documents of for forced labour, child labour, discrimination, harassment & abuse

K: If Yes , is there evidence (an indication) Not applicable that training has been effective e.g. training records etc.? Please give details

L: Are there published, anonymous and/or Yes open channels available for reporting any No violations of Labour standards and H&S or Please describe: any other grievances to a 3 rd party? Sindacati territoriali

M: If Yes , are workers aware of these Yes channels? Please give details.

Audit company: Bureau Veritas Report reference: 60419670 Date: 16 and 17 April 2015 15 N: Have health and safety risks been Yes identified e.g. through internal audits, formal No risk analysis process, worker involvement Please describe: formal risk assessment May 2014 etc.?

O: If Yes , has effective action been taken to Yes, PPE are distributed and protections are available on machinery reduce or eliminate these risks?

P: Are accidents recorded? Yes No Please describe: an injury log is kept as required by local law

Q: Has the auditor made a simple calculation Yes to compare capacity with workers’ work load No in order to identify possible unrecorded work Please describe: hours? This calculation is almost impossible because quantity produced is not directly linked to hour/man worked: production is in line and its velocity depends more on the number of product changes.

R: Does the site have all required land rights Yes licenses and permissions (see SMETA Measurement Criteria )?

S; Does the site have any internationally IFS certification - COID 37835 released by CSQA under Acrredias recognised system certifications e.g. ISO Accreditation 9000, 14000, OHSAS 18000, SA8000 (or RSPO (sustainable Palm Oil) certificate n° RSPO-AC C-006 released other social audits). by ICEA Please detail (Number and date).

T: Is there a Human Resources Yes manager/department? No If Yes, please detail. Please describe: Owners with consultancy from national association of artisans.

Audit company: Bureau Veritas Report reference: 60419670 Date: 16 and 17 April 2015 16 Worker Analysis

Worker Analysis

Local Migrant Total Home Permanent Temporary Agency Permanent Temporary Agency workers

Worker numbers – 14 2 0 23 3 0 0 42 Male

Worker numbers – 8 2 0 11 0 0 0 21 female

Total 22 4 0 34 3 0 0 63

Number of Workers 4 0 0 6 0 0 0 10 interviewed

Contractors: (Individuals supplying workers to site with the workers paid by contractors, not by site) Yes A: Any contractors on site? No

At the moment of present audit there in no worker from supplier. They B: If Yes , how many workers supplied by are in charge only on Saturday for cleaning with a team of 6-10 contractors persons

C: Are all contractor workers paid according Yes to law? No

If Yes , Please give evidence for contractor NA workers being paid according to law:

Migrant Workers: (Please see SMETA Best Practice Guidance and Measurement Criteria for definitions of migrant workers) D: Originating China Locations/Countries:

E: Type of work undertaken by Process operator and supervisors migrant workers :

F: Were migrant workers Yes recruited through an agency? No

Audit company: Bureau Veritas Report reference: 60419670 Date: 16 and 17 April 2015 17 If yes, please give details. Please describe: Not applicable

If Yes , is there a contract with Not applicable the agency? Provide details of agencies and contractual arrangements including any fees lodged during the recruitment process.

G: Does the site have a system Yes for checking labour standards of No agencies? Please describe: there is no agency If yes, please give details.

H: Percentage of migrant 0% workers in company provided accommodation:

Audit company: Bureau Veritas Report reference: 60419670 Date: 16 and 17 April 2015 18 Audit Results by Clause 0: Management systems and Code Implementation 0: Managements system and Code Implementation (click here to return to NC Table)

0.1 Suppliers are expected to implement and maintain systems for delivering compliance to this Code. 0.2 Suppliers shall appoint a senior member of management who shall be responsible for compliance with the Code. 0.3 Suppliers are expected to communicate this Code to all employees. 0.4 Suppliers should communicate this code to their own suppliers and, where reasonably practicable, extend the principles of this Ethical Code through their supply chain.

Current Systems and Evidence Examined To complete ‘current systems’ Auditors examine policies and written procedures in conjunction with relevant managers, to understand, and record what controls and processes are currently in place e.g. record what policies are in place, what relevant procedures are carried out, who is/are responsible for the management of this item of the code. Evidence checked should detail any documentary or verbal evidence shown to support the systems.

Current system s: A system is in place unless it is not fully documented , senior member of management is the owner, communication was made and all workers were aware of code’s principles but code is not exposed in production boards neither has been delivered No complete communication was made to suppliers

Evidence examined – to support system description (Documents examined & relevant comments. Include renewal/expiry date where appropriate): Production boards and internal procedures on hiring, discipline and safety

Non –compliance:

1. Description of non –compliance: Objective evidence NC against ETI/Additional Elements NC against Local Law observed: There is no formal communication of ETI code to workers. Production boards and internal procedures on Local law and/or ETI requirement: hiring, discipline and 0.3 Suppliers are expected to communicate this Code to all employees. safety

Recommended corrective action: To communicate code with appropriate means

Observation : Nothing to sta te

Description of observation : Objective evidence Local law or ETI requirement: observed: Comments:

Audit company: Bureau Veritas Report reference: 60419670 Date: 16 and 17 April 2015 19 Good Examples observed: nothing to state

Description of Good Example (GE): Objective evidence observed:

Audit company: Bureau Veritas Report reference: 60419670 Date: 16 and 17 April 2015 20 1: Employment is Freely Chosen 1: Employment is Freely Chosen (Click here to return to NC–table)

ETI 1.1 There is no forced, bonded or involuntary prison labour. 1.2 Workers are not required to lodge “deposits” or their identity papers with their employer and are free to leave their employer after reasonable notice.

Current system s: People are free to leave the company with an advanced notice that is 30-60-90 days depending on the job (e.g. manager must advise 90 days before leaving, common workers must advise 30 days before) in compliance with law and collective bargaining. People are not asked to deposit money or documents at hiring.

Evidence examined – to support system description (Documents examined & relevant comments. Include renewal/expiry date where appropriate): Collective bargaining available in company; workers personal files – no evidence of “deposits” or identity documents in original.

Non –compliance: Nothing to state

1. Description of non –compliance: Objective evidence NC against ETI NC against Local Law : observed: (where relevant please add Local law and/or ETI requirement photo numbers)

Recommended corrective action:

Observation : Nothing tostate

Description of observation : Objective evidence Local law or ETI requirement: observed: Comments:

Good Examples observed : Nothing to state

Description of Good Example (GE): Objective evidence observed:

Audit company: Bureau Veritas Report reference: 60419670 Date: 16 and 17 April 2015 21 2: Freedom of Association and Right to Collective Bargaining are Respected 2: Freedom of Association and Right to Collective Bargaining are Respected (Click here to return to NC–table) (Click here to return to Key Information)

ETI 2.1 Workers, without distinction, have the right to join or form trade unions of their own choosing and to bargain collectively. 2.2 The employer adopts an open attitude towards the activities of trade unions and their organisational activities. 2.3 Workers’ representatives are not discriminated against and have access to carry out their representative functions in the workplace. 2.4 Where the right to freedom of association and collective bargaining is restricted under law, the employer facilitates, and does not hinder, the development of parallel means for independent and free association and bargaining.

Current system s: Copy of collective bargaining agreement is available inside plant and union representatives are free to communicate with workers. Meetings among unions’ representatives and company management happen on a regular basis. It is mandatory to have each year one meeting among Management, workers’ representative for safety (RLS) and competent doctor.

