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SUSTAINABILITY REPORT 2020


H OW T H I S R E P O R T WA S P R E PA R E D

Covering the Eton Group 2020, this is Eton’s fourth Sustainability Report. It is inspired by the Global Reporting Initiative’s (GRI) Sustainability Reporting Standards of 2016.

G OV E R N A N C E O F T H E S U S TA I N A B I L I T Y WO R K

Eton’s Management Group is responsible for overall sustainability direction, goals and strategies, and reports to the Board and its appointed Sustainability Responsbile. The Sustainability Steering Group advices the Management Group. The Steering Group is headed by the CEO and currently includes CFO, Quality and R&D Manager, as well as functions in the Quality and R&D and Marketing department. Sustainability development within each area made the responsibility of every department head, and department as of 2020.

C O N TAC T

For questions about this Sustainability Report, please contact us at CSR@etonshirts.com

TABLE OF CONTENTS

Words from our CEO

3

Eton’s Business Idea

5

Eton’s Vision Statement

5

Company Details

7

Business Overview

8

CHAPTER ONE: Eton’s View on Sustainability & CSR Sustainable Development Goals Materiality Assessment Key Stakeholders, Dialogue & Expectations Sustainability Goals & Strategy Integration into Business Today’s Challenges Summary

9 12 14 15 16 18 19 20

CHAPTER TWO: People 23 Priorities, Policies & Implementation 24 The Eton Values 26 Healthy Work Environment 28 Equality, Diversity, Fairness & Respect 28 Education & Training 29 The Effects of Covid-19 30 Reorganization 34 A Great Place to Work 35 Identified Risks & Actions 36 CHAPTER THREE: Planet Product Value Chain Design Materials & Quality Decision-making: Principles & Policies Shirt Production Chain Supplier Compliance: Principles & Policies Distribution Responsible Marketing Selling: Our Three Pillars e-Commerce Retail Wholesale The Consumer Reducing Emissions by 50% Analysis by 2050 Identified Risks & Actions Summary – Previous Goals & Results

37 39 40 42 46 50 51 55 56 60 61 62 63 65 66 68 71 72

AUDITOR’S REPORT GRI

74 75


WO R D S F R O M O U R C E O

David Thörewik Eton was founded in 1928, and since the very beginning,  we have been obsessed with creating a superior quality product. A timeless yet stylish design that can be used many times and for many years.

were not spared. Despite our employee’s enormous commitment to mitigating the effects, we have had to make changes as an effect of the outbreak. Not only did the business come under pressure, but the pandemic has also greatly impacted consumer behavior. It has not been an easy adjustment, but I am confident that we are now in a better position to service our consumers, and as a consequence, remain a great and safe place to work. 

Not relying on any middlemen, we make our products in close collaboration with our suppliers and work together to improve products  across everything from fit to performance, fibers, and weaving techniques. Our  absolute  belief is that sustainability should include  all  environmental and social aspects and be fully integrated into everything we do. In the words of our founder, Annie Pettersson, “we should never hand over a shirt unless we are fully satisfied with it.” Today the words “fully satisfied” incorporate more than our obsession with making the best shirt. They also include being proud of how it was made, by whom, under what circumstances and the full lifecycle of the shirt. 

An initiative that I am proud of is how we have now fully integrated our sustainability goals into our business processes. The governance of our sustainability efforts is coordinated through a sustainability steering group that consists of people representing different departments.  The group advises management but also aligns initiatives and coordinates the implementation of the overall strategy. During the past year, this has resulted in a joint commitment throughout the organization as well as several new initiatives bringing us closer to our long-term goals. We are adding even more resources to be able to speed up and meet our revised goals.  Further, we have updated our Eton values, emphasizing sustainability as a core part of our culture, and integrating it into our personal performance reviews. I know that perhaps ‘culture beats strategy’ is a worn-out expression, but we believe that the most important success factor is a broadly anchored ownership. As of 2020, it is, therefore, our joint responsibility – and opportunity – as Etonians to work towards Eton’s sustainability goals. 

While never ceasing to look for new, even more sustainable options, we have made a commitment to having all our cotton products be made from 100% organic cotton by no later than 2025. In 2020 we communicated this ambition to all our suppliers and  initiated the process, beginning with the products that will have the biggest impact. In this spirit, we started with our most important fabric – Eton Signature Twill – and developed an, in all aspects, better  premium organic cotton  version.  I cannot stress enough how significant this is as a step towards ensuring that we reach our 2025 goal, and I am excited to share that the fabric has passed our extensive quality testing with the highest marks. 

Looking ahead, I believe in making the impossible possible. GOTS certification of our wrinkle-free fabrics is next on the list. Eton is renowned for its perfect finish, so it is important that we set ourselves the challenge of developing a version that is perfect while at the same time reducing or eliminating any substances negatively impacting our blue planet. While we still have much to do, I am very proud of my hard-working colleagues’ absolute commitment to ensuring that Eton plays its part, or more, in ensuring that future generations will inherit a better world.

Another important part of a shirt’s total environmental impact is how many years it can be used before it is worn out. To help customers make their Eton shirts last, we have included a new Care Guide in the launch of our new online platform. Eton shirts are made from the finest fibers, and they are constructed to last. If you treat the shirt well, employing sustainable washing and airing techniques, it will look crisp and new for many, many years.  

We have set ourselves ambitious targets, but I am confident that by working together as one Eton, we will reach them.

Most importantly, we have decided to sharpen our ambition for CO2 emissions. Our revised goal is for Eton to be CO2 neutral by latest 2035.  I am still as excited as I was when I had the privilege to join the great Eton team, but 2020 was above anything else a year when we were tested, medically, physically, mentally, and emotionally.  The Covid-19 outbreak is a human tragedy, and it affected us all personally in many and different ways. Its impact on markets exerted tremendous pressure on the apparel industry, and we

David Thörewik CEO, Eton

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ETON’S BUSINESS IDEA

Superior products for all occasions in life, made with consideration for people and the planet, sold in a premium to luxury segment to men striving for excellence. ETON’S VISION STATEMENT

To make Eton known for the best shirts in the world.

BRAND DNA

Superior Quality

Innovation

Style

5

Modern Luxury


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OWNER EQT

Company Details

OFFICES Gånghester (HQ) Alpharetta Cantu London New York Stockholm WHOLESALE SHOWROOMS Amsterdam London Dusseldorf New York Copenhagen Stockholm PRODUCTION CHAIN Design: Eton Stockholm and Cantu Product development, Quality and Production: HQ Gånghester, Romania Cotton and other raw materials: Eton mainly buys fabric directly from weavers, who in turn buy yarn from spinneries, who in turn purchase raw materials. These are mainly but not exclusively produced in Egypt, Turkey, the US. Other components: Bought directly, Sweden, Italy. Weaving: Italy, Switzerland, Egypt and Turkey. Finishing: Italy, Switzerland and Turkey. Assembly units: Romania, Lithuania, North Macedonia, Eton HQ Accessories: Italy, England LOGISTICS CENTERS Own: Gånghester, Sweden Alpharetta, USA

Third party logistics center: Toronto, Canada

CUSTOMER TOUCHPOINTS Eton Online: reaches 41 countries. Eton Retail: 16 locations, Europe, North America Eton Outlet: 5 locations, Europe, North America Wholesale: Partners in Europe, North America Russia, the Arab World, Asia. E-wholesale: Partners with near global reach.

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BUSINESS OVERVIEW

SPECIALIST ASSORTMENT

SPECIALIST ASSORTMENT

Off-the-shelf premium to luxury shirts and accessories, Custom Made shirts. Key usp: Uncompromising production and quality focus.

Production per product range

Shirts pieces

Accessories pieces

Total

2019

1 179 626

271 775

1 451 401

2020

652 242

91 886

744 128

Four key areas: » Shirt specialist, inhouse design and buying » Quality fabrics » Unique finishing (crease resistant products) » Quality assembly process

SALES BY CUSTOMER TOUCHPOINT

FIVE PILLARS Eton is a customer facing company with own online and retail, including own outlet stores, and a wholesale partner to premium department stores and global e-wholsale partners.

12,5% Retail 26,4% eCommerce

End-users: primarily male 61,1% Wholesale (incl eWholesale)

(note: heavily affected by Covid 19) A GLOBAL COMPANY

SALES PER MAJOR REGION

Sold on a near global scale digitally, and in brick-and-mortar stores in over 50 markets in Europe, North America, Africa, Oceania and Asia (including Russia).

8,4% UK and Ireland <4% Other 32,0% The Nordics

39,1% North America

NET SALES

456 784 SEK

For details, see annual Financial Report. Please request from csr@etonshirts.com

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17,2% EU


CHAPTER ONE

Eton’s View on Sustainability & CSR

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INTRODUCTION

Founded in Gånghester, Borås, Sweden in 1928, Eton has gone from a family-owned shirtmaker to a multi-national shirt specialist brand in just over 90 years. In 2019, we took the step to make “Consideration for people and planet” a part of our business idea. We know that business activities have an environmental and social impact, and that the fashion industry as a whole faces specific sustainability challenges.

PEOPLE

PLANET

2020 was an extraordinary year, but if anything the Covid-driven need to focus on “People” (as in for example health and safety) in unique ways, reinforced how important this area always is. As a company we know and acknowledge that our actions affect our own employees, business partners, their employees, our customers and the communities in which we operate.

We also acknowledge that this is a critical point in time to take on the challenges inherent in all our touchpoints, from own operations to supply chain, sell-out and end-consumer phase. We do so referencing the goals set in the Paris agreement within the United Nations Framework Convention on Climate Change (UNFCCC), and implement them in the Eton framework through our Materiality Matrix, and the roadmap of our set Sustainability Goals.

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ETON’S VIEW ON SUSTAINABILITY 2019

Global – Sustainable Development Goals

The 2030 Agenda for Sustainable Development is a global, shared blueprint for peace and prosperity for people and the planet. The core consists of 17 identified Sustainable Development Goals (or SDGs) focusing our efforts world-wide in order to produce results by 2030. The 2030 Agenda has been signed by all UN member states (2015), and all stakeholders, including the private sector and civil society as well as official governments are expected to contribute to the identified goals.

SDG 6: Ensure access to clean water and sanitation for all.

SDG 12: Ensure sustainable consumption and production patterns.

SDG 8: Promote inclusive and sustainable economic growth, employment and decent work for all.

SDG 13: Take urgent action to combat climate change and its impact.

ETON AND SDG Contributing to the SDGs are a given foundation for our sustainability work. As a member of the textile industry we have identified SDG 6, 8, 12 and 13 as our primary focus goals when developing our Materiality Matrix (see page 14).

