IMPROVING THE WORKING CONDITIONS

We continuously monitor working conditions in the factories we work with. In addition, we ensure that they comply with our Code of Conduct and - together with stakeholders - actively pursue improvement projects within the various production countries.

MAKING IMPROVEMENTS

There are many people working in the textile sector. Unfortunately, a lot of them still function under very poor social conditions. A good, long-term relationship with our suppliers forms the basis for addressing these social problems in production processes. It also improves the work's quality and raises the factories to a higher level, due to training.

For years, WE Fashion has been committed to improving social conditions for employees in production countries and processes. We do not have our own factories, but work together with specialised suppliers. As a result, we have managed to build a solid and strong social management system that monitors working conditions. It also implements improvements, leading to progress in workers' lives.

The textile chain is very extensive and includes many steps, all contributing to the creation of our clothes. The process goes from farmer to trader, spinner, weaver, sewing factory, laundry and distribution centre. Within these steps, fibres, fabrics and clothes are traded, transported

and stored. We therefore consider it vital to ensure proper working conditions and respect for human rights within this extensive process. Furthermore, we contribute to the gradual improvement of environmental conditions.

In the years to come, we want to structurally improve sustainability within the supply chain. In doing so, we focus on all factories we work with. It's our job to monitor problems closely and remedy them wherever possible. Therefore, we continue to look for relevant projects and initiatives from other companies, governments and stakeholders in which WE Fashion can join.

WE Fashion focuses on three themes and goals to achieve the above:

• Improving social conditions in production
• Improving the living conditions of employees
• Improving the environment in production and surrounding communities

After signing the Covenant on Sustainable Clothing and Textiles (CKT) in 2016, WE Fashion took the next step in achieving more transparency within the garment industry. On November 12, 2019, the retailer signed the Transparency Pledge, an international initiative set up to establish a common minimum standard for transparency in the clothing industry. By signing the Transparency Pledge, companies commit to disclose their production sites, including possible suppliers of manufacturing processes needed to make the final product. Joris Aperghis, CEO WE Fashion Europe, says: "By signing the Transparency Pledge and publishing our supplier list, we hope to make a positive contribution to making the garment industry more transparent.

Besides our own monitoring mechanism, the publication of the list allows stakeholders to alert us when potential violations are observed in factories where we produce. This allows us to take immediate action if necessary. Our ultimate goal is to make fashion more sustainable by joining forces with other stakeholders to find the right balance between human, environmental and economic interests. WE Fashion takes its responsibility and we believe everyone should be able to trust that we make products with respect for people and the environment. Now and in the future."

THE TWO-WAY WE® CODE OF CONDUCT FOR SUPPLIERS

The Two-way WE® Code of Conduct is a broad code of conduct that applies to all our suppliers. We developed it since we work with factories controlled by systems - other than our own.

The Two-way WE® Code of Conduct is part of the 'Supplier Declaration' and contains the 13 themes of the 'Business Social Compliance Initiative (BSCI) Code of Conduct'. It has the following main lines: safe working conditions, no child or forced labour, reduced environmental impact and responsible sourcing. The code of conduct is signed by every supplier that supplies us. The same applies to the factories that produce for us. By doing so, all parties declare to comply with the minimum requirements regarding working conditions. We speak of a 'Two-way Code of Conduct', because it also contains agreements that we, as an organisation, must adhere to. It works both ways! Take a look at the WE Fashion Code of Conduct.

ALL FACTORIES ARE AUDITED

We care about the conditions under which our clothes are made. Factories are only allowed to produce for WE Fashion if they can provide a valid audit report. No valid audit directly means no order. This strict principle also goes for new suppliers.

Audited factories are included into our ordering system after a thorough selection, in which social conditions are also taken into account. When new suppliers and factories are added, various departments such as Buying, CSR and Finance have to give their approval. Factories linked to woolvet first get a quality inspection. The final approval comes from the CPO. This applies to all factories producing stitching, knitting, bonding (attaching parts together) and accessories and shoes.

100% of the goods for WE Fashion are produced in controlled factories.

