Supplier Guidelinepart of BeStSeller’S Code of ConduCt

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ContentS

1. Introduction .......................................................................................3

1.1 How do we approach sustainability in our supply chain? ..........3

1.2 applying management systems ...............................................4

2. Working procedures ..........................................................................5

2.1 General requirements and information......................................5

2.2 audit program .........................................................................7

2.3 factory rating system ..............................................................9

2.4 new suppliers ........................................................................10

2.5 Current suppliers adding new production sites .......................11

2.6 Supplier sustainability evaluations ..........................................12

2.7 Supplier portal .......................................................................12

2.8 non-compliance to the Code of Conduct ..............................12

3. Health and safety ............................................................................14

3.1 risk assessment and control .................................................14

3.2 Health and safety checks during audits ..................................15

3.3 Bestseller guidelines on health and safety in the factories ......15

4. Ethics ...............................................................................................16

4.1 Supply chain transparency and product traceability ...............16

4.2 responsible sourcing of raw materials ...................................16

4.3 animal welfare .......................................................................17

4.4 animal testing ........................................................................17

5. Environmental work .........................................................................18

5.1 introduction ...........................................................................18

5.2 Chemical restrictions..............................................................19

5.3 Water and wastewater management ......................................19

5.4 energy efficiency, air emissions and climate change

(GHG emissions) ....................................................................19

5.5 Cleaner production and waste management ..........................20

5.6 environmental rating system ..................................................21

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1. introduCtion

in Bestseller we are seeking to meet the needs of our customers and to develop our business, but aim to do so with respect to human wellbeing and the environment.

Corporate Sustainability is the department in Bestseller where efforts on working towards sustainable business prac-tices are coordinated. Corporate Sustainability works in close cooperation with all Bestseller brands to help ensure that our products are made with respect to human rights and with limited impact on the environment. our aim is to develop more sustainable long-term business practices to ensure future prospects for our customers and employees, as well as our suppliers’ businesses and their employees.

this information pack outlines how we are working with bestseller’s Code of Conduct, and the procedures and working methods that we follow, and expect our suppliers to follow, throughout the supply chain.

1.1 HOW DO WE APPROACH SUSTAINABILITY IN OUR SUPPLY CHAIN?

We have in the past focused on auditing and checking production sites as a means of ensuring that factories are meeting law and the requirements set down in Bestseller’s Code of Conduct. over the past few years we have begun focusing on a more long-term sustainable approach where suppliers take more responsibility for their own production sites and supply chains, and we apply our efforts and resources to providing tools and training on how to make im-provements. We will continue to use audits to check that factories have efficient systems in place to ensure long-term development in social and environmental issues.

We have developed a number of training programs for suppliers, factory managers, factory supervisors and workers. training and development is something that we will continue to focus on in the future.

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We acknowledge that problems in the supply chain can also be caused by business practices from Bestseller. We are working on aligning sustainable business solutions throughout the organisation. this includes training buying depart-ments on the consequences actions and decisions made in head office may have further down the supply chain, looking at sustainable options during the designing process, and avoiding certain materials that are known to cause harm to human health or the environment both during manufacture and use of the product.

1.2 APPLYING MANAGEMENT SYSTEMS

to achieve sustainable business practices, management systems focusing on continuous improvement can be applied throughout the organisation. this model can be applied to help ensure that all aspects of the Code of Conduct are met or are on the right development path to be met in the future, and used as an effective tool to ensure that suppliers are managing the risks in the supply chain.

poliCy

planninGManaGe-

Ment revieW

CHeCkinG (MonitorinG)

iMpleMen-tation

POLICY DEVELOPMENTWritten policies on the social and environmental policies to be implemented throughout the organisation should be agreed from top management and effectively communicated throughout the company.

PLANNING AND IMPLEMENTATIONrisks and impacts should be identified within your organisation and your supply chain. allocation of responsibility to an individual person or a team to ensure that plans and procedures are implemented efficiently throughout the organisation (Hr, head of departments, line supervisors, etc). training and communication should occur through-out company with clearly documented procedures and guidelines outlining these procedures.

CHECKING (MONITORING)Suppliers should incorporate internal auditing and monitoring into operational procedures. information relating to social and environmental policies should be gathered and all relevant performance data should be collected in order to measure improvements and effectiveness of the policy.

