Sustainability Report 2019 - KATHMANDU HOLDINGS LIMITED

 
Sustainability Report 2019 - KATHMANDU HOLDINGS LIMITED
KATHMANDU HOLDINGS LIMITED

Sustainability
Report 2019
Sustainability Report 2019 - KATHMANDU HOLDINGS LIMITED
SUSTAINABILITY REPORT 2019   INTRODUCTION                     SUSTAINABILITY REPORT 2019        1

                                                                     Inspiring
                                                                     adventure is
                                                                     what inspires us.

                                                                     The people who make up
                                                                     Kathmandu are travellers and
                                                                     adventurers from all over the globe.
                                                                     From our beautiful, untamed home
                                                                     New Zealand, we go out into the
                                                                     world with a purpose at heart.

                                                                     Whakaoho te Manurau I             in sustainable product
                                                                     roto ia tatou                     development and doing
                                                                     To inspire and equip the          business ethically. We’re
                                                                     adventurer in all of us.          focused on minimising
                                                                                                       environmental impact, and
                                                                     Since 1987, we’ve been            look to contribute to the
                                                                     engineering gear to equip         wider community.
                                                                     adventurers around the world      We believe we have
                                                                     in their quest to discover.       an opportunity, and
                                                                     Our passion is to inspire         responsibility,
                                                                     everyone to feel the thrill of    to help create a better world.
                                                                     travel and adventure.
                                                                     Nothing enriches us like          Na tatou – nga kaitiaki
                                                                     exploring our planet, which is    o te Ao
                                                                     why caring for it is at our       We need to care for this
Southern Alps / Ka Tiritiri o te Moana – South Island, New Zealand   core. We strongly believe         world together
Sustainability Report 2019 - KATHMANDU HOLDINGS LIMITED
2                 SUSTAINABILITY REPORT 2019   INTRODUCTION             SUSTAINABILITY REPORT 2019   3

Our top 5
sustainability                                                BECAME A CERTIFIED B CORP,
                                                              MEETING THE HIGHEST VERIFIED

highlights.                                                   STANDARDS OF SOCIAL AND
                                                              ENVIRONMENTAL PERFORMANCE

At Kathmandu, sustainability isn’t
a department, it’s a way of doing                             SCORED AN ‘A’ IN THE
                                                     A        ETHICAL FASHION REPORT
things. Here are some of our                                  TWO YEARS RUNNING
highlights from this year.

                                                              RANKED SECOND IN THE
                                                              TEXTILE EXCHANGE REPORT
                                                      2       THREE YEARS RUNNING

                                                              LAUNCHED OUR NEW
                                                              ‘BEST FOR THE WORLD’
                                                              FIVE YEAR SUSTAINABILITY PLAN

                                                              RECYCLED 9.3 MILLION
                                                              PLASTIC BOTTLES INTO
                                                              OUR GEAR
Sustainability Report 2019 - KATHMANDU HOLDINGS LIMITED
4        SUSTAINABILITY REPORT 2019                                                INTRODUCTION   SUSTAINABILITY REPORT 2019                                             5

Contents.                                                                          Chairman’s and
                                                                                   CEO’s report.

    6    Ta matou korero – Our Stories
         Kathmandu becomes a certified B Corp. Our fight against modern slavery.
         And a campaign to encourage helpful travellers.

                                                                                                                               Our biggest news in sustainability
                                                                                                                               this year is the announcement that
    12   Ta matou rerenga – Our Journey                                                                                        Kathmandu has become the
                                                                                                                               largest company in Australia and
         An in-depth review of our strategy has led to an ambitious
                                                                                                                               New Zealand to join the B Corp
         new five-year plan.
                                                                                                                               movement.
                                                                                                                               Certified B Corporations commit to
                                                                                                                               using business as a force for good
                                                                                                                               to create a more sustainable and
    22   Nga kaiwhakarato – Our Suppliers                                                                                      inclusive economy.
         Moving beyond compliance to improving the lives of workers in
                                                                                                                               The certification measures
         our supply chain.
                                                                                                                               performance in five categories:
                                                                                                                               governance, workers, customers,
                                                                                   DAVID KIRK     XAVIER SIMONET               community and the environment.
                                                                                   CHAIRMAN       CHIEF EXECUTIVE OFFICER
                                                                                                                               Sustainability has always been part
    32   Nga hua – Our Products                                                                                                of the Kathmandu DNA, and this
         A move towards more recycled materials and fibres from renewable                                                      milestone reflects the hard work
         resources sets up the future.                                                                                         our teams have done over the years
                                                                                                                               to improve the lives of people in our
                                                                                                                               supply chain and our community
                                                                                                                               and the efforts we’ve made to
                                                                                                                               lessen our impact on the planet.
    46   Ta matou tapuwae – Our Footprint
                                                                                                                               This year, we released a five-year
         We set a goal to have net zero environmental harm from our business
                                                                                                                               sustainability plan that pushes our
         operations by 2025.
                                                                                                                               efforts in all these areas even
                                                                                                                               further. It includes our new social
                                                                                                                               impact statement to positively
                                                                                                                               impact the lives of 100,000 people
    54   Ta matou hapori – Our Community                                                                                       through adventure and education.
         A new social impact statement aims to empower our community to                                                        The plan also challenges us to
         positively change the lives of 100,000 people in the next five years.                                                 integrate the principles of circular
                                                                                                                               economy throughout our business.
                                                                                                                               It’s all part of our mission to inspire
                                                                                                                               and equip the adventurer in all of us.
    64   Ta matou ranga – Our Team
         A focus on diversity has led to a rainbow network and new roles
         for people with disabilities.
Sustainability Report 2019 - KATHMANDU HOLDINGS LIMITED
6                                          SUSTAINABILITY REPORT 2019                OUR STORIES   SUSTAINABILITY REPORT 2019   7

Business as a force
for good.

Kathmandu has become the largest           In the B Corp certification,
certified B Corporation (B Corp) in        Kathmandu was awarded high scores
Australia and New Zealand.                 in the workers, environment and
                                           community sections. These scores
We are proud to be the first publicly
                                           reflect the work we’ve done in
listed certified B Corp in New Zealand
                                           preferred fibres and materials as well
and the first outdoor apparel and
                                           as protecting the rights of employees
equipment retailer in Australia and
                                           in our supply chain.
New Zealand to become one.
Kathmandu is part of a global ethical      Globally, there are more than 3,000
business movement driving a more           companies that have become
sustainable and inclusive economy.         certified B Corps after completing the
                                           certification process. There are nearly
By harnessing the power of business,
                                           300 certified B Corps in Australia and
B Corps aim to use profits as a means
                                           New Zealand, making it the fastest
to positive impacts for their
                                           growing region per capita.
employees, communities and the
environment.                               “Kathmandu’s announcement as New
                                            Zealand’s first B Corp-certified
B Corp is an initiative from B Lab, a
                                            multinational retail business and
global non-profit movement of people
                                            Australasia’s biggest B Corp is a
using business as a force for good.
                                            significant milestone for Australia,
The B Corp assessment process
                                            New Zealand and the wider B Corp
measures a company’s performance
                                            movement,” says B Lab Australia &
in five categories: governance,
                                            New Zealand CEO Andrew Davies.
workers, customers, community and
the environment.                           “Certification is open to all sizes of
                                            business, and we are seeing increasing
“The B Corp certification is a milestone
                                            interest from large corporations
 achievement for the company and
                                            across the world Kathmandu’s
 reflects Kathmandu’s exceptional
                                            certification sends an important
 record in sustainability leadership,
                                            signal for other big businesses to
 which has been fundamental to our
                                            follow in their lead.”
 success,” says Kathmandu CEO Xavier
 Simonet.
“Sustainability is part of Kathmandu’s
                                                                                                   Kathmandu meets the
 DNA and is integral to our entire
 operation, from our supply chain to                                                               highest standards of
                                                                                                   positive social and
 our materials and products and our
 operational footprint.”

                                                                                                   environmental impact
Sustainability Report 2019 - KATHMANDU HOLDINGS LIMITED
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Slavery is not history.