MONITORING SOCIAL CONDITIONS WITH BSCI

WE Fashion has been a member of the Business Social Compliance Initiative (BSCI) since 2004. The WE® Code of Conduct follows the BSCI principles and requires them to be applied by suppliers as well as the factories - located in at-risk countries - that they work with. The code consists of 13 principles audited by independent auditors, ensuring us that these factories meet the minimum requirements.

Not all factories receive the highest score yet. This is because these firms still have improvements to make. The so-called audit reports reveal the problems within these factories and help their management move forward. BSCI works with a one-year audit cycle, which means that a firm should be inspected every two years. If it needs to make improvements during that period, an interim inspection will take place.

Besides BSCI, WE Fashion also accepts audits of other systems, such as SA8000, SMETA, WRAP, SLCP and FSLM. Factories in low-risk countries do not need to conduct audits to be admitted to production. See https://www.amfori.org/content/amfori-bsci for more information.

COMPLAINTS FROM EMPLOYEES IN THE MANUFACTURING SECTOR

The BSCI requires factories to set up a grievance mechanism for their employees, which is checked during audits. Other systems have similar requirements.

As part of the Bangladesh Agreement, a complaints line has been set up in Bangladesh. Factory workers can report unsafe situations there. The line is used regularly and reported problems are addressed jointly by the factory, brands and the Bangladesh Accord team. Since 2023, there's also the Pakistan Accord. A similar complaints line will be introduced for this.

In May 2013, WE Fashion signed the 'Bangladesh Accord', an agreement between fashion brands and international trade unions. By doing so, we promised to improve construction safety and reliable working conditions for workers in factories in Bangladesh. In 2018, WE Fashion renewed this pledge by signing the 'Transition Accord'.

THE AGREEMENT CONTAINS SIX KEY COMPONENTS:

1. Brands and unions signed a legally binding agreement to ensure a safe working environment in the garment industry in Bangladesh;

1. The independent inspection programme is supported by affiliated brands and engages workers and unions;
2. The names of factories - along with inspection reports and improvement plans - are published;
3. Brands must ensure that, if necessary, sufficient resources are available to implement improvement plans;
4. Health and safety committees are established in all factories;
5. There is a comprehensive training programme and grievance procedure for employees. In addition, they have the right to refuse unsafe work.

See https://bangladeshaccord.org for more information.

Together with a large number of other companies - the government, trade unions, NGOs and industry associations - WE Fashion participates in the Dutch Covenant on Sustainable Clothing and Textiles, to promote a sustainable clothing and textile industry. The initiative focuses on key issues, such as living wages, child labour and trade union freedom. It also actively addresses discrimination and gender, occupational health and safety, animal welfare, forced labour, raw materials, water pollution and the use of chemicals, water and energy in the supply chain.

WE Fashion has a spot on the covenant's steering committee to represent the interests of larger brands. As a signatory brand, WE Fashion works, in close cooperation with all other parties, on improvements in the garment and textile industry. All are obligated to provide information on their due diligence process and annual statements on producing factories. This also applies

to the materials used to manufacture their products. In addition, companies submit an action plan every year, explaining specific measures. These should lead to improvement and remediation.

Employees working within the supply chains of signatory brands can file a complaint if their rights are violated. This can be done either directly to the Covenant Secretariat or through employee representatives (or other organisations) representing the interests of people, the environment and animals. When a complaint enters WE Fashion's chain, we're notified so we can take immediate and appropriate action. The independent complaints board has the authority to issue binding statements. Want to know more about complaints and how to submit them? You can find out here.

SUSTAINABLE SOURCING

WE Fashion purchases several collections a year. Although we are familiar with the factories in which our clothes are made, we know the conditions within these firms and we've often worked with the same suppliers for years, it's still important to monitor our buying processes. Evaluation is essential. Are we allowing enough time to produce? Are we reasonable when problems arise? Are we paying sufficient attention to the supplier? To gain more insight into this, we ask our suppliers to rate our buying methods. They can do this anonymously via online tools. These results give us the right information to improve our buying methodology.

