4.2 RESPONSIBLE SOURCING
For the Moncler Group, talking about quality also means talking about health and safety, respect for human rights, environmental protection and, in general, ethics in business conduct along the entire value chain. Being a socially responsible company involves taking a commitment that extends well beyond its boundaries, em- bracing the entire supply chain.
Suppliers are strategic partners, this is why the Group s rela- tionship with them goes beyond the economic and commercial sphere. For Moncler and Stone Island, excellence means quality, style, and innovation, but also a commitment to promote a supply chain that is attentive and respectful of workers rights, of animal welfare, and of the environment.
The focus on ethical, social and environmental aspects along the supply chain starts with the supplier selection phase and continues with a systematic awareness and monitoring activ- ity. Knowledge, traceability, sharing of best practices and verifi- cation are fundamental, not only to limit risk situations, but also, and above all, to generate culture and promote a responsible and sustainable business development to the benefit of the entire supply chain.
All suppliers4, in the contractual phase, must sign the Code of Ethics outlining the principles and guidelines that inspire the Group s business and guide the behaviour and actions of all those with whom Moncler and Stone Island interact. By signing this Code, suppliers commit to comply with these principles and en- sure that their subcontractors comply with them as well. Violation of the principles of the Code constitutes a breach of contract, with the right, depending on the severity of the situation, to immediate- ly terminate the relationship. See also pages 53-54.
In order to steer even better the actions of its partners, the Group has adopted a Supplier Code of Conduct. The Supplier Code of Conduct is inspired by the Universal Declaration of Hu- man Rights and the ILO Conventions, and describes the Group s expectations for the main areas of a responsible way of doing business. It consists of six sections (Labour and Human Rights, Occupational Health and Safety, the Environment, Animal Health and Welfare, Safety and Quality of Products and Services and Business Ethics) and sets the mandatory requirements that sup- pliers must comply with in order to begin or continue to be a sup- plier of the Group.
The Group procedure that governs the selection of new suppliers was updated in 2021. The assessment of a new suppli- er consists primarily of an on-site visit carried out by the Quality Team to evaluate the supplier s alignment with the Group s quality standards. After this technical analysis, the assessment process for new façon manufacturers and finished products suppliers in- volves an ethical, social and environmental audit by a third party. For raw material suppliers, it requires the completion of an envi- ronmental and social evaluation questionnaire supported by doc- umentary evidence and then an audit that is carried out in line with the provisions of the audit plan. By doing so, the Group commits to not include in its supply chain companies that do not comply with the Group s quality standards and basic ethical, social and envi- ronmental principles.
The monitoring of the supply chain continues over the years with periodic and systematic ethical, social and environmental audits performed on suppliers with which the Group already has a collaborative relationship in order to verify compliance with appli- cable laws and principles contained in the aforementioned codes.
In order to ensure maximum impartiality, audits are regu- larly conducted by qualified, experienced third parties. The au- dits focus on verifying respect for fundamental human and labor rights, with particular attention to issues of forced labour, child labour, freedom of association, working hours, guaranteed mini- mum wage and health and safety.
In addition, since 2020 the Group has required all mem- bers of its supply chain to comply with applicable national legis- lation, work authorisations, decrees, regulations and guidelines on health protection to contain the spread of the Covid-19 pan- demic. Even when not explicitly required by local legislation, the Group has asked its suppliers to define internally and comply with safety protocols containing the measures to prevent Covid-19 in- fections. These aspects were monitored by Moncler s technical personnel and the auditors during the audit.
4 85% of significant contracts require compliance with the Brands Code of Ethics (95% for Moncler).
The Group has a three-year audit plan that ensures that all façon manufacturers and finished products suppliers are audited at least once every three years.
Although also in 2021 the planning of the ethical and social audits was difficult to schedule due to the Covid-19 pandemic, which in some periods of the year prevented auditors from visit- ing suppliers, the Group was able to stick to the pre-established audit plan.
During the three-year period 2019-2021, Moncler conduct- ed 454 ethical and social audits (both on suppliers and subcon- tractors), equal to approximately 100% of the volumes assigned to outerwear façon manufacturers, 79% of the volumes assigned to suppliers of other outerwear processes (dye houses, printing works, embroideries, etc.), 95% of footwear and bags suppliers, 100% of tanneries and 98% and 77% of the volumes assigned re- spectively to knitwear suppliers and soft accessories suppliers.
Also Stone Island, which has a three-year ethical and social audit plan aimed at ensuring the highest coverage of suppliers in its supply chain, during the same three-year period carried out 127 ethical and social audits (on both suppliers and subcontrac- tors), equal to around 98% of the value of orders assigned to fin- ished products suppliers and 83% of the value of orders assigned to façon manufacturers.
With regard to the 180 suppliers audited in 2021, at year- end more than 82% of them were in line with the Group s social and environmental standards; collaboration was ended with around 5% of them (eight suppliers) while around 13% turned out to have non-compliances at the end of 2021, as the audit activity took place just before the last months of the year and not all the projects aimed at remediating the non-compliances had already been closed.
In 2021, with particular reference to social aspects, 43 of the 180 sites were found to have non-compliances and the rela- tive improvement plan was issued. The main areas of non-compli- ance related to occupational health and safety (77%) and, only in some cases, the management of employment relationships (23%), including non-compliance relating to wages and remuneration (12%), management of employment contracts (7%) and working hours (4%). In the majority of cases, suppliers that were found to be non-aligned with the Group s social standards completed their improvement action plans during the year and closed the most relevant non-compliances.
Moreover, during 2021 both Brands also conducted ethical and social audits on main raw materials suppliers equal to 53% of total purchases of materials. In particular, with regard to the down supply chain, Moncler has set the target of having 100% down suppliers compliant with the new human rights and environmen- tal modules included in the DIST Protocol by 2023. For this rea- son, during 2021 a working group was set up to define and test the checklists to be used during DIST audits.
Lastly, ethical and social audits also continued to be car- ried out on strategic service suppliers: logistic platforms, ex- ternal quality control platforms, providers of services at Group offices and stores for which no significant non-compliances were identified.
The ethical and social audits carried out by both Brands in- clude modules on environmental compliance. In addition, in 2021 Stone Island conducted nine environmental audits on a sample of fabric, finishing and dyeing suppliers, while Moncler requested specific in-depth documentation on waste water in 15 companies with wet processes. From the activities no significant non-compli- ances emerged. It is the Group s goal to continue to monitor these activities in the upcoming years.
For Moncler, these audit activities were complemented by audits on animal welfare and on down traceability as per the DIST (Down Integrity System & Traceability) Protocol across the entire supply chain. The trend in the number of audits carried out over the last three years is linked to the Moncler s decision to strength- en its relationship with its most reliable suppliers by building long-term relationships with them and excluding from the supply chain those who, over the years, have had quality and traceabil- ity problems. Stone Island only uses RDS-certified down whose compliance audits are handled by the suppliers and hence not re- ported in this document. See also pages 145-146.
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2021BE FAIR BE FAIR