Did you know that there are more
people in slavery now than at any
                                           opportunity for businesses to make a
                                           dent in this problem,” Gary says.
                                                                                      75% of modern
other time in human history?1 It’s
                                           Gary has seen modern slavery and           slaves are hiding
estimated that 40.3 million people are
trapped or working against their will.2
                                           human trafficking firsthand. For eight
                                           years, he worked as a human rights
                                                                                      in global supply
As a criminal industry, the global         investigator, going undercover in 13       chains.
profits from human trafficking are         countries to help rescue enslaved
second only to the drug trade.3 Human      people and facilitate the prosecution
trafficking accounts for approximately     of the perpetrators.                       For Kathmandu, this meant ensuring
25% of modern slavery.1                                                               our supply chain was transparent
                                           “Right now, less than 2% of people in
                                                                                      and that our workers had a voice. We
The other 75% of modern slaves are          slavery are liberated and their
                                                                                      worked in partnership with our
hiding in global supply chains.1 This is    perpetrators held accountable.3 This
                                                                                      suppliers and in collaboration with
often in the form of debt bondage or        rate shows that governments and
                                                                                      other brands to proactively address
debt slavery. This is when a person is      NGOs working on this problem are not
                                                                                      such risks.
forced to work to pay off a debt. It        going to address this issue without
might start when a mother seeks a           the help of the private sector. The       At the heart of the Kathmandu
loan to provide resources for her           Australian Modern Slavery Act creates     approach to human rights in the
children and then finds her entire          the opportunity for collaboration         supply chain is the brand statement –
family forced into labour for the ever-     between businesses, governments           to inspire and equip the adventurer in
increasing loan. Attempts to escape         and NGOs.”                                all of us.
are often met with violence.
                                           Gary says the Act will mean all large      “That includes the people who make
The solution requires action from          businesses will have to become more         our gear and to inspire adventure
governments, NGOs and businesses.          aware of the risks.                         presupposes that you have the
                                                                                       freedom to adventure in the first place.”
The 2018 Global Slavery Index found        “Initially, it might be confronting for
36 countries were taking steps to           some businesses who have just
investigate forced labour in business       assumed that their supply chain is
or public supply chains, up from just       free of slavery. A lot of people assume
four countries in 2016.                     that slavery ended in the 1800s. When
                                            they start to look, they might be
Australia was one of them. The
                                            surprised to find that their supply
Modern Slavery Act was passed by
                                            chain includes high-risk industries or
the Australian Government in
                                            product lines that cause, contribute or
October 2018.
                                            are directly linked to modern slavery.”
From 1 July 2019, every company with
                                           Gary is hopeful about the response that
revenues of AU$100 million or more
                                           will come from more open reporting.
are required to track the risks in their
supply chains. From 1 July 2020,           “The aim is not to say that you don’t
                                                                                      1. The Mekong Club, Oct. 2019, themekongclub.
these companies will be required to         have slavery in your supply chain. The    org
report their risks and what they are        legislation is encouraging companies
                                                                                      2. International Labour Organization and Walk
doing about it.                             to report where they identify those
                                                                                      Free Foundation. Global Estimates of Modern
                                            risks so that they can be addressed,”     Slavery: Forced Labour and Forced Marriage,
Kathmandu Corporate Social
                                            Gary says. “Allowing businesses to        2017, pp. 1–68. https://www.ilo.org/wcmsp5/
Response-ability Manager Gary Shaw
                                            discuss slavery risks in the open         groups/public/---dgreports/---dcomm/
says the legislation is a big step                                                    documents/publication/wcms_575479.pdf
                                            without fear of shame or criticism will
forward for reducing slavery.
                                            allow for the collaboration necessary     3. United States Department of State.
“With 75% of modern slavery                 to shut it down.”                         Trafficking in Persons Report. US Department of
 happening in the global supply chains                                                State Publication Office, June 2017, pp. 1-454
                                                                                      https://www.state.gov/wp-content/
 of businesses, there is a huge                                                                                                                                                    A worker at one of our supplier factories
                                                                                      uploads/2019/02/271339.pdf                                                                   outside of Ho Chi Minh City, Vietnam.
Sustainability Report 2019 - KATHMANDU HOLDINGS LIMITED
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“We felt we had a
 responsibility to                                                     Helpful or harmful.
 help people think
 more deeply about
 their impact.”                                                        Travel and tourism is a US$8 trillion
                                                                       industry and the largest employer on
                                                                                                                  harmful effects of tourism and provides
                                                                                                                  education about how individual
                                                                                                                                                            issues in the three-part documentary
                                                                                                                                                            series. The films explored the impacts
                                                                       Earth. But as Elizabeth Becker writes      travellers can be more helpful in the     of tourism in Bali, Nepal and Australia.
PAUL STERN                                                             in Overbooked, “Travel and tourism         choices they make when travelling.
                                                                                                                                                            Kathmandu General Manager
                                                                       has become a behemoth, capable of
GENERAL MANAGER                                                                                                    The report looks at a problem called     Marketing and Online Paul Stern says
                                                                       doing great good and great damage.”
MARKETING AND ONLINE                                                                                              “tourism leakage”. This is when           the series and report were designed to
                                                                       As part of our World Ready brand            companies in developed nations take      educate customers and the public on
                                                                       proposition last year, we decided to        more profit from travellers than the     how to have a more positive impact.
                                                                       take some responsibility to educate         less-developed destinations, which
                                                                                                                                                            “It’s part of our purpose to inspire
                                                                       travellers and address some of the          still have to absorb the costs.
                                                                                                                                                             people to go travelling, but we felt we
                                                                       impacts of travel.
                                                                                                                  The report found that, on average, for     also had a responsibility to help
                                                                       Helpful or Harmful is a report and         every US$100 spent by a tourist from       people think a bit more deeply about
                                                                       documentary series commissioned by         a developed country, only US$5 stays       their impact.”
                                                                       Kathmandu and released last year.          in the developing destination
                                                                                                                                                            This content reached millions of
                                                                                                                  country’s economy.
                                                                       Research commissioned by                                                             people. It sparked discussion on social
                                                                       Kathmandu found a third of Aussies         Tourism can also be harmful when it       media – with many people grateful to
                                                                       and half of Kiwis think of themselves      overloads infrastructure, damages         learn more about how they could be
                                                                       as the best travellers in the world, yet   nature, alienates local residents or      more helpful.
                                                                       only 20% of us make an effort to spend     threatens culture and heritage.
                                                                                                                                                            The second phase of this project will
                                                                       our money to benefit local people.
                                                                                                                  These ideas were explored by              launch this year to include markets
                                                                       To help travellers match their actions     investigative journalist Jan Fran, who    beyond Australia and New Zealand.
                                                                       with their intentions, the Helpful or      travelled to three areas impacted by
                                                                       Harmful report shines a light on           tourism to shine a light on these

                                                                         HARMFUL EFFECTS OF TOURISM

                                                                           ALIENATED LOCAL              DAMAGE TO             OVERLOADED           DEGRADED TOURIST     THREATS TO
                                                                               RESIDENTS                 NATURE             INFRASTRUCTURE            EXPERIENCE    CULTURE & HERITAGE

                                                                         WAYS TO BE HELPFUL

                                                                           PURIFY YOUR OWN             GET OFF THE         LEARN SOME LOCAL   CHOOSE LOCAL,                   OFFSET YOUR
                                                                                WATER                 BEATEN TRACK             LANGUAGE     ETHICAL OPERATORS                   FLIGHTS
A local Nepalese man outside a waste
incinerator. Burning of waste surges in
Nepal during peak tourism seasons.
Sustainability Report 2019 - KATHMANDU HOLDINGS LIMITED
12                                     SUSTAINABILITY REPORT 2019   OUR JOURNEY   SUSTAINABILITY REPORT 2019    13

                                                                                                         Ta matou
                                                                                                         rerenga.
                                                                                          Our journey.
Nepalese expedition guide Chhiring
Sherpa takes a break while hiking in
Nepal.
Sustainability Report 2019 - KATHMANDU HOLDINGS LIMITED
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We’re aiming to be best
                                                                                                           SOCIAL IMPACT                 TEAM                           PRODUCTS                     FOOTPRINT

