As part of our 2020 strategy, we have developed a set of environmental, human rights, labour, health and safety standards framed under our Supplier Code of Conduct. This Code of Conduct applies to our manufacturers, their subcontractors and suppliers of inputs and raw materials. These minimum standards are referenced in all supplier contracts and based on international measures and regulations, including the International Labour Organization's fundamental Conventions, and the Base Code of the Ethical Trading Initiative (ETI). We are committed to maintaining a strong human rights due diligence system and preventing any exploitation of workers, including children, in the production of our products. This commitment is clearly stated in our Supplier Code of Conduct and available to view, here.
Our own brands—Atmos&Here, Spurr, Staple Superior, Double Oak Mills, Dazie and Locale — are produced in 61 independent supplying factories in China (52), India (5), Bangladesh (3) and Australia (1) with over 12,000 people employed in those locations. A list of all THE ICONIC's final stage factories is updated on a monthly basis and can be found here. Subcontracting from these facilities is not permitted without prior approval as a part of the Purchase Order Terms stated in THE ICONIC’s contract with the supplier who must commit to ensuring production takes place in the nominated approved factory. THE ICONIC has regular checks in place to identify unapproved subcontractors and whenever identified they are also audited.
We hold regular third-party audits covering areas of our Code of Conduct with our first tier supplying factories, which all involve interviews with production workers. At least 25% of these interviews are conducted on a semi-unannounced or unannounced basis. These audits enable us to track the use of migrant, temporary and agency workers. All factories must undergo a full audit every 24 months, with follow-up third party audits in between to verify that any issues uncovered during the full audit have been rectified.
We recognise there can be times where our standards are not being met by our factory partners and we are committed to working with our supply chain to ensure that employee issues are resolved to ensure continuous improvement. In the second half of 2018, we increased the number of minor or major audit issues resolved from 8% to 27% and although this is a significant result, we recognise the work that still needs to be done. In 2018, we exited four factories as a result of a failure to address critical issues identified through our audit process despite our remediation efforts. This was not our preferred outcome as we always aim to resolve issues and maintain long-term supplier relationships, but we are committed to the ethical trading standards we have set and will not work with factories who will not meet these expectations.
Should THE ICONIC ever identify incidences of forced or child labour in our supply chain, we would seek to use our leverage to influence positive change and we would work with the appropriate local organisations to support the factory in implementing a remediation plan designed to achieve positive outcomes for the people concerned. However, we reserve the right to immediately terminate the relationship with the factory or vendor if they do not comply with the remediation plan in place.
THE ICONIC rejects any form of modern slavery or exploitation where a person cannot refuse or leave work because of threats, violence, coercion, abuse of power or deception. This crime and exercise of power or ownership over another in modern economic circumstances occurs in every region of the world. The Global Slavery Index estimated that in 2018 over 40 million people globally were living in modern slavery globally and that 15,000 of these people are subject to these conditions in Australia. If a situation of slavery, servitude, forced labour, debt bondage and deceptive recruiting or any other human rights abuse is to be found occuring in our operations or supply chain, an immediate remediation response would commence. This would focus first and foremost on ensuring the person or people involved were safely removed from the situation and provided the necessary support by local organisations. We would also work with local authorities to help ensure perpetrators are brought to justice.
Australian modern slavery legislation necessitates a rapid response by companies to prioritise supply chain human rights risks. THE ICONIC fully supports this legislation and the requirement to publish a Modern Slavery Statement. We expect all employees, suppliers and stakeholders to actively support the work involved to eradicate modern slavery and where relevant ensure they meet their relevant modern slavery reporting requirements. Our first step in what will be a continuous and rigourous end-to-end process of managing modern slavery in the context of THE ICONIC’s business, has been to perform a top-down risk analysis of both our business operations and the various entry points to our supply chain. This analysis of the intersections between known risks, current controls, and opportunities identified to ensure that THE ICONIC is operating to effectively combat any risk of modern slavery and other human rights abuses in our business operations and supply chain.
To this end, we hosted our first Supplier & Factory Conference in Shenzhen in November 2018 where we provided training for factory managers in health and safety management, as well as human resources management. The sessions focused on our supply chain standards, including intractable issues that appear during audit process such as working hours and social insurance. The purpose of the conference was to provide factories with information that helps them implement positive change continuously over time. Feedback from suppliers was very positive and a range of additional topics were identified as useful for the 2019 sessions.
Through our parent company, Global Fashion Group, we are are members of the Ethical Trading Initiative (ETI), a leading alliance of companies, trade unions and Civil Society Organisations that promotes respect for workers’ rights around the world. Our ETI membership provides great value to our business and gives us the opportunity to engage with our wider industry, including civil society representatives, to learn and share best practices. Our suppliers are also currently involved in ETI training programs on worker representation in Bangladesh, modern slavery and a Better Buying program on purchasing practices.