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13


C O M PA N Y

Materiality Assessment In the Eton Materiality Assessment, we identify and assess the potential environmental and social issues most relevant to us as a company, and, based on input from key stakeholders and the Sustainable Development Goals define and rank Eton’s prioritized areas. METHOD In-depth interviews with external and internal stakeholders (Management Group and department representatives), conducted and analyzed together with sustainability consultancy firm Futerra in 2018.

CONTINUOUS DIALOGUE It is Eton’s aim to engage in continuous dialogue with stakeholders to map their expectations of us. For 2020, we aimed to do so in an extensive and organized enough format to produce an updated materiality assessment. Due to Covid 19, this had to be postponed. Therefore, we have extended the use of the existing matrix by another year but taken regular input from stakeholders into account in our yearly action plan, with a forum and contact area — the Sustainability Steering Group.

MATERIALITY MATRIX

HIGH

» Water depletion in supply chain » Chemical and pollution in supply chain » Animal welfare in supply chain

» Fair labour conditions and human rights in supply chain » Sustainable product development, production and products

I N F L U E N C E O N S TA K E H O L D E R S

Key focus areas based on our stakeholder’s input is presented in the below materiality matrix model. The navy boxes represent our most prioritised areas.

» Working condition in own operations » Attracting and retaining employees » Transparency and sustainable market position

» Product safety

» Circular and resource efficient product life circle and climate foot print

» Anti-corruption

LOW

» Sustainable packaging materials

LOW

S I G N I F I C A N C E O F E C O N O M I C , E N V I R O N M E N TA L & S O C I A L I M PAC T

14

HIGH


Key Stakeholders, Dialogue & Expectations OWNERS Eton’s main owner since 2016, EQT, has clear requirements for CSR practices, working actively to “Future Proof” companies. “Genuine management of environmental, social and corporate governance (ESG) factors is fundamental to business success and strong investment performance.” EQT’s expectations on portfolio companies are outlined in the EQT RI&O Policy, which is aligned with key international conventions and standards, including the Ten Principles of the United Nations Global Compact. Sustainability expectations are also articulated in the EQT Sustainability Blueprint, expressed in a set of KPIs which portfolio companies are reporting on annually. EQT assesses each portfolio company’s maturity against these expectations to track their journey and performance over the ownership period. www.eqtgroup.com/sustainability/sustainability-documents/ EMPLOYEES Employee engagement in creating a sustainable workplace is a focus area. Day-to-day interaction and biannual employee surveys provide feedback for continued development. Employee engagement in environmental issues has increased in the past year in answer to a blanket invitation from CEO and Sustainability Steering Group, resulting in employee-initiated initiative included in work process 2020, but rolled out to customers in 2021. AUTHORITIES Eton participates in a “textile dialogue” with Swedish government authorities such as the Environmental Protection Agency and Swedish Chemicals Agency to be informed of rules and expectations. ORGANIZATIONS Eton is a member of the textile trade organization TEKO, allowing us to exchange information and best practice when it comes to sustainability. We are also members of action learning network STICA, The Swedish Textiles Initiative for Climate Action (STICA).

CUSTOMERS We believe that customers, end consumers and wholesale partners, increase their expectations on sustainability as an aspect of the clothing industry. Customer input — end consumer and wholesale — indicate in current communication with Eton, as they did in the 2017 in-depth interviews, that consumers expect long-lasting quality and good workingconditions throughout the production chain. In a major 2020 marketing survey (conducted in North America, UK, the Nordics and Dach). Despite specific “more sustainable products” not yet a key part of the Eton assortment, 25% stated that that was a key factor, up by at least 7 percentage points from a comparable 2018 survey. In addition, we know that customer consideration of sustainability in general is on the rise, from for example the Sustainable Brand Index (measuring customer perception in the Nordic Region and Holland) with a particular increase in 2019 and 2020. This is now true of all identified customer groups. This includes the most traditional (middle aged man with traditional views, local interests) through moderate (male/female, followers) and lifestyle oriented (drive general shopping development) as well as the dedicated (special interest).


Sustainability Goals & Strategy Launched in 2019, Eton’s Sustainability Goals are based on an analysis of the Materiality Matrix and selected SDGs. It identifies an overarching vision (for implementation in company culture and day-to-day-work, i.e. drive immediate and long term effects) a vision statement identifying a method and concrete goals and aims (in addition to already established methods) targeting short, medium and long term goals.

OUR VISION: SUSTAINABILITY IS QUALITY

Today’s world, and today’s customers, place new demands on the definition of the word quality. It goes beyond the actual product. It includes as sustainable production as is possible, and responsible practices throughout a garment’s lifecycle, including consideration for the people who make the shirt, as well as for the people who buy it.

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SUSTAINABILITY VISION STATEMENT

Our purpose is to set clear goals. When we cannot set goals, we aim to define ambitions. … and get started.

Production & People

Climate

Transparency

A circular approach, with consideration for planet and people from beginning to end.

Taking action for our customers, the future — and our business.

Engage, inform and collaborate with customers and stakeholders.

» Longevity and low FPU (footprint per use)

» A science-based target in line with reducing emissions by 50% by 2030

» Public sustainability report – immediate

» Supply Chain focus

» Climate Neutral by 2035

» Aim for a public supply chain, countries and rating

» 100% organic cotton by 2025

» Structured Stakeholder dialogue

» 100% certified sustainable fibers in all shirts and accessories by 2030 » Aim for GOTS certification » On demand production

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Integration into Business

MANAGEMENT TEAM Sustainability development made the responsibility of each department and department managers, as of 2020, for maximized possibilities for actions in all touchpoints. (Leaders are also responsible for contributing information on their actions to this report).

BOARD

The Sustainability Steering Group (set up 2019) provides a forum for and a point of contact to spearhead development within environmental issues and the stewardship of human and social capital. Led by CEO, it currently brings together representatives from Quality, Finance, Marketing and Communication. Note: for Eton as a company, an HR Group targeting stewardship of human and social capital within the organization.

MANAGEMENT TEAM GOVERNANCE STRUCTURE

SUSTAINABILITY STEERING GROUP DEPARTMENTS/ETON EMPLOYEES

SPECIALIST ROLES Sustainable product and production focus previously assigned to Sustainability Coordinator redistributed on two Product Quality Specialist roles (as of 2020) allowing for increased focus on Planet (environmental, materials) and People (processes, work environment in the production chain etc.), respectively. Both roles report to Quality and R&D Manager, who reports to CPO. ALL ETONIANS A blanket invitation to all staff to contribute to a more sustainable Eton via their managers or the Steering Group has resulted in employee-initiated actions implemented in workflow 2020, and in production 2021 (f.ex. buttons in recycled polyester). PERSONAL PERFORMANCE AND RENUMERATION Sustainability is an integrated part of Eton’s values (as launched 2020) and as such will be a measuring factor in yearly Dialogue Reviews for all staff. The Diaologue Review forms the basis forms the basis for the yearly, performancebased salary discussions. MEASURING PROGRESS With our set goals (2019), we now measure our progress against them – and take note of additional progress – on a yearly basis with this report. TRANSPARENCY Sustainability Report and Sustainability Goals shared with all staff globally as well as made available to customers and press via etonshirts.com

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Today’s Challenges 2020 is a year that will go down in history. We have faced, and are still facing, a global pandemic that affects every aspect of civilization, as do its financial effects. The cost in lives, and other effects, is still unknown. As many have stated, the positive insight we have gained this past year is how capable we are of taking action on a global scale against a threat.

PEOPLE As a customer-facing company, we see that 2020 has presented unique challenges and reinforced the importance of putting people first when it comes to health and safety. It has challenged all companies’ efforts to provide a healthy work environment, physically and mentally. A challenge reinforced by emotional stressors – illness, isolation, fear, grief and financial effects – occurring and intersecting with work-life simultaneously on a (very) big scale. Any view of sustainable, “decent work for all” (SDG 8), and health and safety must be seen as both a constantly ongoing set way of working (the foundation) that includes common understanding, verified by signed agreements such as Code of Conduct, active internal work and active partnership — as well as the ability to rise to challenges and act quickly and jointly. Challenges we identify in 2020 is how to best execute our set way of working (vetting, audits, close collaboration) in an ongoing pandemic requiring physically distancing. Actions we have identified are for example initiation of video meetings and digital routines to maintain close contact and collaboration, but audits have unfortunately been temporarily impacted.

PLANET Any sustainable view of the environmental impact we have as a company, is and must be circular. As a textile company, which raw material we use is key. However, the environmental footprint of each product comes from every aspect of its lifecycle: starting with the material — from the fiber and throughout the production — to logistics, sell-out (energy costs for retail locations, greenhouse gas emissions from business trips, environmental impact is just one example) to end-consumer use, re-use, recycling and end-of life. Greenhouse gas emissions from business activities drive climate change. Challenges we identify is to pinpoint points of action: One way is to identify the areas that contribute the most to a negative footprint, and the changes can have the biggest impact. (For example, the production phase stands for a significant share of a garment’s climate impact). Another way is to identify areas in which Eton has a unique or immediate opportunity to have impact. (For example, using our know how to have a positive impact in the user-phase). In both of these areas, we are aware that new options are developed every day, and that the options available to us today may or may not be perfect. Our standpoint is to act in the best possible way now and be innovative in order to find the best possible way at every given point in time to reach our goals.

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2020

Summary Although many of our planned goals, aims and actions were affected by COVID, we see many reasons to be proud of the steps we have taken during 2020. To mention just a few:

PEOPLE

PLANET

» “People first”: In a very challenging year we put the health and safety of coworkers, customers and suppliers first, through recommendations to work from home if at all possible to reduce spread. A specific Corona taskforce was appointed, and localized health and safety measures were taken.

» We took great steps towards goal-oriented sustainability work and towards fulfilling our key goals – with Eton’s first cotton certification in the pipeline, despite the obstacles presented by the pandemic.

» Values: we implemented new company values with clear definitions on the company’s standpoint in key issues such as equality, diversity, sustainability, but also collaboration, empowerment in all directions in the company hierarchy and work smart. Process: introduction, team workshops, made a part of dialogue review grading. » Great place to work: conducted a special Covid Survey.

» Innovation: New, cutting edge digitalized wholesale service platform reducing need for travel and materials – four platforms for every need. » We initiated a new focus on collaborations with a sustainability angle (end-consumer launch 2021) and launched our own capsule collection from overstock fabrics, to master one of our industry’s footprint issues. » Learnings: We retraced our steps, and acted on new rules implemented by our current our suppliers of lyocell/Tencel, a more sustainable material – creating increased knowledge throughout the company and resulting in new Eton standards for Tencel (minimum 40%) » Our new, 360 approach to sustainability in our business model resulted in: • Higher response rate than ever for this report, indicating an increasing awareness and engagement • Increased understanding and exploration of integration into business • Employee-initiated projects and advocacy

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2020

Status Production & People

Climate

Transparency

A circular approach, with consideration for planet and people from beginning to end.

