SUSTAINABILITY

There is global conversation happening now around sustainability and the fashion industry; a drive from within to have a more positive impact on people and the environment. Hallenstein Glasson Holdings (HGH) welcomes that.

Our enthusiasm for 'being better' has led us to develop a structure and framework around our sustainability efforts - and we've focussed on the things that matter most to us under three pillars: People Planet & Product.

Under our pillars, we've identified four key focus areas where we've focussed our journey to true sustainability.

As well as two others that are also important, Climate change and Community support.

Staff wellbeing and empowerment.

Our people are what makes Glassons and Hallenstein Brothers the iconic brands they are today. Whether it be our frontline staff in our stores, the office staff in the engine room, or the gifted people producing our beautiful garments in our factories; all play a crucial role in our success.

We recognise this; our people are entitled to feel valued, respected and appreciated. We also want to make sure they feel safe and happy whilst at work.

Our focus on staff wellbeing and empowerment has four themes:

An empowered workforce makes for a happy crew - and we are committed to supporting that empowerment by promoting our values of respect, dignity, nondiscrimination and providing safe workplaces.

We are an Equal Employment Opportunity employer with a diversity policy that ensures we have a diverse and inclusive workforce. Everyone joining our team is supported with a comprehensive induction programme and a career development plan that we develop together.

We review performance and job satisfaction six monthly, setting goals and KPIs with staff to ensure they continue to grow in their roles.

In terms of staff wellbeing, all staff can access:

• Gym membership with a discount
• Health Insurance with a discount

Healthy, happy staff are more likely to be productive and have more to contribute. Simple really.

HGH cares for staff in a number of ways; one of those is our membership of the Employee Assistance Programme, EAPworks.

EAPworks can provide assistance and counselling to employees in need in a number of ways. The programme can help employees with stress or relationship issues, as well as providing mentoring, career planning, life transition skills and more.

It's available to all HGH employees and clearly promoted through posters at our HQ, and in distribution centres and retail stores (staff only areas) with phone number and details.

HGH pays for two free sessions and then EAP will contact the business if they believe the staff member would benefit from more. If this happens, it is always approved.

In addition to our membership with EAPworks, our Employee Trust was set up to support staff through hardship and/or career development. Staff can apply to the trust for financial support.

Here's how the trust helps our team:

• Hardship support
• Career advancment
• Additional funds

Supporting the communities where we live and work is important to HGH; it's a vital way we stay connected to people, many of whom are our customers too.

We have been supporting charities dear to our heart for a number of years now. These include:

• Women's Refuge (with product)
• Breast Cancer NZ

We also support one off events, such as Hallenstein Brothers sponsorship of NZ music month 2020.

For more information see our Sustainability Report.

Our 117 retail stores, and our head offices in Auckland and Sydney, all generate waste, consume electricity and use resources, so we're always looking for ways to make our stores and operations more efficient and environmentally sustainable.

There are three areas we concentrate on are:

1. PACKAGING & PLASTICS

It's time to say goodbye to single use plastics.

Single-use plastic bags in our stores have become a major concern for us and our customers in recent years, so we set ourselves the following two targets:

• Eliminate single use plastic carry bags in stores by 2020
• All single use polybags to be compostable by 2021

We have replaced plastic store carry bags that customers use to take their purchases home, with paper bags. For our online customers, the courier bags and the polybags we use to ship goods to them, will shortly all be compostable.

Not everyone has access to composting facilities, so we are making life easier for our customers by providing collections bins in our stores for the return of these bags. This way we can dispose of them effectively.

Also, we have changed our policy around the use of polybags. As a result, the quantity of polybags we use has plummeted.

• 80% reduction in polybags - the equivalent of 2 million polybags removed in 12months
• 500,000 bags removed from waste stream in the past 12 months

Dealing with plastic in the supply chain is more complicated, as eliminating polybags completely from the supply chain is not always the best environmental solution. That may sound counter-intuitive, but polybags protect garments from soil and damage in transit from factory to store, and the environmental cost of damage to a garment can outweigh that of producing a polybag, if that garment is damaged and needs replacing.

