ZERO DISCHARGE OF HAZARDOUS CHEMICALS PROGRAMME

T H I R D Q U A R T E R

PROGRESSREPORT

2013

ES021913202409MKE

2THIRD QUARTER PROGRESS REPORT

IntroductionThe Zero Discharge of Hazardous Chemicals (ZDHC) Programme signatory brands continue to work collaboratively to advance environmental responsibility in the textile industry. Our coalition has grown from the original six to sixteen brand members: adidas Group, C&A, Esprit, G-Star Raw, Gap Inc., H&M, Inditex, Jack Wolfskin, Levi Strauss & Co., Limited Brands, Li Ning, M&S, New Balance Athletic Shoe, Inc., NIKE, Inc., PUMA SE and PVH Corp. This quarter we welcomed two new Associate Members: the European Outdoor Group and German Fashion. We also engage regularly with a diverse group of stakeholders who provide technical support. Given the challenge of driving industry change, we will only succeed in achieving the vision and goals of the ZDHC Joint Roadmap if we continue to work together.

In June 2013, the ZDHC Programme released an update to its Joint Roadmap document (see http://www.roadmaptozero.com/joint-roadmap.php). The ZDHC Joint Roadmap is a high-level strategic document that describes our goals, milestones and deliverables. It also defines specific near-term actions for the next 12 months of the Programme.

Progress Summary In the third quarter of 2013 (Q3), we made great progress in executing against the strategy laid out in the Joint Roadmap, Version 2. As the ZDHC coalition grows, we are able to accelerate our progress and extend the impact of our work through the supply chain. Specifically, this quarter we:

Finalized the Benchmarking Study and Final Report (http://www.roadmaptozero.com/df.php?file=pdf/ZDHC_Benchmarking_Report.pdf), which provides critical insights about current discharge and for targeting our phase out activities in the supply chain.

Created a draft prioritisation framework and developed a list of hazardous chemical substances. The framework and list will be published in the next quarter.

Developed the ZDHC Generic Audit Protocol and conducted two pilot audits in Bangladesh and China.

Selected a training partner to deliver Asia-based supplier training and ensure that essential safety information is shared.

Co-hosted a China supplier symposium with the China National Textile and Apparel Council.

Table 1 summarizes progress in seven workstreams. Workstream 7 is expected to be launched in the fourth quarter of 2013.

Because this is the first progress update since the release of the Joint Roadmap, Version 2, and because planned deliverable end dates stagger, percentages shown may indicate initial stages of completion. Please refer to the Joint Roadmap, Version 2, for additional details.

ZDHC Welcomes New Members

Signatory Brands

Associate Members

3THIRD QUARTER PROGRESS REPORT

Table 1. Project Progress Across the Seven Workstreams

Action Progress Tracker (%)

Workstream 1: Chemical Hazard Assessment, Prioritisation and Action

• Provide a list of chemical substances and prioritise for phase out or further research

• Increase awareness of chemicals targeted for elimination and substitution in the supply chain and provide recommendations

• Develop a key performance indicator (KPI) that each brand can use to track whether phase out has been achieved at a supplier location

• Define and develop the ZDHC Manufacturer Restricted Substance List (MRSL)

• Conduct a research project on durable repellency technologies

Workstream 2: Training• Establish partnership with a training organisation and set up a near-term

curriculum outline

• Disseminate and promote training in first key market (China)

• Expand to two additional markets

Workstream 3: Right to Know

• Define the criteria that will be included in the Right to Know performance rating mechanism

• Develop the process for creating the preferred list of chemicals and dyestuff

• Publish the extensive research conducted by ZDHC in 2012 on disclosure methodologies for managing chemical compliance, including pollutant release and transfer registers (PRTRs)

Workstream 4: Assessments and Audits• Develop a joint generic audit approach for environmental performance

• Develop a shared dyehouse audit protocol

Workstream 5: Management Systems Approach• Develop the ZDHC Environmental Management System (EMS) Manual

• Develop guidelines for brands, Tier 3 suppliers and mills

• Develop ZDHC EMS procedures

Workstream 6: Stakeholder Partnering• Engage with key influencers in the system through three regional

stakeholder meetings

• Align stakeholders with relevant workstreams

• Obtain commitments to zero discharge from 20% of suppliers, representing the highest materials volumes

• Increase the number of partner brands to 20 signatory members in 2013

• Establish an external advisory board

Workstream 7: Chemicals Management Best Practices Pilot• Pilot best available chemistry practices at a set of supplier locations to

determine which best practices have the most valuable outcomes and business case

20 40 60 80 100

Not started

Not started

Not started

Not started

Not started

Not started

4THIRD QUARTER PROGRESS REPORT

Workstream 1: Chemical Hazard Assessment, Prioritisation and ActionThis workstream focuses on prioritising hazardous chemicals and planning actions for their supply chain phase out or safely managed use. Key to this workstream is encouraging innovation for alternative processes and substitutes for which there are either limited or no current alternatives available. In Q3, this workstream:

Released the results of the 2012 benchmarking study as the Benchmarking Report and Addendum (see http://www.roadmaptozero.com/df.php?file=pdf/ZDHC_Benchmarking_Report.pdf).