Evidence examined – to support system description (Documents examined & relevant comments. Include renewal/expiry date where appropriate): Copy of collective bargaining agreement is available inside plant - CBA Minute of meeting of safety committee

Non –compliance: Nothing to state

1. Description of non –compl iance: Objective evidence NC against ETI NC against Local Law observed: (where relevant please add photo Local law and/or ETI requirement: numbers)

Recommended corrective action:

Observation : No thing to state

Description of observation : Objective evidence observed: Local law or ETI requirement:

Comments:

Audit company: Bureau Veritas Report reference: 60419670 Date: 16 and 17 April 2015 22 A: Name of union and union No union representatives Is there evidence of free elections? representative, if applicable: Yes No N/A

B: If no union what is parallel means of As usual in Italy beside unions Is there evidence of free elections? consultation with workers e.g. worker there is a workers’ committee for Yes No N/A committees? safety issues, its representative is called RLS (Rappresentante dei Lavoratori per la Sicurezza: workers’ representative for safety)

C: Were worker representatives/union Yes No representatives interviewed If Yes , please state how many: 1 Workers representative

D: State any evidence that Last meeting in December 2014 minutes signed by competent doctor, union/workers committee is effective? management representatives and worker representatives are archived. Specify date of last meeting; topics covered; how minutes were communicated etc.

E: Are any workers covered by Yes No Collective Bargaining Agreement (CBA)

F: If Yes what percentage by trade 100% workers covered by Union 0% workers covered by worker rep Union/worker representation CBA CBA

G: If Yes , does the Collective Yes Bargaining Agreement (CBA) include No rates of pay

Good Examples observed: Nothing to state

Description of Good Example (GE): Objective evidence observed:

Audit company: Bureau Veritas Report reference: 60419670 Date: 16 and 17 April 2015 23 3: Working Conditions are Safe and Hygienic 3: Working Conditions are Safe and Hygienic (Click here to return to NC–table) (Click here to return to Key Information)

ETI 3.1 A safe and hygienic working environment shall be provided, bearing in mind the prevailing knowledge of the industry and of any specific hazards. Adequate steps shall be taken to prevent accidents and injury to health arising out of, associated with, or occurring in the course of work, by minimising, so far as is reasonably practicable, the causes of hazards inherent in the working environment. 3.2 Workers shall receive regular and recorded Health & Safety training, and such training shall be repeated for new or reassigned workers. 3.3 Access to clean toilet facilities and to potable water, and, if appropriate, sanitary facilities for food storage shall be provided. 3.4 Accommodation, where provided, shall be clean, safe, and meet the basic needs of the workers. 3.5 The company observing the code shall assign responsibility for Health & Safety to a senior management representative.

Current system s: Health and safety management system unless not certified keeps under control main issues, training is delivered regularly and maintenance is carried out timely. Workers have access to clean water and sanitary facilities are in good working conditions, Senior representative has been assigned. Two issues emerged that do not disqualify good system performance

Evidence examined – to support system description (Documents examined & relevant comments. Include renewal/expiry date where appropriate): Site responsible for safety matter (Datore di Lavoro) : Scarabelli Simonetta– Owner Management senior representative (RSPP Responsabile del Servizio di Prevenzione e Protezione): Vincenzi Roberto - external Competent doctor (MC: Medico Competente): Hossein Salarieh Workers representatives for safety (RLS: Rappresentanti dei Lavoratori per la Sicurezza) : Tamagna Giorgio Safety supervisors (Preposti) Lavignani Antonino Bilancia Celestino

General Risk evaluation document (DVR: Documento Valutazione dei Rischi) released 4 May 2014 – a new release is scheduled for next months with new factory implementation. Main risk is related with slippery floors in production area and burns related with frying process: as counter- measure PPE are mandatory in the whole area. Noise rev. 11 Sept 2014 next Asbestos: evaluation dated 5 May 2014 risk is present and under control – new location will be free of asbestos. Chemical: last rev April 2010 – risk is low – situation is compliant with local law. Explosion last evaluation performed 5 May 2014 - Fire: Last evaluation 5 May 2014 – level is considered MEDIUM – Maintenance of fire equipment: extinguishers last Feb 2015; emergency exits last check: April 2015; Emergency lights: March 2015 Last meeting of safety committee: 18 Dec 2014

Audit company: Bureau Veritas Report reference: 60419670 Date: 16 and 17 April 2015 24 Last fire drill 1 Dec 2014. Safety training: last delivered to all workers – with translator – 1 Dec 2014 First aid team last training Dec 2014 ; Internal fire brigade: last is dated 2012. A booklet with highlights on safety matter in Italian and in Chinese has been produced and delivered to workers in 2008 and is delivered at hiring of new personnel. Fire license: released by local fire brigade 23 June 2008 valid until June 2014 renewed in 23 June 2014 new expiring date June 2019. - file n° 59403 Emergency plan 17 Jan 2015 Injury log: last episode 19 Feb 2015 – with 24 day lost; during 2015 another episode with 60 days lost. 1 episode during 2014.

Non –compliance:

1. Description of non –compliance: Objective evidence NC against ETI NC against Local Law observed: There is no recorded training for safety supervisor for night shift. Training records Structured training is scheduled but not yet performed. Risk assessment document Local law and/or ETI requirement Req 3.2 of ETI code requires “ 3.2 Workers shall receive regular and recorded Health & Safety training” and Art 37 c. 7 of Dlgs 81/01 (local law) requires specific training for safety supervisors (“Preposti” in Italian)

Recommended corrective action: Keep on with scheduled corrective action and deliver prescribed training.

2. Description of non–compliance: Objective evidence NC against ETI NC against Local Law observed: General Risk evaluation document does not consider risk of stuffing hands in boiling Risk assessment oil during frying operations or passing near to frying line. document dated 4 May Operator at frying line wears PPE and risk is low but not absent. 2014

Local law and/or ETI requirement: ETI Code 3.1 … Adequate steps shall be taken to prevent accidents… Art 28 Dlgs. 81/08 (local law) require a document with assessment of all risks for workers

Recommended corrective action: Update Risk Assessment document.

Observation : Nothing to state

Description of observation : Objective evidence observed: Local law or ETI requirement:

Recommended corrective action:

Audit company: Bureau Veritas Report reference: 60419670 Date: 16 and 17 April 2015 25 Good Examples observed :

Description of Good Example (GE): Objective Evidence Translation of all relevant information in a language familiar to workers. Observed: boards exposed in factory

Audit company: Bureau Veritas Report reference: 60419670 Date: 16 and 17 April 2015 26 4: Child Labour Shall Not Be Used (Click here to return to NC–table) (Click here to return to Key Information)

ETI 4.1 There shall be no new recruitment of child labour. 4.2 Companies shall develop or participate in and contribute to policies and programmes which provide for the transition of any child found to be performing child labour to enable her or him to attend and remain in quality education until no longer a child. 4.3 Children and young persons under 18 shall not be employed at night or in hazardous conditions. 4.4 These policies and procedures shall conform to the provisions of the relevant ILO Standards.

Current system s: Italian law does not allow work for people of less than16, youngest worker found was born in 1993 – 21 years old and hired in 2013. Each worker at hiring is requested to show a personal identification document with date of birth and a copy of this is kept in the personal file of each worker

Evidence examined – to support system description (Documents examined & relevant comments. Include renewal/expiry date where appropriate): Copy of personal identification documents in each worker’s file

Non –compliance: Nothi ng to state

1. Description of non –compliance: Objective evidence NC against ETI NC against Local Law observed: (where relevant please add Local law and/or ETI requirement: photo numbers)

Recommended corrective action:

Observation : Nothing to state

Description of observation : Objective evidence observed: Local law or ETI requirement:

Comments:

Audit company: Bureau Veritas Report reference: 60419670 Date: 16 and 17 April 2015 27 Good Examples observed : Nothing to state

Description of Good Example (GE): Objective Evide nce Observed:

Audit company: Bureau Veritas Report reference: 60419670 Date: 16 and 17 April 2015 28 5: Living Wages are paid 5: Living Wages are Paid (Click here to return to NC–table) (Click here to return to Key information)

ETI 5.1 Wages and benefits paid for a standard working week meet, at a minimum, national legal standards or industry benchmark standards, whichever is higher. In any event wages should always be enough to meet basic needs and to provide some discretionary income. 5.2 All workers shall be provided with written and understandable information about their employment conditions in respect to wages before they enter employment and about the particulars of their wages for the pay period concerned each time that they are paid. 5.3 Deductions from wages as a disciplinary measure shall not be permitted nor shall any deductions from wages not provided for by national law be permitted without the expressed permission of the worker concerned. All disciplinary measures should be recorded.