Taking action for our customers, the future — and our business.

Engage, inform and collaborate with customers and stakeholders.

Longevity and low FPU (footprint per use)

A science-based target in line with reducing emissions by 50% by 2030

Constant focus – developments in casual assortment New care guide for even further extended lifespan Changed to FSC-paper in hangtags and cardboard related to product

CO2 mapping scope 1 and 2 continued Climate neutral by 2035 Increased focus on digital wholesale process New packaging project

Supply Chain

Public sustainability report

Aim for a public supply chain, countries and rating Under review Structured Stakeholder dialogue Rework materiality Matrix delayed Sustainability Steering Group Blanket invitation from CEO for all to participate and engage

Covid focus, upholding close collaboration digitally 100% organic cotton or better by 2025 OSC certification in process audits delayed by COVID) First organic and recycled cotton products designed (presented to wholesale/end consumer 2021) First tests completed of organic version of top selling product 100% certified sustainable fibers in all shirts and accessories by 2030 Developed and tested buttons in recycled polyester, for launch 2021 Aim for GOTS certification OCS, first step On demand production Initiated and developed during 2020, launch 2021

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CHAPTER TWO

People

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Priorities, Policies & Implementation At Eton, we strive to contribute to “sustainable and decent work for all” – guided by SDG8 and our Materiality Matrix which identifes “fair labor conditions” as our most prioritized area. “Working conditions in own operations”, and “attracting and retaining employees” are close seconds. At the end of the day, it comes down to two things: doing something because it is the right thing to do, and assuming stewardship of all kinds of capital – from natural to human to social.

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WAY OF WORKING

Eton always acts in accordance with national legislation in all countries where we operate and take appropriate measures to prevent direct or indirect violations of human rights, labor laws, environmental laws, competition laws and anti-corruption laws.

Integration into Business Eton HQ has a work environment council that convenes at regular intervals to discuss working conditions, health and safety issues etc. Minutes are kept, and actions planned or taken are documented. A digital onboarding tool ensures that all new employees read and sign relevant policies.

Eton’s rule is that all our suppliers and other business partners must, in all their activities, follow the national laws and regulations in the countries in which they operate as well as Eton’s company policies and agreements. We have aligned our Code of Conduct with the Ten Principles of the UN Global Compact and applicable international agreements: the UN Universal Declaration of Human Rights, the International Labor Organization Conventions, the UN Convention against Corruption, and the Rio Declaration on Environment and Development.

Agreements with external production partners have the Eton’s Code of Conduct attached. We also make risk assessments in our various operations, specifically for employees in business and purchasing positions in countries that are considered at high-risk for corruption. Our Risk Registry is updated yearly and based on the considerations identified in our Materiality Matrix. During 2020, there were no confirmed incidents of corruption within any of Eton’s operations.

POLICIES

Internal: » The Eton Values » Code of Conduct internal » Anti-corruption and Anti-bribery Policy » HR Policy, including Equal Treatment » Workplace Guidelines External: Code of Conduct external Please email csr@etonshirts.com for access to these documents

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INTRODUCING

The Eton Values EMPOWERING

ONE ETON

» Eton is here for a reason

» One company, one vision, same goals – one planet » Work as a team, win as a team

» Eton empowers you to excel and make a difference in your role

» Equality, diversity, and inclusiveness are a given.

» Show: respect for others and Tell: transparency matters

WORK SMART

QUALITY-DRIVEN

» We choose the simple over the complex

» Eton exists to offer high-quality products and service to men striving for excellence

» We say yes to the right challenges, the right way

» And to do high-quality work – in every touchpoint

» The 5 Cs: Collaboration, Communication, Creativity, Common sense and Colleagues

» …creating a high-quality experience of Eton

CUSTOMER-COMMITTED

PROGRESSIVE

» The customer is always the most important person in the room

» Innovation – leaders in our field

» The best sales through the best customer experience – with a business mindset

» We have the future in mind

» Constant improvement

» We go the extra mile!

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IN 2020 WE LAUNCHED OUR NEW COMPANY VALUES:

Our values come from what we are. Their origins came from the kitchen where Annie and David Petterson had the vision, the skill, and the drive to found what would become an international luxury brand out of nothing. But we have also added new values, that stands for the future, and will help us take the steps we need to take together to be even better to reach new goals. Our values guide every aspect of what we do: they are here to ensure that we keep making a great product – and that we find even better ways of working, making decisions and interacting, office to office, person to person. To use a shirt analogy, our values form the warp in the fabric we weave together, every day. Without it, there is no fabric. CULTURE DOESN’T SPREAD ITSELF To implement and make our values a natural part of our everyday job, we have organized Values workshops for the company during fall 2020 with great success. Employee-led workshops will continue in 2021 across the company.

Goal for 2021: Everyone within the Eton organization to know, understand and be able to translate “Eton values” into concrete actions – exemplified by the fact that values will be a part of yearly employee performance reviews as of 2021.

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IDENTIFIED FOCUS AREA 1

Healthy Work Environment At Eton, we strive for a positive company culture with the goal of a pleasant, sustainable, and physically and mentally healthy work environment throughout the organization. As a global company, we know that we affect people well beyond the front doors of our HQ in Gånghester, Sweden. Good labor conditions are of key importance throughout our operations and a factor in all our collaborations. Note: Supply Chain will be addressed in Chapter 4. In addition to actively working with values, annual Dialogue Reviews and biannual Great Place to Work Surveys, the internal Eton support system includes:

ETON’S CURRENT GENDER DIVERSITY STATUS We work actively to secure an organization based on equality and diversity, free from discrimination and harassment. Respecting the integrity, privacy and rights of our employees.

GENDER PARITY AS OF 2020-12-31 female male

Employees in total 52%

48%

Management

PREVENTATIVE

78 %

Yearly wellness allowance for each employee.

22 %

Full time employees 53%

COLLABORATIVE (Valid for Eton HQ and the Gånghester Warehouse only) Safety Representatives have been appointed by the union, Unionen, in collaboration with Eton. These representatives, in collaboration with HR and Legal, not only advocates for and collaborates with the employer in work environment issues, they also monitor that the physical and organisational environment is in line with legal demands. The safety representatives have participated in BAM, a course on legal requirements and practical ways of working for a good work environment.

IDENTIFIED FOCUS AREA 2

Equality, Diversity, Fairness & Respect We will be open and welcoming, knowing that diversity, equality, and different perspectives, whether based on role, experience, religion or other beliefs, geography, gender, skin color, sexuality, disability, age, or any other factor, not only makes us better as a company but are necessary for Eton’s continued success in a changing world. The loss of one perspective is the loss of an opportunity. From the Eton Values: in-depth definition of “One Eton: Equality, diversity, and inclusiveness are a given”.

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47 %

Part time employees* 48%

52%

Note: we are not aware of any employees who identify as anything other than man or woman at this point, but there may naturally be such employees.

BEYOND GENDER Diversity is an important area for us, although one where we are looking for ways to develop and grow. For 2020, one of our focus areas was diversity – gender, race, sexuality, disability – in our values work, with implementation through workshops, and fulfillment listed as a part of each employee revies. It was also a part of first step to review our recruitment processes and materials. Note that Swedish law prohibits any record of racial identification — so we are not able to show corresponding charts to gender diversity.


Education & Training Eton believes that the most important competence development happens “on-the job”. All Eton managers are required to provide on-the-job training and coaching to ensure improvement and development. In that respect, 2020 has provided challenges, but also great growth and development, especially with a focus on digitalization and operational excellence. For example, previously analogue departments have embraced a digital way of working with impressive speed.

CURRENTLY PLANNED:

However, due to COVID 19, no formalized education or courses took place.

» Note that the year brought a major reorganization, this may demand a review of what/who requires focused education and how that will be achieved during 2021. (Read more page 30).

THE “TRIVSEL” GROUP

COMMUNITY ENGAGEMENT

The “Trivsel” Group, located at Eton HQ, arrange well-being activities for Eton’s employees.

Industry

» Anti-corruption training rescheduled for 2021 (all employees) » Training for all managers in preventing sexual harassment planned for 2021. The intention is to hold a wider education in the topic for at least 50% of our employees.

We strive to support students looking to have a career in our field of business. Today, we collaborate with the University of Borås’ (Sweden) renowned textileoriented programs as visiting guest-lecturers and Nordiska textilakademin (the Nordic Textile Academy), through donations.

During 2020, the group introduced four digital activities to promote teambuilding and emotional wellbeing: digital movie and music quizzes, and a multi-national Christmas choir.

Eton is also a member of: Teko, E-commerce City Borås, Marketplace Borås, and a member of the board of Proteko/Nordic Textile Academy. Local community At Eton, we have a strong bond with the village of Gånghester and the city of Borås, Sweden: the company has been a vital part of the community since 1928. As a way of giving back we sponsor local youth initiatives (Equmenia) and sports clubs (IF Elfsborg, Gånghester SK and Borås Basket).

CHARITABLE ORGANIZATIONS During 2020 Eton focused on supporting people negatively affected by the pandemic. » As a part of a “Work from home”-campaign we donated shirts and accessories to charitable organizations Career Gear and Suited for Success in the UK and US respectively, who help men struggling to re-enter the workforce. The total value of the donation was 17 700 USD. » As its annual Christmas gift, Eton gifted employees in all countries a set of sheets and a tote bag made from Eton’s own high-quality overstock fabrics and made a 10 000 SEK donation in their names to Fonden för psykisk hälsa; an organization for mental health, supporting research and increased openness around mental health. Before

After

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2020

The Effects of Covid-19 2020 offered challenges not seen in a century. It is perhaps no surprise that this year would also show us completely new ways of working, existing and supporting each other.

PEOPLE We made a decision to place Health and Safety, or “people” first, even as we simultaneously took on the financial effects of the pandemic through a focus on cost control, revenue streams and, eventually, a reorganization. As a multi-national company, we were affected in multiple ways at different times and intervals. A key action was therefore to establish a Corona Taskforce, with management and work environment council. Local divisions were established to quickly keep up to date with changing local rules and recommendations. Corona information was immediately put on the agenda for all Company Information meetings and regular Corona Update emails were sent from March 2020 and onwards. » Physical distancing and on-site health and safety We offered all staff that could the opportunity to work from home, later followed by a recommendation to do so – in order to reduce risk for all, minimize spread in the community and keep staff who had to work in the office safe. This recommendation/opportunity was in effect from March 2020 and is still in effect as of the writing of this report (May 2021). It is important to note however that many employees, from store staff to sales representatives and HQ staff are not able to do so due to the demands of their roles: for them, health and safety measures such as hand sanitizers, masks and (depending on market) regulations for physical distancing and clear communication became primary. Other Eton actions included a ban on external visits, all national travel to be approved by manager, obligatory 14-day quarantine for anyone travelling abroad, information and rules to customers visiting our stores, set capacity indications for all areas of our offices and a strong recommendation not to use public transport to and from work if at all possible. Actions mandated by local authorities helped keep staff and customers safe: Stores were closed according to local regulations, health and safety measures were introduced and team members in Production, Supply Chain, Retail, Wholesale and Marketing were affected by lock-down measures. All departments were affected by travel bans and restrictions in physical interaction.