                                                                                                           Empower our community         All Kathmandu team             100% of products             Net zero environmental

for the world.
                                                                                                           to positively change          members embody the             designed, developed and      harm from our business.
                                                                                                           100,000 lives.                company purpose and            manufactured using
                                                                                                                                         values.                        elements of circularity      ACTION POINTS
                                                                                                           ACTION POINTS                                                principles.                  Operate only zero-waste
                                                                                                           Through collaboration, our    ACTION POINTS                                               facilities.
                                                                                                           partners, suppliers and       provide all team members       ACTION POINTS
                                                                                                                                                                                                     Set science-based targets
                                                                                                           Summit Club members will      access to programmes that      Define our own unique
                                                                                                                                                                                                     to combat climate change.
                                                                                                           strive to:                    align with the company's       circularity principles.
                                                                                                                                         purpose.                                                    Operate with a net zero
                                                                                                           ·	
                                                                                                              improve the standard
                                                                                                                                                                                                     carbon footprint.
                                                                                                              of living and working      Rank in the top quartile
                                                                                                                                         of high performance for                                     Have 100% sustainable
“Our new              Four years ago, the United Nations
                      released a roadmap for ending
                                                                 After a comprehensive review of our
                                                                 current practices and strategies, Brian
                                                                                                              conditions for 50,000
                                                                                                              workers in our supply      employee engagement.                                        packaging materials by
 sustainability       poverty, fighting injustice and tackling   and Mary’s report showed that,               chain
                                                                                                                                         be a leader in diversity and
                                                                                                                                                                                                     2025.
                      climate change by 2030. The                although we are a leader in Australasia
 action plan is not   Sustainable Development Goals              and we stack up with global leaders
                                                                                                           ·	provide 30,000 Nepalese
                                                                                                               people with access to
                                                                                                                                         inclusion.

 about Kathmandu      address the most pressing challenges
                      of our time, including climate change,
                                                                 on material choices and human rights,
                                                                 we still have room to improve
                                                                                                               quality education

 being the Best in    resource depletion, poverty and social     compared to global competitors in         ·	give 10,000 Summit
                                                                                                               Club members access
                      justice – aiming to help everyone from     some areas – particularly around our
 the World. It’s      governments and businesses to              environmental footprint, governance           to volunteering and       SDG                            SDG                          SDG
                                                                                                               outdoor adventure
 focused on           citizens to transform our world by
                      stimulating actions that benefit
                                                                 and social impact.
                                                                 The report strongly advised               ·	provide 10,000
 making the best      people and the planet.
                                                                 Kathmandu to invest in these areas.           disadvantaged youth

 decisions for the    These 17 global goals have defined
                      the agenda for good business –
                                                                 Both Brian and Mary emphasise one
                                                                                                               with outdoor education
                                                                                                           ·	proactively address
 world.”              because all businesses will benefit
                                                                 thing. “Our vision for Kathmandu is
                                                                 to be a bright, shining voice of              modern slavery within
                      from more resilient communities,                                                         our industry
                                                                 human rights coming out of the                                          SUPPLIERS                      GOVERNANCE                   CIRCULAR
                      reliable access to natural resources
OLIVIA BARCLAY                                                   southern hemisphere – and they can        ·	enhance worker
                      and a healthy population.
                                                                 do it at home as well as around the           wellbeing through         All direct suppliers across    Become a leading global      Integrate circular
BRAND MANAGER         Although we’re proud of the work           world. They can do it with that                                         our business meet our
                                                                                                               mindset transformation                                   B Corp using our business    economy principles
                      we’ve done already, we know that           Kathmandu spirit of adventure and             training.                 minimum expectations           as a force for good.         within the business.
                      doing our part for sustainable             do it in an active way. There is a real                                 on their social and
                      development will require us to keep        opportunity for Kathmandu to lead in                                    environmental impacts.         ACTION POINTS                ACTION POINTS
                      trekking this path. Understanding          the people space, generating truly                                                                     Become a leading certified   Establish recommerce and
                      where we are is the first step.            positive social impacts.”                                               ACTION POINTS                  B Corp with an impact        rental business models that
                                                                                                                                         Ensure all suppliers across    score of >120.               support and drive circular
                      This year, we brought in Drs Brian and
                                                                                                                                         our entire business are                                     economy solutions.
                      Mary Nattrass of Sustainability
                                                                                                                                         subject to measuring and
                      Partners to review our sustainability
                                                                                                                                         improving their social and
                      strategy and initiatives. Based in
                                                                                                                                         environmental impact.
                      Canada, Brian and Mary are global
                      leaders in sustainability, having worked
                      with some of the world’s biggest
                      brands.

                                                                                                           SDG

                                                                                                                                         SDG                                                         SDG
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16                                         SUSTAINABILITY REPORT 2019                   OUR JOURNEY     SUSTAINABILITY REPORT 2019         17

A NEW FIVE-YEAR PLAN                       BEST FOR THE PLANET
                                                                                        BEST FOR THE WORLD
After a comprehensive review by
Kathmandu, we have created a
                                           This pillar sees a big shift towards
                                           circularity principles. The Ellen            OUR 2025 SUSTAINABILITY GOALS
five-year plan – Best for the World.       MacArthur Foundation describes the
                                           three principles of a circular economy
This new plan takes the
                                           as designing out waste and pollution,
recommendations from the
                                           keeping products and materials in use
Sustainability Partners review and
groups them into three pillars: people,
                                           and regenerating natural systems. For
                                           Kathmandu, this means applying
                                                                                                        INTEGRATE CIRCULAR ECONOMY
planet and practice.
                                           these principles to the way our                              PRINCIPLES WITHIN OUR BUSINESS
                                           products are designed, developed and
BEST FOR PEOPLE                            manufactured. Our goal is to have
                                           100% of our products designed,
This pillar covers all the people in our
                                           developed and manufactured using
network – from the 50,000 people in
our supply chain to our 2,000
                                           elements of circularity principles.
                                                                                                        BECOME A LEADING GLOBAL
employees as well as our customers
and our wider community. This year,
                                           Our waste and carbon footprint are
                                           another part of our impact on the
                                                                                                        CERTIFIED B-CORP
we created our social impact               planet. Our aspirational goal for 2025
statement that sums it all up. Our         is to have zero environmental harm
2025 aspirational goal is to empower       from our business operations. To get
our community to positively change         there, we’ll need to become carbon
the lives of 100,000 people. We’ll         zero, operate zero-waste facilities and                      100% OF PRODUCT DESIGNED,
inspire and equip people to discover       look at how we can remove waste
their potential through education,         from our supply chains.                                      DEVELOPED & MANUFACTURED
personal development and wellbeing.
                                                                                                        USING CIRCULARITY PRINCIPLES
To achieve this goal, we’ll take action    BEST FOR THE WORLD IN PRACTICE
over the next five years to improve the
                                           In this pillar, we focus on governance
standard of living and working
                                           and widening the circular economy
conditions for people in our supply
                                           principles to the whole business. This
chain. We’ll help our partners provide
30,000 Nepalese people with access
                                           year, as part of our goal to use our                          NET ZERO ENVIRONMENTAL HARM
to high-quality education. We’ll give
                                           business as a force for good, we
                                           became a certified B Corp. This
                                                                                                         FROM OUR BUSINESS
10,000 Summit Club members access
                                           means Kathmandu meets the highest
to outdoor adventure and volunteering
                                           verified standards of positive social
opportunities with free events.
                                           and environmental impact. Our five-
For our team, we are aiming for 100%       year goal is to become a leading B
of team members to embody the              Corp by lifting our assessment score                          EMPOWER OUR COMMUNITY TO
company purpose and values. That           from 83 points to more than 120.
means we will be a leader in diversity
                                           The executive team and wider
                                                                                                         POSITIVELY CHANGE 100,000 LIVES
and inclusion and will rank in the top
                                           leadership team will have training and
quartile for employee engagement. It
                                           accountability for sustainability
will also mean staff have access to
                                           performance. A sustainability
programmes that align with the
                                           governance structure will provide clear
company’s purpose.
                                           performance accountability for all of                        ALL KATHMANDU TEAM MEMBERS
                                           our sustainability and community
                                           impact strategies.
                                                                                                        EMBODY THE COMPANY PURPOSE
                                           For the whole organisation to shift to                       AND VALUES
                                           circular principles, we’ll need to clearly
                                           define what our own circularity
                                           principles are across the organisation.
                                           From there, we’ll be able to experiment
                                           with internal business models that                           ALL SUPPLIERS MEET OUR MINIMUM
                                           drive circular economy solutions. These
                                           might be recommerce, repair or rental                        EXPECTATIONS ON THEIR SOCIAL
                                           business models.
                                                                                                        AND ENVIRONMENTAL IMPACTS
18                                        SUSTAINABILITY REPORT 2019                                      OUR JOURNEY                 SUSTAINABILITY REPORT 2019                                  19

A little                                                                B CORP                                          TEXTILE EXCHANGE                           ENVIRO-MARK SOLUTIONS

help from
                                                                        Certified B Corporations®                       Our membership with the                    Our membership with Enviro-
                                                                        (B Corps™) are for-profit                       Textile Exchange supports                  Mark Solutions helps us to
                                                                        companies that use the                          our materials strategy, and                measure, manage and reduce
                                                                        power of business to build a                    we also participate in their               our carbon footprint.

our friends.                                                            more inclusive and
                                                                        sustainable economy.
                                                                                                                        Preferred Fiber & Materials
                                                                                                                        Market Report.