Current system s: Company is more than compliant with ETI code and local law. Wages are paid in accordance with local law, monthly at the last working day of the month A- 1714 B- 1575 C- 1500

Evidence examined – to support system description (Documents examined & relevant comments. Include renewal/expiry date where appropriate): Payrolls and Collective Bargaining Agreement available in plant

Non –complian ce: Nothing to state

1. Description of non –compliance: Objective evidence NC against ETI NC against Local Law observed: (where relevant please add Local law and/or ETI requirement: photo numbers)

Recommended corrective action:

Audit company: Bureau Veritas Report reference: 60419670 Date: 16 and 17 April 2015 29 Observation : Nothing to state

Description of observation : Objective evidence observed: Local law or ETI requirement:

Comments:

Good Examples observed :

Description of Good Example (GE): Objective Evidence About 90% of workers earns more than legal minimum wage Observed: Sampling of payrolls

Audit company: Bureau Veritas Report reference: 60419670 Date: 16 and 17 April 2015 30 Wages analysis: Wages analysis: (Click here to return to Key Information)

A: Sample Size Checked 10 from March 2015 (State number of worker records checked and from 10 from December 2014 which weeks/months – should be current, peak and 10 from September 2014 random/low. Please see SMETA Best Practice Guidance and Measurement Criteria)

B: Are there different legal minimum wage Yes If Yes , please give details: grades? If Yes , please specify all. No í D { !

Gross wages per month in €

C: If there are different legal minimum grades, Yes If No , please give details: Not applicable are all workers graded correctly? No N/A

D: What deductions are required by law e.g. Taxes and social insurance social insurance? Please state all types:

E: Have all of these deductions been made? Yes If Yes , Please list all deductions that have been Please list all deductions that have/have not No made: Taxes and social insurance been made. If No , please give details on any deductions which have not been made:

F: Industry norm for this region: Minimum wage per grade (please include time period e.g. hour/week/month)

Audit company: Bureau Veritas Report reference: 60419670 Date: 16 and 17 April 2015 31 Wages table Wages table (Click here to return to Key information)

Process Operator Process Operator Process Operator Worker Type (Lowest paid) (Average paid) (Highest paid)

Select from individual worker records one worker from, lowest, average and highest wages and populate the boxes. Ensure comparison is made for same pay period and only uses full–time workers. See SMETA Best Practice Guidance and Measurement Criteria for completing this:

A: Pay period: March 2015 March 2015 March 2015 (State month selected)

B: Anonymous Employee Employee H Employee M Employee L Reference/Dept.

C: Employee Gender F F M

D: Contracted/Standard 123,5 H/month 160 H/month 176 H/month working hours: (excluding OT – please include time period e.g. hour/week/month)

E: Contracted /Standard 9,56€/h 11,29€/h 11,81€/h work pay rate: (excluding OT – please include time period e.g. hour/week/month)

F: Standard day overtime – 0h 8h/month 0h hours: (please include time period e.g. hour/week/month)

G: Standard day overtime – 0 131,03€/month 0 wage: (please include time period e.g. hour/week/month)

H: Rest day overtime – 0 0 0 hours: (please include time period e.g. hour/week/month)

I: Rest day overtime – wage: 0 0 0 (please include time period e.g. hour/week/month)

J: Statutory Holiday overtime 0 0 0 – hours: (please include time period e.g. hour/week/month)

Audit company: Bureau Veritas Report reference: 60419670 Date: 16 and 17 April 2015 32 K: Statutory holiday OT – 0 0 0 wages: (please include time period e.g. hour/week/month)

L: Total overtime hours: 0 0 0 (please include time period e.g. hour/week/month)

M: Incentives/Bonus/ 76€/month 641,33€/month 1788,39€/month Allowances etc.: (please include time period e.g. hour/week/month)

N: Gross wages: 1257,73€/month 2579,70€/month 3867,56€/month (please include time period e.g. hour/week/month)

O: Social insurance and 112,07€ Social Insurance 244,84€ Social Insurance 364,98€ Social Insurance other deductions; please list 112,63 Taxes 596,86€ Taxes 1082,41€ Taxes which and amount.

P: Actual wage paid after 1033,03€/month 1738€/month 2420.17€/month deduction: (please include time period e.g. hour/week/month)

Comments: (Please state here any specific reasons/circumstances that explain the lowest and highest gross wages)

Seniority and availability to learn new works.

Q: Is there a defined living wage: Yes This is not normally minimum legal No wage. If answered Yes please state Please specify amount/time period: 724,32 net wage per month according amount and source of info: to national statistics Please see SMETA Best Practice Guidance and Measurement Criteria.

R: Are workers paid in a timely Yes manner in line with local law? No

S: Is there evidence that equal rates Yes are being paid for equal work: No Details: Grades are noted in CBA

T: How are workers paid: Cash Cheque Bank Transfer Other If other explain:

Audit company: Bureau Veritas Report reference: 60419670 Date: 16 and 17 April 2015 33 6: Working Hours are not Excessive 6: Working Hours are not Excessive (Click here to return to NC–table) (Click here to return to Key Information)

ETI 6.1 Working hours must comply with national laws, collective agreements, and the provisions of 6.2 to 6.6 below, whichever affords the greater protection for workers. Sub–clauses 6.2 to 6.6 are based on international labour standards.

6.2 Working hours, excluding overtime, shall be defined by contract, and shall not exceed 48 hours per week.

6.3 All overtime shall be voluntary. Overtime shall be used responsibly, taking into account all the following: the extent, frequency and hours worked by individual workers and the workforce as a whole. It shall not be used to replace regular employment. Overtime shall always be compensated at a premium rate, which is recommended to be not less than 125% of the regular rate of pay.

6.4 The total hours worked in any 7 day period shall not exceed 60 hours, except where covered by clause 6.5 below.

6.5 Working hours may exceed 60 hours in any 7 day period only in exceptional circumstances where all of the following are met: – this is allowed by national law; – this is allowed by a collective agreement freely negotiated with a workers’ organisation representing a significant portion of the workforce; – appropriate safeguards are taken to protect the workers’ health and safety; and – The employer can demonstrate that exceptional circumstances apply such as unexpected production peaks, accidents or emergencies.

6.6 Workers shall be provided with at least one day off in every 7 day period or, where allowed by national law, 2 days off in every 14 day period.

Current system s: Company seems to meet both legal and ETI standard’s requirements for working hours. No complaint emerged from interviews and no discrepancies emerged from documents’ review.

Evidence examined – to support system description (Documents examined & relevant comments. Include renewal/expiry date where appropriate): Time cards and payrolls

Audit company: Bureau Veritas Report reference: 60419670 Date: 16 and 17 April 2015 34 Non –compliance: Nothing to state

1. Description of non –compliance: Objective evidence NC against ETI NC against Local Law observed: (where relevant please add Local law and/or ETI requirement: photo numbers)

Recommended corrective action:

Observation : Nothing to state

Description of observation : Objective evidence observed: Local law or ETI requirement:

Comments:

Good Examples observed : Nothing to state

Description of Good Example (GE): Objective Evidence Observed:

Audit company: Bureau Veritas Report reference: 60419670 Date: 16 and 17 April 2015 35 Working hours analysis Working hours analysis Please include time period e.g. hour/week/month (Go back to Key information)

Systems & Processes

A. What timekeeping systems are Describe: Magnetic Badge used: time card etc.

B: Sample Size Checked 10 from March 2015 (State number of worker records 10 from December 2014 checked and from which 10 from September 2014 weeks/months and type – should be current, peak and random/low: See SMETA Best Practice Guidance and Measurement Criteria )

C: Do ALL workers have Yes If NO, state which type of workers do NOT have contracts/employment agreements? No contracts/employment agreements:

Not applicable

D: Are standard/contracted working Yes If NO, please state which type of workers do NOT have hours defined in all No standard hours defined in contracts/employment contracts/employment agreements? agreements.

