Sustainability Report 2019 - KATHMANDU HOLDINGS LIMITED
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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
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
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.
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
8 SUSTAINABILITY REPORT 2019 OUR STORIES SUSTAINABILITY REPORT 2019 9 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.
10 SUSTAINABILITY REPORT 2019 OUR STORIES SUSTAINABILITY REPORT 2019 11 “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.
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.
14 SUSTAINABILITY REPORT 2019 OUR JOURNEY SUSTAINABILITY REPORT 2019 15 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
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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