SOCIAL REPORT 2015 Reporting period July 2015 â€“ June 2016
TWO MINUTE VERSION
ABOUT DEUTER KEY EVENTS 2015/16 PARTNERSHIP FOR SUSTAINABLE TEXTILES DEUTER ABOUT THE FWF THE FWF ABOUT DEUTER SIMPLIFIED PRODUCTION CYCLE PRODUCTION VOLUMES PER COUNTRY 2015/16 LIST OF SUPPLIERS DEUTER PRODUCTION IN NUMBERS
5 6 6 7 7 8 12 12 12
1. VIETNAM 1.1. Implementation 2015/16 1.2. Monitoring 1.3. FWF Complaint System 1.4. Targets 2016/17
8 8 11 11 11
3. MYANMAR 3.1. Monitoring 3.2. FWF Complaint System 3.3. Targets 2016/17
13 13 16 16
FOREWORD DEAR DEUTER FAMILY, CUSTOMERS, AND BUSINESS PARTNERS! The world has become more unstable. That’s the predominant feeling I have when looking back on the past months. The attacks in Munich and Paris, the attempted coup in Turkey or the terrible suffering of the refugees – how do you maintain your ideals in the face of events that repeatedly shake your positive core belief? We at Deuter foster a brand philosophy, which has also helped me these days to remember that it is worth to keep up our beliefs and strive for improvement. We trust in our policy of small steps – a policy, which builds a strong, solid foundation for changes and which has again proven to be the right path in the past months. Our brand philosophy primarily focuses on people – people worldwide, including the employees of our long-term partners Duke in Vietnam and Bellmart in China and since 2015 also in Myanmar. In the past fiscal year all three factories in Vietnam (chapter 1) and the new production site in Myanmar (chapter 2) have been monitored by independent FWF auditors. Further, so-called WEP trainings were held by the FWF at all sites in Vietnam. In the end, changes are most effective when they arise from cooperation rather than being dictated and this means we have to strengthen communication and the awareness for rights as well as responsibilities.
Martin Riebel (Managing Director)
Another big positive inspiration came from individual stories in the team at the headquarters in Germany. Such as the vita of our new Area Manager Johannes Heinl, who joined us as an intern in May 2015. We quickly realised how much potential he has and when we were looking for support for our international sales team, we knew he was qualified for this responsible position. We always try to promote talents and encourage them to show and develop their strengths. Those are very personal moments I experience in Asia as well as in Europe and they assure me that not the whole world is upside down. It is our duty, in the small as well as in the big, to believe in and strive for the better, especially in unsettled times. Our annual Social Report has always been an occasion for us to reflect our ambitions and efforts and to consciously define new tasks. Now I hope you will enjoy the read. Your Martin Riebel
TWO MINUTE VERSION In the fiscal year July 01, 2015 through June 30, 2016 four factories of our production partners have been audited by the Fair Wear Foundation (FWF). All three factories of our long-term partner Duke in Vietnam were audited in September 2015. Prior, the FWF held successful WEPs: these Workplace Education Programmes focus on strengthening the communication between workers and management (chapter 1). We also achieved a further reduction of overtime at our supplier Duke. In 2015 we were awarded the FWF’s Best Practice Award for our efforts in overtime reduction and we were able to jointly further lower overtime in the past fiscal year.
To unburden the production in Xiamen and to meet the cost rise in China, more and more sleeping bags are produced in the new factory of our long-term partner Bellmart in Myanmar. Only the production of our down sleeping bags as well as bluesign® certified products has remained in China (chapter 2). At the first audit of the new factory in May 2016 some deficits in regards to communication and workplace safety were detected. We are working jointly with Bellmart on a follow-up of the audit (chapter 3). Also, the textile alliance Textilbündnis has further defined and formalised its structures in the past fiscal year. By the end of 2016 all members are to develop individual roadmaps (page 6).
ABOUT DEUTER Hans Deuter founded his company in 1898 in Augsburg/ Germany and was soon commissioned to supply the Royal Bavarian Post Office with postage bags and mail sacks. Today Deuter is one of the leading brands for backpacks, sleeping bags and accessories worldwide. 101 employees are working in the headquarters in Gersthofen near Augsburg and the brand is represented in 54 countries. In 2006 Deuter was acquired by the Schwan Stabilo Group – a family owned company with a tradition of 160 years. We believe that “from little things big things grow” and are committed to efficiently reduce the negative impacts of our actions on man and nature step by step.
