the relationship with the supplier, which could lead to further harm to the workers, ECCO worked with the supplier to stop this practice and implement an alternative system. At a Chinese supplier, ECCO found ID papers were withheld from migrant workers. The audit was conducted as a joint audit from several Brands who all were using this supplier. It was agreed with the supplier to stop this practice immediately. There have not been findings related to this topic since. ECCO is aware of the importance of complementing audits with other measures, in particular in the area of modern slavery. For instance, ECCO has since 2004 had environment, safety, and health committees at its own factories to assist workers in voicing their concerns related to working conditions more generally. ECCO ensures that workers are empowered to report complaints without fear of reprisals. ECCO seeks to assess whether its suppliers have such mechanisms in place in the course of its audits. ECCO uses a number of different indicators to assess whether labour rights are respected in its operations and supply chains. 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. The parts of ECCO’s business and supply chains where there is a risk of slavery and human trafficking taking place 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 reflecting on how to bring 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 visibility of 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 the 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. Dieter Kasprzak President & Chief Executive Officer Steen Borgholm Deputy Managing Director & Group CFO 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. MORE THAN 20,000 EMPLOYEES WORLDWIDE 70% WOMEN, 30% MEN NATIONALITIES AUDITS 78 SUPPLIER AUDITS 14 OF OWN FACILITIES NEXT STEPS In the coming year, ECCO plans to: • H ost the Code of Conduct Supplier Summit (April 2017). • Introduce a ‘Business Partner Guide’, which will include guidance for suppliers to convey more specifically what is expected, also when it comes to avoiding modern slavery. • E xtend the selection pool for suppliers to be audited to contruction and service companies. • Continue the supplier audits to ECCO’s leather division and train auditors at ECCO’s tanneries to conduct Code of Conduct supplier audits. • Include suppliers of so-called ‘point-of-sales’ (POS) material to ECCO’s retail shops in China in the audit programme.
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