MANAGEMENT REVIEWManagement should meet regularly to discuss the progress of the policies. are targets being met? are documented procedures effective? is there a need for a policy review? new objectives and targets can be set following review of progress, and the development cycle continues.

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2. WorkinG proCedureS

2.1 GENERAL REQUIREMENTS AND INFORMATION

Roles and responsibilitiesSuppliers are fully responsible to take ownership of their supply chain and ensure that their producing factories are work-ing to meet the CoC. Suppliers must provide and communicate the CoC to all subcontractors.

all suppliers must have a specified member of staff responsible for coordinating work in social and environmental re-sponsibility, who will be the main point of contact for Bestseller. this person should be present in the factories during audits as well as during follow-up audits and visits by Bestseller, and ensure that development plans and deadlines are met, and needed improvements are made in the factories. this person should also ensure that any new production sites are up to a certain standard and prepared for a Bestseller audit, to avoid time delays and unnecessary cost. Suppliers should ensure that this responsible person is fully trained in issues relating to the Code of Conduct.

Identification of risks and risk managementrisks should be managed carefully. By reducing the number of subcontractors and suppliers in the supply chain it is easier to manage risks. Close relationships and open communication with suppliers and subcontractors will enable greater transparency and identification of risks.

Transparencyit is essential that all suppliers and their producing factories are fully transparent. all production sites must be applied for and entered into the audit program prior to addition into the supplier portal and the placement of orders. Suppliers should ensure that factories are open and honest during audits and that the auditor is allowed full access to the site and the true records.

We are willing to work with suppliers and factories that are open and transparent about problems in meeting the Code of Conduct, as long as they agree to work on continuous improvement and development.

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Continuous improvementSuppliers should work on continuously improving their operations, and developing more sustainable methods of work-ing. this may be related to working conditions in the factory, the effect of business operations on the environment, or how they engage with local communities and other relevant stakeholders in the business.

We acknowledge there are many improvements that can be made in our business operations and pledge to work on identifying these issues and to develop more sustainable internal business practices, whilst working with suppliers throughout our supply chain to find practical solutions to developing sustainability.

Communication and engagementas part of the development work in social, ethical and environmental issues we are often engaging in project work and other supply chain initiatives. our suppliers should be willing to involve themselves and assist Bestseller in such projects. any training or participatory events organised by Bestseller. Material developed by Bestseller to be passed down to subcontractors, workers, or displayed in the factory should be done so efficiently.

Contact informationfor more information and in relation to any social and environmental issues in the supply chain, suppliers should contact the Code of Conduct colleague in their local purchase office. Contact information can be found on the Supplier portal.

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2.2 AUDIT PROGRAM

the audit program is currently in place as a means for Bestseller to check that our suppliers and their factories are working in accordance to the Code of Conduct, to ensure that all new production sites are of a certain standard prior to being accepted to produce for Bestseller brands, and finally as a performance indicator or measure for suppliers and buyers to see how successful current management systems and policies are and to enable comparison of suppliers.

Scope

• All factories and production units that make up Bestseller products are included in the Audit Program

• Wet processing units may be included following risk assessment (for example all denim finishing units are included in the audit program due to the labour-intensive activities and potential health and safety risks)

• The audit will include all buildings and work-shops onsite, even those not involved directly in Bestseller production

• Any onsite subcontractors linked to components and materials intended for Bestseller products will also be in-cluded in the audit

• All onsite workers are included in the audit – this includes temporary or agency workers, as well as, for example, cleaning and security staff

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Organisation

• All factories producing for Bestseller are required to have a full Bestseller audit completed by an independent third-party auditing company at least every 2 years

• Further information on third-party auditing companies and their prices can be obtained from the buying offices and can also be found on the Supplier portal

• All full audits are paid for by the supplier

• Bestseller Code of Conduct colleagues will help to arrange audits, and are in close cooperation with the supplier to ensure that developments are made within the deadline agreed

Audits

• A full audit is a detailed and objective insight into the working conditions inside the factory, and covers all aspects of Bestseller’s Code of Conduct

• The audit will be carried out by an independent auditing company using Bestseller’s audit form

• The audit results will list any issues found in the factory during the audit. These will be placed into a development plan with agreed improvement deadlines