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» Financial and organizational changes Financially, in addition to a rapidly changed demand and revenue streams affecting all revenue-driving departments, departments relying on physical interaction with customers or customers’ customers took a direct hit (due to many of the same safety measures mentioned above: store closings, travel bans and physical distancing). In addition to an immediate review of our financial roadmap, with clear goals to minimize costs and increase revenue (for additional information, see Financial Report or request it from csr@etonshirts.com) the following actions affected our staffing: Short term work allowance: From 1 April 2020 until 31 December the majority of all staff in all countries where Eton operates worked reduced hours due to less demand from customers because of the Covid-19 pandemic. In Sweden, agreements with local labor unions for white collar, blue collar and retail staff were made to ensure that Eton could apply for government financial payroll support, short term work allowance. Similar financial support has also been received in Denmark, France, Germany, Holland, and UK. Staff changes: All global non-business critical employees who were employed on probation or temporary employment were terminated (app. 40 employees). A reorganization was carried out in part because of the financial effects of Covid, and in part because of increased digitalization of the retail business (sped up by the pandemic). In the reorganization, 16 roles were made redundant, and 17 were created adjusting for reduced or increased need/workload or future need. We were able to successfully relocate resources and employees to departments with strong strategic possibilities immediately and in the long run, such as e-com. See also page 34.

PLANET Two collections were cancelled to meet decreasing demand, with quick decisionmaking meaning that we were able to adapt production to a decline in demand, a sustainability factor as well as a financial one. In addition, reduced travelling for work, including sell-in and production (as well as, albeit second-hand, the effect of reduced commuting) was a positive effect on our footprint.

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Challenges, Actions – and Wins Based on individual reports from Eton’s Department Managers and the heads of the support functions, highlighting that even in times of great challenges and, of course, tragedy, Eton was able to see clear and defined wins, company-wide or department-specific. C Challenges

A Actions

W Wins

CONSTANT CHANGES

WORKLOAD AND DELIVERY UNDER CHANGED CIRCUMSTANCES

» The instability, the challenge of planning, need for speed and agility and new ways of working.

C

» Actions, Focus, Reprioritization – an agile way of working,

A W

REDUCED DEMAND FOR ETON’S PRODUCTS » Decreased Revenue It is subtext or origin for a lot of listed other challenges as a result of decreased revenue:

C

– Rents – Organizational/Staff changes – Walk away from assets/investments already made (f. ex. shirt collections) » Renegotiations with external partners, suppliers and landlords about terms

A W

» Strict cost control

A W

» Flexibility – order adjustments, collection cancellations, sped-up casualization of offer. » Digitalization – Incentive shopping digitally with Eton – Digitalization of wholesale selling (Digital showroom, B2B, Wholesale newsletters, offers/ order flexibility) – Utilizing Eton’s website for wholesale partner remote end-consumer selling

A

A A W A

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» Required finding new ways of achieving the same or more.

C

» Risk of stress, excessive overtime if working from home (due to no clear separation of home/work).

C

» Digitalization Speed up/improve the process of digitalization.

A W

» Operational Excellence/Improved ways of working Meeting structure, information flow, problem solving, speed-up execution of new strategy, effective and efficient team organization, improved collaboration with other departments, achieved goals without access to “usual way of working” etc.

A W

» Reduced Travel Cost savings, environmental savings, increased work-life-balance.

A W

» Flexibility and Generosity Going beyond/outside roles, supporting the team and other departments.

A W

» Communication Regarding Expectation – of when to be available/expected to work and when not to.

A W


BELONGING, INTERACTION AND EMOTIONAL HEALTH » Finding ways to keep team involved, active and engaged, reduced personal connection.

C

» The missing social aspect of work (when work is more than just a job), that affected work, processes and information flow.

C

» The need to replace natural spaces (like coffee breaks) for spontaneous ideas, peer learning.

C

» Digital catch-ups – reoccurring meetings, after work events, team activities etc.

A W

THE RISK OF CONTRACTING COVID » Keep people and co-workers safe.

C

» Information and compliance with local health regulations, including quarantine if sick, providing safety equipment (masks, hand sanitizer etc.) and workplace capacity indications.

A

» Distance Work – reduced commute, flexible ability to work from home, flexibility of when and where to work.

A

PHYSICAL HEALTH WORKING FROM HOME

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» Concern for ergonomic effects.

C

» Borrow work equipment – staff enabled to use equipment at home (to some extent)

A


2020

Reorganization The financial effects of Covid-19 exerted tremendous pressure on the apparel industry. Eton is no exception. Despite our commitment and efforts to mitigate the effects, we faced a significant decrease in revenue starting March 2020. In parallel, the apparel industry has, for quite some time, been in a state of change, dealing with a fundamental digital transformation. A paradigm shift which has been further accelerated by the Covid-19 outbreak. While taking measures to secure the financial health of Eton we have also needed to invest in areas and competences that will fuel growth and ensure that we stay competitive. PROCESS In line with the above, and in order for Eton to maintain its market position, a reorganization was decided during the fall. This entailed redundancies as well as new positions and affected all countries within the Eton organization. A detailed risk analysis was conducted by Safety Representatives from Unionen and IF Metall, in collaboration with the Union, detailing perceived risks on team and individual basis (excluded from this report) and general risks agreed on by the company: psychosocial stress, emotional and health risks for affected coworkers, increased workload for remaining team-members in the new organization and loss of competence, either directly or indirectly i.e. through uncertainty created by the process itself, causing competent employees to look elsewhere for employment.

SAFETY INSPECTIONS

CLEAR AND CONSISTENT COMMUNICATION

(Valid for Eton HQ and the Gånghester Warehouse only). No physical safety inspections were conducted at Eton HQ or the Gånghester Warehouse by Safety Representatives for Unionen and If Metall respectively during 2020 but are planned for 2021, in addition to collaboration for a sound work environment physically and psychosocially. This due to Covid and many coworkers working from home.

We leaned on our company values. Treating all concerned parties fairly and correctly was a key priority for us. The management team’s highest priority during the re-organization process was to mitigate stress and insecurity by consistently providing the organization with honest information and explanations to ensure understanding of the current situation, possible outcomes and likely next steps.

No safety representatives at other offices/workplaces at this point.

OCCUPATIONAL HEALTH CARE AND PSYCHOLOGIST Eton employees were entitled to consultancy and support when needed during the organizational transformation process.

NEW ORGANIZATION SE UK NORTH AMERICA TOTAL Redundant positions 13 1 2 16 Offered new positions 13 – – 13 Declined 3 – – 3 New positions created

17

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17


A Great Place to Work Even in a very challenging year, with COVID and a reorganization, we strive to ensure that Eton is a great place to work.

All employees should have a yearly dialogue review with their reporting manager. Due to themeffects of the pandemic, this year’s completion rate was 84% (manager/employee preferred in-person meetings but plans were frustrated by Covid 19 rates/safety concerns).

A system including a yearly dialogue review, salary discussions and anonymous biannual Great Place to Work surveys form the foundation of our short- and long-term efforts to ensure individual development and secure competence needs for the organization as a whole. In addition, employees participate anonymously in a biannual employee satisfaction survey, Great Place to work. This is our set method for measuring satisfaction – in 2018 this resulted in a 67% score for Eton globally. As a result of the Covid-19 pandemic, the planned biannual survey was postponed to 2021. Instead, we launched a special Covid-oriented Great Place to Work survey that helped target immediate issues that defined these unprecedented times.

As a response local Covid-19 instructions for each satellite office were established. These instructions stipulated the rules and guidelines for all Eton employees and made it possible, when the rules were followed, for our employees to work from the office occasionally although we encourage those who could to work from home.

For 2021, our completion goal is 100%. Salary discussions should be held in a separate meeting.

OUR TWO TOP STATEMENTS

SATISFACTION RATE

“I feel trusted to do my work”

93%

“If I need to take time off from work, I feel fairly treated”

88%

OUR TWO LOWEST-RANKING STATEMENTS

SATISFACTION RATE

“When I work remotely, it’s easy for me to be as efficient as I am when I work at my regular workplace”

69%

“My organization encourages me to focus on my personal health and well-being”

71%

36% of our employees felt a lack of information-sharing from management team, closest manager and HR-team. It was therefore decided to systematize information, with Company meetings, and send-outs with weekly updates from management meetings to all teams within the Eton organization and HR-team to increase the regular information sharing to bi-weekly information send outs. In this send outs we have, among other things, emphasized the importance of keeping in touch with all team members when working remotely.

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Identified Risks & Actions RISK COVID 19 was and remains the number one identified risk for the company during 2020: in a health and safety perspective contagion topped the list of both managers and employees, with emotional health a very close second.

ACTION » Immediate and continuous actions for health and safety in the pandemic through a Corona Task Force – country based and general – with clear Corona Update emails and digital meetings. As many as possible to work from home. » Local health and safety measures for on site/customer-facing personnel. » Occupational health care.

COVID 19 – financial effects The immediate reduction in demand for our products had a clear effect on the team, with workload and perceived stress to perform under very different circumstances, including a rapid need to digitalize and replace old ways of working topping the manager’s evaluation of the crisis.

» Immediate and continuous actions for financial stability, including reorganization and financial support. » Operational excellence continued strategic focus, with communication and teamwork encouraged globally.

During 2020, Eton underwent a reorganization, which had the effect that 16 positions within ten teams in Sweden, the US and the UK were cut. 13 people were offered new positions in the company, ten accepted. Ultimately, 6 people left Eton. General risks for individuals concerned and the organization at large were psychosocial stress, negative health effects, potential workload imbalance, risked loss of competence. In addition, all non-business critical consultants, short term employees and employees on probation were terminated in the summer, circa 40 in total, causing a similar risk form potential workload imbalance and negative health effects etc.

Thorough by the book process for reorganization, with emphasis on respect, information, and manager support. Open door policy from top management.

Short term work allowance is a generous measure, but even so it contains risks: workload imbalance, both for those with in an inblanace in scope, and team members, stress of managing job in less time, worry for redundancy and perceived lowered value for those “less needed”.

Focus on middle management prioritizing and planning to mitigate workload imbalance.