Every explorer knows that a journey is better
with someone by your side. As we continue the                          OUTDOOR INDUSTRY                                 CANOPY                                     AUSTRALIAN PACKAGING
journey of sustainability, industry partnerships                       ASSOCIATION                                                                                 COVENANT ORGANISATION
provide important support ­– resources,                                                                                 We have been partners
information and frameworks.                                            We participate in OIA’s                          with Canopy since 2016. We                 We submit an annual report to
                                                                       Sustainability Working Group,                    work with them to use our                  the APC, which supports our
                                                                       a collaborative platform of                      influence in our fabric                    packaging and waste strategy.
                                                                       more than 300 outdoor brands                     supply chain to protect the
                                                                       and suppliers working together                   world’s remaining ancient
                                                                       to identify and implement                        and endangered forests
                                                                       better business practices.                       and endangered species
                                                                                                                        habitat.

                                                                       SUSTAINABLE APPAREL                              LEATHER WORKING GROUP                      AUSTRALIAN HIMALAYAN
                                                                       COALITION                                                                                   FOUNDATION
                                                                                                                        Our work with the LWG helps
                                                                       Membership of the SAC gives                      us to assess the environmental             We have been partners with
                                                                       us access to the Higg Index                      compliance and performance                 the AHF since 2011. We work
                                                                       modules. We’ve been using                        capabilities of our tanneries              with the AHF to support
                                                                       the index since 2014, which                      and to promote sustainable                 communities in Nepal, the
                                                                       supports our sustainability                      and appropriate environmental              nation that inspired our brand.
                                                                       strategy. The index guides us on                 business practices within the
                                                                       the environmental and social                     leather industry.
                                                                       impacts of our products and
                                                                       how we can improve.

                                                                       FAIR LABOR ASSOCIATION                           GREEN BUILDING COUNCIL                     HIMALAYAN TRUST
                                                                                                                        AUSTRALIA                                  NEW ZEALAND
                                                                       We became the first brand in
                                                                       the southern hemisphere to                       Our membership with the                    We have partnered with the
                                                                       achieve FLA accreditation.                       GBCA supports our green                    Himalayan Trust to further
                                                                       This verifies that our social                    building programme.                        improve outcomes in education
                                                                       compliance programme in our                      We also work in collaboration              in remote rural Nepal.
                                                                       supply chain exceeds the most                    with this organisation in
                                                                       stringent global standards.                      trialling new projects.
“B Corps form a
 community of leaders
                                                                       BLUESIGN®
 and drive a global                                                                                                     CARBON DISCLOSURE
                                                                                                                        PROJECT
                                                                                                                                                                   ELEVATE
                                                                       Our bluesign® system                                                                        Elevate Limited is our
 movement of people                                                    partnership supports our                         We submit an annual                        chosen supply chain partner
 using business as a                                                   chemicals management
                                                                       programme, materials
                                                                                                                        report to the CDP, which
                                                                                                                        supports our carbon
                                                                                                                                                                   and an industry leader in
                                                                                                                                                                   sustainability, auditing and
 force for good.”                                                      and products so that                             measurement and reduction                  improvement services.
                                                                       they are environmentally                         programme.
                                                                       and socially friendly.
B CORP COMMUNITY
20              SUSTAINABILITY REPORT 2019                                                                                    OUR JOURNEY                                                    SUSTAINABILITY REPORT 2019                                                              21

                                                                                                                                                                                                                                                           KEY

Our world.
                                                                                                                                                                                                                                                        FACTORIES
                                                                                                                                                                                                                                                           101 TOTAL

                                                                                                                                                                                                                                                          China – 80
                                                                                                                                                                                                                                                         Vietnam – 11
                                                                                                                                                                                                                                                         Indonesia – 3
                                                                                                                                                                                                                                                       New Zealand – 3
                                                                                                                                                                                                                                                           Nepal – 1
                                                                                                                                                                                                                                                            Italy – 1
                                                                                                                                                                                                                                                           Spain – 1
                                                                                                                                                                                                                                                          Taiwan – 1

                                                        Iceland
                                                                                                                                                             Russia
                                                                                                                                                                                                                                                MATERIALS SOURCING
                                                                                    Norway

                                                                                       Denmark
                                                                        UK
                                                          Scotland
                                                                                           Germany

                                                                                                Lithuania
                                                        Ireland                           Poland                                                             Mongolia
       Canada
                                                                                Netherlands
                                                                              Belgium
                                                                  France                Austria
                                                                                                                                                                                                                                                       OPER ATIONS
                                                                    Switzerland
                                                                                                  Macedonia                                                   China
                                                                                                                                                                                                                                                      New Zealand
                                                                       Spain
                                                                                   Italy              Greece                                                                                                                                            48 stores
                   USA                                                                                                                                               South Korea                 Japan                                            1 distribution centre
                                                                                              Malta
                                                                                                                       Iraq                                                                                                                  1 headquarters – Christchurch
                                                                         Algeria                                               Afghanistan        Nepal

                                                                                                        Egypt                                                                                                                                           Australia
            Mexico                                                                                                                             Thailand                       Taiwan
                                                                                                                               Pakistan                     Laos                                                                                        119 stores
                                                                                                                  Yemen                                                Hong Kong                                                                  1 distribution centre
                                                                                                                                          Myanmar
                                                                                                                                              Cambodia                                                                                        1 headquarters – Melbourne
                                                                                                                              India                            Vietnam
                                                                                                                                                                                   Philippines
                                                                                                               Ethiopia                                                                                                                                America
                                                                                    Nigeria                         Somalia               Sri Lanka                                                                                            1 headquarters – Bozeman
                                                                                                                                                          Malaysia
                                                                                                                                                                              Indonesia
                                                                                                                                                                                                                                                     United Kingdom
                                                                                              Rwanda                  Kenya                                                                                                                               1 store
                                                                                                                                                                                                     Papua New Guinea
                                Peru           Brazil                                                             Tanzania

                                                                                                                                                                                                                        Fiji        Samoa
                                                                                            Zambia

                                                                               Namibia
                              Chile
                                                                                                                                                                                                 Australia                                            COMMUNITY
                                                                                                        South Africa
                                                                                                                                                                                                                                                     SPONSORSHIPS
                                        Argentina                                                                                                                                                                                               14 Adventure Sponsorship
                                                                                                                                                                                                                                                   winners travelled to
                                                                                                                                                                                                                                              Mongolia, Namibia, Zambia,
                                                                                                                                                                                                                               New Zealand
                                                                                                                                                                                                                                             Tanzania, Kenya, New Zealand,
                                                                                                                                                                                                                                               Samoa, Papua New Guinea,
                                                                                                                                                                                                                                             Nepal, Australia, Peru, Norway,
                                                                                                                                                                                                                                                     England, France

                                                                                                                                                                                                                                               214 adventure sponsorship
                                                                                                                                                                                                                                                       recipients

                                                                                                                                                                                                                                                   49* NATIONALITIES
                                                                                                                                                                                                                                                   ACROSS OUR TEAM

                                                                                                                                                                                                                                             *Estimated at the time of publication
22                                 SUSTAINABILITY REPORT 2019   OUR SUPPLIERS   SUSTAINABILITY REPORT 2019               23

                                                                                                             kaiwhakarato.
                                                                                                             Nga
                                                                                            Our suppliers.
A worker at one of our supplier
factories outside of Ho Chi Minh
City, Vietnam.
24                         SUSTAINABILITY REPORT 2019                                                          OUR SUPPLIERS                            SUSTAINABILITY REPORT 2019                                                                25

New social impact
                                                                                                                                                                                                                            TGI factory manager
                                                                                                                                                                                                                            Ms Nguyen Trang.

statement includes
workers.
“The aspiration            Our new five-year sustainability
                           strategy focuses on people, planet
                                                                    This year, we travelled to one of our
                                                                    most progressive factories in Vietnam
 is that we would          and practice. We have included our       to collect stories from the workers
                           50,000 supply chain workers in our       about how this training is already
 empower and               social impact aspiration: to empower     changing lives.

 inspire our               our community to positively change
                           100,000 lives. We’ll do this by
                                                                    Corporate Social Response-ability
                                                                    Manager Gary Shaw says, “At a
 workers.”                 proactively addressing modern slavery
                                                                    baseline, we want to ensure that the
                           in our industry, by working to improve
                                                                    worst forms of modern slavery and
                           the standard of living and working
                                                                    exploitation are eradicated. But that’s
GARY SHAW                  conditions for those people in our
                                                                    just a baseline. The aspiration is that
CORPORATE SOCIAL           supply chain and by enhancing worker
                                                                    we would empower and inspire our
RESPONSE-ABILITY MANAGER   wellbeing with education, training
                                                                    workers to grow and flourish in the
                           and mindset transformation.
                                                                    same way we want to ourselves.”