• The audit will usually take one full day depending on the size of the factory

• All areas of the production site and all records must be available for the auditor; the supplier is responsible to ensure that the factory is transparent during the audit

Follow up and continuous development

• The follow up and continuous development is coordinated by Code of Conduct colleagues, who in close col-laboration with the supplier will keep track of developments made by factories, visit production sites to check progress and further assist the factory in making the necessary improvements

• Suppliers must take responsibility to ensure that factories are making improvements and that all deadlines are met

Roles and responsibilitiesCode of Conduct colleagues are not responsible for ensuring that the factories are working in accordance to the Code of Conduct, the suppliers must take ownership of their supply chain. the role of the Code of Conduct colleagues is to provide assistance and guidance to the supplier and factory, to inform them of Bestseller expectations and procedures, and to check that suppliers are following up on improvements identified during the full audit.

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2.3 FACTORY RATING SYSTEM

the results of the independent third-party audit are entered into the online audit form in the Supplier portal. a rating based on the results of the audit will automatically be generated in the system and given to the factory. red factories will not be accepted for production.

for more details on the rating system and which issues are considered ‘minor’ (Class C), ‘serious’ (Class B) and ‘critical’ (Class a) please contact the Code of Conduct colleague in your local purchase office.

Rating General description

Green • Factory is working according to Bestseller’s Code of Conduct and has systems in place to ensure that it will be able to maintain a high standard

• Factory demonstrates a number of best practices• Factory is not ‘perfect’ and should always be working to improve further on sustainability issues

and maintain a high standard

yellow • Minor issues are found and highlighted as needing improvement• Factory is making continuous progress and is transparent and open

orange • Some ‘serious’ issues and/or a number of minor issues are found, but the factory is transparent and open to work on improvements

red • factory is non-compliant to the Code of Conduct• ‘Critical’ issues are found which automatically result in a red rating • if factory is not transparent or dishonest and does not allow auditor full access to the site and true

records, factory will automatically receive a red rating

Black • factory is far below standard required in production sites • Black rated factories can never be used to manufacture Bestseller products• factory may be black-listed for a number of reasons, including dishonesty and corruption

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2.4 NEW SUPPLIERS

new suppliers to Bestseller are sourced in cooperation between our local buying offices and the danish buying depart-ments. the need for a new supplier is evaluated based on the current portfolio of the supplier base and the needs of the brand. We do the majority of our business with suppliers who we have been working with for a number of years, and always aim to establish long-term and close relationships with our suppliers.

new suppliers will only be accepted if they meet the following criteria:

• They must declare all producing factories that will be registered for the Audit Program and production is only allowed in factories that are registered in the Supplier portal and which have entered the audit program

• Suppliers must ensure that all factories and subcontractors are transparent during the audits and allow full access to site facilities and true records for the audit

• Factories will be rated according to Bestseller’s rating system (RED or BLACK factories will not be accepted for pro-duction – any factory that is not honest will be rated either RED or BLACK automatically)

• Suppliers should also be prepared to provide bestseller with full mapping details of their supply chain, including fabric suppliers, suppliers of accessories and sundries, and as far as possible the origin of raw materials that make up the products on request. Suppliers are responsible to pass down the Code of Conduct and relevant guidelines to all subcontractors

once new suppliers are accepted and all production sites have entered the audit program, supplier will be given access to the Supplier Portal – an IT system used for order placement and communication.

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2.5 CURRENT SUPPLIERS ADDING NEW PRODUCTION SITES

We aim to limit the number of suppliers that we work with in order to achieve the benefits of a closer and longer-term business relationship with fewer key suppliers, as well as minimise our supply chain risk. it is important to us that our suppliers operate in a similar way, minimising risk and increasing control and reliability in all areas (including social and environmental responsibility issues).

Suppliers should discuss with Bestseller buyers if it is necessary to add additional production sites for Bestseller produc-tion. it is important that Bestseller buying departments and local buying offices are in close collaboration with suppliers regarding capacity availability and possible future production needs.

