Kwintet’s Social and Environmental Program - for the supply chain

CSR Dept. Incentra Agenda Council, Oslo, 7th of September 2010

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Overview Kwintet CSR policy

To achieve economic success, Kwintet must also contribute to social and environmental success

On a fundamental human level we act because we care and because we can – we are a big company with a potentially large impact wherever we operate

Kwintet’s ambition is to meet and exceed CSR related expectations of the company’s stakeholders

Working together to create a compliant supply chain for

Kwintet

Preferred suppliers

Complementary suppliers

Preferred suppliers

Complementary suppliers

Close cooperation between CSR Dept. and Strategic Sourcing will be done in a way that does not hamper the consolidation process; the more consolidated supply chain, the more we can reach a sustainable compliance level among our suppliers

Kwintet’s supply chain compliance strategy

Preferred suppliers

1) Finished goods

2) Fabric and trim

Time and resources spent on

audits and compliance monitoring

Integrating compliance activities into the sourcing activities, focusing on the most important suppliers, i.e. where we plan for long term business relations, will promote a sustainable compliance level and as well as a truly compliant Preferred supply chain

2008: CSR department established – location in Asia and at head office

Kwintet’s Code of Conduct developed and rolled out in December 2008

Extensive social compliance program and audit procedure developed, tailor-made for the Group’s Strategic sourcing approach

Kwintet group – member of Sedex – Supplier Ethical Data Exchange

Members of Fair Wear Foundation (FWF)

REACH compliance procedure set up

Other environmental measures are currently under development

Overview

Fair Wear Foundation (FWF) - multi-stakeholder initiative based in Netherlands to support and promote good labor conditions in garment production

Assurance of CSR objective, planning and performance by FWFVerification audits of Kwintet suppliersManagement System Audit

Results from FWF verification made public on FWF web site

Support provided by FWF:Information on local legislation, labor standards and cultureMulti-stakeholder dialogue

All Kwintet entities to be members of FWF within 2011More info on FWF:

http://fairwear.org

Fair WearFoundation

Minimum requirements from all Kwintet suppliers regarding our compliance program

Sign the Code of Conduct (COC)

Sign the Restricted Substances List (RSL)

Fill out the Production Unit Register

Be audited according to our audit planning criteria:

Sourcing importanceCompliance risk of geographical locationCompliance risk of product categorySedex SAQ results

AUDIT PROCEDURE FOR DIRECT PRODUCT SUPPLIERS- a first phase of data gathering for the supply chain

• Minimum requirement for all direct product suppliers

• Compliance audit conducted; Corrective Action Plan (CAP) set up for each audited supplier

• Audit grading system – Red, Orange, Yellow, Green

• Red graded findings to be corrected immediately• Re-audit to verify corrections according to CAP• Progress reported monthly to Sourcing Team/Category Management and integrated into running order placement plans

Signed COC and RSL

Audit planningcriteria

Complianceaudit

conducted

Correction, monitoring,Re-audits

• Potentially new supplier or production unit shall be audited and pass, i.e. no Red graded audit findings, prior to order placement

Compliance procedure fornew suppliers

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• Focus on Preferred suppliers during 2010 – 2011• 2010: Preferred finished goods suppliers• 2011: Preferred fabric and trimming suppliers

CSR targets

2010100 % of Preferred suppliers have signed the COC and RSL100 % of Preferred finished goods suppliers audited 0 % Red graded findings by the end of the yearMinimum 50 % have no worse than Yellow grading

2011100 % of Preferred fabric and trimming suppliers auditedTotal Preferred supply chain cleansed from and Red graded findings100 % of Complementary suppliers to have signed the COC and RSLFramework for environmental program ready

2013

All Strategic suppliers have no worse than Yellow gradingAll employees have received training in company CSR

Our aim is to improve worklife – for users, workers in production and for employees

We are a committed partner with a significant and long-term impact on people’s lives in various local communities

We have the size, power and will to commit to taking responsibility for our business activities

We have started to build a long-term sustainable social compliance program with thorough and credible procedures for:

AuditingRemediationContinuous compliance progress and supplier dialogueNo quick fixes

Fair Wear Foundation continuously evaluates the quality of our compliance program and purchasing practices and publish the results on its web site

What customers can expect from us today

Compliance in the supply chain – it’s complex and not a quick fix

We need to get started with the basicsKwintet Group’s supply base is huge and complex and we are starting from scratch by mapping out the starting compliance level

How to reach sustainable compliance in our supply chain Focus needs to be on our overall approach rather than audit details. There are no short cuts; We will have come a long way when our sourcing is consolidated through the Kwintet Preferred supply chain

CSR and sourcing are symbiotically connectedLong-term business relations with a fewer amount of suppliersMutual supplier dialogueCooperation with local community and other stakeholders – MSI (multi-stakeholder initiatives)

Keeping the internal and external discussions on CSR aliveRaising the bar for our ambition level as we gradually make progress in laying the foundation of our CSR program

Questions?

Feel free to contact Wenaas or the CSR

Dept. directly

Kwintet CSR Department

Deeba C RemhedenGlobal Head of Social and Environmental Affairs

E-mail: dcr@kwintet.com