Lack of gender parity on management level and diversity in decision-making departments, with a relatively homogenous HQ staff in general remains a risk. Potential risks are: negative effects within primarily HR issues (recruitment, promotion etc) and bias in decision-making. In addition, we know that we risk not contributing to for example closing the Economic Participation and Opportunity gender gap globally (currently at 58% according to the Global Gender Gap Report for 2019 from the World Economic Forum: http://www3.weforum. org/ docs/WEF_GGGR_2020.pdf )

Launch and implementation of new company values with clear company statements — equality and diversity, empowering attitude across all levels, the obligation to collaborate and work smart to mention a few, implemented in workshops (started 2020, planned for 2021) and development reviews.

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CHAPTER THREE

Planet

37


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Product Value Chain A value chain describes the business model, or actions required to create a product or service – from conceptualizing and designing the product, to bringing it to life via production, to distributing, marketing and selling it to customers and end-consumers. The collective footprint of a product is the effect of all factors contributing to its existence: Eton is aware of this, and we recognize our part: we are both in an ongoing process to map where and how to affect our footprint, specifically via CO2, and in the process of acting on set sustainability goals, based on our materiality matrix and global goals SDG 6, 12, 13 and 8 — targeting for example transition to more sustainable materials, and lower footprint per use. We belive that we need to act now, and boldly — both when we know the goal and have a clear roadmap of how to get there, and when we don’t yet have all the answers for how to reach a goal — challenging ourselves to develop solutions along the way.

DESIGN AND CIRCULARITY

Foundation » Minimise emissions (CO2) » Transparent supply chains » Respect for people and compliance with the Code of Conduct » Respect for animal welfare

Superior Quality » Made to last: quality and longevity of every garment » Sustainability = Quality: answer up to customer perception » Good working conditions is quality: answer to customer perception » Certification is key

Versatility » Two ways as standard: dressy and effortless » Made for multiple occasions » Fit and comfort that encourages use

Timeless design » Made to last – fresh and modern throughout lifespan » Traditional product type — longer trend cycles (or none)

Innovation » Organic cotton » Recycled materials » More sustainable trimmings, labels, packaging and accessories » Minimize use of resources in production and user phase: energy, chemicals, water


Design Relevant goals » Longevity and low FPU (footprint per use) » 100% organic cotton by 2025 » 100% certified sustainable fibers in all shirts and accessories by 2030

CHALLENGES Incorporating longevity, luxury, design and trends in consumer behaviors and wants in a functioning business model. Innovating and incorporating increasing amounts of more sustainable materials.

ACTIONS Sustainable design principles We know sustainable design represents opportunities for environmental improvement throughout the entire value chain. To create four core sustainable design principles we connected CPO, Design Manager, Assortment Manager and sustainability communication to create a framework that: » Reflects key stakeholder input. » Reflects our day-to-day decision-making and way of working. » Opens up for future actions as a part of our new organization and strategy.

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MADE TO LAST

Fashion comes and goes. Style remains.

FOUR BASIC SUSTAINABLE DESIGN PRINCIPLES

Superior Quality

Innovation

We never compromise on quality: with the best materials, techniques and expertise, our shirts stand the test of time. We know that sustainability is an aspect of quality.

We design for optimal use: on many different occasions, in many different ways.

Timeless Design We aim higher than the next trend: we create shirts that are modern today, tomorrow and in ten years.  

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Versatility We push the boundaries of what “shirt specialist” means: constantly looking for the next step in design, materials and technique — and we have committed to doing it with people and planet in mind.  


Materials & Quality Relevant goals » Longevity and low FPU (footprint per use) » 100% organic cotton by 2025 » 100% certified sustainable fibers in all shirts and accessories by 2030 CHALLENGES Conventionally grown materials: As the most important source of raw material for Eton products by far, conventional cotton is a key sustainability issue — if complex: As a natural cellulose fiber it is renewable and biodegradeable, and Eton’s choice of long staple or extra long staple fibers means we can purchase high quality, durable fabrics for shirts with a long life span. However, conventional production includes a level of water use and intense agrochemical use that has a significant, negative environmental effect, causing soil and water pollution and affecting access to water, eco systems and biodiversity. In addition, social conditions and health of workers must be taken into account. In 2020 our annual cotton consumption was approximately 117 tons or 975 803 meters, in 2019, 216,4 tons, compared to 903 tons in 2018, and 718 tons in 2017, all conventionally grown. The majority of our cotton was high quality Extra Long Staple cotton sourced from US and Egypt, with a smaller percentage being Long Staple and/or coming from other places such as China.

2%

98%

SHIRTS

Conventional Linen Flax is a natural fiber, and linen is a renewable, biodegradeable material. Flax requires less fertilizers and water that conventionally grown cotton, but as conventionally grown it still has a footprint comparable to a C on the Made-By ranking.

Conventional sheep’s wool, virgin, merino and cashmere wool Wool is on the one hand a natural fiber from animal hair, a renewable, biodegradeable material. On the other hand, the production produces greenhouse gases at high levels, as sheep are ruminants, producing nitrate at a level which, turned into its CO2 equivalent, is very high. All Eton wool is mulesing free. A note on Merino Due to its antimicrobial properties, merino wool may need to be washed less frequently than many other textile fibers, potentially reducing the end-consumer phase impact.

Conventional Silk (China) Animal fiber silk is a natural, renewable, biodegradeable material and mulberry trees, the sole source of food for the silk worm, are hardy and easy to grow in the right conditions, meaning less need for chemicals and water. The food industry often makes use of the pupae, meaning reduced waste. In conventional silk production the silk worm is killed so that the silk cocoon can be harvested with the silk yarn unbroken.

More sustainable material (lyocell)

100%

Conventionally produced materials

ACCESSORIES

Conventionally produced materials, or not yet defined


ANIMAL RIGHTS POLICY At Eton, we support animal rights and work to ensure that the rights of animals are respected in all our production processes throughout the entire value chain. We are continuously working to secure our supply of raw materials from an animal welfare perspective, through tough supplier requirements and full traceability. We require our suppliers to maintain good animal husbandry and meet our strict animal welfare requirements. Eton does not accept mulesing, a procedure performed on merino sheep to prevent fly strike. Neither do we tolerate plucking, shaving or picking wool or fur from live animals in a way that harms the animal or causes suffering in any way. We never endorse the use of any materials from vulnerable or endangered species.

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ACTIONS Superior Quality Our process is set up to ensure high quality — from a sustainability perspective, a long possible life span, giving the product the potential for a lower footprint per use. All production deals have our Code of Conduct attached and all animal fibers should be produced according to our Animal Right’s Policy. Innovation Finding alternatives that lessen the environmental impact of mainstream cotton cultivation is a main concern for Eton. In line with our goals, we are taking steps towards a transition to organic cotton or better by 2025. To do that, we have placed a joint responsibility on all departments. But in order to drive change and execute on our goals we also have a dedicated task force looking at innovation and materials — driving the development together with Production and Quality and testing new, more sustainable alternatives, and exploring materials with a lower environmental.

Organic cotton At this stage, cotton is a necessity for our business and our product. Because of the quantities involved and the high environmental impact of conventionally grown cotton in the growth phase, we are absolutely certain as a company that we need to make the best choice possible, from a sustainability standpoint: organic or better. Organic cotton is produced according to organic agricultural standards and is certified as such. The effect is stunning: compared to conventional cotton, organic cotton has 46% less impact on global warming. textileexchange.org/organic-cotton-round-table Concerns regarding quality and the availability of high-quality cotton has held us back in previous years. This year, COVID-19 somewhat delayed but did not derail development: Status » Organic cotton has reached quality levels comparable to the high-quality conventional ELS and LS cotton Eton mainly uses ELS. » We initiated the process of getting our first certification, OCS. Finalization delayed due to COVID. » We developed our first 100% organic product. First product launched 2021) » We developed a successful organic cotton version of our best-selling product. When blind-tested, the test group could not tell the organic and conventional cotton product apart. (Currently in process).

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Recycled cotton and polyamide By choosing already produced over virgin materials, we will be able to maximize the use of already “spent” footprint: water, chemicals in farming etcetera. As of 2020, our projects included mechanically recycled cotton from waste materials from our supplying mills and recycled polyamide. For a clear example of the impact these materials could have we reference the Made-By Index, where recycled cotton is classed as A, whereas organic is B and conventional E — effectively illustrating the difference in footprint. When including recycled material, we will be using a third-party certification to ensure the origin and create a transparency from recycled material to ready-made product. GRS, Global Recycled Standard. Status » We developed our first product made with recycled cotton in 2020. Product launch 2021. » Certification developed 2020, finalization delayed by COVID » More information to come

Lyocell and Tencel™ Like cotton, Lyocell is a renewable, biodegradeable material. It is made from natural cellulose. Eton uses only lyocell from the Lenzing Group; who offer lyocell with the brand name Tencel™ — a more sustainable material, derived from sustainably sourced wood, harvested from certified and controlled sources and produced in an environmentally responsible closed loop production process, recycling water and reusing the solvent at a recover rate of 99%.www.lenzing.com/en/sustainability/ This is an environmentally important material but not as strong and therefore durable as for example cotton. In itself, we do not consider lyocell suitable, but to increase longevity and quality, Eton developed its own premium ELS cotton and Tencel™ blend fabric in 2018, with varying proportions of cotton versus lyocell.

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Status » During 2020 cotton-lyocell (below 30% lyocell) stood for 2% of the fabric we produced » We developed a new Eton Cotton-Tencel™ range with minimum 40% Tencel. Product launch spring 2021.

A note on Tencel In 2020, Lenzing communicated a new rule to all its customers: only products containing 30% or more lyocell where allowed to use the brand name TencelTM. In response, Eton reviewed its assortment and removed TencelTM from its product communication (all blends contained >30% lyocell). In addition, we increased awareness, set new routines and developed a new range of products with at least 40% lyocell/Tencel™.


DECISION-MAKING:

Principles & Policies More sustainable alternatives currently identified as suitable for shirt production: » Organic cotton » Recycled materials (Cotton, Polyester) » Tencel™ » Organic linen

CLAS S A

C LAS S B

C LAS S C

C L AS S D

C L AS S E

UNCLASSIFIED

Mechanically Recycled Nylon

Chemically Recycled Nylon

Conventional Flax (Linen)

Modal® (Lenzing Viscose Product)

Bamboo Viscose

Acetate

Chemically Recycled Polyester

Conventional Hemp

Poly-acrylic

Conventional Cotton

Alpaca Wool

Mechanically Recycled Polyester

Virgin Polyester

Generic Viscose

CRAILAR™ Flax Organic Flax (Linen)

Cashmere

PLA

Leather Rayon

In Conversion Cotton

Ramie

Mohair Wool Spandex (Elastane)

Organic Hemp Recycled Cotton

Natural Bamboo Monocel® (Bamboo Lyocell Product)

Virgin Nylon Organic Wool Wool

Recycled Wool

Silk

Organic Cotton TENCEL® (Lenzing Lyocell Product)

More Sustainable

Less Sustainable

Black represents materials we use today.

