likely to produce adverse human rights impacts. For instance, ECCO will prioritise audits of suppliers that use subcontractors, as well as those with work-intensive production. 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 the number of strikes. One indicator alone will not provide an adequate measure and must be complemented by a range of indicators. The most significant risk of modern slavery occurs where ECCO has less control – for example, within the supply chain that provides 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 evaluating how to guard against instances of modern slavery, 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. ECCO is also increasing the level of in-house production, including the 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. However, ECCO has less insight into the labour practices that exist in the supply chain beyond the first tier. This is where ECCO identifies the greatest risk of modern slavery. 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 human rights risks exist in Europe and are not confined to Asian or Third World countries. This is why, as described above, ECCO is extending its audit programme beyond the existing primary supply chain tiers to better understand the modern slavery risks. ECCO will complement its findings with greater stakeholder engagement. 41
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