SGC 2020 Corporate Social Responsibility Highlights Report

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2020 Corporate Social Responsibility Highlights Report

superiorgroupofcompanies.com


CONTENTS 06 A MESSAGE FROM CEO MICHAEL BENSTOCK 08 ABOUT SGC 14 COVID-19 RESPONSE 22 BUSINESS ETHICS & HUMAN RIGHTS

08 ABOUT SGC

28 L ABOR PRACTICES & SUPPLY CHAIN 34 EMPLOYEE ENGAGEMENT 44 COMMUNITY RELATIONS

34 EMPLOYEE ENGAGEMENT

44 COMMUNITY RELATIONS

50 ENVIRONMENTAL MANAGEMENT 56 CLOSING


ABOUT THIS REPORT

This report covers Superior Group of Companies, Inc.’s (SGC) priority environmental, social and governance (ESG) topics for our three reportable business segments as presented in our financial statements: (1) Uniforms and Related Products, (2) Promotional Products, and (3) Remote Staffing Solutions. In this report, we refer to these segments more informally as our uniform, branded merchandise and business process outsourcing (BPO) segments. Information and data provided in this report covers our 2020 fiscal year (which is the calendar year), with prior year trend information reported when beneficial. Years presented are fiscal unless noted otherwise. This is our second corporate social responsibility report, and it is our intention to continue publishing updates on our progress on an annual basis.

LEGAL STATEMENTS This report may make forward-looking statements about SGC’s expectations or predictions about the future. Because these statements are based on current assumptions and factors that involve risks and uncertainties, SGC’s actual performance and results may differ materially from what is included in the report. Please refer to SGC’s SEC filings, including our 2020 Annual Report on Form 10-K filed with the SEC on March 3, 2021, and our subsequent periodic filings, such as our second quarter 2021 Quarterly Report on Form 10-Q filed on April 28, 2021, for more detail, including about the principal risks and uncertainties that could cause such differences.

For more information about this report or to inquire about our corporate responsibility performance, please contact Andrew D. Demott, Jr., SGC’s Chief Operating Officer, Chief Financial Officer and Treasurer, at ademott@superiorgroupofcompanies.com. 5


INTRODUCTION

MESSAGE FROM CEO

MICHAEL BENSTOCK My great grandmother, Rose Benstock, started Superior Group of Companies on the heels of the Spanish flu pandemic, entering us into the world of medical apparel in 1920. She was a bold woman and a trailblazer, who set the tone for our leaders who followed. I’m proud to count my father, who diversified our company and took it public in 1968, among them. In 2020, we celebrated a key milestone: the 100th anniversary of our founding. We’re immensely proud of what we have accomplished in the past century, as well as in our ability to adapt and rise to the transformational challenges presented by the COVID-19 pandemic.

In the wake of COVID-19, we prioritized the safety of our employees and customers while building on our legacy of providing excellent products and customer service. As international business leaders, we also supported communities in need, and we have emerged from these difficult times as a stronger company. Our values and principles have helped us endure. Our

At SGC, one of our most important goals is to empower our employees with the tools they need to succeed. In this vein, we have enhanced our benefits and expanded our learning and development programs – from courses on management training to lessons on maximizing our technologies to best practices to managing the transition to working remotely. We foster a culture of accountability, integrity, ambition, curiosity, innovation, and inclusiveness. Our aim is to retain and attract the best talent, and we are honored that Forbes placed SGC as #10 in its 2021 list of America’s Best Small Companies. Yet again, we maintained high standards for social responsibility within our supply chain, keeping up our trusted partnerships with suppliers and a long-standing attention to ethical sourcing. This includes using social criteria to screen our suppliers – an initiative we will continue to grow. In addition to our social commitments, we’re also paying close attention to opportunities to reduce our environmental impacts through our operations, procurement, and manufacturing decisions. In our distribution facilities we are retrofitting our systems with efficient equipment and lighting to reduce our energy use. Within our supply chain we are increasing our

