ECCO uses a number of different indicators to assess whether labour rights are respected in its operations and supply chain. These include indicators related to audit findings, worker satisfaction, annual employee turnover, staff wellness, and number of strikes. One indicator alone will not provide an adequate measure and will need to be complemented by a range of indicators. WHERE THERE IS A RISK OF SLAVERY AND HUMAN TRAFFICKING TAKING PLACE IN ECCO’S DIRECT OPERATIONS AND SUPPLY CHAIN The most significant risk of modern slavery occurs where ECCO has less control: within the supply chain of suppliers that provide the company with services and materials, such as uppers, laces, inlay soles, machines, chemicals, finished products, and components used in connection with the manufacturing of ECCO products. In the evaluation of how the approach to modern slavery could be strengthened, ECCO has identified its business model as a key strength in terms of its modern slavery risk profile. Operating its own R&D, production, and retail operations gives ECCO full control of the working conditions for its employees. Further, ECCO is bringing more production in-house, including more production of components. ECCO competes on the superior quality of its shoes, rather than on cost of the product. ECCO has long-standing relationships with its suppliers who have strong capabilities in terms of product quality and labour standards. At the same time, ECCO has less insight into the labour practices that exist in the supply chain beyond the first tier. This is where ECCO deems the risks of modern slavery to be the highest. The risks are also high with other business partners, such as in cleaning companies and construction companies that build and service ECCO’s tanneries, shoe factories, and retail stores. ECCO recognises that the risks exist in Europe and are not confined to only Asian countries. As described above, ECCO is extending its audit programme beyond the existing tiers to better understand the modern slavery risks, and ECCO will be complementing its findings with conversations and stakeholder engagement. NEXT STEPS In the coming year, ECCO plans to: •Keep extending the selection pool for suppliers to be audited both horizontal and vertically, e.g. to suppliers responsible for the final treatment or disposal of hazardous waste. •Conduct an in-depth human rights impact assessment to enhance ECCO’s human rights due diligence and more fully understand its potential and actual impacts. •Extend pre-screening of new suppliers to indirect suppliers, e.g. marketing. •Continuously conduct ‘refresher’ training of internal key stakeholders, e.g. audit teams, procurement teams and Senior Managers. •Work to develop a metrics to support key performance indicators in order to effectively track progress. •Host the next Code of Conduct Supplier Summit. •Continue to include Corporate Responsibility in communication in internal channels (e.g. ECCO’s intranet, ECCO People Magazines) and external channels (e.g. ECCO Annual Report, group.ecco.com). MORE THAN 21,000 EMPLOYEES WORLDWIDE 70% WOMEN, 30% MEN NATIONALITIES AUDITS 130 SUPPLIER AUDITS Steen Borgholm Chief Executive Officer Michel Krol Executive Vice President, Global Sales Panos Mytaros Executive Vice President, Global Shoe Production 1. Definition of tier one suppliers: Business unit that manufactures the finished leather good sold to the end-consumer.
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