                                                                                                               Mindset training helps
                                                                                                               workers see new possibilities.
                                                                                                               Vietnamese supplier TGI has              Trang says the people who go through        such sad circumstances. Instead of
                                                                                                               implemented a mindset training           the training are better employees and       hiding in fear, we were inspired to be
                                                                                                               programme for its employees. Factory     tend to stay with the company longer.       courageous and change together.
                                                                                                               manager Ms Nguyen Trang says they
                                                                                                                                                        “We would like to improve the               “After taking the course, I feel like, when
                                                                                                               saw this programme being used in
                                                                                                                                                         education of the community. We              there are difficulties, I can openly share.
                                                                                                               another company with good results
                                                                                                                                                         want to see our employees develop           I can now openly report to my
                                                                                                               and implemented it at TGI in 2015.
                                                                                                                                                         their life with a transformed mindset       supervisors to solve the obstacles and
                                                                                                               The first round of training included      so they will be happier in their job and    not be afraid or hide things.
                                                                                                               200 workers, and the second round         in their family.”
                                                                                                                                                                                                    “What we learned was powerful
                                                                                                               included 500 workers.
                                                                                                                                                        My Le Thi is a worker who went               because we could apply our new skills
                                                                                                               Trang says she’s seen the changes        through the training. “I discovered I        and ways of interacting with others to
                                                                                                               firsthand. “They can organise their      had the ability to change my mindset         our work but also in our daily life with
                                                                                                               daily life better. They are more         and overcome difficulties. There was a       friends and family.”
                                                                                                               confident in themselves and in their     class where we wrote down each of
                                                                                                               abilities. Before, when we offered       the challenges we were facing. After
                                                                                                               people promotions, many would            that, each person had the
                                                                                DriFill down jackets being     refuse. The mindset training helps       opportunity to share their obstacles.
                                                                                produced in Shenzhen, China.
                                                                                                               open their mind and be more positive.”   I heard about such difficult stories,
26                                       SUSTAINABILITY REPORT 2019                                                          OUR SUPPLIERS                            SUSTAINABILITY REPORT 2019                                                        27

How one factory protects
                                                                                                                             SUPPLIER PROFILE

workers from debt                                                                                                            Social media tools create
bondage.                                                                                                                     opportunities for change.

“We created loans                        The International Labour Organization
                                         estimates that around 8 million
                                                                                    These interest-free loans are
                                                                                    approved on a case-by-case basis.
                                                                                                                             Last year, we introduced a new way
                                                                                                                             for workers around the world to let us
                                                                                                                                                                      Kathmandu Corporate Social
                                                                                                                                                                      Response-ability Manager Gary Shaw
                                                                                                                                                                                                                 This is one example of how open lines of
                                                                                                                                                                                                                 communication with workers can spark
 to help the                             people around the world are enslaved       Stories are collected by the Youth       know directly when they felt their       explains, “In one case, we received a      improvement. Kathmandu is currently
                                         due to what is known as debt               Union and put to the management          human rights were being                  complaint about a particular manager       rolling out an equivalent platform in
 employees have a                        bondage. It happens when people sell       board. The company also has a            compromised. WeChat is one of the        who was behaving in an unprofessional      Vietnam to ensure workers there can
 better life.”                           their labour in exchange for a loan
                                         and then become trapped in a
                                                                                    charitable foundation called Golden
                                                                                    Heart, which gives grants of US$500–
                                                                                                                             world’s largest multipurpose
                                                                                                                             communication platforms, and this
                                                                                                                                                                      manner towards some female workers.        also communicate immediately and
                                                                                                                                                                                                                 directly with the company.
                                                                                                                                                                      “As a result of our intervention, the
                                         situation where they are unable to         $10,000 to employees who are facing      year, we have heard from several
                                                                                                                                                                       factory invested in leadership training   “We aim to come alongside our suppliers
MS NGUYEN TRANG                          repay or escape the bond. The              hardship. The TGI management             workers via this channel.
                                                                                                                                                                       and a review of management. They           and work together to improve,” Gary
                                         practice is illegal, but penalties are     board contributes US$22,000 per
FACTORY MANAGER                                                                                                              These led to ongoing conversations        hired someone to help them change          says.” In this case, our partner ELEVATE
                                         rarely enforced in the parts of the        year to this fund.
                                                                                                                             with our China-based supply chain         the company culture, and when the          was able to recommend the necessary
                                         world where it’s most common. This is
                                                                                    Progressive companies like TGI can see   specialist and resulted in Kathmandu      manager concerned was unwilling to         steps for improvement and facilitate
                                         the extreme end of the spectrum, but
                                                                                    the benefits of workers who are less     contacting our suppliers to seek          change his behaviour, he was               training. This is going beyond risk
                                         debt can be crippling for many low-
                                                                                    vulnerable and more engaged.             clarification, redress or immediate       ultimately dismissed.”                     management and compliance to
                                         wage workers.
                                                                                                                             action.                                                                              genuine positive change.”
                                                                                     As a result of Kathmandu’s
                                         Kathmandu’s Vietnam-based supplier
                                                                                     commitment to sustainability, we
                                         TGI has taken a progressive step
     Corrective action                                                               have identified suppliers like TGI as
                                         towards helping workers who find
                                                                                    "high-potential, high-growth vendors
     plans                               themselves facing debt.
                                                                                     that will be allocated more business.
                                         Factory manager Ms Nguyen Trang
     Kathmandu issued 144                                                           “By supporting companies like TGI with
                                         explains, “Some workers need to
     corrective action plans                                                         our business, we are directly
                                         borrow money to help their parents
     following social audits                                                         preventing and proactively addressing
                                         build a house or for a wedding,
     designed to identify and                                                        those factors that fuel modern
                                         university fees for their children or in                                              OUR SUPPLIERS 2019
     collaboratively improve the                                                     slavery,” Corporate Social Response-
                                         the case of illness. If they borrow
     working conditions and                                                          ability Gary Shaw says.

                                                                                                                                                            101                                                              37
                                         money from a private bank, the
     wellbeing of those in our supply
                                         interest is 20%. We created loans
     chain.
                                         from our management board to help
                                         the employees have a better life so
     Factory exits                       they don’t have to worry and can                                                                                    KATHMANDU                                                   KATHMANDU BRANDED
                                         concentrate on their job.”                                                                                       BRANDED FACTORIES                                                   SUPPLIERS
     Kathmandu exited 34 factories.

                                                                                                                                                                                    100%                                       144
     Some were as a result of
     consolidating a number of
     smaller suppliers with whom
     we had very little influence. The
     remaining suppliers were exited
                                                                                                                                                                                    NEW SUPPLIERS SCREENED                          CORRECTIVE
     after repeatedly failing to                                                                                                                                                     USING SOCIAL CRITERIA                         ACTION PLANS
     improve and showing no
     intention or desire to do so. By

                                                                                                                                     29                                34                                              625
     working with fewer suppliers,
     we can increase our purchasing
     power, allowing us to have
     more influence over workplace
     best practice.                                                                                                                  TOTAL AUDITS                           EXITS                                      HOURS TRAINING STAFF
28                         SUSTAINABILITY REPORT 2019                                                           OUR SUPPLIERS                            SUSTAINABILITY REPORT 2019                                                   29