Classifying more sustainable alternatives When classifying alternatives to conventionally grown cotton, Eton follows industry praxis, and specifically follows the recommendations made in the following report: ENVIRONMENTAL BENCHMARK FOR FIBRES. Report by MADE-BY, Version 2.1, December 2013. © Copyright MADE-BY Label UK Ltd. MADE-BY Benchmarks cannot be printed, circulated or copied without the accompanied MADE-BY logo and website. This Benchmark was made in cooperation with Brown and Wilmanns Environmental, LLC. For further information on this Benchmark see www.made-by.org/benchmarks In the MADE-BY report fibres are evaluated according to their impact in six areas: greenhouse gas emissions, human toxicity, eco-toxicity, energy input, water input and land use.

MADE-BY was a not-for-profit organisation with a mission to ”make sustainable fashion common practice”. As of October 2018, the organisation is in administration due to financial reasons, but prior to that it worked with over 100 brands and retailers.

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Long Term Partnership-based Production

7

Relevant goals

Assembly units: Romania, Lithuania, North Macedonia and Sweden

7

Accessories suppliers: England, Italy

11

Fabric mills: Italy, Switzerland, Egypt, Turkey

» Longevity and low FPU (footprint per use) » Supply Chain focus

3

» Aim for GOTS certification

Finishing providers: Switzerland, Turkey and Italy

» On demand production

CHALLENGES Reducing the environmental footprint throughout our value chain, introducing new and more sustainable materials (including certification) and ensuring compliance with our policies in the best interest of both people and planet.

ACTIONS While we do not own any production facilities apart from our inhouse assembly unit at Eton HQ in Gånghester, our way of working today includes an aim for long term relationships with select qualified specialist partners — today located in/near Europe: At our end, contact areas include our design team, located in Stockholm, Sweden and Como/Milan, Italy and a team of buyers, production and logistics, quality and compliance controllers, located at our headquarters in Gånghester.

Way of Working Our aim is: » All production suppliers required to sign Code of Conduct and The Eton Standard » Eton “ownership” of review and monitoring » In addition to third party audits » Aim for long term relationships » Close collaboration in day-to-day work » Contributing to effective ways of working » Dialogue » Continuous audits

Our goal is always the best quality product, with longevity as a result. To do that, we carefully select a small number of suppliers to collaborate with, in a way that ensures close contact, and multiple visits a year (in assembly units even weekly). This year, we handled the challenge of travel bans and health and safety risks by effectively digitalizing our process. Our process also includes cross-departmental discussions and decision-making to ensure all perspectives are covered, as well as if needed references from other clients. Once a supplier is deemed suitable, we test the quality of their work, ensuring the quality and longevity of our product. However, clear policies, joint understanding, and third party audits of compliance remain crucial, as does a close working relationship where we, together with existing suppliers, develop our collaboration and review developments in environmental and social issues.

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THE ETON STANDARD It is important to us that our customers can feel safe in the knowledge that our products are safe and follow chemical restriction laws and other product applicable regulations. All production suppliers sign The Eton Standard, agreeing to our quality standards in three areas: Performance and Quality (ensures longevity) Chemical Restrictions (ensures compliance with strict demands) and Flammability (for safety). The Eton Standard is based on REACH, and ECHA, the European Chemical Agency’s Candidate List Of Substances Of Very High Concern For Authorization, as well as the OEKO-Tex standard. All our fabrics must live up to the Eton Standard, and are controlled to ensure compliance. As stated in previous year’s report most suppliers are OEKO-TEX® 100 certified, a standard for limiting dangerous substances in textiles such as harmful chemicals, including legally banned and controlled substances, chemicals known to be harmful to human health but not yet legally restricted and other parameters for health protection. With our goal for 100% GOTS certification in mind, we have decided to move away from strictly looking at OEKO-TEX, while always ensuring that our suppliers fulfill those demands or better. Status » Audits and certification processes delayed by COVID a future priority as soon as possible (travel restrictions) » In 2020, neither Eton visits nor all necessary in person certification reviews were possible and will be postponed – but addressed as soon as possible depending on the pandemic. However, we strove to uphold the same quality level in monitoring and collaboration – digitally.

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REDUCING OVER-PRODUCTION One way to reduce our footprint is to reduce over-production, ensuring that products made are products in use to as a great an extent as possible. On demand During 2020 we have had a strong focus on developing on-demand production, to give customers access to shirts regardless of size and stock levels and reduce over-production and the need to store and transport garments unnecessarily. Custom Made: Getting a shirt made for you We strongly believe in offering shirts adjusted to fit the clients’ actual needs and measurements to ensure that our products can be appreciated and in use for a long time, equaling a low footprint per use. Eton Custom Made allows customers to adjust measurements and fit, for example for different arm length or body width, as well as customize shirts to their taste. In addition, Custom Made is an on-demand product, that is to say each product is ordered before it is produced, reducing the risk of overstock and unnecessary resource use or waste. Custom Made is available in an essential and extended package in all brand stores and certain wholesale partners through a cloud-based application, and in an essential form on etonshirts.com. Status » On demand production developed 2020, planned launch 2021 » Custom Made – in use. Relaunch online 2021.

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Shirt Production Chain

Code of Conduct for Suppliers

FABRIC SUPPLIERS: WEAVING MILLS Unlike the garment-making industry as a whole Eton focuses on developing most of its own fabrics for its shirt range. This means that rather than buying fabrics directly, we collaborate with weaving mills, mainly located in Italy and Switzerland, to actively choose weaving techniques and influence a fabric’s quality and longevity, as much as its aesthetic value. All weavers follow the Eton Standard. All but one have also chosen to be certified to OEKO-TEX® Standard 100. For more information, see www.oeko-tex.com

All production agreements have the Code of Conduct attached to ensure compliance with Eton’s health and safety regulations, fair working conditions and fair pay as well as freedom of association and anti-corruption. In addition, we carefully review potential suppliers’ environmental and social ways of working and ask to review any certifications. We routinely visit suppliers to ensure we, in addition to certifications etcetera, have a chance to form our own opinion. This process in complemented by third party audits, controlling compliance.

FABRIC SUPPLIERS: ASSEMBLY UNITS Eton works with six contracted assembly units in Romania, Lithuania and North Macedonia. We conduct weekly visits by Eton’s local quality control representative to guarantee the highest possible quality. In addition, we have a smaller production unit at our headquarters in Gånghester for the purpose of product development, mainly sample production and technique tests. All our assembly units sign our Code of Conduct.

ETON SYSTEMS Some facilities have installed the Eton System. This gives them an efficient production process with increased opportunities for quality control. The system also has ergonomic benefits such as reduced load on operators and reduced risk of strain injuries.

SUPPLIERS: WRINKLE FREE FINISHING When it was first introduced in 1992, the Eton’s finishing process, making fabrics permanently wrinkle free, was the first in the world to be used in shirt-making. Today, it is a feature customers seek from our brand specifically, to keep a shirt looking crisp from early morning to late night. Eton uses independent third-party finishing providers to ensure high quality. This top performance remains even after frequent washing. As shirtmakers, we are naturally aware of the environmental impact of wet treatment and are as of 2019 in discussions with providers to explore the possibilities of options ensuring our products high quality with a lower footprint. While we are not yet at a stage where we are able to draw conclusions, this is a key question we will continue to pursue. All our finishing providers are certified by Sustainable Textile Production (STeP) by OEKO-TEX® with the highest result level (3). STeP is an independent system for certification of sustainable manufacturing processes in the textile industry, addressing following areas:

ACCESSORIES PRODUCTION CHAIN The Eton range of soft men’s accessories and styling details include scarves, ties, bow ties, bandanas, pocket squares and and knitted products such as beanies and cold-weather scarves, designed either inhouse or in collaboration with suppliers. The production is controlled by our inhouse accessories team located in Como, Italy, with trusted partners, who are among the top producers in their field such as heritage suppliers in England and Italy. Materials used include wool, virgin wool, merino wool, silk or cotton, cashmere, nylon och polyester. Design and make are always geared towards longevity.

• • • • •

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chemical management environmental performance environmental management health and safety social responsibility and quality management


SUPPLIER COMPLIANCE: PRODUCT SAFETY Any clothing manufacturer should take a stand regarding chemical regulations, for environmental and human safety reasons.

Principles & Policies As the makers of high-quality shirts and accessories it is important to us to be a high-quality partner to our suppliers. Initiating a relationship with a new supplier or continually placing orders with one creates an amount of influence. With influence comes responsibility We work with third party auditors and we use our close working relationship to encourage producers to continuously comply with our Code of Conduct. The control of third tier suppliers is equally key. Procedure when initiating a collaboration with a new supplier All suppliers are required to sign the Eton Code of Conduct in order to sign a business agreement with Eton. A valid audit report is requested to confirm compliance with the Code of Conduct before the supplier can start working with Eton on a long-term basis. The Eton Code of Conduct is aligned with: » The UN Global Compact » The UN Universal Declaration of Human Rights » The International Labour Organisation Conventions » The UN Convention against Corruption

To dye, process and finish our products requires chemicals. To ensure that our baseline is responsible use and management, we ensure that any Eton products are high quality, safe and follow REACH, EU regulations and the most stringent requirements valid in any of the sales markets. All of our suppliers are required to sign agreements pledging that the products meet the legal requirements regarding use of chemicals. In addition, all suppliers are contractually obligated to follow Eton’s Chemical List, regulating chemicals we ourselves do not permit in our production or finished products. To ensure compliance, we regularly have independent laboratories carry out chemical tests. Comprehensive risk and safety assessments are made for every product and regular product testing is also carried out. Should a product test negatively, that product will be rejected and prevented from being sold. Our end-consumers’ safety is very important to us. Eton is a member of the Chemical group managed by Swerea who is a part of the Swedish research institute RISE Research Institute of Sweden. www.swerea.se

» The UN Rio Declaration on Environment and Development

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DAVID THÖREWIK, CEO

”In the words of our founder, Annie Pettersson, ‘we should never hand over a shirt unless we are fully satisfied with it’. Today the words being ‘fully satisfied’ incorporate more than our obsession with making the best shirt. It also include being proud of how it was made, by whom, under what circumstances and the full lifecycle of the shirt”

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Audits To verify that our suppliers comply with the Code of Conduct, we perform regular reviews, as well as external audits by independent third-party auditing providers. An independent third party of our choice conducts audits in order to evaluate compliance with our Code of Conduct, mainly but not limited to Intertek, and its Workplace Conditions Assessment (WCA) — a program to efficiently improve workplace conditions in accordance with widely accepted industry standards and best practices.* *Approved Audits reports and systems: WCA, Workplace Conditions Assessment (Intertek), BSCI, SMETA (Sedex), SA8000, WRAP.