In 2019 we will continue to engage our supply chain with face-to-face factory visits, control audits and delivery of training programs and workshops. We also intend to build on and shape the current factory-managed grievance mechanisms (including training) that are in place, as well as extend this engagement by implementing a confidential helpline for factory workers by 2020.
We also recognise the need to grow the ethical sourcing awareness of our team internally through education that will help them understand the role they have in better buying practices so In 2018 we introduced an extensive program on ethical sourcing as a part of our Buying Academy (an internal education program for our Category Management team), which has been completed by all buyers. THE ICONIC Buying Academy is a permanent internal program, so education on ethical sourcing will continue throughout 2019 and beyond.
All brand partner agreements include reference to our Supplier Code of Conduct and the minimum standards it sets, however we want to do more to ensure that we are partnering with organisations who are aligned with our core values. By 2020, we will develop minimum criteria for brand partners and use these to inform decision making about new brand partnerships no matter the commercial impact.
We also know these issues can occur at the raw material stage (e.g. during the farming process) or material processing stage (e.g. during washing or dying of fabric) and that we have a responsibility to address at this level. In 2018, we began transitioning to certified organic cotton styles in both our mens and womens apparel own-brands, leveraging the lower water and chemical impacts associated with organic cotton production and providing the corresponding traceability of Chinese mills, dying houses and farms. Our current percentage of organic cotton in apparel is 5% of units, with this figure set to grow significantly in 2019 with a wider range of styles planned to achieve greater company targets.
While transitioning materials in our own brands, we identified the need to conduct a more formal analysis to ensure we are focusing on the most significant environmental impacts of our materials. During Q4 of 2018, we completed a risk assessment of our own-brand supply chain to assess materials in use and to prioritise those based on their environmental impacts such as global warming and water impacts. Our analysis showed that although we used more than 20 materials in the production of our own-brand styles, 94% of this product was made using only six of these materials. This data was measured against the Higg Material Sustainability Index (which provides impact measures of environmental impacts) and as a result we were able to develop THE ICONIC’s Material Risk Rating system. Using this system we identified that our top three fibres cotton, polyurethane and cow leather, accounted for 47% of materials used in our own-brand styles in 2018. These materials are rated considered high risk for environmental impact and have been prioritised for further research and action in 2019.
In 2019, we will work with our suppliers to implement strategies to adopt more sustainable alternatives and/or remove these materials from our products. This work will operate in parallel to the tracing of our second tier own-brand supply chain including spinning mills and washing facilities for fabric, forecast for completion in 2020. and efforts to gain better visibility of other initiatives we know are in place to reduce environmental impacts, for example investment in technology to reduce textile waste and offcuts recycling. This traceability work will also enable water to be better in focus and building on information already collected about usage and recycling through tier 1 audit reports., we will work to identify where we are sourcing from water stressed basins and engage with relevant stakeholders to assess where improvements can be made. Our ongoing face-to-face factory visits will also support this project.
Consumer safety, worker health and environmental protection are priorities for THE ICONIC. Responsible use of chemicals in our supply chain is essential. To ensure safe use, we have embedded a Chemical Standards and Restricted Substances List outlining the requirements our suppliers must adhere to. This includes our Manufacturing Restricted Substances List, which is consistent with industry standards and that of many other retailers. THE ICONIC expects all suppliers to undertake due diligence to ensure that these standards are being met, including in their own supply chains.
THE ICONIC acknowledges that the way we interact with suppliers and how well organised we are in relation to production can have an impact on their ability to meet the standards we outline in our Supplier Code of Conduct. As such we have developed our Responsible Purchasing Policy, outlining our commitment to behaving with integrity in our dealings with suppliers, and to support our internal teams to ensure that our purchasing behaviours align with our aim to be positively and transparently contributing to the improvement of social and environmental conditions in our own-brand supply chain.
THE ICONIC Animal Welfare Policy outlines our expectations as to how and where animal materials are used in our products, and is applicable to both our own brands and our third party brand partners.
We also expect that the industry-recognised Five Freedoms developed by the UK’s Farm Animal Welfare Committee are implemented.
The Five Freedoms include:
1. Freedom from hunger and thirst
2. Freedom from discomfort
3. Freedom from pain, injury and disease
4. Freedom to express normal behaviour
5. Freedom from fear and distress
Additionally, THE ICONIC requires any animal materials used in our private label styles or partner brand’s styles to strictly be a by-product of the food industry. THE ICONIC does not purchase nor sell items that use real animal fur of any kind including exotic skins or hair from the angora rabbit and prohibits processes including; unnatural abortions, live skinning, live plucking, mulesing, confinement of animals in veal or sow crates and animal testing on cosmetics.