Laborlink gives                                                                                                 Another 'A' score in the
workers a voice.                                                                                                Ethical Fashion Report.
“Honest                       A worker at one of our supplier
                                                                                                                The 2019 Ethical Fashion Report was
                                                                                                                released by Tearfund in April.
                                                                                                                                                         Kathmandu scored an A again this
                                                                                                                                                         year and ranked as one of New
                                                                                                                                                                                                 Tearfund CEO Ian McInnes says this is
                                                                                                                                                                                                 a sign that accountability is starting
 transparent
                              factories outside of Ho Chi
                              Minh City, Vietnam.                                                                                                        Zealand’s top five companies.           to motivate change from companies.
                                                                                                                The Ethical Fashion Report sheds light
 communication                                                                                                  on what the industry and individual
                                                                                                                companies are doing to address
                                                                                                                                                         Companies are assessed at three
                                                                                                                                                         critical stages of the supply chain –
                                                                                                                                                                                                  Kathmandu Corporate Social
                                                                                                                                                                                                  Response-ability Manager Gary Shaw
 is how we create                                                                                               issues such as forced labour, child      raw materials, inputs production and     says the report helps raise the bar on
                                                                                                                labour and other forms of worker         final stage production. This year, in    human rights in the supply chain.
 change.”                                                                                                       exploitation. Each report – since the    addition to the four established key    “Companies are competitive by
                                                                                                                launch of the first in 2013 – has        areas of grading (policies,              nature. Now instead of trying to be
                                                                                                                tracked progress within the industry.    transparency and traceability,           the best in the world, they’re
GARY SHAW
                                                                                                                The change since 2013 has been           auditing and supplier relationships,     competing to be the best for the
CORPORATE SOCIAL                                                                                                significant. The 2019 report assessed    and worker employment), Tearfund         world. Like the Modern Slavery Act,
RESPONSE-ABILITY MANAGER                                                                                        130 fashion companies (representing      has added a fifth grading criteria –     the Ethical Fashion Report invites
                                                                                                                480 brands) on how well they             environmental management.                companies to become more aware of
                                                                                                                mitigate the risk of exploitation in                                              their supply chain and the impact
                                                                                                                                                         Tearfund said this year saw the most
                                                                                                                their supply chain.                                                               they have on the world.”
                                                                                                                                                         substantial progress in traceability
                                                                                                                                                         down the supply chain since its
                                                                                                                                                         conception in 2013.

                           One of the other tools we use to           “We did an audit this year on one of
                           understand the concerns of workers in       our new suppliers that came back
                           our supply chain is Laborlink, an           almost perfect with a score of 93%.
                           anonymous confidential survey tool          However, in the anonymous Laborlink
                           that workers complete using their           survey, 58% of workers reported that
                           own mobile phone.                           their supervisors often or sometimes
                                                                       yell at them. So the workers’
                           “Audits are very good at looking at the
                                                                       wellbeing is still being impacted, and
                            building, checking that fire escapes
                                                                       that is a concern.”
                            aren’t blocked and that workers are
                            getting fairly paid, but it doesn’t       Gary says the next step is a
                            reveal things like harassment or          conversation with the factory
                            bullying, which can have a much           managers. “We’ll ask if they
                            more detrimental impact,” says            recognise the issues involved and
                            Corporate Social Response-ability         are equipped to address them. If
                            Manager Gary Shaw.                        not, we’ll invite them to work with
                                                                      ELEVATE to change the culture of
                           The traditional audit process does
                                                                      their workplaces and make it clear
                           include interviews with workers, but
                                                                      to all what is acceptable.
                           these are often done on the factory
                           premises, in sight of their managers,      “We don’t expect or anticipate
                           and it’s not surprising that they result    perfection. What we do require is
                           in very few complaints. Some workers        honest transparent communication
                           are worried they will lose their jobs if    so we can work on these issues
                           they speak up, or in some cases, there      together. This is how we create
                           is a cultural expectation that they         change. We collaborate with ELEVATE
                           remain silent out of misplaced loyalty      because they understand the issues,
                           to their employer.                          have the experience and expertise
                                                                       and know the culture,” Gary says.
                                                                                                                Garments being manufactured
                                                                                                                at TGI in Vietnam.
30                                           SUSTAINABILITY REPORT 2019                OUR SUPPLIERS   SUSTAINABILITY REPORT 2019                                        31

 Ongoing progress.

COLLABORATION ADDRESSES                       SUPPLY CHAIN GOES PUBLIC
WORKER CONCERNS
                                              In December, we made 100% of our
In three cases, our grievance                 Tier 1 manufacturing list public on the
mechanism resulted in us working with         Open Apparel Registry.
other brands to increase our influence.
                                              Gary says this move creates greater
“Sometimes our spend with a                   transparency and accountability. “In
 particular factory isn’t significant, so     the past, many brands saw this as a
 our voice is not as influential,” explains   risk. But today, it’s best practice. It
 Corporate Social Response-ability            means that, if someone finds human
 Manager Gary Shaw. “This is a                rights violations in our supply chain,
 common problem for businesses all            we want people to be able to track us
 over the world who truly want to             down and let us know about it. We
 make a difference but don’t have the         are not about self-protection. We are
 leverage or influence to do so on their      about collaboration and doing the
 own. However, as an example, by              best for the world.”
 working together with other brands,
                                              Tier 1 includes all of our
 we were able to approach one of our
                                              manufacturers. Gary says the next
 shared factories with a unified and
                                              step is to increase transparency to our
 powerful voice as together we made
                                              Tier 2 suppliers, like fabric mills.
 up more than 90% of their business.
 They were suddenly very responsive
 and eager to address the issues we           OBOZ TAKES FIRST STEPS ON
 raised.” This approach has been              CORPORATE SOCIAL
 welcomed by other brands. “New               RESPONSIBILITY JOURNEY
 ways of doing business built on
                                              Gary spent time with the team at
 partnership and collaboration are
                                              Oboz this year to share his supply
 essential if we are going to
                                              chain approach and knowledge.
 meaningfully improve the lives of
                                              Oboz CEO Amy Beck says, “It was
 workers and their communities.”
                                              great to have Gary and his
                                              knowledge to partner with us on this
                                              very important topic. We are in the
“We were able to                              process of building our CSR and
                                              sustainability road map. By working
 approach with a                              with the Kathmandu team and their

 unified and                                  processes, standards and training,
                                              this will be an area of focus and
 powerful voice as                            priority for our teams and partners.”

 together we
 made up more
 than 90% of their
 business.”
 GARY SHAW                                                                                                                           Workers in our Nepalese factory handmaking
                                                                                                                                     our annual Christmas ornament. All proceeds
 CORPORATE SOCIAL                                                                                                                    go to our community partners to fund
 RESPONSE-ABILITY MANAGER                                                                                                            education in Nepal.
32                         SUSTAINABILITY REPORT 2019   OUR PRODUCTS   SUSTAINABILITY REPORT 2019                          33

                                                                                                                    Nga hua.
                                                                                                    Our products.
Summit Club member Ben
on location in Kaikoura.
34                           SUSTAINABILITY REPORT 2019                                                        OUR PRODUCTS                                     SUSTAINABILITY REPORT 2019                                35

Number two in the
                                                                                                               Kathmandu team member Jacinta wearing an
                                                                                                               Earthcolours tee while exploring the farmers
                                                                                                               markets in Vietnam. Every Earthcolours
                                                                                                               product is dyed with fully traceable, patented

world for the third
                                                                                                               Earthcolours that come from agricultural
                                                                                                               waste like nutshells, leaves and vegetables.

year running.
“It’s about learning         The Textile Exchange is a global non-
                             profit on a mission to transform the
                                                                      More importantly, the benchmarking
                                                                      programme has been able to track
 and moving                  textile industry. It uses industry       progress in the industry as a whole.
                             benchmarking to help brands              The number of companies
 forward as an               understand where they are and where      participating grew 106% to 111

 industry.”                  they might be heading. As a network,
                             the Textile Exchange helps brands
                                                                      companies from 17 countries with an
                                                                      estimated combined turnover of
                             share their knowledge and join forces    US$1.65 trillion. The report showed
MANU RASTOGI                 to influence change.                     that the Founders Club – who have
                                                                      been using the tool for three years –
HEAD OF PRODUCT INNOVATION   The Corporate Fiber & Materials
                                                                      are outperforming other companies.
AND PRODUCT SUSTAINABILITY   Benchmark is an annual report that
                             helps businesses to measure how their    Kathmandu Head of Product
                             preferred fibre and materials strategy   Innovation and Product Sustainability
                             stacks up and to track progress.         Manu Rastogi says, “The Textile
                                                                      Exchange benchmarking is a great
                             Kathmandu is one of 43 companies in
                                                                      tool and has helped us develop
                             the Founders Club of the Textile
                                                                      insights and strategies into areas for
                             Exchange and has reported its
                                                                      improvement. It’s not about being
                             material choices to the benchmark
                                                                      first or being last on the chart, it’s
                             study for three years.
                                                                      more about learning and moving
                             For all three years, we’ve sat in the    forward as an industry.”
                             Leader’s Circle for the Outdoor/Sports
                             category – with a number two ranking.
                                                                                                                                    GLOBAL SCOREBOARD

