Consumer’s Need for More Assurance on Ethical and Sustainable Manufacturing

in the Footwear Industry

2014 November 28th

Yves MORINCTC ‐ CEO

UITIC (International Union of ShoeIndustry Technicians) ‐ President 1

Part 1

Where do weStart from ?

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Hourly Costs in Textile IndustrySource : Werner International 2014

Germany :  30,03 $ / hour

USA :  17,71 $ / h Poland : 5,70 $ / h Bangladesh : 3,49 $ / h Tunisia :  3,18 $ / h Mexico : 3,06 $ / h China : 2,65 $ / h Bulgaria : 2,33 $ / h India :  1,12 $ / h Pakistan : 0,62 $ / h

3

Development of Globalization

Different labor costs from Northern Countries to Southern Countries

Consumption in Wealthy Countries &Production in Developing Countries

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World Footwear ExportationsSource :World Footwear Yearbook 2013

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CENTRAL & NORTH AMERICA2%

SOUTH AMERICA1%

EUROPA11%

AFRICA1%

SOUTH PACIFIC1%

ASIA & MIDDLE EAST

85%

TOTAL EXPORT 2012 : 13.500 MIO PAIRS

Social Issues : IdentifiedProblems in Factories

Source : Social Audits

Difficulties to apply labor laws, Minimum wages very low or not applied, Working days of 7 days a week, Working hours over 16 hours a day, Unpaid overtime, No labor contracts, Disadvantaged female labor force, …

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Social Issue : Child LaborSource : U.S. Department of Labor’s Bureau of

International Labor Affairs (Oct 2014)

• 168 million children worldwide between the ages of 5 and 17 worked aslaborers in 2013,

• 85 million child laborers are engaged in hazardous work around theworld.

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Environmental Issues : Waste Water 

Alert system such as RAPEX :European rapid alert system for non‐fooddangerous products

Regulations such as Restricted Substance List

California Proposition 65

Alert system such as SIAR / IARAS : New !SIAR : Sistema Interamericano de Alertas Rapidas,IARAS : Inter‐American Rapid Alert System,

Health & Consumer Issues  

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Regulations such as REACh : Registration,Evaluation, Authorisation and Restriction ofChemicals

Europa

Americas

Building Collapse ‐ Rana Plazza April 2013

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Part 2

Stakeholders : Consumers and NGO’s

Stakeholders : Examples

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COMPANYSuppliers

Sub contracters

EmployeesGovernment

NGO’s & Associations

Importers

Retailers

Consumers

Media

Customers

Unions

Competitors

« A person, group, or organization that has direct or indirect stake in an organization because it can affect or be affected by the organization’s actions, objectives, and policies » 

B to B B to C

Ref : Havas PR “ BeCause IT Matters ‐ 2014”

Consumers

« Havas Survey Findings : Likely, Desired 

and Future Behavior »

Brand Credentials will not beoverlooked in the Future

DISAGREE……………………..

NEITHER AGREE OR DISAGREE….

AGREE………………………...

Italy

7

30

63

Ref : Havas PR “ BeCause IT Matters ‐ 2014”

US

16

39

45

China

2

21

77

Mexico

8

15

77

%

« In the next year, I will consider the contribution to well‐being and sustainability of the brands I buy, more »

Would Like to Support Responsible Brands 

DISAGREE………………………

NEITHER AGREE OR DISAGREE….

AGREE…………………………

Italy

5

24

71

US

13

33

54

China

2

19

79

Mexico

8

8

84

%« I’d like to buy brands that let 

me support issues of well‐being and sustainability 

through my purchase »

Ref : Havas PR “ BeCause IT Matters ‐ 2014”

Likely Loyalty to Responsible Brands

DISAGREE……………………..

NEITHER AGREE OR DISAGREE....

AGREE………………………..

Italy

6

27

67

US

12

29

59

China

1

14

85

Mexico

8

12

80

%

« I am likely to be more loyal to brands that are responsible, ethical and 

sustainable » 

Ref : Havas PR “ BeCause IT Matters ‐ 2014”

Fair Labor Association ‐ USA 

People For The Ethical Treatment of Animals ‐ UK

Clean Clothes Campaign ‐ UK

3 539 « Green NGO’s » in China (Source : Ministry of Commerce People’s Republic of China)

And so many others ! …

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Influence of NGO’S & Associations

International 

Local

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Influence of NGO’S

Production costs €1.50

Material€8.50

VAT€17

Publicity Brand Name€8

Research €11

Profit brand name €13

Rent/stocks retailer€12

Publicity retailer€2.50

Labour costs retailer€18

Transport & Tax€5

Labour costs workers€0.50

Profit subcontractor€3

Price make‐up of a € 100 Sport Shoe

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Influence of NGO’S

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Influence of NGO’S

Part 3

Corporate Social Responsibility :The Toolbox ?

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International Labor Organization8 Fundamentals Conventions

Forced Labor Convention ‐ 1930 Freedom of Association and Protection of 

the rights to organize ‐ 1948 Rights to Organize and Collective Bargaining 

Convention ‐ 1949 Equal Remuneration ‐ 1951 Discrimination (Employment and 

Occupation) ‐ 1958 Abolition of Forced Labor Convention ‐

1957 Minimum Age Convention ‐ 1973 Worst Forms of Child Labor ‐ 1999

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Social Accountabilty International

The SA 8000 Standard is the central document. It is one of the world’s first auditable social certification standards for decent workplaces. Code of Conduct includes 9 categories :

Child labour, Forced or compulsory labour, Health and safety, Freedom of association/ rights to collective 

bargaining, Discrimination regarding religion,race, sex, Disciplinairy practices, Limited working hours, Remuneration Decent Salary Management systems.