KEY EVENTS 2015/16
„PARTNERSHIP FOR SUSTAINABLE TEXTILES GIVES US THE OPPORTUNITY TO IMPROVE THE SOCIAL AND ECO STANDARDS WITHIN THE TEXTILE INDUSTRY WITH POLITICAL SUPPORT AND THE COOPERATION WITH OTHER COMPANIES. THE TEXTILE ALLIANCE IS CURRENTLY DEFINING ITS FRAME STRUCTURES AND WE ARE VERY MUCH LOOKING FORWARD TO FINALLY START PUTTING THE OBJECTIVES INTO PRACTICE IN 2016/17!” Katrin Bauer (CR Managerin)
BEST GRADE: “LEADER STATUS” in FWF’s Brand Performance Check 2015 LECTURE AT THE 3. BAVARIAN CSR DAY Growth Engine CSR – why the economy’s future depends on sustainability. LECTURE AND INFORMATION DESK AT FOKUS N (sustainability exchange and network event in Augsburg/Germany) PRESENTATION BY MARTHA AND RICHARD ANKER ABOUT OUR NEW LIVING WAGE CALCULATION (ISPO 2016) ATTENDANCE OF THE FWF INDUSTRY ROUNDTABLE 2016 (ISPO 2016) AND THE FWF MULTI-STAKEHOLDER MEETING
PARTNERSHIP FOR SUSTAINABLE TEXTILES The Partnership for Sustainable Textiles was founded in October 2014. Representatives from business, government and civil society aim at continuously improving the social, ecological and economic conditions along the whole textile supply chain in the textile and apparel industry. Deuter has joined the Partnership for Sustainable Textiles in June 2015. The Partnership for Sustainable Textiles has aligned its different working groups and now works on the specification of its implementation standards and indicators. To improve the cooperation within this big multi-stakeholder alliance with 185 members (as at May 2015) a joint online platform has been created. By the end of 2016 all members have to develop an individual roadmap based on the specified implementation standards. Although these roadmaps will not be published yet, this will be obligatory for all members by early 2018.
FWF ANNUAL CONFERENCE EXCHANGE AT THE BSI SECTION OUTDOOR ABOUT CSR
DEUTER ABOUT THE FWF We joined the Fair Wear Foundation (FWF) in 2011. The FWF is an independent organisation cooperating with companies and factories worldwide to improve the working conditions in the textile and garment industry, especially in low-wage countries. By becoming a member we are committed to the FWF’s strict Code of Labour Practices.
We have found a strong partner in the FWF that greatly supports our efforts in improving labour conditions with independent auditors, important background information and a global network. And with the FWF’s annual Brand Performance Check our commitment stays transparent and credible.
THE FWF ABOUT DEUTER THIS IS WHAT THE FWF SAYS ABOUT DEUTER IN ITS LATEST BRAND PERFORMANCE CHECK – THE ANNUAL REVIEW OF OUR EFFORTS TO IMPROVE WORKING CONDITIONS:
„DEUTER MEETS MOST OF FWF’S MANAGEMENT SYSTEM REQUIREMENTS AND GOES BEYOND SEVERAL OF THEM. DEUTER HAS 97 % OF ITS SUPPLY CHAIN UNDER MONITORING MEETING THE 90+% THRESHOLD REQUIRED FOR MEMBERS AFTER THEIR THIRD YEAR OF MEMBERSHIP. Deuter has a stable, long-term relationship with all its suppliers as well as significant leverage, which allows them to work effectively on improving working conditions. While continuous efforts are still needed, the company has strong systems in place to prevent and remediate excessive overtime. It has made considerable efforts to ensure subcontractors are part of its monitoring.
Deuter received one complaint in its last financial year, which was handled according to FWF‘s complaint procedure. Preventive steps were implemented. Challenges remain to ensure independent worker representation as well as continuous remediation at smaller subcontractor locations.”
THE 8 LABOUR STANDARDS www.fairwear.org
employment is freely chosen
freedom of association and the right to collective bargaining
no discrimination in employment
no exploitation of child labour
payment of a living wage
reasonable hours of work
safe and healthy working conditions
a legally binding employment relationship
1. VIETNAM Since 1994 Duke has produced our entire backpack, bags and accessories collection and we are Dukeâ€™s exclusive customer. Duke accounts for 90 % of our production volume. At the three sites close to Ho Chi Minh today altogether 4.210 employees (thereof 3.230 women and 980 men as of July 2016) assure the Deuter quality.