                                                                                                                                                  2                #
                                                                                                                                                                                     WORLD RANKING IN THE
                                                                                                                                                                                     TEXTILE EXCHANGE PREFERRED
                                                                                                                                                                                     MATERIALS REPORT

                                                                                                                                                 #7
                                                                                                                                                                                     by volume on the Preferred
                                                                                                                                                                                     Down Leaderboard

                                                                                                                                                 #5
                                                                                                                                                                                     by growth on the Preferred
                                                                                                                                                                                     Down Leaderboard

                                                                                                                                              100%
                                                                                                                                                                                     INCLUDED IN THE 100% CLUB
                                                                                                                                                                                     ON THE PREFERRED DOWN LEADERBOARD,
                                                                                                                                                                                     PREFERRED LYOCELL LEADERBOARD AND
                                                                                                                                                                                     PREFERRED MAN-MADE CELLULOSICS
                                                                                                                                                                                     LEADERBOARD
36                                          SUSTAINABILITY REPORT 2019                             OUR PRODUCTS   SUSTAINABILITY REPORT 2019                                            37

Recycled
                                                                                                                                               Summit Club member Jarod putting his Solus
                                                                                                                                               pack to good use in Cuba. The Solus pack is
                                                                                                                                               made with REPREVE fabric and recycles 13
                                                                                                                                               plastic bottles.

materials win.
When it comes to choosing the most          “Recycling is a key component of that.
sustainable materials, there are few         If we want to shrink the loop, we’ve got
easy answers. Cotton is a natural,           to keep materials in use for as long as
renewable material, but its                  we can,” Manu says. “Our goal is to
environmental impacts are almost             become a recycling champion – not
three times greater than polypro. The        just recycled polyester but nylon and
materials that win the sustainability        cotton and TPU in our rainwear.”
game change based on what you’re
                                            Polyester holds the title as the number
measuring and where the material is
                                            one fibre used worldwide. Only 15% is
being made. Some methods use more
                                            produced using recycled materials –
energy, but if it’s renewable energy,
                                            the rest is virgin polyester produced
the impact decreases.
                                            for consumer demand.
There are so many variables that it
                                            Recycled polyester has been part of
could be a full-time job just figuring
                                            the Kathmandu range since the 1990s.
out what’s the best product to buy.
                                            The REPREVE brand of recycled
Luckily, at Kathmandu, there’s              polyester is now used in 101 products
someone whose job it is to do all this      in the Kathmandu range. We recycled
analysis for you. His name is Manu          9.3 million bottles last year alone.
Rastogi, and his title is Head of
                                            Manu says that measures of
Product Innovation and Product
                                            sustainability change depending on
Sustainability.
                                            which lens you look through. If water
Manu uses tools like the Higg Materials     use is most important, one material
Sustainability Index, life cycle analysis   wins. If carbon emissions is most
and conversations with individual           important, another material wins.
suppliers to make decisions on which        Life cycle analysis is an attempt to
materials have the least impact.            see a product with all the lenses
                                            stacked together.
The ultimate aim is to move towards a
circular economy where products sit         “People tend to go towards natural
within a closed loop, because we             fibres, but a life cycle analysis shows
know that 85% of a product’s impact          polyester is the best of the lot. We do
comes from its materials.                    all that research in the background.”

Our plastic bottle                                                                       10.0
                                                                                  2020
                                                                                TARGET

recycling journey                                                                        MILLION

                                                               9.3
                                                        2019
                                                     ACTUAL

                                                               MILLION

                                     7.5
                              2019
                           TARGET

                                     MILLION
       6.7
2018

       MILLION
38                                     SUSTAINABILITY REPORT 2019                                                             OUR PRODUCTS                                SUSTAINABILITY REPORT 2019                                         39

       100% sustainable
       cotton on the horizon.

       Sustainable                                   For the last five years, we’ve been       better for the people who produce
                                                     working to transition our entire          it, better for the environment it
       cotton breakdown                              range to sustainable cotton. This         grows in and better for the
                                                     year, we hit 99%, and from                sector’s future. They aim to do
                                                     September 2019, all new products          that by making Better Cotton a
                                                     will be made exclusively with             mainstream commodity.
                                                     sustainable cotton.
                                                                                               Last year, more than 1 million
                                                     Head of Product Innovation and            metric tonnes of Better Cotton

               99
                                                     Product Sustainability Manu               went into the world’s supply

                                %
                                                     Rastogi says the biggest                  chains. Better Cotton was grown
                                                     challenges came when converting           by 2.2 million farmers in 21
                                                     the tail end – the blended fabrics        countries and made up 19% of
                                                     that were only 5% or 10% cotton.          global cotton production.

                                                     Sometimes, this meant                     Manu is excited about growing the
                                                     approaching suppliers who we              recycled cotton percentage in the
                                                     didn’t have large volumes with and        range. When it comes to impact,
                                                     asking them to switch to Better           recycled cotton beats other
                                                     Cotton Initiative (BCI) yarns.            sustainable cotton hands down. It
                                                                                               takes pre-consumer waste from
                                                    “The first step is asking,” Manu
                                                                                               the factory floor and blends the
                                                     says. “We found that most of our
       65     %
              BCI       22       %
                                 organic             suppliers didn’t realise how easy it
                                                     was to do. We would give them
                                                                                               fabric back to a yarn, removing all
                                                                                               the heavy impacts from the
                                                                                               growing and dyeing phases of
                                                     the resources to go further down

       9                3
            %                  %                                                               cotton production.
                                                     the chain to the yarn supplier. In
            fairtrade          recycled

                                                                                                                                                                                                              12.1
                                                     the end, everyone said yes.”
                                                     Better Cotton makes up the
                                                     largest chunk of our sustainable
                                                     cotton portfolio. The BCI exists to
                                                     make global cotton production
                                                                                                                         100%
                                                                                                                  2020
                                                                                                                TARGET

       Our sustainable                                                                             99%                                                                                                        MILLION
                                                                                            2019

       cotton journey
                                                                           78%                                                                                                                                bottles worth of fresh
                                                                    2018

                                                                                                                                                                                                              water saved in 2018*
                                                  74%
                                           2017

                                                                                                                                                                                                              By using more solution-dyed polyester,
                                                                                                                                                                                                              nylon and polypropylene, recycled and

                                59%
                                                                                                                                                                                                              fairtrade cotton, we have been able to
                        2016

                                                                                                                                                                                                              increase our water savings from 11.5

        38%
                                                                                                                                                                                                              million bottles for 2018 to 12.1 million
2015

                                                                                                                                                                                                              bottles for 2019.
                                                                                                                                             Summit Club Member Hayley wearing
                                                                                                                                             the new Kathmandu Logo Tee on
                                                                                                                                             location in Cuba                                                 * based on 500ml bottles.
40                                           SUSTAINABILITY REPORT 2019   OUR PRODUCTS   SUSTAINABILITY REPORT 2019                                                       41

                                                                                         A growing
                                                                                         resource.

                                                                                         As we transition away from fossil
                                                                                         fuels, the world will need renewable
                                                                                                                                   Commercial bio-
                                                                                         materials to replace the synthetics       based synthetics
                                                                                         that make up many outdoor products.
                                                                                         Bio-based materials are essentially       come from
                                                                                         synthetics made from plants. Not only
                                                                                         can they can help reduce our
                                                                                                                                   renewable sugars,
                                                                                         dependence on fossil fuels, they can      starches and
                                                                                         also absorb CO2 when growing to give
                                                                                         us a climate-neutral alternative.         lipids – think corn,
                                                                                         Of course, it’s never that simple. If     beets, sugar cane
                                                                                         growing plants for synthetic fabrics
                                                                                         takes away from land we need for
                                                                                                                                   and plant oils.
                                                                                         food or if it requires fertilisers that
                                                                                                                                   broader range of renewables,
                                                                                         cause the release of nitrous oxide,
                                                                                                                                   including algae, fungi and bacteria.
                                                                                         then we’re not really winning. But
                                                                                         these problems are slowly being           Kathmandu made its foray into bio-
                                                                                         tackled, and bio-based synthetics is      based materials with EarthColors dye,
                                                                                         one of the major areas of innovation      which is made from the inedible parts
                                                                                         in the textile industry.                  of nuts, fruits and seeds. This year, our
                                                                                                                                   Stockton Jacket used a bio-based
                                                                                         Today’s commercial bio-based
                                                                                                                                   waterproof membrane.
                                                                                         synthetics come from renewable
Summit Club member Jen wearing the                                                       sugars, starches and lipids – think       “Bio-based materials will move up our
highly sustainable Stockton Jacket during                                                corn, beets, sugar cane and plant oils.   preferred fibre and material portfolio,”
an unexpected sun shower in Tasmania. The
Stockton Jacket features recycled REPREVE                                                In the future, there may be an            says Head of Product Innovation and
face fabric, recycled polyester insulation                                               opportunity to extend this to an even     Product Sustainability Manu Rastogi.
and a recycled inner lining.
42                                       SUSTAINABILITY REPORT 2019                                                          OUR PRODUCTS                           SUSTAINABILITY REPORT 2019                                      43