• Suppliers should limit the risks in the supply chain by reducing as much as possible the number of suppliers and subcontractors

• All production sites must be declared and registered with Bestseller and started on the Audit Program PRIOR to orders being placed

• Suppliers must ensure that proposed production sites are able to meet Bestseller’s Code of Conduct prior to register-ing them with Bestseller

• Factories that are rated RED or BLACK will not be accepted

• The supplier is responsible to ensure that the requirements of the Code of Conduct are communicated to all subcon-tractors and that effective management systems are in place to ensure that requirements are met

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2.6 SUPPLIER SUSTAINABILITY EVALUATIONS

Suppliers will be evaluated at least once a year based on performance in sustainability issues and production site com-pliance to the Code of Conduct. these evaluations are constantly being developed in order to increase communication throughout the business of the work our suppliers are engaging in with ethical, social and environmental issues. Supplier evaluations give an overview of factory audit results, but also highlight a suppliers’ activities in relation to sustainability issues, their willingness to participate and be involved in projects and training, transparency of the supply chain, ‘best practice’ techniques, and more.

2.7 SUPPLIER PORTAL

the Supplier portal is the it system used in Bestseller as a means of communicating between suppliers and the Buying, Shipping and Corporate Sustainability departments. orders are placed on this portal, and suppliers are also able to view the current status of their factories and the developments that are needed according to the last audit that was done.

for more information and details on the supplier portal please contact your local purchase office.

2.8 NON COMPLIANCE TO THE CODE OF CONDUCT

We understand the difficulties that factories can face in regards to working within the Code of Conduct. there are many complications – and unforeseen problems can often arise. Consequences of non-compliance to the Code of Conduct will vary according to the specific circumstances, which will be reviewed on a case-by-case basis. We will of course always discuss the situation with the supplier – to work out how that problem occurred and what can be done to prevent similar problems in the future.

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Suppliers should be aware that a serious breach of the Code of Conduct, or continuous breaches, may result in the supplier being removed from Bestseller’s supplier list. orders will be removed from the supplier and new orders will not be authorized through the system.

it is essential that suppliers declare all production units, which must be checked according to the Code of Conduct. if Bestseller production is found in non-registered factories, Bestseller will end the relationship with the supplier.

dishonesty during the audit (for example showing fake documentation) is also taken very seriously and factories that cannot show the real situation during the Bestseller audit will automatically be rated red. factories that show the real picture will not face penalty, but will be expected to work on improving the situation in collaboration with Bestseller.

less serious, but recurring, problems such as not meeting deadlines and agreements set in development plans, will result in a warning from Bestseller. Suppliers will need to show that they are committed to improving and developing. if necessary, suppliers will be asked to give regular feedback on the work and progress that they are making.

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3. HealtH and Safety

3.1 RISK ASSESSMENT AND CONTROL

Suppliers must take ownership of their supply chains, and it is essential that they ensure that efficient management systems are in place throughout all production sites to ensure that the highest standard of health and safety is reached. Suppliers should use basic risk assessment techniques to evaluate the risks in the factories, and if possible remove them. if it is not possible, risks should be minimised and workers must be protected.

evaluate

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reMoveproteCt

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3.2 HEALTH AND SAFETY CHECKS IN AUDITS

the full audit by an independent third party and consequent follow up audits will focus a great deal on health and safety in the factories, covering all areas onsite including workshops, canteens, dormitories and out-buildings.

3.3 BESTSELLER GUIDELINES: HEALTH AND SAFETY IN THE FACTORIES

for detailed and more specific information on how to control health and safety risks in the factories, suppliers and factories can refer to Bestseller’s Health & Safety Guidelines. these guidelines have been developed as a tool to help suppliers address the potential risks in the factories, and to reduce potential health and safety hazards. In addition to a general guideline on health and safety in the factories, which would be applicable for all factories, there are also spe-cialised guidelines, which take into consideration any additional hazards that may arise when manufacturing specific product groups.

Health & Safety Guideline

Jeans Guideline

Jewellery Guideline

Shoe Guideline

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4. etHiCS

Suppliers should aim to source materials that come from regions and companies that do not cause negative effects to local populations or animals, and have a limited impact on the natural environment.

4.1 SUPPLY CHAIN TRANSPARENCY AND PRODUCT TRACEABILITY

in order to improve sustainability in our products, it is important that we maintain close partnerships throughout the supply chain and engage on sustainability issues in a collaborative approach. in order to achieve this it is important that we develop greater transparency and product traceability to more clearly understand the challenges and impacts of our business. We expect that our suppliers help us to achieve greater product traceability – through the development of internal systems that will better monitor the flow of materials through the supply chain.