Not applicable

E: Are there any other types of Yes If YES, Please complete as appropriate: contracts/employment agreements No used? 0 hrs Part time Variable hrs Other

If “Other”, Please define:

Not applicable

Standard/Contracted Hours worked

F: Do standard/contracted standard Yes If YES give details and comparison (local law/48 hrs hours ever exceed the law or 48 No week) hours per week? Not applicable

G: What are the actual Highest hours: 40H per week– standard hours standard/contracted hours worked in sample (State per week/month) Lowest hours: 15H per week - standard hours part time contract

H: Any local waivers/local law or Yes If YES, Please give details

Audit company: Bureau Veritas Report reference: 60419670 Date: 16 and 17 April 2015 36 permissions which allow No Not applicable averaging/annualised hours for this site?

Overtime Hours

I: Actual overtime hours worked in Highest OT 13 hours per month sample (State per day/week/month) hours:

Lowest OT 0 hours per month hours:

J: Range of overtime hours over all a workers/or as large a sample as 5! possible. (State per week/month and {"! details)

K: Approximate percentage of 7% workers on highest overtime hours

L: Is overtime voluntary? Yes Please detail evidence e.g. Wording of No contract/employment agreement/handbook/worker Conflicting interviews/refusal arrangements: Information CBA specifies that OT must be voluntary no evidence of mandatory overtime emerged during interviews.

Overtime Premiums

M: Is overtime paid at a premium? Yes Please give details of normal day overtime premium as a No % of standard wages:

0% 1 – 116 – 125 – 150 – 200%+ 115% 124% 149% 199%

Any other comments:

N: ETI Code requires a prevailing No standard to give greatest worker Consolidated pay (May be standard wages above minimum legal wage, with protection. no/low overtime premium) If a site pays less than 125% OT Collective Bargaining agreements premium and this is allowed under Other local law, are there other considerations? Please complete the Please explain any checked boxes in N above e.g. detail of consolidated boxes where relevant. Multi select is pay CBA or Other. possible. Not applicable - lowest overtime premium is 145%

Rest Days

Audit company: Bureau Veritas Report reference: 60419670 Date: 16 and 17 April 2015 37 O: Are workers provided with 1 day Yes Maximum number of days worked without a day off (in off in every 7–day–period, or 2 in 14– No sample): day–period (where the law allows)? 6

Total Hours

P: Range of total hours: Highest total 176 h per month (Quote highest and lowest please include hours time period e.g. hour/week/month) Lowest total 130 h per month hours

R: If more than 60 total hours per Overtime is voluntary week and this is legally allowed, are Onsite Collective bargaining allows 60+ hours/week there other considerations? Please Safeguards are in place to protect worker’s health and safety complete the boxes where relevant. Site can demonstrate exceptional circumstances Multi select is possible. Other reasons

Please explain any checked boxes in R above

Not applicable - no cases of more than 60 hours/week

Comments: (please state here any specific reasons/circumstances that explain the highest working hours)

Please add details of examples where the site has demonstrated “exceptional circumstances”. Not applicable - no cases of more than 60 hours

Please give details of any appropriate safeguards in place at the time of the 60+ hours working.

Not applicable - no cases of more than 60 hours

Any other comments: Overtime ratio is low, working on shifts does not allow big amounts of overtime.

Audit company: Bureau Veritas Report reference: 60419670 Date: 16 and 17 April 2015 38 7: No Discrimination is practiced 7: No Discrimination is Practiced (Click here to return to NC–table)

ETI 7.1 There is no discrimination in hiring, compensation, access to training, promotion, termination or retirement based on race, caste, national origin, religion, age, disability, gender, marital status, sexual orientation, union membership or political affiliation.

Current system s:

Policies and procedures does not admit discrimination

Evidence examined – to support system description (Documents examined & relevant comments. Include renewal/expiry date where appropriate): All hiring documents and recruiting policies speak about competences and availability, no other parameters are used.

Non –compliance: Nothing to state

1. Description of non –compliance: Objective evidence NC against ETI NC against Local Law observed: (where relevant please add Local law and/or ETI requirement: photo numbers)

Recommended corrective action:

Observation : Nothing to state

Description of observation : Objective evidence observed: Local law or ETI requirement:

Comments:

Audit company: Bureau Veritas Report reference: 60419670 Date: 16 and 17 April 2015 39 Good Examples observed : Nothing to state

Description of Good Example (GE): Objective Evide nce Observed:

Audit company: Bureau Veritas Report reference: 60419670 Date: 16 and 17 April 2015 40 8: Regular Employment Is Provided (Click here to return to NC–table) (Click here to return to Key Information)

ETI 8.1 To every extent possible work performed must be on the basis of recognised employment relationship established through national law and practice. 8.2 Obligations to employees under labour or social security laws and regulations arising from the regular employment relationship shall not be avoided through the use of labour–only contracting, sub–contracting, or home–working arrangements, or through apprenticeship schemes where there is no real intent to impart skills or provide regular employment, nor shall any such obligations be avoided through the excessive use of fixed–term contracts of employment.

Current system s: All employees are regularly employed, from a cross check between list of personnel, number of people involved in production, and shift list exposed in locker room no discrepancies emerged. All payrolls are checked by an external consultant in charge for avoiding penalties from public administration

Evidence examined – to support system description (Documents examined & relevant comments. Include renewal/expiry date where appropriate): Payment of taxes and social security are OK - checked bank transfer

Non –compliance: Nothing to state

1. Description of non –compliance: Objective evidence NC against ETI NC against Local Law observed: (where relevant please add Local law and/or ETI requirement: photo numbers)

Recommended corrective action:

Observation : Nothing to state

Description of obse rvation : Objective evidence observed: Local law or ETI requirement:

Comments:

Audit company: Bureau Veritas Report reference: 60419670 Date: 16 and 17 April 2015 41 Good Examples observed : Nothing to state

Description of Good Example (GE): Objective Evidence Observed:

Audit company: Bureau Veritas Report reference: 60419670 Date: 16 and 17 April 2015 42 8A: Sub–Contracting and Homeworking: 8A: Sub–Contracting and Homeworking (Click here to return to NC–table) (Click here to return to Key Information)

8A.1. There should be no sub–contracting unless previously agreed with the main client. 8A.2. Systems and processes should be in place to manage sub–contracting, homeworking and external processing. Note to auditor on homeworking: Report on whether it is direct or via agents. How many workers, relationship with site and what control systems are in place.

Current system s: A system is in place to keep under control accesses to plant and respect of safety rules: a shared risk evaluation is performed and documented and external workers are under supervision of internal safety manager. In order to have guarantee on regularity in payments, each quarter subcontractors are required to show a certification delivered by public administration of conformity with social insurance payments (so called DURC: Documento Unico di Regolarità Contributiva: unique document of compliance in contribution) Last DURC for subcontractor is dated 29 January 2015 and is valid until July 2015

Evidence examined – to support system description (Documents examined & relevant comments. Include renewal/expiry date where appropriate): Worker interview If any processes are sub–contracted – please populate below boxes Process Subcontracted Cleaning Name of factory Agri Log Società Cooperativa Viale Alfeo Corassori, 24 41124 Address Modena (MO)

Audit company: Bureau Veritas Report reference: 60419670 Date: 16 and 17 April 2015 43 Non –compliance: Nothing to state

1. Description of non –compliance: Objective evidence NC against ETI/Additional Elements NC against Local Law observed: (where relevant please add photo numbers)

Local law and/or ETI /Additional Elements requirement:

Recommended corrective action:

Observation : Nothing to state

Description of observation : Objective evidence observed: Local law or ETI/Additional elements requirement:

Comments:

Good Examples observed : Nothing to state

Description of Good Example (GE): Objective Evidence Observed:

Audit company: Bureau Veritas Report reference: 60419670 Date: 16 and 17 April 2015 44 Summary of sub–contracting – if applicable Summary of sub–contracting – if applicable

A: If sub–contractors are used, is Yes there evidence this has been agreed No with the main client? If Yes , summarise details:

B: Number of sub– 1 contractors/agents used

C: Is there a site policy on sub– Yes contracting? No If Yes , summarise details: Policy is not a written one but owner’s states his commitment in working only with trustable companies

D: What checks are in place to Direct control and document checking. ensure no child labour is being used and work is safe?