WCA covers five main areas:

LABOR

The audit must cover the following areas:

WAGES AND HOURS

HEALTH AND SAFETY

MANAGEMENT SYSTEMS

ENVIRONMENT

• Child/Forced Labor

• Wages and Benefits

• Work Facility

• Documentation

• Legal Compliance

• Discrimination,

• Working Hours

• Emergency Preparedness

• Records

• Management Systems

• Discipline

• Occupational Injury

• Harassment

• Machine Safety

• Freedom of Association

• Participation • Audits and Corrective Action Process

• Waste and Air Emissions

• Safety Hazards

• Contracts

• Chemical and Hazardous Material • Dormitory • Canteen

Work place performance shirt factories Delayed (Covid): High performance

Labor

Medium performance – further improvements needed

Wages and hours

Low performance – significant action required

Health and safety

Very low performance – urgent actions required

Management systems Environment 0

P E R C E N TAG E O F A U D I T S

100

Corrective actions All non-compliance means that the supplier must provide proof of correction to Eton in a limited time frame. Timelines for achieving compliance should be defined and agreed upon. Eton follows up the implementation of the plan to correct the non-compliance and verifies that violations have been remedied.

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Audits Audits are important to secure working conditions and compliance within the supply chain. Due to Covid no such audits have taken place. This is a prioritized focus area for us in 2021 or as soon as it is possible to so. 2015–2018 Tier 1 ASSEMBLY UNITS, SHIRTS

SUPPLIERS, ACCESSORIES

Risk countries identified: Romania North Macedonia Lithuania

We totally work with 10 suppliers, 5 major suppliers and 5 minor based on volume. Result: All the major 5 audited 2017. In compliance.

All units (6 in total) audited. Completed in 2018. Result: Only one failed to achieve the highest performance level. We noted minor violations: for example, first aid kits not available in all places of work, the evacuation door was not clearly marked, and a smoke detector was not properly installed.

Continued audits of remaining 5 suppliers producing a lower volume of Eton products begun 2018.

Outcome: The supplier has since taken action. New audit planned but delayed due to Covid.

2020 Tier 1

ASSEMBLY UNITS, SHIRTS

SUPPLIERS, ACCESSORIES

Review audit plan for assembly units, shirts, and set plan, based on, but not limited to, risk factors, volume and time since last audit into account.

Review suppliers, accessories and determine which suppliers to move forward with. Set plan for continued and revised audits (see assembly units).

Tier 2

Tier 3

Set plan for audit process, taking into account and prioritizing the minority of suppliers in identified higher risk areas, with Western Europe being a secondary focus unless the current pandemic should produce different conditions.

Postponed (Covid-19)

2021 We will set a new plan for an efficient work flow after the pandemic.

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Distribution Relevant goals: » A science-based target in line with reducing emissions by 50% by 2030 » Climate neutral by 2035 » Public sustainability report » Aim for a public supply chain, countries and rating » On demand production

CHALLENGES As a global brand, we are aware of and take sustainability in production into account, but we are also aware that the footprint of a product extends beyond materials and production and all the way through reaching the end consumer to end of life.

ACTIONS Over the course of a year, Eton transports and distributes many shirts, accessories and more on a near global market. Besides shirts and accessories, Eton distributes fabrics, packaging material, marketing material and store furnishings. Our distribution is mainly carried out from our two distribution centers, in Gånghester, Sweden and Atlanta, USA. We also distribute a significant volume of products directly from the factories. A third-party partner solution in Toronto, Canada is used to support key customers with specific requirements and last mile deliveries in the Canadian market. All transportation is done by third party forwarders, truck is used to recipients in Europe. Transatlantic transportation is done by air and last mile deliveries from the Atlanta distributions center is done mainly by truck. By using a few strategic logistic locations, we can consolidate and minimize the number of shipment as well as eliminate splitting the stock in different locations, meaning we can efficiently utilize the stock of ready made garments. Returns and claims are sent back directly to the distribution centers, to make it as efficient as possible for the sender. Parts of the larger seasonal returns are sent directly to outlet stores, in order to cut unnecessary transports and goods handling. The goal was same procedure for 2020, with more sustainable transportations.

PEOPLE

PLANET

In 2020, Eton moved the U.S. distribution center to a new modern facility, created with a focus on a quality work environment. In the Swedish distribution center in Gånghester we continued our journey to work smarter and take advantage of our AutoStore solution, meaning improvements in safety. We have also focused on ergonomics and on reducing the risk for work-related injuries.

At Eton, we constantly strive to make our transports as efficient and low impact as possible. By planning and co-operating throughout the group, we can consolidate shipments and combine modes of transport more efficiently — both environmentally and economically. By working towards as correct deliveries as possible — quality in every part of the Eton experience is our constant aim — we reduce the risk of returns, with an added transport footprint.

Status » Strategic location points to reduce transportation needs

Eton’s claimed product rate from wholesale/retail, also causing extra transportation, was 0.34% in 2018, 0,13% in 2019 and 0,14% in 2020.

» Aim for correct deliveries to reduce returns – relatively very low rate » Work environment and safety improvements

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Responsible Marketing Relevant goals:

Our aim is:

» Engage, inform and collaborate with customers and stakeholders

» To correctly and fairly represent the Eton products, offers and price levels to end consumers and customers and for a clear, transparent communication as a whole. All our products are labelled with the legally required information about material composition, country of origin and care instructions.

» Longevity and low FPU (footprint per use) » Public sustainability report » Aim for a public supply chain, countries and rating

CHALLENGES Marketing phases challenges concerning both this chapter (“planet”) and “people” with the footprint of own production as well as correct representation of product (to minimize online returns), customer interaction and engagement and potential footprint reduction in the end-consumer phase key in the first, and positive representation and diversity key in the latter.

ACTIONS Following the Brand DNA we create communication to achieve Eton’s vision, to become known for the best shirts in the world, propelled by our brand purpose: to empower the modern man to be the best he can be. All rooted in sound communication practices, in line with industry practices and never intentionally misleading, false or inappropriate.

» A diverse, fair, open and respectful online climate and conversation. » Positive storytelling: We consciously aim for marketing and PR material that is diverse, equality-based and does not reflect negatively on people because of for example, but not limited to, race, cultural or religious background, orientation or if they are people who have a disability. Nor do we accept the objectification of women, men or any other genders. » Cut down on printed material for own stores, showrooms and retail partners, with an estimated reduction from 14 400 units to 50 during 2020. (This excludes window communication).

Eton is not political, religious or ideological nor do we align ourselves with any such parties, organizations, representatives or informal spokespersons at any time.

BRAND DNA

For our internal transports between the Eton distribution center in Gånghester and the headquarters, we use a transport bicycle in order to minimize our footprint. For sell-in to wholesale customers, one of the most positive changes of 2019 was the beginning of a transition to our digital sell-in platform, the Digital Showroom. This has allowed us to begin the transition from a traditional approach sales meetings in person, meaning a reduction in printed materials and travel.

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Superior Quality

Innovation

Style

Modern Luxury


BRAND PURPOSE

To empower the modern man to be the best he can be.

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COMMUNICATION CSR STRATEGY FRAMEWORK Eton stands for a positive contribution to the world by striving to make the best shirts in the best possible way for people and planet, and through creating communication that inspires customers to be best they can be through: 

» Always relating back to our customers where Eton plays a relevant part.

PACKAGING MATERIAL To keep our shirts and accessories protected as well as for branding reasons, we require packaging and support material. We have strict environmental requirements for all packaging material, based on a combination of legislation (European Commission Decision 94|62|EC) and Eton’s own requirements.

Status

Status

» Reduced own footprint through reduction in printed material

In 2019, we initiated a review of our packaging material from a sustainability perspective. Developed during 2020, it is in process for launch 2021.

» Representation. Showing a diverse image of masculinity. » Reaching a traditional core customer group through said diverse communication – to positive effects.    » Aiming to openly acknowledge and contributing to a solution for the problem of climate change — and inspiring customers to contribute as well.  

» Ethnically diverse casting in all shoots, from product models to campaigns » Action point: age diversity in casting (Christmas Campaign) » Improvement project re. clear product information to minimize online returns — text and photo (see above)

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PHOTO STUDIO In 2020 we were able to finalize our own professional level photo studio at Eton HQ. Designed to offer stakeholders the photographic material (product images, model images, campaign images and moving content) they need to reach their customers and for Eton to be competitive in its field, the studio also is a tool for potential sustainability gains: potential for a reduced travel footprint (replacing certain shoots abroad). It also has a potential to reduce number of salesman’s samples produced going forward — see Digitalized Wholesale. Status » Photo studio fully operational » Able to produce content inhouse in Covid year » Prerequisite for the reduction in accessories samples (see Wholesale) 59


SELLING

Our Three Pillars – e-Commerce, Retail & Wholesale The collective footprint of both our garments and our operations is a factor in how we reach our customers and end consumers.

60

Wholesale

e-Commerce

To this effect we have initiated a test where we sync buying and marketing contributions for each collection launch around 1–2 set so called “SUPERHERO” products (internal

name) that all three “pillars” commit to buying and promoting at the same time. In addition, we have an additional HERO and supporting layer all are encouraged to buy, enabling smaller collections – with potential sustainability gains including: less overstock due to more synced purchasing patterns and fewer style variations (as yet inconclusive in 2020) and reduced samples (tendencies to this effect, see Wholesale below).

Retail

SALES, ALL CHANNELS: PURCHASE WITH AWARENESS In 2020 we have continued to work on purchasing routines, with the goal to reduce stock-levels and implement a more sustainable purchasing pattern.


e-Commerce Relevant goals: » A science-based target in line with reducing emissions by 50% by 2030

ACTIONS In 2020, we launched a new site in response to customer demand. A key factor was improved information necessary for correct purchasing decisions, with a low return rate as part-goal (affecting the footprint). Note: Sustainability information page temporarily down at the end of 2020 due to launch of new platform.

» Public sustainability report

A key focus going forward is to enable on-demand orders, for an assortment servicing a more diverse customer base, and create conditions to reduce overstock.

» Aim for a public supply chain, countries and rating

Status:

» Climate neutral by 2035

» On demand production » Product Longevity and low FPU (footprint per use)

CHALLENGES A key concern for all ecommerce is the environmental cost of returns, due to increased transportation. As the public face of Eton globally, a secondary focus is information and transparency.