4.2 RESPONSIBLE SOURCING OF RAW MATERIALS

We are aiming to increase the use of sustainable raw materials throughout the business, and hope that our suppliers will engage with us to develop products made from more sustainable materials. We welcome new initiatives and ideas from our suppliers on how our products can become more sustainable.

Bestseller aims to ensure that raw materials in our products do not come from regions with serious human rights vio-lations and expect that our suppliers respect these sourcing decisions and implement them throughout their supply chains.

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4.3 ANIMAL WELFARE

We believe that it is not acceptable to harm animals for manufacturing of our products, and we will only work with sup-pliers who respect the welfare of animals. This is applicable to all products retailed by Bestseller A/S. We never use real fur in our products, and will only use leather that is a by-product from animals that have been bred for the food industry. We will not use leather obtained from live-skinning or live-boiling. Suppliers must only use feather or down that comes from birds bred and raised for the food industry. Bestseller condemns the practice of live-plucking. Suppliers must be willing to declare their suppliers of feather and down.

Suppliers’ of wool products must be aware that Bestseller does not accept the practice of mulesing, and we require evidence from suppliers that all merino wool for Bestseller products is mulesing-free.

We will not use any materials derived from species that appear on the CiteS (the Convention on international trade in endangered Species of Wild fauna and flora) or iuCn (international union for Conservation of nature) lists of endan-gered species. Information on these lists can be found at http://www.cites.org and http://www.iucnredlist.org

in addition, we require that any materials derived from animals used in our products are from animals that are treated humanely and according to animal welfare laws and recommendations.

4.4 ANIMAL TESTING

in Bestseller we do not agree with testing cosmetics on animals. our suppliers must not be involved in any animal test-ing of cosmetic products and ingredients, or purchase ingredients or products from suppliers which have been involved in such practices.

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5. environMental Work

5.1 INTRODUCTION

Bestseller’s Code of Conduct stipulates that our suppliers must follow all national and regional environmental laws. all factories must set up and continuously develop an ‘environmental management plan’ (eMp) in order to minimise the effect of our business activities on the environment.

an eMp works like other management systems with cycles that create continuous improvements from each cycle passed (refer to the general management systems diagram on page 4). as a minimum an eMp should address the fol-lowing issues:

• Monitoring, handling, treatment and disposal of domestic sewage and industrial waste water

• Monitoring, handling and disposal of hazardous waste such as chemicals, and non-hazardous waste, such as textiles

• Monitoring and treatment of air emissions, for example from boilers

• Monitoring schemes for the consumption of chemicals, water and energy

• Policy and plans for the continuous work to reduce the environmental impacts. For example by implementing cleaner production techniques that will reduce the consumption of chemicals, water and energy and the amount of solid waste generated

in recent years, as our expectations for achieving a more sustainable business approach have become higher, our work on environmental issues throughout our business has become more focused. Bestseller’s environmental work follows

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the product from ‘the cradle to the grave’. the following information and guidelines, however, are aimed at our supply chain, and the beginning of the life-cycle of our garments.

5.2 CHEMICAL RESTRICTIONS (CR)

the Chemical restrictions describe the limitation and prohibition of substances in products manufactured for Bestseller. the Cr have been developed based on a concern for the health of our customers, the working conditions inside the factories producing our goods, and for the preservation of the environment.

Examples of best-chemical-practice in the supply chain:

• Using wet-processing subcontractors and accessories subcontractors certified according to the internationally re-cognized Oeko-Tex certification scheme. This will minimise the risk of non-compliance with Bestseller’s Chemical restrictions

• The implementation of an automated dosing and dispensing system for chemicals in the wet processing will reduce the consumption of chemicals

• Recovering and recycling the most concentrated alkali baths after mercerization of cotton and viscose which will help to reduce the consumption and emission of alkalis

5.3 WATER AND WASTE WATER MANAGEMENT

throughout the supply chain we are focusing on the use of water. the textile industry is responsible for using large quantities of water every year during pre-treatment, washing, dyeing, printing and finishing processes – as well as the tanning of leather goods and raw wool scouring.