However, we can still do better, and so we are moving to certified home compostable bags for the balance of polybags still used in the business. This means that we be removing ALL individual Plastic Polybags from our shipped goods by December 2020.

2. REDUCING WASTE

The trend-driven fashion industry generates waste, and we are no different. We import product weekly, and this is sold either in store or online. With so much movement of product comes packaging.

We are rapidly moving toward packaging that's disposed of properly and has less environmental impact. But we are also reducing the amount of packaging we use, and the amount of waste we generate. And where we cannot eliminate waste, we're doing all we can to reuse or recycle. This is our reduce re-use recycle policy.

We have been pretty good at reducing waste sent to landfill, but we know we can do better and so we've set ourselves the following target:

• 50% reduction in distribution centres waste sent to landfill by 2025.

We would love to include our stores in this target but collecting waste data from stores is difficult. This is because many of our stores are located in shopping malls where waste facilities are shared. We're working on solutions to this.

3. ENERGY EFFICIENCY

Store lighting.

Clothing retail stores rely on good lighting for optimal display and safety. Lighting is the main consumer of energy in all our stores and contributes significantly to our carbon footprint.

We are currently installing LED store lighting and have set ourselves the following target:

• 100% LED light replacements in all stores by 2023.

We are well on track to meet this target.

Distribution centres.

A number of years ago we switched to electric forklifts, and as we no longer use LPG for these, we've reduced our carbon footprint significantly.

In addition, the new Glassons distribution centre in Christchurch has been designed to maximise the use of natural light, and this, coupled with the use of light sensors, has dramatically reduced our electricity consumption for lighting.

We are now looking at ways we can make the Hallenstein Brothers distribution centres more energy efficient. This will be part of the work we do next year on our carbon management plan.

Climate change will affect all of us, and in many different ways. We all need to act to reduce its effects.

At HGH we need to measure, manage and reduce the carbon emissions we generate as a business, and in FY21 we will be developing our carbon management plan to do just that.

Watch this space.

Who made our clothes?

This has become an often-asked question for consumers demanding more transparency from the fashion industry. Behind the question is customers preference to buy from an ethical brand - one that doesn't exploit people or animals.

The fashion industry is complex - it relies on tiers of suppliers sourcing raw materials, processing textiles, and producing garments. That makes supply chains difficult to trace, but we must. For HGH to be truly sustainable we need to take responsibility for the actions of all our suppliers as well as ourselves.

That's a challenge because we don't own or manage factories and our manufacturing is outsourced to selected partners who meet our high ethical and quality standards. Much of our product currently comes from factories in China, India and Bangladesh where, quite rightly, working conditions and the rights of workers have recently come under scrutiny.

However, because we build long term supplier relationships (our supplier turnover is low) we can, and do, demand high standards and transparency from those suppliers, and we can check conditions ourselves too.

Two key aspects of that relationship are:

1. Supplier partnerships.

Most of our suppliers have been on our journey with us for more than 15 years. These relationships are personal and fundamental to the success of our business.

Our supplier relationships are 'tiered' - which is just a reflection of where they sit in our supply chain.

Because our supply chain is complex, we need a structured approach for developing and managing the relationships in it. So we've engaged with fibre certification programmes that can help:

• Lenzing Group
• Global Recycled Standard (GRS)
• REPREVE ®
• Organic Content Standard (OCS)
• Global Organic Textile Standard (GOTS)
• European Flax
• The Woolmark Company.

Having complete transparency across all tiers is our ultimate goal, but this will take time. The easiest way to understand how our supply chain works is to show it visually.

Here's how it looks:

The COVID-19 pandemic has had a severe effect on global health and economies. The fashion industry has been hit hard.