domestic spend with factories that are engaged in sustainability platforms and sourcing textiles from mills that are Oeko-Tex® certified. We are also using recycled materials to create new products and increase sustainable products options for customers. Our company has a long history of working closely with many communities. Philanthropy is ingrained in our culture. While we have continued to give to some of the charities we have worked with in the past, during these trying times we focused most of our efforts on COVID-19-related areas, such as providing financial relief and donating protective personal equipment to frontline workers. We are grateful to the people who have helped our communities weather the pandemic, and who continue to fight to beat the virus. As we look back on the past century and consider the 100 years ahead, we’re thankful for the customers, employees, and partners who have helped shaped us. We’re also incredibly thankful for and continually awed by the many thousands who over the years have thought so highly of us that they became shareholders. The journey toward sustainability must be a concerted endeavor; this report serves as a crucial step along that path. We are committed to strengthening our corporate responsibility efforts and look forward to a more sustainable future.

second Corporate Social Responsibility Report highlights our accomplishments achieved in 2020 and speaks to the bright future of this organization.

Michael Benstock

CEO, Superior Group of Companies 7


ABOUT SGC

WE CELEBRATED 100 YEARS IN BUSINESS FOR SUPERIOR GROUP OF COMPANIES IN 2020,

AWARD WINNING

and our legacy of entrepreneurial spirit still drives us today. Our strategic and synergistic combination of companies equips the world’s most recognized companies with tools to unleash the power in their brands. We help those brands put their best foot forward with a range of products and services, including uniforms and image apparel, branded merchandise, and business process outsourcing. At SGC we are dedicated to sustainable practices, quality, value, professionalism and delivering extraordinary experiences for customers and employees.

Key Organizational Highlights (as of Dec. 31, 2020)

Years in Business

100

Facilities World Wide

35+

Employees

4,600

Net Sales

$526,697,700

Net Income

$41,026,000

NASDAQ Stock Market Symbol

SGC

For more information, visit our Investor Relations website: https://ir.superiorgroupofcompanies.com

Rose Benstock

9


ABOUT SGC

AWARDS & RECOGNITION

SUPERIOR UNIFORM GROUP

SUPERIOR BPO SOLUTIONS

Dressing America’s workforce

Being the voice of our customers

Forbes placed SGC as #10 in its 2021 list of America’s Best Small Companies; the list is based on 2020 data and features 100 of the best publicly-traded companies from around the United States.

The Los Angeles Business Journal named BAMKO as one of the best places to work in Los Angeles.

The Ministry of Economy of El Salvador recognized SGC among the companies that sustained and created new job opportunities during the pandemic.

Tecoloco mentioned TOG as a top five most attractive company to work for in the call center business in 2019 and 2020 based on the results of an annual external survey.

BAMKO’s former President (and SGC’s current Chief Strategy Officer) Phil Koosed was named to Counselor Magazine’s Power 50 ranking of the most influential leaders in the promotional products industry.

Employers for Youth awarded TOG first place among Call Centers and fourth place overall in the Best Companies for Young Professionals.

SUPERIOR BRANDING SOLUTIONS EMPLOYEE ID

Delivering lasting, custombranded connections U.S.A.

El Salvador

Belize

Jamaica

HEALTHCARE


ABOUT SGC

OUR FOCUS AREAS This Corporate Social Responsibility Report addresses prioritized topics that are aligned with our business strategy, our Purpose, Values and Principles, and feedback from our investors, customers, employees and other key stakeholders. This report was guided by recommendations from the Sustainable Accounting Standards Board (SASB) and Global Reporting Initiative (GRI).