Ho Chi Minh
1.1. Implementation 2015/16 In the fiscal year 2015/16 we put a lot of time and effort in the follow-up and clarification of a complaint that reached us in November 2014. The Australian non-profit organisation Viet Labour reported non-compliances in regards to
working conditions in two factories of our producer Duke (see Social Report 2014). We informed the FWF immediately and they initiated an independent investigation of the allegations. Some could not be confirmed, however some points requested improvement. All parties agreed to strengthen the communication between workers, management and supervisors in the factories. Therefore a WEP was conducted in all three factories in August 2015.
SIMPLIFIED PRODUCTION CYCLE: (SAMPLE MAIN COLLECTION 2016) Approval
First delivery to the shops
$$$? $ $$
Strategy Development and Design Test case Production Production shipment sales samples from Asia
05 07 01 04 06 07 08 12 01 2014 2015 2016
WEP stands for Workplace Education Programme. The training educates workers and management in regards to the FWFâ€™s Code of Conduct as well as communication. Both sides learn effective communication tools for problem solving and worker-management dialogue. We further initiated a FWF audit in September 2015 (see 1.2. Monitoring). In December 2015 our Partner Duke took part in a FWF subcontractor training. Right: FWF subcontractor training Below: FWF audit
Right: Workplace Education Programme
We – Duke and Deuter – were very proud to receive the Best Practice Award 2015 for the significant overtime reduction in the years 2011 to 2015 (see Social Report 2014). This was the result of a multi-level approach, which included
• a balanced production capacity utilization over the entire year by establishing the so called pre-production of carry-over articles during low season • building a third factory in Vietnam and • increasing the storage capacities in the German headquarters.
However, overtime continues to be an issue that we have to and want to focus on. We further strive for an optimization and we were able to reduce overtime also in 2015 /16.
MONTHLY EXCESSIVE WORK HOURS AT VINA DUKE, OUR PRODUCTION PARTNER (FACTORY 1/2 AND FACTORY 3)* 100 92
2011 2012 2013 2014 2015 2016
Maximum: The highest overtime number during that month. Mode: The most frequent overtime number during that month. Minimum: The lowest overtime number during that month.
The randomly selected employees worked a maximum of 92 excessive work hours in January 2011, but a minimum of 67 overtime hours. Most of the randomly selected employees worked 73 excessive hours in January 2011. *random sample of workers from different departments (e.g. sewing, packing and cutting)
1.2. MONITORING After the audit of a subcontractor of our partner Duke in • One worker has applied for her job with wrong paMay 2015 (see Social Report 2015) we followed up the pers (those of her older sister) stating she was born in results in this fiscal year. A task, however, that turned 1991, when she was actually born in 1998. The proout to be very difficult. One reason being that we ourcess of age verification, therefore, has to be improved. selves had no direct business relation with the subcon- All points have been addressed and solved during the tractor, which impeded the communication. But the sub- past fiscal year. contractor also showed no interest in improving „ONE OF THE BIGGEST CHALLENGES IS THE PLANNING AND PLACING OF the points in discussion. THE PRE-PRODUCTION. THERE IS A VERY HIGH COORDINATION RISK, Despite repeated visAND IT IS CRUCIAL THAT OUR IMPORTERS UND OUR SUBSIDIARY IN its and communication Duke was forced to end THE US ARE ALSO STRONGLY COMMITTED TO THE PROJECT. IT IS NOT the business relation AN EASY TASK SINCE DEUTER IS A GLOBAL BRAND OPERATING IN with the subcontractor. 54 COUNTRIES AND EACH AND EVERY MARKET HAS ITS OWN RULES. In September 2016 the FWF team audited all ALL IN ALL MORE THAN 650.000 ARTICLES ARE ORDERED AT ONCE.“ production sites of our Sebastian Schmidt (Supply Chain Manager) partner Duke. Since the management systems of the 1.3. FWF COMPLAINT SYSTEM three factories are identical or very much alike the re- There has been no complaint in the past fiscal year. sults of the audits are very similar, too. 1.4. TARGETS 2016 /17 A selection of the improvement potential / audit results: For the fiscal year 2016 /17 we will continue to focus on • The Vietnamese Labour Law has been revised and in living wages as well as the improvement of the subconconsequence the wage agreement has to be updated. tractor management. Further, we established relations • There were various occupational safety points such to the Global Living Wage Coalition, an initiative by six as defective emergency exit signs, missing fire extin- of the world‘s most influential sustainability standards guishers or the routine health check which for some like Fairtrade International, UTZ Certified, and Social Acemployees is due not once but twice a year. countability International (SAI) to improve wage levels in • Workers have to approve individually planned over- certified supply chains. And supported the calculation of time and sign a declaration of consent, while to date the Living Wage Benchmarks for HCMC in Vietnam. Unthey agreed in teams. fortunately, the official benchmark has not yet been published and therefore cannot be presented in detail here.