The majority of our suppliers have been with us for more than 15 years, so our relationships with them are personal. We have witnessed first-hand the challenges faced by factories who were left with unpaid goods and cancelled orders.

We look out for our suppliers and their workers, and we've made a commitment to honour our contracts. We've signed up to the Tearfund 6 Commitments to underline this commitment.

In The 2020 COVID Fashion Report, published by Tearfund and Baptist World Aid, Hallenstein Glasson Holdings placed in the top category, having actions evidenced across all the commitment listed above.

See our Sustainability Report for more detail.

2. Ethical factories

It's a work in progress.

Knowing who participates in our supply chain, meeting them and checking their operations, is important to us.

We have achieved this with our tier 1 suppliers, and we are working on our tiers 2 and 3.

Here's what we want to achieve:

• 60% visibility of entire supply chain down to raw materials by 2023
• 90% visibility of entire supply chain down to raw materials by 2025

Ok, so how do we get there? And what does 'visibility' and 'transparency' actually mean?

Means we have traced to the source all the raw material and all facilities that are involved in the processing and manufacturing of that material.

Means we know who they are. We have met them, visited their facilities and conducted our own audits.

The good news is we have achieved transparency with the tier 1 factories that make our clothes.

Full transparency of our tier 2 and 3 suppliers is not so easy. Visibility is our first step, and we are on that journey. In future reports we'll share our progress. Keeping our eye on the ball with tier 1

In 2016 we launched our Supplier Code of Conduct policy. Every tier 1 factory that supplies us agrees to comply with this policy and they are regularly audited by our audit partner QUALSPEC SgT, to ensure compliance.

Our journey towards ethical factories.

As you can see, our journey to sustainability began some time ago, with the introduction of our auditing programme, which we've been developing since 2015.

Code of Conduct.

Our Social & Ethical Compliance Auditing programme operates across our entire supplier-base. This programme consists of conducting annual factory audits. Our external audit partner, QUALSPEC SgT, undertakes these on our behalf.

The purpose of these audits is to ensure that our suppliers are following our Supplier Code of Conduct.

To give you a better picture of how we are tracking with our supply chain auditing, here are our results for FY20.

Workers welfare and safety is a really important aspect of our Code of Conduct, and a cornerstone of our Ethical Factory programme. Auditing is essential for transparency and having visibility into a typical day within a factory.

Positive change in our supplier factories comes as a result of strong partnerships between us and our suppliers. Understanding context, culture and values leads to open dialogue, respect and better communication. All of this helps us resolve non-compliance issues and deliver ongoing improvements.

That said, most of our factories have some non-compliance breaches that come up in audits. The audit helps us identify root causes and any systemic weaknesses.

Some audit numbers.

120 total number of compliances checked in against each audit

9 average non-compliances per audit

• Factory not paying all mandatory social benefits (China specific).
• Emergency exit routes not posted in all areas of the factory.
• Overtime exceeds 36 hours month. (In China the working week is 40 hours and allowed overtime is 36 hours per month).
• First aider photos not posted in factory.
• Machinery inspection records not up to date.

Here's what we're doing to promote this:

Inno Community Development Organisation (INNO)

We have partnered with Chinese Non-governmental organisations (NGO) INNO - by implementing the Handshake Workers Programme which supports worker voices and grievances. We believe this is a perfect fit, as INNO is Chinese based, providing support right where the majority of our suppliers are located. INNO is a whistle blower hotline that workers can access via QR code posted in the factory, enabling direct communication to INNO employees.

Responsible Sourcing Network

We support the Responsible Sourcing Network (RSN), a programme dedicated to ending human rights abuses and forced labour associated with the raw materials found in everyday products.

Democratically elected worker representatives.

In China independent unions are illegal. So we prioritise factories that have democratically elected worker representatives and functioning grievance mechanisms within the factory.

Looking good is just the start.