Loyal Customers

OUR VISION • Seek opportunity • Innovate boldly • Earn the loyalty of our customers • Be the leader in corporate ethics and social responsibility

OUR VALUES • Integrity above all else

Materiality Topics that are being discussed in the report:

• Be ambitious; persevere; be tenacious

• Business Ethics & Human Rights

• Be honest and transparent

• Labor Practices & Supply Chain • Community Relations

• Curiosity drives change Embrace change • Everyone is accountable • Solve problems quickly

TOG giving back to the community

13


COVID-19 RESPONSE Mask Donations

Virtual Meetings

Scrub Donations

Work From Home

15


COVID-19 RESPONSE

To better support our employees during the pandemic, SGC expanded our benefit offerings above and beyond traditional pay, benefits, and learning and development. This has led to a greater focus on our employees’ physical, mental and financial well-being. Our expanded benefits include both temporary and longer-term changes such as:1

FINANCIAL

• More than $1 million additional salary expense distributed to essential employees in 2020 • Bonuses for hourly workers and temporary wage increases for distribution center/warehouse workers

OUR EMPLOYEES

• 401(k) plan updates (hardship clauses) • Company subsidized disability coverage

PHYSICAL

COVID-19 created an unprecedented and challenging situation for SGC and the world. We are proud that we were able to mitigate and adapt to the adversity, while working toward ensuring that our employees were safe and that our communities were supported.

• Working from home if possible (including technological resource support) • Providing personal protective equipment (PPE) and elevated sanitation and safety measures • Telemedicine co-pay fee waived • Flu shot incentives

MENTAL

• Additional paid time off, including rollover into 2021 • Extension of vacation time carry over into 2021 • Access to free sessions with mental health professionals • Frequent CEO and management communications

1

Benefits vary across geographic regions.

17


COVID-19 RESPONSE

THE OFFICE GURUS

BPO Solutions Adapting to Work from Home Our BPO segment has the largest number of employees within SGC, so we are especially proud of our team’s agility and creativity in successfully executing the significant transition to a work from home model. We successfully retained all our nearshore agents who were willing to work remotely. We did this in part by collaborating with the El Salvadoran government to lift laws preventing our employees from working from home, and then providing our agents with the necessities and cyber security measures to create a viable work environment— shipping computer equipment to homes, supplying internet extenders, providing sound canceling technology, and offering an internet stipend. Furthermore, we retained 100% of our customers who successfully managed through the pandemic, and even grew our agent headcount. We are honored that for our results the Ministry of Economy of El Salvador recognized SGC among the companies that sustained and created new job opportunities during the pandemic.

OPEN MIC We became creative with solutions to assist our talent during the pandemic. For example, The Office Gurus organized two Open Mic Sessions (webinars) to support our staff members on topics of Emotional Intelligence and “Take Care of Me, To Take Care of Others.” Similarly, all our divisions held department- or teamlevel online events to engage our employees.

19


COVID-19 RESPONSE

COMMUNITIES SGC’S GLOBAL DONATIONS In keeping with our legacy, SGC continued to give back to communities. We donated nearly $5 million worth of clothing and PPE to support our communities and frontline workers.

NEW YORK ARKANSAS

TEXAS

LOUISIANA

SYRIA

HAITI

EL SALVADOR 21


BUSINESS ETHICS & HUMAN RIGHTS

23


BUSINESS ETHICS & HUMAN RIGHTS

BUSINESS ETHICS

SPEAKING UP

Integrity is a guiding value in our approach to business ethics, and it begins at the top. Through broad communications efforts, our CEO and executive team regularly emphasize the importance of ethical behavior to our employees and other stakeholders. These beliefs are codified in our Code of Business & Ethical Conduct (“Code of Conduct”), Anti-Corruption and Anti-Bribery Policy, Insider Trading Policy, supplier and vendor manuals, and other compliance documents. We hold ourselves to a higher standard, and our actions reflect this. Our Corporate Governance, Nominating & Ethics Committee meets quarterly to discuss ethics, data security, data privacy, and similar topics with a focus on continuously improving the Company’s practices. The Committee also reviews our Code of Conduct more frequently than the minimum required period. Other internal teams, including our legal department, stay aware of global rules and regulations that pertain to our business. Often our internal procedures are more rigorous than what is required in the approximately 15 countries in which we operate.