E: What processes are sub– Cleaning contracted?

Summary of homeworking – if applicable NOT APPLICABLE – NO HOME WORKERS

F: If homeworking is being used, is Yes there evidence this has been agreed No Not applicable - no home working with the main client? If Yes , summarise details: Not applicable

G: Number of homeworkers Male: 0 Female: 0 Total: 0

H: Are homeworkers employed direct Directly or through agents? Through Agents Not applicable - no home working

I: If through agents, number of 0 agents

J: Is there a site policy on Yes homeworking? No Not applicable - no home working

K: How does site ensure worker Not applicable - no home working hours and pay meet local laws for homeworkers?

L: What processes are carried out by Not applicable - no home working homeworkers?

M: Are written agreements in place Yes for homeworkers that include regular No Not applicable - no home working employment?

N: Are full records available at the Yes site? No Not applicable - no home working

Audit company: Bureau Veritas Report reference: 60419670 Date: 16 and 17 April 2015 45 9: No Harsh or Inhuma ne Treatment is Allowed (Click here to return to NC –table)

ETI 9.1 Physical abuse or discipline, the threat of physical abuse, sexual or other harassment and verbal abuse or other forms of intimidation shall be prohibited.

Current Systems and Evidence Examined To complete ‘current systems’ Auditors examine policies and written procedures in conjunction with relevant managers, to understand, and record what controls and processes are currently in place e.g. record what policies are in place, what relevant procedures are carried out, who is /are responsible for the management of this item of the code. Evidence checked should detail any documentary or verbal evidence shown to support the systems.

Current system s: No evidence of abuses or discipline, the threat of physical abuse, sexual or other harassment and verbal abuse or other forms of intimidation.

Evidence examined – to support system description (Documents examined & relevant comments. Include renewal/expiry date where appropriate): No evidence of abuse from interviews or documents

Non –compliance: Nothing to state

1. Description of non –compliance: Objective evidence NC against ETI NC against Local Law observed: (where relevant please add Local law and/or ETI requirement: photo numbers)

Recommended corrective action:

Observation : Nothing to st ate

Description of observation : Objective evidence observed: Local law or ETI requirement:

Comments:

Audit company: Bureau Veritas Report reference: 60419670 Date: 16 and 17 April 2015 46 Good Examples observed : Nothing to state

Description of Good Example (GE): Objective Evidence Observed:

Audit company: Bureau Veritas Report reference: 60419670 Date: 16 and 17 April 2015 47 10. Other Issue areas: 10 A: Entitlement to Work and Immigration (Click here to return to NC –table)

Additional Elements 10A1 Only workers with a legal right to work shall be employed or used by the supplier. 10A2 All workers, including employment agency staff, must be validated by the supplier for their legal right to work by reviewing original documentation. 10A3 Employment agencies must only supply workers registered with them. 10A4 The supplier shall implement processes to enable adequate control over agencies with regards the above points and related legislation.

Current system s: Migrant workers are hired conforming to ETI code and local law

Evidence examined – to support system description (Documents examined & relevant comments. Include renewal/expiry date where appropriate): Personal files of workers

Non –compliance: Nothing to state

1. Description of non –compliance: Objective evidence NC against ETI/Additional Elements NC against Local Law observed: (where relevant please add Local law and/or ETI /Additional Elements requirement: photo numbers)

Recommended corrective action:

Observation : nothing to state

Description of observatio n: Objective evidence observed: Local law or ETI/Additional Elements requirement:

Comments:

Audit company: Bureau Veritas Report reference: 60419670 Date: 16 and 17 April 2015 48 Good examples observed : nothing to state

Description of Good Example (GE): Objective Evidence Observed:

Audit company: Bureau Veritas Report reference: 60419670 Date: 16 and 17 April 2015 49 10. Other issue areas 10B4: Environment 4–Pillar (Click here to return to NC–table) To be completed for a 4–Pillar SMETA Audit and remove the previous page which is 10B2 environment 2 pillar

B.4. Compliance Requirements 10B4.1 Suppliers as a minimum must meet the requirements of local and national laws related to environmental standards. 10B4.2.Where it is a legal requirement, suppliers must be able to demonstrate that they have the relevant valid permits including for use and disposal of resources e.g. water, waste etc. 10B4.3. The supplier shall be aware of their end client’s environmental standards/code requirements and have a system in place to monitor their performance against these. B4. Guidance for Observations 10B4.4. Suppliers should have completed the appropriate section of the SAQ and made it available to the auditor. 10B4.5. Suppliers should have an environmental policy, covering their environmental impact, which is communicated to all appropriate parties, including its own suppliers. 10B4.6. Suppliers shall be aware of the significant environmental impact of their site and its processes. 10B4.7. The site should measure its impacts, including continuous recording and regular reviews of use and discharge of natural resources e.g. energy use, water use (see 4–pillar audit report and audit checks for details). 10B4.8. Suppliers shall seek to make continuous improvements in their environmental performance. 10B4.9. Suppliers shall have available for review any environmental certifications or any environmental management systems documentation 10B4.10. Suppliers should have a nominated individual responsible for co–ordinating the site’s efforts to improve environmental performance. 10B.4.11. Has the site recently been subject to (or pending) any fines/prosecutions for noncompliance to environmental regulations.

Note for auditors and readers. This environment section is intended to take not more than 0.25 auditor days. It is an assessment only and the main requirement is to establish whether a site is meeting applicable environmental laws and/or has any certifications or environmental management systems in place. Following this assessment the client/supplier may decide a full environmental audit is required (see also best practice guidance/environment and guidance for auditor)

Current system s: Company does not have a big environmental impact, it seems to be compliant with applicable law

Evidence examined – to support system description (Documents examined & relevant comments. Include renewal/expiry date where appropriate): Authorization to discharge water release 7 November 2006 file n° 14764 Authorization to discharge in atmosphere 29/12/2006 Waste log - OK

Audit company: Bureau Veritas Report reference: 60419670 Date: 16 and 17 April 2015 50 Non –compliance : Nothing to state

1. Description of non –compliance: Objectiv e evidence NC against ETI/Additional Elements NC against Local observed: (where relevant please add photo numbers)

Local law and/or ETI/Additional Elements requirement:

Recommended corrective action:

Observation : Nothing to state

Description of observation : Objective evidence observed: Local law or ETI/Additional elements requirements:

Comments:

Good examples observed : nothing to state

Description of Good Example (GE): Objective Evidence Observed:

Audit company: Bureau Veritas Report reference: 60419670 Date: 16 and 17 April 2015 51 Environmental Analysis Environmental Analysis (Site declaration only – this has not been verified by auditor. Please state units in all cases below.)

A; Responsible for Environmental issues (Name and Simonetta Scarabelli– Owner Position): i

B: Does the site have a recognised environmental Yes No system certification such as ISO 14000 or equivalent? Details: Not applicable Please detail.