New quality
                                                                                                                                                                                                  DATA BREACH
                                                                                                                                    CARE AND REPAIR
                                                                                                                                                                                                  Between 8 January and 12
                                                                                                                                                                                                  February, an unidentified third

programme rewards                                                                                                                                                                                 party gained unauthorised access
                                                                                                                                                                                                  to Kathmandu’s website. During
                                                                                                                                                                                                  this process, the third party may

excellence.
                                                                                                                                                                                                  have captured customer personal

                                                                                                                                                            3,546
                                                                                                                                                                                                  information and payment details
                                                                                                                                                                                                  entered at checkout for potential
                                                                                                                                                                                                  fraudulent use.
                                                                                                                                                                                                  As soon as we became aware of
                                                                                                                                                                     REPAIRS
                                                                                                                                                                                                  this incident, we took immediate
                                                                                                                                                                                                  steps to confirm that our online
                                                                                    “We’ve spent the                                                                                              store and our wider IT environment
                                                                                                                                                                                                  were secure. After this, we worked
                                                                                     last two years                                                                                               closely with leading external IT and

                                                                                     designing a new                                SAFETY
                                                                                                                                                                                                  cyber security consultants to fully
                                                                                                                                                                                                  investigate the circumstances of
                                                                                     programme that                                                                                               the incident and confirm which
                                                                                                                                                                                                  customers were impacted.
                                                                                     addresses quality                                                                Reported incidents          Our number one focus was to
                                                                                     of manufacturing.”                                                                 were a result of          clearly identify who had been (and
                                                                                                                                                                        foreign articles          rule out who had not been)
                                                                                                                                                                    found in clothing and         potentially affected by this
                                                                                    TARA STRANGWICK                                                                    some equipment             incident and also identify precisely
                                                                                    GROUP PRODUCT                                                                    failures. Over half of       what information was involved so
                                                                                                                                                                          the reported

                                                                                                                                             11
                                                                                    OPERATIONS MANAGER                                                                                            we could meaningfully inform our
                                                                                                                                                                     incidents resulted in        customers about how they may
                                                                                                                                                                      no injuries and four        have been affected.
                                                                                                                                                                        were a result of
                                                                                                                                                                                                  Kathmandu proceeded to roll out
                                                                                                                                                                    non-compliance with
                                                                                                                                                                                                  a global notification campaign to
                                                                                                                                             Incidents                 voluntary codes.
                                                                                                                                                                                                  directly notify 19,726 potentially
                                                                                                                                                                                                  affected customers and 24
                                                                                                                                                                                                  regulators/law enforcement
                                                                                                                                                                                                  agencies in 93 jurisdictions. It is
                                                                                                                                                                                                  not clear the exact amount of
Quality is at the heart of               The Supplier Quality Excellence            Five core suppliers were onboarded
                                                                                                                                                                                                  individuals who suffered a loss or
Kathmandu’s sustainable approach to      programme is designed to be an early       into the programme this year. These
                                                                                                                                                                                                  fraud as a result and no
product development, because even        detection system that picks up             suppliers represent 43% of our total
                                                                                                                                                                                                  substantiated complaints were
the greenest material choices won’t      manufacturing problems before the          spend. The programme is working.
stack up if the products don’t have a    product leaves the supplier. The aim is    First-time pass rates improved by 38%.   Customer return                                                      received from customers or
                                                                                                                                                                                                  regulators.
long and useful life.                    to reduce the number of
                                                                                    The programme also includes a            rates for quality
                                         unacceptable products that arrive to                                                                                                                     As an organisation, we attach a
Group Product Operations Manager                                                    Certified Factory Auditor initiative,
                                         our warehouses and, ultimately, to                                                                                                                       high value to our customer data,
Tara Strangwick explains, “There are                                                designed to make sure factory
                                         reduce the number of customer                                                                                                                            and we take the protection of our
lots of facets to quality. One part is                                              inspectors are crystal clear about our
                                         returns due to manufacturing                                                                                                                             customers’ data very seriously. We

                                                                                                                                      0.34%
designing for quality. Does the                                                     quality standards. Only those that
                                         workmanship.                                                                                                                                             have worked and will continue to
product do what it’s supposed to do?                                                pass the programme become                2016                                                                 work with the relevant authorities
Then there is the quality of             The new Supplier Quality Excellence        Certified Factory Auditors and are
                                                                                                                                                                                                  and independent security experts.

                                                                                                                                                         0.31%
development. Does everything tick        programme is an award-based system         able to inspect product on our behalf.

                                                                                                                                                 2017
the boxes for the user and does it       for suppliers. The programme includes      This year, we certified our first two                                                                         Kathmandu conducted a post-
work? And then there is the quality of   a factory quality audit that helps drive   groups of auditors at two of our                                                                              incident review of the security

                                                                                                                                                                    0.26%
the manufacturing. We’ve spent the       continuous improvement in a factory’s      suppliers’ factories in China.                                                                                breach, and from this review, we

                                                                                                                                                             2018
last two years designing a new           quality processes. The programme                                                                                                                         understand our management

                                                                                                                                                                                          0.20%
programme that addresses that.”          also includes product inspections and                                                                                                                    approach to the breach was

                                                                                                                                                                                   2019
                                         incorporates customer feedback by                                                                                                                        adequate. Further changes have
                                         aligning with return rates.                                                                                                                              been made to upgrade credit card
                                                                                                                                                                                                  payment processing systems to
                                                                                                                                                                                                  prevent this happening again.
44                                         SUSTAINABILITY REPORT 2019                  OUR PRODUCTS                     SUSTAINABILITY REPORT 2019   45

Oboz                                                                                   Oboz products will incorporate
                                                                                       more sustainable materials in
                                                                                       the next two years.

sustainability
update.
WITH DAWSON WESTENSKOW,
DIRECTOR OF PRODUCT

WHAT ARE THE BIGGEST                       WHAT PROGRESS HAVE YOU MADE
SUSTAINABILITY CHALLENGES FOR              THIS YEAR?
OBOZ WHEN IT COMES TO
                                           I think the biggest progress we have
PRODUCT?
                                           made in sustainability in 2019 has been
I think overall our biggest                in setting up verification mechanisms.
sustainability challenge has been          The first was getting integrated into
clarifying our core values as a            the Kathmandu factory audit system.
company and then using those values        That has been a huge step for us, and
to inform the overall sustainability       it has been great to have the support
strategy. The challenge is that we can     of Kathmandu during that process.
go so many different directions when       The second form of verification is
it comes to product-related                around restricted substance list testing.
sustainability, but we really need clear   We are working with a third-party
overarching values that inform where       testing firm to help set up that
we should go. We are in the process of     programme.
doing that work.
                                           The transition to Forest Stewardship
                                           Council (FSC) mixed packaging has
                                           been a big win this year. We will
                                           complete this transition before the
“We have started                           end of 2019.

 to incorporate                            We have also started to incorporate
                                           more sustainable materials into our
 more sustainable                          development process. We will be
 materials into our                        launching products in 2020 and 2021
                                           that utilise a percentage of recycled
 development                               materials as well as bloom algae
                                           foam (replacing 30% of petroleum-
 process.”                                 based materials in our insoles). These
                                           changes will not impact all products,
                                           but we are testing them in collections
DAWSON WESTENSKOW
                                           with the hope of using them more
DIRECTOR OF PRODUCT                        broadly in the future.
46                       SUSTAINABILITY REPORT 2018   OUR FOOTPRINT   SUSTAINABILITY REPORT 2019      47

Our new flagship store
in Christchurch.

                                                                                               tapuwae.
                                                                                               Ta matou
                                                                              Our footprint.
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