2. CHINA Our partner Bellmart was able to significantly unburden its production site in Xiamen by building a new factory in Myanmar. Today, all our synthetic sleeping bags are produced in Myanmar. 240 people are currently working for Bellmart in Xiamen (as of December 2015) producing all our down sleeping bags as well as our bluesignÂŽ certified products.
PRODUCTION VOLUMES PER COUNTRY 2015/16
DEUTER PRODUCTION IN NUMBERS
2 5 101 240 387 4300
Suppliers Production sites Deuter Mitarbeiter Employees in China Employees in Myanmar Employees in Vietnam
LIST OF SUPPLIERS Myanmar (< 3 % )
China ( 4 % )
Vietnam ( 93 % )
Vina Duke Corp.
Hoc Mon (Factory 3)
Ho Chi Minh City
Vina Duke Corp.
Cu Chi (Factory 1/2)
Ho Chi Minh City
Vina Duke Corp.
Count Vina (Factory 4)
Bellmart Industrial Co., Ltd
Kingtai Industrial (Xiamen) Co., Ltd.
Bellmart Industrial Co., Ltd
Bellmart (Myanmar) Co., Ltd.
3. MYANMAR We as Deuter have not made the decision to move production to Myanmar ourselves. We rather trusted in the cooperation with our long-term partner Bellmart, who has built an additional factory in Myanmar.
Bago Thailand Cambodia
Currently 387 employees work in the new factory (thereof 298 women and 89 men as at May 2016). We were able to further expand the production in Myanmar and today already 44% of our sleeping bags are manufactured at the new site. These are synthetic sleeping bags only. The production of our down sleeping bags and all our bluesignÂŽ certified products remains in the factory in Xiamen, China. Just like in the fiscal year before, several Deuter employees from the headquarters (management as well as product and quality managers) have visited the factory. Further a FWF audit was conducted in May 2016, accompanied by our CR Manager on site. 3.1. MONITORING The Audit In May 2016 we initiated an audit at our partner Bellmart. It was a so-called shared audit in cooperation with two further FWF members. Apart from the sleeping bag production the site also accommodates a sewing factory for garments operated by the same management.
Thus the audit of the sleeping bag factory was followed by the audit of the garment production. Although the results were very similar, Deuter handled the follow-up for the sleeping bag site, while another member oversaw the follow-up of the garment production. All of the brands are in close communication to keep the processes as effective and efficient as possible. The audit team consisted of two auditors from Thailand and one from Burma, who was responsible for the interviews with the employees. The FWF is currently just about to establish a local audit team.
The Results There were no irregularities regarding forced labour, child labour, payment of legal living wage or legally binding employment. Communication and Complaint System Deficits were found, however, regarding factory internal communication. The workers are not sufficiently informed about the FWF’s Code of Labour, the Burmese Labour Law and their rights. A complaint system exists, yet the employees are not used to the procedures and the workers’ representative is not much involved in the complaint process. FROM THE WORKERS‘ INTERVIEWS OF THE FWF AUDIT:
> THE WORKERS INDICATED THAT THE MANAGEMENT TREATS WORKERS QUITE WELL AND ARE ABLE TO COMMUNICATE WITH MANAGEMENT THROUGH THEIR SUPERVISOR. > EVEN THOUGH THEY ARE NOT AWARE OF THE COMPLAINT POLICY AND PROCEDURES, THEY FEEL FREE TO RAISE COMPLAINTS TO SUPERVISORS OR MANAGERS DIRECTLY. Freedom of Association There is no wage agreement and the trade union is not involved in disciplinary proceedings. There are further no regular meetings between trade union and management or they are not recorded.