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Worldwide ResponsibleAccredited Production

Dedicated to the certification of lawful, ethical and humane manufacturing.Code of Conduct includes 12 categories:

Compliance with local laws, Prohibition of forced labour, Prohibition of child labour, Prohibition of harrasment or abuse, Compensation, decent salary and benefits, Hours of work and Limited working times, Prohibition & discrimination, Health and safety standards, Freedom of association / rights to organize, Environnemental issues, Customs compliance, Security and safety shipping.

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The Global Compact

Established by the United Nations’sGeneral Secretary Koffi Annan during theDavos ForumMission :To gather companies, NGO’s, Unions, toagree on 10 sustainable principles within4 categories : Human Rights Labour Standards Environment Anti‐corruption policy

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Zero Discharge of Hazardous Chemicals

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RØADMAP TOZERO DISCHARGE OF HAZARDOUSCHEMICALS

18 Major Fashion and Footwear brands

MissionThe Joint Roadmap is highly ambitious; it is a planthat sets a new standard of environmentalperformance for the global apparel and footwearindustry. It includes specific commitments andtimelines to realize this shared goal.Benefits to participation“Positions your organization at the forefront of this cross‐industrial movementAllows your organization to contribute to setting the agenda for integrated chemicals management, impacting all environmental aspects in our industries”

About 100 Major Fashion and Footwear brands

Mission The Sustainable Apparel Coalition was founded by a group ofsustainability leaders from global apparel and footwearcompanies who recognize that addressing the industry’s currentsocial and environmental challenges are both a businessimperative and an opportunity.Through multi‐stakeholder engagement, the Coalition seeks tolead the industry toward a shared vision of sustainability builtupon a common approach for measuring and evaluating appareland footwear product sustainability performance that willspotlight priorities for action and opportunities for technologicalinnovation.Current FocusDevelopment, piloting and broad adoption of the Higg Index, atool for measuring the environmental and social performance ofapparel products.

Sustainable Apparel Coalition

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ISO 26000 ‐ CorporateSocial Responsibility

ISO 26000 : Provides guidance rather than requirements, so it cannot be certified to unlike some other well known ISO standards.Instead, it helps clarify what social responsibility is, helps businesses, and organizations translate principles into effective actions and shares best practices relating to social responsibility, globally.

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Part 4

Corporate Social Responsibility :In Practice !

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H&M & ILO

“Issues in the garment industry are systemic andrequire action that helps develop effectiveindustrial relations and promote respect ofinternational labour standards. There is thereforean urgent need to establish strategic andcomprehensive collaborations with companiesthat have experience in these fields, such asH&M,” ILO Director‐General Guy Ryder

“We see the cooperation as a great opportunity tofurther strengthen our work towards theestablishment of well‐functioning industrialrelations on all our strategic production markets.ILO, with its unique tripartite composition, is theperfect partner for addressing issues such aswages and training and skills development in thetextile industry,” Karl‐Johan Persson, CEO at H&M

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H&M 900 suppliers 80% in Asia

Nike & Sustainable Apparel Coalition Source : The Guardian

“A team of employees at Nike was given a special project:Cataloging the 75,000 items found in the company’s materialslibrary and giving each a score based on their environmentalimpact and long‐term sustainability.

The outcome:Materials Sustainability Index, or MSI, a “cradle‐to‐gate index”of everything and anything that could go into making awindbreaker or a pair of shoes.Nike has been pushing sustainability within its own product linesfor years, introducing waste‐reducing technologies like Flyknitand working towards a “closed‐loop” business model in which allof its offerings are made with 100 percent recyclable materials.The company’s also been exploring how it might affect changethroughout the industry, with projects like the MSI, which Nikesubmitted to the Sustainable Apparel Coalition, an internationalgroup of apparel and footwear companies, for industry‐wide use.”

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Esprit & Peta

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“With the demand for cruelty‐free clothing,shoes and accessories, international retailerEsprit is ramping up its animal ‐ and eco ‐friendly credentials by launching a newcollection of leather‐free trainers forwomen!

The new line carries a “PETA‐ApprovedVegan” hanging tag, making it easy forshoppers to make sure that their purchasesare animal‐ free”

VF Corporation & Codeof Business Conduct

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“At VF, we conduct business based on our values.First and foremost, we believe in treating ourassociates, our customers and everyone weencounter with the highest levels of honesty,integrity and respect. The Code of BusinessConduct sets forth business policies and principlesfor all directors, officers and associates of VF.It is based on principles we have followedthroughout the years, and is designed to help uscontinue to do business with the higheststandards. Our Board of Directors and seniormanagement are wholly committed to the ethicaland lawful policies that guide our business, whichis why we are communicating this Code to all VFassociates worldwide.”Eric C. Wiseman Chairman, President and Chief Executive

Officer

Patagonia & CorporateSocial Responsibility

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“ We can’t pose Patagonia as the model of aresponsible company. We don’t do everythinga responsible company can do, nor doesanyone else we know.But we can tell you how we came to realize ourenvironmental and social responsibilities, andthen began to act on them.Like other things in human life, it began withone step that led to another”

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« Maybe a company won’t sell more products if it’s ethical … 

but it might sell less if it’s not !… »Yves Morin

Food For Thought

Thank youfor your Attention !

2014 November 28th

Yves MORIN CTC ‐ CEO

UITIC (International Union of ShoeIndustry Technicians) ‐ President

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Sustainability for The Footwear Industries