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Responsible sourcing

Suppliers are strategic partners and Moncler’s relationship with them goes beyond strictly economic and commercial aspects. Indeed, the Group is actively engaged in the continuous sharing of best practices, so as to ensure responsible and sustainable business growth.
Suppliers1, are contractually required to acknowledge and comply with the principles of the Group’s Code of Ethics, and to ensure the compliance of their subcontractors, as well. Any violation of the principles set out in the Code constitutes a serious breach of contract, which Moncler reserves the right to terminate immediately.
In addition, in 2016, the Group formalised and disseminated the Supplier Code of Conduct and related guidelines, devised to provide Moncler partners with accurate operational guidance.
The Supplier Code of Conduct is consistent with the Universal Declaration of Human Rights and the main conventions of the International Labour Organization (ILO), and describes Moncler’s expectations regarding responsible purchasing. It consists of six sections (Labour and Human Rights, Occupational Health and Safety, Environment, Animal Health and Welfare, Safety and Quality of Products and Services, and Corporate Ethics), and sets forth the mandatory requirements to become or continue to be a supplier of the Moncler Group.
The main requirements of the Supplier Code of Conduct were the focus of a training event held during a convention organised in February 2017 at the corporate headquarters in Trebaseleghe (Padua, Italy), attended by the Group’s national and international suppliers involved in the production of jackets. In addition, a dedicated online training section was added to the supplier portal, which was also implemented in 2017.
During the year, Moncler continued to conduct ethical, social, and environmental audits across its supply chain to verify compliance with applicable laws and the principles set forth in the aforementioned Codes.

In line with previous years, the audits were conducted by a qualified and experienced independent body to ensure maximum impartiality.
Social and ethical audits were centred on fundamental human and workers’ rights, particularly on forced labour, child labour, freedom of association, working hours, minimum wages, and – last but not least – occupational health and safety. In 2017, the Company focused particularly on auditing all its façon manufacturers (of jackets – Tier 1), as well as a significant sample of suppliers of other commodity groups.
Environmental audits, some of which particularly on wastewaters, focused mainly on suppliers with internal production units, and on the analysis of their policies and procedures to minimise impact.
The scope of the audits and the suppliers and subcontractors to involve in the auditing process are determined by the Internal Audit division based on a risk analysis, which takes into account various factors, such as the amount of orders placed with the given supplier, the type of good or service provided, and geographic location.
The risk analysis also considers other parameters, such as the supplier’s number of employees and plants, and/or the use of subcontractors and their geographic location. The outcomes of previous audits are also an important selection criterion.
Additional audits on animal welfare and on down traceability as per DIST Protocol (Down Integrity System & Traceability) were conducted across the entire down supply chain.
In 2017, a total of 60 social and ethical audits were performed (on both suppliers and subcontractors), covering 81% of the volume produced by façon manufacturers (of jackets), 46% of the volume of knitwear, 41% of the volume of soft accessories (footwear and bags), and 100% of the volume of down purchased from direct suppliers. 10 environmental audits were carried out on a sample of raw material suppliers (in particular, on fabric and down suppliers and on suppliers with in-house galvanic processing). And 85 audits on animal welfare and traceability were conducted across the down supply chain (covering 100% of the value of the down purchased).
Moncler has a zero tolerance policy against major compliance breaches, which could indeed lead to immediate contract termination. That being said, the Group is committed to raising awareness and driving continuous improvement within its supply chain, requiring the implementation of corrective measures when deemed necessary. In this case, the Group verifies that measures are implemented by an agreed deadline through follow-up audits.

In 2017, most instances of non-compliance were related to certain aspects associated with occupational health and safety and the management of employment relationships. All non-compliance cases were addressed through corrective actions agreed upon with the suppliers, which will be verified via follow-up audits. The audits performed in 2017 did not reveal any major supplier breach requiring contract termination.
During the year, alongside its auditing activities, the Group also sent raw material suppliers a self-assessment questionnaire to gather information on social and environmental aspects, such as the presence of relevant management systems.
When selecting its partners, Moncler takes ethical aspects into account, and thus requires potential suppliers to provide adequate information and documentation that may help understand their actual commitment in this field.
Moncler is also continuing to update its own vendor rating system by incorporating new indicators – including sustainability aspects. Each indicator will be weighted, contributing to the assessment of each supplier based on scores achieved in the different areas.
The macro-areas of the vendor rating system are:
• risk (country risk, financial risk, number of subcontractors, etc.);
• service (technological capacity, innovation, timely delivery, etc.);
• quality (defect rate in manufacturing, quality grievances reported to client service, etc.);
• costs (price competitiveness, logistics costs, etc.);
• ethics (working conditions, environmental practices, animal welfare, etc.).

NOTES

190% of signi cant contracts require compliance with the Group’s Code of Ethics

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