IMPROVEMENTS IN FACTORIES

To work on improving identified concerns and finding a way to make day-to-day operations operate appropriately, a factory receives an improvement plan after each audit. Working with the company, we then review whether this plan is feasible and effective.

The CSR team helps factories raise their social standards to acceptable levels. We do this by helping firms solve issues mentioned in their improvement plan. When a factory cannot or will not improve, we will eventually stop production at that factory.

WE FASHION SIGNS CALL-TO-ACTION AGAINST UYGHUR FORCED LABOUR

WE Fashion has signed the call-to-action for better human rights in Xinjiang, China. Here, the government is facing allegations of human rights violations against Uyghurs, an ethnic minority group. The allegations concern the employment of Uyghur labourers in textile factories that could potentially be linked to forced labour. This worries us and suggests that forced labour remains a major problem in many parts of the world. Therefore, WE Fashion asks all suppliers to sign the WE® Forced Labour Policy. We want to play a positive role and support society in banning all forms of forced labour.

WE Fashion does not work with suppliers in Xinjiang and will not source products from this region. In June 2020, WE Fashion explicitly included the ban on the use of cotton from Xinjiang in the WE® Code of Conduct, signed by all suppliers. Currently, all cotton for WE Fashion is sourced more sustainably from other regions of the world.

SUSTAINABILITY TRAINING

The BSCI offers a comprehensive set of training courses for factories. These have a variety of topics: from preparations for an audit to themes that are being audited. These are used regularly, offering firms new insights and teaching them more about implementing improvements.

The Bangladesh Accord also organises training courses. They teach factory workers about a safe working environment and what to do in case of an emergency. In addition, staff are trained on how to follow procedures, so the knowledge acquired is not diluted over time.

Several times a year, WE Fashion's sustainability team gives training sessions to the buying department. In these, the latest developments are shared and specific topics - such as social compliance in the factories, buying practices and the use of more sustainable materials - are discussed. The team also provides workshops for colleagues.

LIVING WAGE

A living wage is an amount necessary for an employee to meet basic needs, both for oneself and one's family. In many manufacturing countries, the minimum wage is not enough to support these. This increases the risk of overtime, child labour and forced labour.

In every audit, we check the wages paid to employees in factories that manufacture products for WE Fashion. This way, we ensure that the lowest wages meet at least the legal minimum wage. This applies to direct suppliers, but also to sub-suppliers. In recent years, the legal minimum wage has always been paid to all workers in all factories.

ACTIONS AGAINST CHILD LABOUR

WE Fashion has signed the Cotton Pledge by the Responsible Sourcing Network. The Responsible Sourcing Network is committed to eliminating child and forced labour from the cotton fields of Uzbekistan and Turkmenistan. Excluding cotton from Uzbekistan and Turkmenistan is also included in the WE® Code of Conduct.

PROJECTS IN TURKEY AND INDIA TO ADDRESS THE RISKS OF CHILD LABOUR

WE Fashion participated in the collective project 'Remedies towards a better workplace' of the Sustainable Clothing and Textiles Covenant. This three-year programme took place in Tamil Nadu (India) and focused on Indian labour compliance, capacity building and exchanging examples through customised training sessions. These aimed to increase employee job satisfaction, retention rates and production quality.

The project was coordinated by Hivos - a Dutch development cooperation organisation - on behalf of several brands participating in the Sustainable Clothing and Textiles Covenant. It was also supported by NGOs such as Arisa, Fair Labor Association (FLA) and SAVE.

The project had a central role in setting up workers' committees in factories and spinning mills in Tamil Nadu. In addition, upstream mapping of the supply chain also became an important component. After all, child labour is more likely to occur in lower layers of the chain.

Read more about the project in our latest sustainability report here.

The Turkey project sought to map out suppliers' apparel and cotton supply chains in Turkey. Brands investigated the risks of child labour in all layers of these supply chains. Although the research team was able to investigate deep into the chain in Turkey, it was not possible to fully map it out. Child labour was not found in the brands' supply chains.