It is critical to SGC to provide a safe and ethical workplace, and our publicly available Code of Conduct outlines several options for reporting questionable ethical behavior. Avenues for raising incidents include: • Calling our Company Ethics Hotline • Contacting the Chairperson of the Audit Committee • Reporting anonymously via our Safe 2 Say Program

25


BUSINESS ETHICS & HUMAN RIGHTS

HUMAN RIGHTS As a global organization we are committed to upholding our principles everywhere we operate. Our many policies that invoke human rights include our globally applicable Code of Conduct and supplier and vendor manuals. For example, they outline provisions requiring compliance with labor laws and other requirements as a condition of doing business with us. Our human rights due diligence process encompasses supplier selection, ongoing monitoring and employee training. We will decline opportunities with factories at high risk of labor violation unless there is a clear demonstration of compliance and mitigation plans. Third party audits review human resources documentation and interview factory workers, among other things, providing another screen for ethical conduct. Our branded merchandise segment’s international purchase orders also include human rights clauses.

Training our Employees on Ethical Conduct New employees receive training on our Code of Conduct in their introductory period, while our established workforce receives periodic training on these guidelines to refresh their knowledge. All employees are regularly required to read and confirm compliance with the Code of Conduct. We also provide training to our employees on our Anti-Harassment and Anti-Discrimination policies.

EXPANDING TRAINING AT BAMKO 100% SGC reinforces our policies with training and courses. Specifically, our branded merchandise segment increased the number of employees trained on human rights policies and procedures 3.5 times from 2019.

80%

70%

60% 40% 20% 0%

20% 2019

2020

27


LABOR PRACTICES & SUPPLY CHAIN

29


LABOR PRACTICES & SUPPLY CHAIN

LABOR PRACTICES SGC’s strict social compliance programs and clear guidelines for unacceptable behavior establish high expectations of social responsibility in our global sourcing and manufacturing operations. From the outset, we work to ensure that we are onboarding reputable companies that meet our ethical labor standards, while external audits and our own people on the ground assess performance, maintain compliance at factories across the globe, and encourage continuous improvement.

We are also diligent in tracking supplier and vendor documentation, assessing their social compliance certifications and proactively initiating conversations with suppliers and vendors to ensure they are prepared for a forthcoming audit when their certifications expire. If noncompliance is found, we prioritize remediation through a range of resolution efforts, such as holding collaborative conference calls and utilizing consultants to facilitate solutions.

100%

PERCENTAGE OF SUPPLIERS SCREENED USING SOCIAL CRITERIA FOR SGC’S UNIFORM SEGMENT

80%

60%

40%

20%

0%

2017

2018

2019

2020

31


LABOR PRACTICES & SUPPLY CHAIN

SUPPLY CHAIN We realize that it is important to assess our supply chain and determine where potential risks may affect SGC and our customers. We also appreciate that while certain requirements are immutable and apply to all suppliers and vendors, certain situations warrant a more individualized approach in which tailored solutions are appropriate. As part of our social compliance inspections, we ensure suppliers adhere to, among other things, minimum wage and fire safety protocols, while encouraging them to exceed the base requirements. Specific to our uniform segment, we have long imposed strict adherence to a zero-tolerance policy of sourcing raw materials from prohibited areas. We work collaboratively with our suppliers as needed to find acceptable alternate sources. In this way, we preserve our direct supplier relationships while ensuring that the risk is mitigated.

Safety First At SGC Facilities

Despite the challenges of COVID-19, our branded merchandise team increased the percentage of domestic spend with audited factories engaged in sustainability platforms by approximately 15%.

33


EMPLOYEE ENGAGEMENT

Training Event In Early 2020

35


SGC is consistently recognized as an exemplary workplace. We are proud of the talent we attract and retain. Our employees’ feedback on professional development and company culture is a vital tool we use to ensure we maintain an inclusive and positive place of work. In this spirit, our Director of Learning and Development led the charge of creating and delivering a wide array of content and courses for our employees. Employee input aided curriculum decisions, and with thirdparty partnerships as additional support we were able to offer more than 140 classes resulted in over 1,750 hours of live training. Many of the sessions were repeated, as well as recorded, so that employees unable to attend could listen at a more convenient time. The trainings received extremely positive reviews. We are proud to offer our talent tools for success.

I was able to relate the different leadership/ communication skills that help me appeal better to my teams. Adjusting my style of leadership to the different personalities allows my team to be more receptive and get the job done.