WAGE LADDER BELLMART (MYANMAR) FOR SEWING MACHINE OPERATORS MONTHLY WAGES INCLUDING BENEFITS (NO OVERTIME) 200 MMK
Maximum: 165750 MMK Mode: 155450 MMK
Minimum: 132250 MMK 125 MMK
108000 MMK Legal minimum wage1) 81000 MMK Legal minimum wage for workers in probation2)
25 MMK Currency: Myanmar Kyat (MMK) Maximum: The highest wage paid in the sewing department. Mode: The wage that most workers receive in the sewing department. Minimum: The lowest wage paid in the sewing department. 1) Legal monthly minimum wage Myanmar from September 2015 on. 2) Legal minimum wage for workers in probation period from September 2015 on. 3) Poverty line, World Bank international norm, 2014.
32370 MMK National poverty line 3)
Wages Before 1st September 2015 Myanmar had no national minimum wage. Since then the minimum wage is in effect and is set at: • Trainees for 3 months are paid 50% of the minimum wage (1.800 Kyats per day). Workers who are under probation for 3 months are paid 75 % of the minimum wage (2.700 Kyats per day). After working for six months, the workers are regarded as permanent workers who are fully paid (3.600 Kyats per day) • The legal minimum wage per month is calculated with 30 days per month x daily wage (54.000 MMK, 81.000 MMK, 108.000 MMK) • Currently we have no independent or multi-stakeholder minimum wage evaluation for Myanmar. Working Hours Maximum weekly working hours allowed in Myanmar amount to 60 hours/week (44 hours/ regular working + overtime 16 per week). • Regular working time at Bellmart in Myanmar is from Monday to Friday 7:30 am to 4:30 pm. Lunch time is from 12:00 pm to 13:00 pm (1 hour), Saturdays are only ½ -workdays 7:30 am to 11:30 am. Overtime starts from 4:30 pm to 5:30 pm or 6:30 pm. The factory has to submit the overtime request with the agreement of a worker representative to get the approval from Labor Department every week before providing the overtime to workers. The audit has shown that the employees work 8-16 hours overtime per week, which complies with the legal requirements. However, the audit uncovered very few irregularities regarding the documentation of Sunday work.
Workplace Safety The building housing the stitchery had not the same safety precautions as the main building. Fire alarm, emergency exit signs and evacuation plans were missing.
Handbook for workers, Bellmart, Myanmar
Workplace safety, Bellmart Myanmar
Follow-up An orienteering program for new employees is being set up and complemented by regular trainings. Thus all workers will be informed about the processes within the factory, the communication channels and the FWF. The workersâ€™ representative is involved in the grievance process. Additionally, every worker receives a handbook with all the important information. Non-compliances regarding workplace safety have already been addressed and are planned to be remediated until October 2016. Monitoring overtime and wages will be done in the future.
Our partner Bellmart has agreed to manage the FWFâ€™s WEP in Myanmar. However, there is not yet a date set for the pilot. 3.2. Complaint System There have been no complaints in the past fiscal year. 3.3. Targets 2016/17 In the fiscal year 2016/17 we will finalise all open points of the Corrective Action Plan and further support Bellmart with trainings and expertise. Also, the wage policy will remain an issue, which we will follow closely.
Founding member of the European Outdoor Conservation Association (EOCA)
bluesign® system partner
FWF membership New CR manager position 1. FWF audit at Duke Duke becomes bluesign® system partner
FWF audit at Duke (Hoc Mon, Count Vina) Bellmart becomes bluesign® system partner
WEP training at Bellmart
AND, OF COURSE, PLEASE DO NOT HESITATE TO CONTACT US IF YOU HAVE ANY QUESTIONS OR QUERIES: KATRIN BAUER – KATRIN.BAUER@DEUTER.COM
FWF audit at Bellmart OHS training and audit at Duke (Hoc Mon)
FWF verification audit at Bellmart „Leader Status” in the FWF’s Brand Performance Check
FWF Best Practice Award
Member of the „Partnership for Sustainable Textiles”,
WEP and audit at Duke
Audit at Bellmart in Myanmar
DEUTER SPORT GMBH Daimlerstraße 23, 86368 Gersthofen, Germany Tel. + 49 (0) 821 / 49 87 -0 www.deuter.com
Published on Oct 25, 2016
Published on Oct 25, 2016
The Deuter Social Report sums up all our actions regarding corporate responsibility towards our workers and their environment.