C: Does the site have an Environmental policy? Yes No (For guidance, please see Measurement criteria )

Does the site have a Biodiversity policy? Yes No (For guidance, please see Measurement criteria )

E: Is there any other sustainability systems present such Yes No as Chain of Custody, Forest Stewardship Council Details: RSPO (sustainable Palm Oil) certificate n° (FSC), Marine Stewardship Council (MSC) etc.? RSPO-ACC-006 released by ICEA Please detail. (For guidance, please see Measurement criteria )

F: Have all legally required permits been shown? Yes No Please detail. Details: Authorization to discharge water release 7 November 2006 file n° 14764

G: Is there a documentation process to record Yes No N/A hazardous chemicals used in the manufacturing Details: only hazardous chemical is sodium hypochlorite process? and it is managed like a production item with a charge – discharge log

H: Is there a system for managing client’s requirements Yes No and legislation in the destination countries regarding Details: company does not export directly. environmental and chemical issues?

Usage/Discharge analysis

Criteria Current year: Please state period: Previous Year: Please state period: ____2015______year 2014______

Electricity Usage: Data not available 2.948.212 Kw/h Kw/hrs

Renewable Energy Usage: Data not available Data not available Kw/hrs

Gas Usage: Data not available 24.560 cubic meters Kw/hrs

Has site completed any carbon Yes No Yes No Footprint Analysis?

Audit company: Bureau Veritas Report reference: 60419670 Date: 16 and 17 April 2015 52 If Yes , please state result

Water Sources: • Public aqueduct • Public aqueduct Please list all sources e.g. lake, river, • and local water authority. •

Water Volume Used: Data not available Cubic meters 3.457 (m³)

Water Discharged: • Public Sewing • Public sewing Please list all receiving waters/recipients.

Water Volume Discharged: Data not available Data not available (m³)

Water Volume Recycled: Data not available Data not available (m³)

Total waste Produced Data not available 63930 Kg (please state units)

Total hazardous waste Produced: Data not available Data not available (please state units)

Waste to Recycling: Data not available Data not available (please state units)

Waste to Landfill: Data not available Data not available (please state units)

Total Product Produced Data not available 3.600.000 tons (please state units)

Audit company: Bureau Veritas Report reference: 60419670 Date: 16 and 17 April 2015 53 10C: Business Ethics – 4–Pillar Audit 10C: Business Ethics – 4-Pillar Audit (Click here to return to NC–table) To be completed for a 4–Pillar SMETA Audit

10C. Guidance for “Observations” 10C.1. Suppliers should have completed the appropriate section of the SAQ and have made it available to the auditor. 10C.2. The supplier should have received and acknowledged– preferably in writing – the Business Ethics policy of the auditor/audit company. 10C.3. Suppliers shall seek to conduct their business ethically without bribery, corruption, or any type of fraudulent Business Practice. 10C.4. Suppliers shall be aware of any applicable laws, their end client’s Business Ethics standards/code requirements and have a system in place to monitor their performance against these. 10C.5. Supplier should have a Business Ethics policy concerning bribery, corruption, or unethical Business Practice. This should be clearly communicated to all relevant parties. 10C.6. Suppliers should have a designated person responsible for implementing standards concerning Business Ethics 10C.7. Suppliers should have a transparent system in place for confidentially reporting, and dealing with unethical Business Ethics without fear of reprisals towards the reporter 10C.8. Suppliers should ensure that the staff whose job roles carry a higher level of risk in the area of ethical Business Practice e.g. sales, purchasing, logistics are trained on what action to take in the event of an issue arising in their area.

Note for auditors and readers. This Business Ethics section is intended to take not more than 0.25 auditor days. It is an assessment not an audit and the main requirement is to gather information on the relevant Business Ethics issues in a supply chain. All findings will be recorded as observations not Non– Compliances and the data collected will allow the membership to define appropriate standards over time as part of a continuous review process.

Current Systems and Evidence Examined To complete ‘current systems’ Auditors examine policies and written procedures in conjunction with relevant managers, to understand, and record what controls and processes are currently in place e.g. record what policies are in place, what relevant procedures are carried out, who is /are responsible for the management of this item of the code. Evidence checked should detail any documentary or verbal evidence shown to support the systems.

Current system s: Company is a family-lead one with a familiar climate among people, so a written and formalized Business Ethic Policy and management system is felt as unnecessary. There is an internal code of behaviour regarding discipline.

Evidence examined – to support system description (Documents examined & relevant comments. Include renewal/expiry date where appropriate): Interviews and direct observation of behaviour

Audit company: Bureau Veritas Report reference: 60419670 Date: 16 and 17 April 2015 54 Observation

Description of observation: Objective evidence There is not a written and formalized Business Ethic Code. observed: Interviews.

Local law or ETI/Additional elements requirement:

10C.5. Supplier should have a Business Ethics policy concerning bribery, corruption, or unethical Business Practice. This should be clearly communicated to all relevant parties.

Comments: A business code of ethics will be evaluated

Good examples observed: Nothing to state

Description of Good Example (GE): Objective Evidence Observed:

Audit company: Bureau Veritas Report reference: 60419670 Date: 16 and 17 April 2015 55 Worker Interview Summary Worker Interview Summary Worker Interview Summary

A: Were workers aware of the audit? Yes No

B: Were workers aware of the code? Yes No

C: Number of group interviews: 1 group of 4 (Please specify number and size of groups. Please see SMETA Best Practice Guidance and Measurement Criteria)

D: Number of individual interviews Male: 3 Female: 3 (Please see SMETA Best Practice Guidance and Measurement Criteria)

E: Total number of interviewed Male: 7 Female: 3 workers (Please see SMETA Best Practice Guidance and Measurement Criteria)

F: Interviews were done in private Yes and the confidentiality of the No interview process was communicated to the workers?

G: In general, what was the attitude Favourable of the workers towards their Non–favourable workplace? Indifferent

H: What was the most common No particular complaints worker complaint?

I: What did the workers like the most Climate, and relationship among persons about working at this site?

J: Any additional comment(s) Nothing to state regarding interviews:

K: Attitude of workers to hours Positive worked: Agency Workers Agency Workers (if applicable) (workers sourced from a local agent who are not directly paid by the site)

A: Number of agencies used 0 (average): And names if available: Not applicable

Audit company: Bureau Veritas Report reference: 60419670 Date: 16 and 17 April 2015 56 B: Were agency workers’ Yes age/pay/hours included within scope No of this audit

C: Were sufficient documents for Yes agency workers available for review? No not applicable

Audit company: Bureau Veritas Report reference: 60419670 Date: 16 and 17 April 2015 57 Other findings

Other Finding s Outside the Scope of the Code

Nothing to state

Community Benefits (Please list below any specific community benefits that the site management stated that they were involved in, for example, HIV programme, education, sports facilities)

Nothing to state

Audit company: Bureau Veritas Report reference: 60419670 Date: 16 and 17 April 2015 58 Appendix 1

Comparison between ETI code and Customer's Supplier's Code. Any areas where a site complies with the Customer's Supplier Code, but not with the ETI code are discussed at the audit close out meeting and recorded on the CAPR. Note to supplier "for this customer it may not be necessary to complete corrective actions where NC's DO NOT meet the ETI code, but DO meet your customer's code. If the audit is shared with other customers who work to the ETI code or an equivalent international standard, corrective actions will be necessary."

NOTE: The provisions of the ETI base Code constitute Instruction to Audit Company: fill in the relevant minimum and not maximum standards, and this code clauses from the Customer Supplier Code - where should not be used to prevent companies from applicable. exceeding these standards. Companies applying the ETI Base Code are expected to comply with national and other applicable law and, where the provisions of law and the ETI Base Code address the same subject, to apply that provision which affords the greater protection.