TRAINING PROGRAM HIGHLIGHTS

140 CLASSES

+ 40 NEW CLASSES

1,543

REGISTRANTS

EMPLOYEE ENGAGEMENT

TRAINING

1,755

HOURS OF LIVE TRAINING

ESSENTIALS OF INDIVIDUAL DEVELOPMENT

+468%

HOURS YEAR-OVER-YEAR

ESSENTIALS OF COACHING

+420%

HOURS YEAR-OVER-YEAR

TRAINING EVENT IN EARLY 2020

37


In 2020, we continued our successful Executive Coaching Program, in fact doubling the participation from the previous year from four to eight people. The program provides an executive coach to help further our individual leaders’ and teams’ growth within and beyond SGC-related skill sets.

• Effective Telecommuting • Leading Remote Workers

I didn’t realize how much I needed these courses. It has been a game changer.

OUR TRAININGS COVERED A BREADTH OF TOPICS, SUCH AS:

The Monday Motivational sessions really help lift me up and start the week strong. I read something positive when I first wake up in the morning - to start that day off in a positive note and aim to attract and exude positivity throughout.

EMPLOYEE ENGAGEMENT

TRAINING

• Habits for Highly Effective People • Stress Management • Microsoft Office (Excel, PowerPoint, Word) • Lean Management 39


EMPLOYEE ENGAGEMENT

THE OFFICE GURUS

TOG University TOG University, a management development program, was developed in 2017 to further our agents along their career paths. TOG University has cross-disciplinary business training so that employees can develop a well-rounded skill set. While the program was adapted to an all-remote environment due to COVID-19 precautions, TOG University boasted 116 graduates in 2020, maintaining a pre-pandemic graduation level.

TOG UNIVERSITY GRADUATES 124

125

116

100 83 75

69

EMPLOYEE SATISFACTION

90%

of our employees indicated they consider The Office Gurus a great place to work, in our annual BPO employee engagement and satisfaction survey. An external survey conducted by Tecoloco backed this up, as we were once again mentioned as a top five most attractive company to work for in El Salvador in the call center business.

50 25 0

2017

2018

2019

2020

41


EMPLOYEE ENGAGEMENT

DIVERSITY, EQUITY & INCLUSION By virtue of our global footprint, our employees are quite diverse. To ensure they are supported throughout their journey with SGC, we work hard to foster a culture of diversity, equity and inclusion. To this end, we continually evolve our approach to recruitment, training, and employee recognition, among other areas, to strengthen our commitment to a welcoming and open workplace.

MALE 2,309

FEMALE 2,229

51%

49%

MALE 300

39%

61%

GLOBAL WORKFORCE GENDER BREAKDOWN

In 2020, we had a third-party expert present to our Board on DE&I, including potential ways to amplify SGC’s efforts. We will continue to explore options that can bolster our ability to provide a diverse and inclusive work environment.

FEMALE 471

US WORKFORCE GENDER BREAKDOWN

BOARD DIVERSITY 2017 -2020

Female

Male

Nonminority

Minority

1

5

6

1

2

6

6

7

7

0

0

2017

2018

2

5

6

1

1

2019

2020 43


COMMUNITY RELATIONS TOG Virtual Race

HPI Cares

Donations To OAR

Olivia Has A Friend

45


COMMUNITY RELATIONS

Techo

COMMUNITY RELATIONS

FUNTER - Sillas de Ruedas

Think Pink

At SGC we believe that giving back to our communities is a fundamental component of doing business. Alongside COVID-19 related donations, we expanded on and continued our efforts to sponsor charities, volunteer our time, and improve the places in which we operate. In 2020, we continued our ten-year partnership with Teleton through a virtual race - 40 of our The Office Guru agents participated. In El Salvador we donated to an organization that provided 7,000 children and their families with nutritious meals.