It will come as no surprise that fabric is the cornerstone of our business. Without it we would not exist. It comes in many forms, some of it sustainable, some not.

So our goal is two-fold: make product as sustainable as possible, and ensure that product is affordable and accessible for our customers, so they can make a sustainable choice without compromise. Our garments should not only function properly and look good; but do so with minimal negative impact on the environment.

Our four sustainable product focus areas are:

1. Certified fabrics

We have aligned ourselves with seven globally recognised fabric certifications. Sounds impressive right? What does that mean?

Most importantly, it gives our customers confidence that we are serious about reducing the environmental impact of manufacturing textiles, as in future, we can be certain our fibre is 'verified', and therefore we can confidently deliver responsibly-sourced fabrics.

After a great deal of research, the seven main certification groups we are aligned with are:

• Lenzing Group
• Global Recycled Standard (GRS)
• REPREVE ®
• Organic Content Standard (OCS)
• Global Organic Textile Standard (GOTS)
• European Flax
• The Woolmark Company.

For more information about our certification groups see our Sustainability Report.

Here are our sustainable product targets:

That's big. Product certification is a brand new initiative for HGH - we are just getting started - and currently less than 1% of product is certified with no discernible difference in rates between Hallenstein Brothers and Glassons.

But that will change quickly. A huge amount of work has gone into setting up this programme across all our suppliers - and it has been done in such a way that we anticipate big uptake as early as next year. As a result, we expect to see a rapid growth in the percentage of certified product sold.

Hallenstein Brothers 100% Merino wool is all Woolmark certified. Soon to be launched in the market is the organic cotton t shirt range, which is OCS certified. We are also working on organic cotton for our cotton polos. The company is working with suppliers on achieving certification across cotton, polyester and nylon textile categories, for introduction across several garment categories for launch later in the year. We estimate this will take their sustainable product offer to 20% over the next 12 months.

Glassons have been working with suppliers on achieving certification since late last year. They've implemented fibre certification programmes across viscose, linen, polyester, cotton, merino and nylon textile categories. The work they have put in is enormous, as all factories within the supply chain need to be certified and we look forward to reporting a substantial certification increase in next year's report.

2. Vintage garments

Garments and clothing re-purposed for re-use and re-love, is how we coin the second of our sustainable product focus areas, and increasingly both Glassons and Hallenstein Brothers are incorporating vintage and upcycled products into stores to complement our main ranges. Customers are loving the trend - and the opportunity to offer a second life (and home) to perfectly good clothing and fabrics.

Vintage branded products provide customers with a unique range and choice of pre-loved product, with very individual styling. This option is really resonating with our shoppers as well as being good for the planet. Buyers and supply partners handpick vintage garments individually, showcasing relevant trend revivals for our customers.

We work closely with our vendors to source carefully curated vintage and recycled clothing which is sold through 15 stores throughout the chain (12 stores in NZ, 3 in Australia). It's a growing part of the business, which we plan to expand further.

Vintage area fit outs are now a feature at seven Glassons stores; Newmarket, Dunedin and Cuba in NZ, Robina, Highpoint, Chapel Street and Warringah Australia, and Vintage product is now sold in 14 Glassons stores throughout New Zealand and Australia as part of our main trend ranges.

We are working towards upcycling becoming a significant component of our sustainability journey, but what is it?

Upcycling is the process of generating new garments from remnant material - what would otherwise be waste. Doing this reduces our wastage and the burden on waste streams and allows us to slow down virgin or new textile production.

That's important. Reducing our reliance on virgin materials is better for the environment and more sustainable, and so we're doing all we can in partnership with suppliers, to source discarded fabric as well as off cuts so we can upcycle more.

Did you know?

Glassons are currently producing a jean made from upcycled denim, and hair scrunchies and face masks from waste offcuts

3. Cruelty-free fashion

No cruelty to animals during production is non-negotiable at HGH.