Created a draft prioritisation framework and developed a list of hazardous chemical substances. Solicited input on this framework from key stakeholders. The framework and list of substances are expected to be published in Q4 2013.

Created a draft ZDHC MRSL that will be released in Q4 2013.

Polled ZDHC and other brands to determine next steps for researching alternatives to perfluorinated chemical (PFC) chemistries. The team determined the best approach is to engage university researchers instead of consulting firms.

Workstream 2: TrainingThis workstream focuses on delivering the training, capacity building and information exchange necessary to support the ZDHC Programme’s 2020 goals. In Q3, this workstream:

Contracted with the Institute for Sustainable Communities’ Environmental Health and Safety (EHS) Academy to provide three, 1-day web-based training sessions on chemicals management for suppliers in English and Chinese (simplified).

Explored options to deliver an additional in-class training for suppliers who have limited access to web-based technology.

Developed plan for additional curriculum development based on results of the three EHS Academy’s pilot training classes conducted.

Workstream 3: Right to KnowThe Right to Know principle is one of the foundations of our work. This workstream focuses on how disclosure drives improvements within the industry and delivers value to key stakeholders, including brands, factories, NGOs and the public. In Q3, this workstream:

Collaborated with Workstream 1 to test an approach to developing a preferred list of commercial chemical products.

Collaborated with Workstream 1 to define the ZDHC MRSL.

Held two in-person working meetings to make progress towards defining a “risk rating” and other deliverables.

Drafted a document outlining trends in global pollutant release and transfer register (PRTR) schemes and how they impact ZDHC’s work. This document is targeted for release in Q4 2013.

5THIRD QUARTER PROGRESS REPORT

Workstream 4: Assessments and AuditsThis workstream will create assessment and audit approaches used to ensure strong environmental performance and continuous improvement throughout the supply chain including, but not limited to, chemicals management. In Q3, this workstream:

Finalized the ZDHC generic audit protocol.

Completed two pilot audits in China and Bangladesh.

Workstream 5: Management System FrameworkThis work focuses on creating the approach, structure and documentation needed to support a ZDHC management system, which will be an effective framework for ensuring continuous improvement towards the ZDHC 2020 goals. In Q3, this workstream:

Collaborated with the Outdoor Industry Association (OIA) to leverage existing work into a draft guidance document.

Workstream 6: Stakeholder PartneringThe key objective of Workstream 6 is to build partnerships and achieve stakeholder support for zero discharge. In Q3, this workstream:

Conducted a supplier event in collaboration with the China National Textile and Apparel Council (CNTAC) in Beijing.

Onboarded five additional members to the ZDHC Programme.

Onboarded the European Outdoor Group and GermanFashion Modeverband Deutschland e.V. to the ZDHC Programme as Associate Members.

Established a draft nomination and selection process to create the ZDHC External Advisory Board, which will be established by the end of 2013.

Workstream 7: Chemicals Management Best Practices PilotThis workstream focuses on piloting best available chemistry practices at a set of supplier locations to determine which best practices create the most valuable outcomes and business case. Workstream 7 will kick-off in Q4 2013.

6THIRD QUARTER PROGRESS REPORT

CommunicationsContinual communication is critical in gaining support from and alignment with our stakeholders. This element underpins every aspect of the zero discharge goal and affects every programme project.

Delivered ten presentations on the ZDHC Programme to the American Apparel and Footwear Association (AAFA) Environment Committee, bluesign® conference, the Colour Trends Cleaner Technologies for Textile Processes Conference in India, the Intertek Supply Chain in Textile Management Roadshow in China, GermanFashion (an association of brands), the OutDoor Show in Germany, three ZDHC Joint Roadmap webinars, and the Chemicals Management Summit in Stockholm.

Maintained active communication with key programme stakeholders.

Issued programme updates to stakeholders and industry media.

Translated and published the ZDHC Joint Roadmap into Chinese (simplified).

Updated www.roadmaptozero.com to be fully functional in Chinese (simplified).

Key Items for Q4 Release of ZDHC MRSL

Preparation of pilot ZDHC trainings

Continuation of pilot ZDHC audits

Delivery of draft EMS manual

Launch of ZDHC External Advisory Board

As always, we welcome your input, support and questions. Contact us at info@roadmaptozero.com and visit our web site (www.roadmaptozero.com) for programme updates and information. Thank you for your interest and support!