Suppliers should use water responsibly, and work to minimise their water footprint. this includes reducing water use and implementing water recycling as much as possible. Suppliers must treat and dispose of wastewater according to the law.

Examples of best-water-practice in the supply chain:

• Implementing a zero waste water system in dye and print houses. For example a combined membrane-filtration and evaporation system can achieve recycling of about 90% of waste water from dyeing/washing as well as the recovery of salt to be reused for processing

• Combining pre-washing and bleaching into one step can reduce water and energy consumption in the wet pre-treatment processing

5.4. ENERGY EFFICENCY, AIR EMISSIONS AND CLIMATE CHANGE (GHG EMISSIONS)

Suppliers should work to reduce energy consumption and greenhouse gas footprint. all emissions that are produced during manufacture must be monitored, controlled and treated as required by law.

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Examples of best energy- and GHG-practice in the supply chain:

• Recovering the heat from hot wastewater streams by heat-exchange with the in-going cold process water

• Using techniques to recover heat from hot off-gases

5.5. CLEANER PRODUCTION AND WASTE MANAGEMENT

Suppliers shall work to improve resource efficiency. this can be done by implementing cleaner production techniques and reducing waste during production processes. Suppliers should implement methods to re-use or recycle waste from the factory.

all the above best-practice techniques are examples of cleaner production.

BESTSELLER ENVIROMENTAL WORK – APPROACH AND EXPECTATIONS

Step 1:focus on the evaluation of wastewater treatment systems throughout the supply chain

• All suppliers must ensure that all parts of their production net-work involved in the use of water during production have adequate wastewater treatment plants operating in accordance to the law

• All suppliers must be able to provide documentation and readings from the wastewater treatment plant in all relevant sites

Step 2:focus on the practices and details of the entire production network of Bestseller suppliers

• Suppliers should prepare by mapping entire production network, stating company names and addresses as well as details on their production

• Suppliers should be able to provide any information requested in regards to Bestseller’s Cr and the environmental work, for exam-ple chemicals that are used, certifications etc

Step 3:Suppliers are rated using the ‘environmental rating System’. Suppliers will be provided with information and training on ‘cleaner production’ techniques to improve resource-use efficiency

• Suppliers should continuously aim to improve their environmental status and aim to implement ‘cleaner production’ techniques over time

Approach Bestseller expectations on suppliers

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Green • Fully compliant• Demonstrates best practice in environ-

mental work and cleaner production

• All wet processing sites used by the supplier have been evaluated concerning waste water and rated fully compliant1

• All demonstrate best-practice cleaner production techniques

• There are no problems in meeting requirements set by Bestseller’s Chemical restrictions

yellow • Basically compliant• Minor issues are found• Factory making progress

• All wet processing sites used by the supplier have been screened concerning waste water and rated ‘basically compliant’ and have a documented waste-water plant in compliance with the national law

• Minor issues include, for example, general bad house keeping

orange • Serious issues are found• Factory making progress and showing

will to improve

• Serious issues include, for example, a missing en-vironmental management plan, or the absence of a person or team responsible for the environment in-ternally

red • Non-compliant• Critical issues are found• Factory making progress and showing

will to improve

• Supplier lacks transparency and does not declare all wet processing units to Bestseller

• Lacking documentation and evidence of wastewater treatment in one or more wet processing sites used by the main supplier

• Breach on national environmental law for any step in the supply chain

Black • Non-compliant• Factory is making no progress• Management lacking the will to improve

• Inadequate or missing wastewater treatment in one or more wet processing sites used by the main sup-plier

• Repeated failure to meet Bestseller’s Chemical Re-strictions

• Lack of honesty

5.6 ENVIRONMENTAL RATING SYSTEM

the environmental performance of suppliers will be rated using a system similar to the factory rating system. the environmental rating will also take into account the suppliers’ control and compliance to the Chemical restrictions.

1 A fully compliant site will have provided documentation of an efficient waste water treatment plant in compliance with the bench mark set by the Sustainable Water Group (SWG). http://www.bsr.org/reports/awqwg/BSR_AWQWG_Guidelines-Testing-Standards.pdf

Rating General description Examples of rating criteria

corporate sustainability

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