HPI Cares

Motorcycle Raffle

HOPE

#TodoLoBuenoTeRegreso

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COMMUNITY RELATIONS

OLIVIA & FRIENDS

We are pleased to report that our Olivia & Friends program is still thriving – in 2020 we adopted a puppy named Pepe! This program was inspired by Olivia, a dog that The Office Gurus adopted in 2017. She has brought so much joy to the office and its visitors that we formalized the program as Olivia & Friends, a dog adoption charity in which employees can give through fundraisers, and through which we partner with local programs to rescue and adopt puppies. Olivia spent much of 2020 at home with one of our Gurus, and is excited to return to the office to show Pepe around. Follow Olivia and Pepe’s adventures at instagram.com/happygurutails.

Supporting the Organization for Autism Research

Our uniform segment maintained its annual charitable scrub design program. In 2020, we designed a charitable scrub top and donated 5% of the sales generated to the Organization for Autism Research.

SGC 2020 Charitable Contributions Total SGC cash donations

$129,725

21 charities Total BAMKO cash donations

$23,648

28 charities Total TOG cash donations

$4,578

7 charities

PEPE

49


ENVIRONMENTAL MANAGEMENT

Reducing Plastics With #Strawlessgurus

Uniforms Made With Recycled Materials

51


ENVIRONMENTAL MANAGEMENT

Walmart Vest By HPI Made With 100% Recycled Polyester

SGC values good environmental management in our operations and products, and we are working toward strengthening our stewardship practices wherever possible. We also recognize the opportunity that a circular economy presents for our business. We’ve integrated circular economy principles in our product design and manufacturing. For example, in 2019 our uniform segment rolled out a new program using recycled bottles to create garments for one of our largest customers. The initiative was so well received that we replicated this program in 2020, recycling 9.4 million plastic bottles – an increase of 1.6 million bottles from 2019 – to make 1.5 million polyester garments. In 2020, 9.7% of our uniform sales were manufactured from recycled products. Although our recycled material usage rose by about 10%, due to the impacts of COVID-19 and demands for single use PPE, the percent of our yearly volume of materials that used renewable resources decreased from last year. We look forward to increasing this percentage in the years to come. • 2019: Recycled 7.8 million plastic bottles to make polyester garments. • 2020: Recycled 9.4 million plastics bottles to make polyester garments. The number of bottles used per garment varies pending customer and garment type.

53


ENVIRONMENTAL MANAGEMENT

In line with our ESG values, we have broadened the scope of our work within our supply chain. All the textile mills that we use are 100% Oeko-Tex® certified – a certification what will help us better identity the chemicals involved in our manufacturing process.

In 2020 our branded merchandising segment established approximately 20 new relationships with suppliers that offer sustainable products, such as Forest Stewardship Council certified paper, compostable plastic and natural fabrics as substitutes for plastic-based bag materials. This segment has also revamped its marketing and sales materials, such as by incorporating sustainable swatch books, to highlight new sustainable offerings to customers. While our branded segment’s packaging recycling program was delayed due to COVID-19, we were able to train our teams on sustainable packaging options and unnecessary packaging elimination. We aim to report on the number of packaging pieces saved in 2021.

Our approach to environmental sustainability extends beyond our facilities and products. We are proud to partner with employees, customers, and vendors that consider sustainability as high a priority as we do.

Our shared distribution facilities strive to reduce impacts in-house. Several facilities undertook lighting upgrades, and we consistently reuse corrugated and plastic cartons received from our vendors. For example, our Oak Grove facility was updated with energy efficient LED lighting with motion detectors. Through these efforts we reduce our energy consumption, and both reduce and divert waste from landfill. In addition, any new facilities are built using sustainability standards in mind. In our new Eudora facility, we installed an energy efficient HVAC system, LED lighting, conveyor and box retrieval cranes with energy efficient low voltage controls, and planted various shrubs and plants to prevent soil erosion.

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CLOSING

We take our role as a global corporate citizen seriously, and our company has always been governed by high ethical standards. Years ago we were identified in the first Fair Labor Trendsetter Report as a company that cares for its workers—a testament to our foundational values. We also recognize that there is always room for improvement. At SGC, we strive to excel, continually seek new opportunities, innovate boldly, and earn customer loyalty though our actions.