ETI Code Customer's Supplier Code equivalent

ETI 1 . Employment is freely chosen ETI 1 . Employment is freely chosen

1.1. There is no forced, bonded or involuntary prison Forced labour labour. The Supplier must under no circumstances use, or in 1.2. Workers are not required to lodge "deposits" or their any other way benefit, from forced labour in line with identity papers with their employer and are free to leave ILO Convention No. 29 on Forced Labour and ILO their employer after reasonable notice. Convention No. 105 on Abolition of Forced Labour. Forced labour refers to any form of indentured servitude such as the use of physical punishment, confinement, threats of violence as a method of discipline or control such as retaining employees’ identification, passports, work permits or deposits as a condition of employment. Where the Supplier is using migrant or prison labourers under a legal framework, the Customer must be made aware to review appropriate documentation maintained by the Supplier. All work shall be voluntary, and workers shall be free to leave work or terminate their employment upon reasonable notice.

ETI 2. Freedo m of association and the right to ETI 2. Freedom of association and the right to collective bargaining are respected collective bargaining are respected

2.1. Workers, without distinction, have the right to join or Freedom of Association and Collective Bargaining form trade unions of their own choosing and to bargain The Supplier should grant its employees the right to collectively. Freedom of Association and Collective Bargaining in 2.2. The employer adopts an open attitude towards the accordance with all applicable laws and regulations. activities of trade unions and their organisational activities. 2.3. Workers representatives are not discriminated against and have access to carry out their representative functions in the workplace.

Audit company: Bureau Veritas Report reference: 60419670 Date: 16 and 17 April 2015 59 2.4. Where the right to freedom of association and collective bargaining is restricted under law, the employer facilitates, and does not hinder, the development of parallel means for independent and free association and bargaining.

ETI 3. Working conditions are safe and hygien ic ETI 3. Working conditions are safe and hygienic

3.1. A safe and hygienic working environment shall be The Customer expects the Supplier’s operating and provided, bearing in mind the prevailing knowledge of management systems, as well as employees, to work in the industry and of any specific hazards. Adequate preventing work-related injuries and illnesses. steps shall be taken to prevent accidents and injury to health arising out of, associated with, or occurring in the Workplace Environment course of work, by minimising, so far as is reasonably The Supplier shall provide its employees with a safe and practicable, the causes of hazards inherent in the healthy working environment. As a minimum, potable working environment. drinking water, adequate lighting, temperature, 3.2. Workers shall receive regular and recorded health ventilation, sanitation, and personal protective and safety training, and such training shall be repeated equipment must be provided together with equipped for new or reassigned workers. work stations. In addition, facilities must be constructed 3.3. Access to clean toilet facilities and to potable water, and maintained in accordance with the standards set by and, if appropriate, sanitary facilities for food storage applicable laws and regulations. shall be provided. 3.4. Accommodation, where provided, shall be clean, Housing Conditions & Respect of Privacy safe, and meet the basic needs of the workers. When provided by the Supplier, dormitory facilities shall 3.5. The company observing the code shall assign be constructed and maintained in accordance with all responsibility for health and safety to a senior applicable laws and regulations, and they shall be management representative. clearly segregated from the factory and production area. All dormitory buildings shall be clean and safe and workers shall be able to enter and leave the dormitory buildings freely at any hour. There shall be clean toilet facilities, access to potable water, and sanitary food preparation and storage facilities. All dormitory facilities shall also provide workers with reasonable personal space, adequate heat and ventilation and clean shower and bathrooms.

Emergency preparedness The Supplier shall be prepared for emergency situations. This includes worker notification and evacuation procedures, emergency training and drills, appropriate first-aid supplies, appropriate fire detection and suppression equipment, and adequate exit facilities. The Supplier shall regularly train employees on emergency planning, responsiveness as well as medical care.

ETI 4. Child labour shall not be used ETI 4. Child labour shall not be used

4.1. There shall be no new recruitment of child labour. Minimum age for employment 4.2. Companies shall develop or participate in and The use of child labour by the Supplier is strictly contribute to policies and programmes which provide for prohibited, in line with ILO Convention 138 on the the transition of any child found to be performing child Minimum Age, and Convention 182 on the Elimination of labour to enable her or him to attend and remain in the Worst Forms of Child Labour. The ILO Convention

Audit company: Bureau Veritas Report reference: 60419670 Date: 16 and 17 April 2015 60 quality education until no longer a child; “child” and 138 on the Minimum Age indicates that no child below “child labour” being defined in the appendices. 15 years (or 14 in certain developing countries) is 4.3. Children and young persons under 18 shall not be allowed to work, subject to exceptions allowed by the employed at night or in hazardous conditions. ILO or national law. 4.4. These policies and procedures shall conform to the If the Supplier employs young workers, it must provisions of the relevant ILO standards. demonstrate that the employment of young people does not expose them to undue physical risks that can harm physical, mental or emotional development.

ETI 5. Living wages are paid ETI 5. Living wages are paid

5.1. Wages and benefits paid for a standard working Wages and benefits week meet, at a minimum, national legal standards or The Supplier’s employees must be provided with wages industry benchmark standards, whichever is higher. In and benefits that, at a minimum, comply with national any event wages should always be enough to meet laws or industry standards whichever is higher, as well basic needs and to provide some discretionary income. as binding collective agreements, including those 5.2. All workers shall be provided with written and pertaining to overtime work and other premium pay understandable Information about their employment arrangements. In any event, wages should always be conditions in respect to wages before they enter enough to meet basic needs for employees, and their employment and about the particulars of their wages for entitled official dependents, and to provide some the pay period concerned each time that they are paid. discretionary income. The Supplier must not apply 5.3. Deductions from wages as a disciplinary measure disciplinary or any other forms of deductions from pay shall not be permitted nor shall any deductions from neither apply any forms of discrimination in employment wages not provided for by national law be permitted and remuneration practices. without the expressed permission of the worker concerned. All disciplinary measures should be recorded.

ETI 6. Working Hours are not excessive ETI 6 . Working Hours are not excessive

6.1 Working hours must comply with national laws, Working time and rest days collective agreements, and the provisions of 6.2 to 6.6 The Supplier must ensure that its employees work in below, whichever affords the greater protection for compliance with all applicable laws and mandatory workers. Sub–clauses 6.2 to 6.6 are based on industry standards pertaining to regular working hours, international labour standards. and overtime hours, including for breaks, rest periods, holidays, and maternity and paternity leaves. In absence 6.2 Working hours, excluding overtime, shall be defined of law, the Supplier shall not require a regular work by contract, and shall not exceed 48 hours per week. week over 60 hours, employees shall be allowed at least one day off after six consecutive days of work, and 6.3 All overtime shall be voluntary. Overtime shall be any overtime worked shall be voluntary and used responsibly, taking into account all the following: compensated at premium rate. the extent, frequency and hours worked by individual workers and the workforce as a whole. It shall not be used to replace regular employment. Overtime shall always be compensated at a premium rate, which is recommended to be not less than 125% of the regular rate of pay.

6.4 The total hours worked in any 7 day period shall not exceed 60 hours, except where covered by clause 6.5 below.

6.5 Working hours may exceed 60 hours in any 7 day

Audit company: Bureau Veritas Report reference: 60419670 Date: 16 and 17 April 2015 61 period only in exceptional circumstances where all of the following are met: – this is allowed by national law; – this is allowed by a collective agreement freely negotiated with a workers’ organisation representing a significant portion of the workforce; – appropriate safeguards are taken to protect the workers’ health and safety; and – The employer can demonstrate that exceptional circumstances apply such as unexpected production peaks, accidents or emergencies.

6.6 Workers shall be provided with at least one day off in every 7 day period or, where allowed by national law, 2 days off in every 14 day period.