We 100% support Cruelty Free Fashion that respects biodiversity, animal welfare and protection of our oceans. So to demonstrate we're serious, we set ourselves the following targets.

Next, we're setting our sights on microfibre pollution.

Microfibres are tiny strands of plastic that shed off synthetic fabrics like polyester, rayon and nylon. Scientists have confirmed that they are one of the main causes of plastic pollution in our oceans.

Microfibres are too small to be filtered out by waste treatment plants, so they end up in our waterways and seas, where they wreak havoc on marine animals and the environment - and can work their way into the food chain itself.

The fashion industry generates a lot of waste and HGH is no different. It's something we've been focused on for a number of years as we look for ways to reduce it.

Most of the waste we generate come in the form of unused fabric in the factories, faulty goods and unwanted stock. We are actively looking for better ways of managing this waste and the first step has been to not think of it as waste at all.

As a result, there are a number of initiatives we have launched in recent years that support the reuse or repurpose of fabric and products we no longer need.

GLASSONS

• We send fabric swatches to preschool centres for art and craft projects.
• We donate product samples to Women's Refuge.

DISTRIBUTION CENTRE

• Faulty products and recalls are made into rags.

HALLENSTEIN BROTHERS

• We send faulty but completely wearable stock to the Salvation Army.

As good as these initiatives have been for us over the past five years, we are always looking for better solutions, and one of those is our partnership with The Formary, New Zealand's leading specialists, supporting organisations like ours to develop a strategic approach to reduce textile waste.

No-harm waste management is not just about how we deal with waste. It is also about minimising the impact of our products on the environment. Our certified fabrics programme is a big part of this for us.

Other initiatives include:

• making all garment neck labels from recycled cotton
• using FSC certified paper in all our swing tickets
• encouraging best practice washing methods on our care labels - wash less, wash cold, hang dry
• making kimbles from recycled plastic (a kimble is the plastic toggle attaching a swing ticket to clothing).

For more information on this and to read more about our initiatives see our Sustainability Report.

CAREER DEVELOPMENT

Supporting our staff early in their careers is critical to ensuring a happy workplace and this is something we focus on doing really well. Healthy, happy, empowered staff can achieve great things!

Once a staff member is part of the HGH family, we provide ongoing professional development support through numerous training opportunities.

Glassons offer two programmes, Empower and Aspire, to train, upskill and allow employees to reach their potential.

• Offers induction sales training for all team members (this is compulsory)
• Full training on all zones of selling so stylists can feel confident on shop floor in any area
• Teaches engagement principles using instore technology to help enhance acustomer's experience.

• Provides a leadership training programme - anyone who wants to may apply.
• Focuses on leadership and management aspects of the business and career growth/opportunities in the business
• Offers the tools to focus on achieving individual career goals.

Hallenstein Brothers offer a comprehensive sales induction programme, called the Brothers Guide to Sales.

THE BROTHERS GUIDE TO SALES

This is a full induction and sales training program that all employees complete within their first 30 days, which includes:

• An introduction to the company values and the role these play in store and across the business
• A comprehensive guide to selling to a wide range of customers that focuses on a genuine and authentic customer experience
• A wealth of product knowledge of all core areas of the business
• Engaging digital content showcasing key people in the business, the culture and succession planning
• Complete understanding of basic store operations, in store shop technology and the role these play to support the customer experience
• 'Buddy system' based learning that ensures best practice during the induction process and includes sign off and feedback portions throughout.

We're very serious about providing our staff with a safe place to work. Our health and safety policies and programmes go beyond compliance to ensure this. We care about our employees - feeling safe in their workplace is a given for us.

We actively promote health and safety throughout the business. Our Health and Safety Committee (which includes HGH Board members) monitors HGH health and safety and regularly reports directly to the Board with recommendations for improvements. We also have a workers committee who provide very valuable 'shop floor' health and safety input on specific issues.