ETI 7. No discrimination is practised ETI 7. No discrimination is practised

There is no discrimination in hiring, compensation, Fair and equal treatment access to training, promotion, termination or retirement The Supplier must operate with dignity, respect and based on race, caste, national origin, religion, age, integrity in regards the treatment of its employees: disability, gender, marital status, sexual orientation, • The Supplier shall not discriminate in hiring and union membership or political affiliation. employment practices on the grounds of criteria such as of race, colour, religion, gender, age, physical ability, national origin, sexual orientation, political affiliation, union membership, medical tests, or marital status, in line with ILO Convention No. 111 on Discrimination.

ETI 8. Regular employment is provided ETI 8. Regular employment is provided

8.1. To every extent possible work performed must be Employment practices on the basis of recognised employment relationship The supplier shall only employ workers who are legally established through national law and practice. authorized to work in their facilities and are responsible 8.2. Obligations to employees under labour or social for validating employees’ eligibility to work through security laws and regulations arising from the regular appropriate documentation. employment relationship shall not be avoided through To every extent possible work performed must be on the the use of labour-only contracting, sub-contracting, or basis of recognised employment relationship home-working arrangements, or through apprenticeship established through national law and practice. schemes where there is no real intent to impart skills or Obligations to employees under labour or social security provide regular employment, nor shall any such laws and regulations arising from the regular obligations be avoided through the excessive use of employment relationship shall not be avoided through fixed-term contracts of employment. the use of labour-only contracting, subcontracting, or home-working arrangements, or through apprenticeship schemes where there is no real intent to impart skills or provide regular employment, nor shall any such obligations be avoided through the excessive use of fixed-term contracts of employment. In the case of employment through third party labour agencies the Supplier shall comply with Convention No. 181 of the International Labour Organization on Private Employment Agencies.

ETI 9. No harsh or inhumane treatment is allowed ETI 9. No harsh or inhumane treatment is allowed

Audit company: Bureau Veritas Report reference: 60419670 Date: 16 and 17 April 2015 62 Physical abuse or discipline, the threat of physical Fair and e qual treatment abuse, sexual or other harassment and verbal abuse or The Supplier must operate with dignity, respect other forms of intimidation shall be prohibited. and integrity in regards the treatment of its employees: • Any form of psychological, physical, sexual or verbal abuse, intimidation, threat or harassment must not be tolerated. • The Supplier shall respect the privacy right of its employees whenever it gathers private information or implements employee monitoring practices. • When the Supplier retains direct or contracted workers to provide security to safeguard its personnel and property, the Supplier will make sure that security personnel apply the same standards on fair and equal treatment.

SMETA Extra Sections for 4 Pillar Audit: SMETA Extra Sections for 4 Pillar Audit:

Environment Section Environment Section

D1. Suppliers as a minimum shall meet the The Customer requires its Supplier to comply with all requirements of local and national laws related to applicable legal environmental requirements and environmental standards. demonstrate continual improvement of its environmental D2. Suppliers shall seek to make continuous performance. improvements in their environmental performance. Environmental Permits and Reporting D3. The supplier shall be aware of their end client’s The Supplier shall make sure that it obtains, keeps environmental standards/code requirements and have a current, and follows the reporting guidelines of all the system in place to monitor their performance against required environmental permits and registrations to be these. at any time legally compliant. D4. Suppliers shall have available for review any environmental certifications or any environmental Environmental Management System management systems documentation. The Supplier shall document and implement a relevant D5. Suppliers should be aware of the significant environmental management system (based on environmental impacts of their site and its processes. international standards such as ISO 14001:2004), D6. Suppliers should have an environmental policy, designed to identify, control and mitigate significant covering its environmental impacts, which are environmental impacts. communicated to all appropriate parties, including their own suppliers. Hazardous Materials and Product Safety D7. Suppliers should have a nominated individual The Supplier shall identify hazardous materials, responsible for coordinating the site’s efforts to improve chemicals and substances, and ensure their safe environmental performance. handling, movement, storage, recycling, reuse and D8. Where appropriate suppliers must be able to disposal. All the applicable laws and regulations related demonstrate that they have the relevant valid permits for to hazardous materials, chemicals and substances shall use and disposal of resources e.g. water, waste, etc. be strictly followed. Supplier shall comply with material restrictions and product safety requirements set by applicable laws and regulations. Suppliers shall ensure that key employees are aware of and trained in product safety practices.

Resource Consumption, Pollution Prevention and Waste minimisation The Supplier shall optimise its consumption of natural

Audit company: Bureau Veritas Report reference: 60419670 Date: 16 and 17 April 2015 63 resources, including energy and water. Supplier shall implement and demonstrate sound measures to prevent pollution and minimize generation of solid waste, wastewater and air emissions. Prior to discharge or disposal, supplier shall characterize and treat wastewater and solid waste appropriately and according to applicable laws and regulations.

Business Practices Section Business Practices Section

E1. As a minimum, suppliers must comply with the The Customer requires the Supplier to comply with all requirements of local and national laws and regulations applicable ethical trade laws and regulations in the in the area of business integrity. countries where materials are sourced, produced and E2. Suppliers shall seek to conduct their business incorporated into the Customer product (“country of ethically without bribery, corruption or any other type of use”). In case of services, the location of service fraudulent or unfair business practice. delivery should prevail. E3. Suppliers shall be aware of their end client’s business integrity standards/code requirements and Anti bribery have a system in place to monitor their performance The Supplier must never, directly or through against these. intermediaries, offer or promise any personal or E4. Suppliers should have a business integrity policy improper advantage in order to obtain or retain a concerning bribery, corruption or unethical business business or other advantage from a third Party, whether practice. This should be clearly communicated to all public or private. The Supplier will not pay or accept relevant parties. bribes, arrange or accept kickbacks and shall not take E5. Suppliers should have a transparent system in place any actions to violate, or cause its business partners to for confidentially reporting, and dealing with, unethical violate, any applicable anti-bribery laws and regulations business practices, without fear of reprisals towards the including the U.S. Foreign Corrupt Practices and the UK reporter. Bribery Acts.

Grievance mechanisms The Supplier shall have systems in place enabling anonymous grievances, reporting and management. A designated officer shall continuously monitor the grievance mechanism, keep records on the issues raised and take appropriate actions on a confidential manner.

Records The Supplier shall maintain transparent and up to date books and records to demonstrate compliance with applicable materials, services, governmental and industry regulations.

Origin The supplier shall be capable to disclose all the potential sources of primary origins (country of origin) associated with deliveries made. The Customer reserves the right to ask the supplier to create, at a point of time, full supply chain mapping back to origin to facilitate assessment of upstream supply chain compliance Intellectual property The Supplier shall take appropriate steps to safeguard

Audit company: Bureau Veritas Report reference: 60419670 Date: 16 and 17 April 2015 64 and maintain confidential and proprietary information of its business partners and use such information only for the purposes authorized for use by the contractual agreement. In case of sub-contracting, sharing of confidential information should be made with the consent of the Customer.

Conflict of Interest The Supplier is expected to report to the Customer any situation that may appear as a conflict of interest, and disclose to the Customer if any Customer employee or professional under contract with the Customer may have an interest of any kind in the supplier’s business or any kind of economic ties with the supplier.

Audit company: Bureau Veritas Report reference: 60419670 Date: 16 and 17 April 2015 65 Photo Form

Time sweeper Chinese/Italian communication Chinese/Italian communication

Emergency exit Locker room Entrance

Packaging Storage Charging forklift area

Audit company: Bureau Veritas Report reference: 60419670 Date: 16 and 17 April 2015 66 Your feedback on your experience of the SMETA audit you have observed is extremely valuable. It will help to make improvements to future versions.

You can leave feedback by following the appropriate link to our questionnaire:

Click here for A & AB members: http://www.surveymonkey.com/s.aspx?sm=riPsbE0PQ52ehCo3lnq5Iw_3d_3d

Click here for B members: http://www.surveymonkey.com/s.aspx?sm=d3vYsCe48fre69DRgIY_2brg_3d_3d

Audit company: Bureau Veritas Report reference: 60419670 Date: 16 and 17 April 2015 67