» Extensive product information and image content form basis for purchase decision/low returns (2020) » A comparatively low return rate, 14% of pieces sold in 2020, vs 11% in 2019 from our online brand store. Industry standard 20–30%. (See cfr.handels.gu.se/ digitalAssets/1662/1662593_euroma-conferencepaper-2017.pdf) In 2020, return rates rose globally by 70% per Narvar via www.morningbrew.com/daily/stories » Extensive FAQ ensuring correct understanding before order » New tool for sizing recommendations developed with low returns as part-goal (launch 2021) » The sustainability report is always available via etonshirts.com » In addition: end of life actions (see page 65)

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Retail

ACTIONS New rules to increase number of articles per order/gather orders (a minimum of four shirts per order). The retail organization now work actively to re-use packaging materials for all products and to educate staff and customers on choosing not to get a shopping bag. All European stores currently sort and recycle in-store waste. North American stores have a set aim to do so.

Relevant goals: » A science-based target in line with reducing emissions by 50% by 2030 » Climate neutral by 2035 » On demand production

Status:

» Product Longevity and low FPU (footprint per use)

» Minimum internal orders introduced

CHALLENGES In existing stores, the 2020 roadmap included three identified areas where each store could make a difference:

» Re-using non-commercial goods » Review of all non-commercial goods » Educational initiative: no bag

A goal to reduce transportation emissions and the sell-out footprint and reducing use of non-commercial goods. (see also mapping CO2 Emissions). Longer term plans include introducing on-demand production, with an aim for around 5% of total sales.

ERC: New stores For retail, 2020 saw the initiation of a process to build new stores in a more sustainable way, with a test store being launched 2021. An ongoing project to define and implement a process for building new stores or renovating old ones is in process, with a first goal to define guidelines for material choices.

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Wholesale Relevant goals: » A science-based target in line with reducing emissions by 50% by 2030 » Climate neutral by 2035 » On demand production » Product Longevity and low FPU (footprint per use)

CHALLENGES Wholesale on a global scale has traditionally required a number of samples, from entire products to swatches, printed information materials, transportation of both as well as travels for in-person meetings.

ACTIONS A fully digitalized wholesale offering Eton has been on a trajectory to offer its wholesale customers full accessibility and easy processing via digital tools, resulting in three different digital accessways to different parts of the Eton assortment/service, with different sustainability effects: » Digital Showroom: Reduced need for travel, materials and (potentially) photo samples » B2B: Reduced need for printed materials » Endless Aisle: Reduce over production » Custom Made: Increased potential for on-demand production/reduced risk of overstock

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PEOPLE

PLANET

2020 meant a strengthened use of digital solutions and had a strong effect – but did not fully replace – established ways of working and conducting long-term relationships with partners, including the use of samples. Somewhat conflicting numbers perhaps most clearly show the value of human interaction in 2020, but also indicate cautious optimism: while an increase in person sell-in (even in a Corona year) of course indicates an increase in the sell-in CO2 footprint, the increase in remote selling and the strong belief in a continued increase of that is a strong, positive indicator in a sustainability sense.

Reception: Embracing “new” in an innovation-driven company Digitalization represents a big potential shift in established ways-ofworking for a company with a long-tradition and a well-established relationships with long-term customers. A potential effect could have been stress or unease at having to change established ways, or reduced ability to do one’s job. Instead, in 2020, 90,3 % of the votes cast by Eton sales representatives across the two main collections actually indicated that they gave the (then new) Digital Showroom an approval rating of 8 or higher out of 10.

2019 2020 83% reduction in Wholesale-related printed material (in weight) vs LY 2019 2020 91,4 % reduction in B2B-related printed material vs LY 2019 2020 25% reduction in spend on accessories sales samples from first to last collection 2020 — indicating a reduction in footprint. 2019 2020

As we stated in our Sustainability Report for 2019, as well as provide our customers with the best possible service, we see a potential for digitalization to have a sustainability effect: Status » Reduced printed material First, and directly, by reducing the need for printed catalogues, so called look books and posters to assist in the sell in process, something that had been the praxis before. The B2B also reduced the need for in season-material (so called LE books) from (estimated weight) 3 820 kg paper in 2019 to (estimated weight) 640 kg in 2020. Note that the biggest impact came from material connected to the B2B, the LE (in season stock replenishment) reduced from an estimated 2969 to 256 kg. » Reduced travel Secondly, the then Sales Department, now Wholesale Department, saw a possibility for reduced travel – with the sell-in period having the absolutely biggest scope and effect on CO2 emission for that Department. A goal for 2020 was set of 25% less travels. Covid, from travel restrictions to the resulting financial strain on our industry and our partners, had an effect on our ability to work goal-based regarding travel – leading us to not have a specific result for this KPI. However, sales representatives who believed the Digital Showroom would result in a future decrease in travel with as much as 50% increased from just 5% to 38% over the course of 2020. » Effective use of samples Another goal for the Digital Showroom is a more efficient use of samples, with the aim to reduce the collective footprint over time, while still following market needs and not transition too quickly for an in many cases traditional industry. Samples are a valuable tool for the wholesale department, and while the aim is reduction and more efficient use, the process is made in line with market and customer needs and abilities. Today, most of the work to reduce samples is driven by the smaller, and more focused collections (see “purchase with awareness”), with good initial tendencies. However, the digital showroom has been effective in reducing the number of accessories samples.

70% reduction in spend on color cards for accessories from first to last collection 2020 64


The Consumer PRODUCT USE, EXTENDED LIFE AND END OF LIFE Eton shirts are designed for longevity, and we know that to further extend the lifespan of a shirt or accessory is beneficial to both the customer and the environment. The right garment care has the ability to extend that life and reduce the individual garment’s environmental footprint throughout its life. Extending the product’s life On our webpage — under About/Care — we now have an integrated wash guide: where reducing the footprint of each laundry and in effect each product is integrated as a natural step in the laundry process (no distinction between laundry and more sustainable laundry) https://www.etonshirts.com/ en/page/wash-a-shirt In addition, we have guides on color maintenance https://www.etonshirts.com/en/page/maintain-color stain removal with tips from Eton’s experts: https://www.etonshirts.com/en/page/remove-stains End of life Eton does not send any usable products, whether unsold products or waste products to incineration or landfills. Unusable and/or unsanitary rags are used to produce long-distance heating, i.e. incinerated in a way that the energy is made use of. As of 2019, we partner with SO-EX, to re-sell, re-use or re-cycle usable products and materials. Status » Overstock fabrics turned into new products – first capsule collection launched 2020, further planned for 2021. » Donation of overstock products to charitable organizations 2020 » Reviewing options » Fabric waste is sent to incineration for energy recovery » New care guide for extended lifetime

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ETON 2030

Reducing Emission by 50% Relevant goals: » A science-based target in line with reducing emissions by 50% by 2030 » Climate neutral by 2035 MAPPING CO2 2020 marks the first year of a decade’s long race to reach our goal to reduce emissions by 50% 2030 – in order to be climate neutral by 2050. In order to reach our goal, we work simultaneously in several areas – from raw material to energy and CO2 emissions. In 2019, we began mapping our CO2 emissions for scope 1 and 2 according to Green House Gas Protocol with help and guidance from STICA in order to develop a comparable method to the industry at large in Sweden. Scope 1 and 2 include own facilities and vehicles (own and rented – i.e. offices, stores, company cars etc). For 2020, we followed up with a new mapping of scope 1 and 2. STICA has also connected Eton and 2050, a third party auditor that provide the analysis of our gathered data. Our next goal is Scope 3: mapping the emissions from our entire value chain. Mapping gives us a truthful, updated fact-based analysis and comparative numbers that allows us to act in the way that will have the most effect for the emissions measured in each scope. We focus on CO2 because of the rapidly increasing concentration of CO2 (carbon dioxide) and CO2e* in the atmosphere, and its relation to global warming, which in turn may have dramatic effects for the Planet, such as melting polar ice and a changing climate. As for People, climate refugeeism and conflicts are come with personal tragedies as well as socio-political consequences. We implement the insights gained in mapping by: internal education and elevated insight for managers (now all responsible for driving Sustainability within their own area) and as a basis for identifying and then measuring action points to reach our defined goals. (See above). This year, numbers were influenced by effects of the global pandemic – including for vehicle emissions (affected by travel restrictions in different ways) and facilities (affected by quarantine and other measures). Although not always comparable, they are nevertheless important both as indicators of progress and problem areas, and as exciting indicators of positive effects that could live on. * CO2e stands for Carbon dioxide equivalent and is a term for describing different greenhouse gases in a common unit.

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Taking action for our customers, the future – and our business.


SCOPE 1 AND 2 — OWN OFFICES, WAREHOUSES, STORES & VEHICLES

Ton CO2e*

TOTAL EMISSIONS

2018

2019

Scope 1 Emissions are direct  emissions from owned or controlled sources. 

2020

350 299 300

Scope 2 Emissions are indirect  emissions from the generation of purchased energy.

250 180

200

143

150 100 50 0

129

115

59 34

54 20

27

Company Operated Vehicles

27

25

Refrigerent leakage

29 Electricity

Heating, cooling and steam

2019

WAREHOUSE

26

27

Scope 3 (future) All other indirect emissions that occur in a company’s value chain.

Other

2020

STORES

WAREHOUSE STORES

Ton CO2e*

Ton CO2e*

OFFICES

OFFICES

Stores Offices Warehouses

13,22% (67)

Stores

55,43% (280,8) 31,35% (158,8)

21% (48)

Offices

44% (97,5)

Warehouses

35% (78,2)

2020

RENEWABLE

Energy use (kWh)

Renewable 39% Non-renewable 61%

NONRENEWABLE

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*CO2e stands for Carbon dioxide equivalent and is a term for describing different greenhouse gases in a common unit.


KEY FIGURES 2018 2019 2020 unit

Change from 2019–2020

Emissions per net revenue (MSEK)

o,62 0,43 0,58

ton CO2e

34%

–6%

Emissions per FTE

1,55 1,09 1,15

ton CO2e

5%

–26%

Emissions per unit sold

375,75 264,57 374,67 g CO2e 42%

Emissions per area (m2) 38,11 Energy use per area (m2)*

26,83

17,93

kg CO2e –33%

110,21 103,00 72,98 kWh

Note: data on emissions per unit and revenue compared to other STICA members will gathered later this year.

Note: CO2 “cost” compared to units and money made In the 2019 report, we learned that in comparison to other STICA members, Eton also has a comparatively high CO2e per unit revenue, meaning we spend more CO2e for the profit we make than the average member. Even taking into account that part of this effect depends on estimated emission data and that our business model is a low volume/high time investment product the numbers are still significant.

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–29%

Change from base yr (2018)

0% –53% –34%


Analysis by 2050

About STICA Eton is a proud member of STICA since 2019.

”The overall climate impact of Eton 2020 is 269 ton, a decrease of 30% compared to last year and 50% compared to base year 2018. There are some uncertainties in reported data and estimations have been made. However, data collection is improving from year to year and the proportion of emissions that comes from estimated data has decreased from 56% to 32%. Looking at the categories separately, we come to the following conclusions: Emissions from company operated vehicles decreased with 41% compared to 2019, mainly due to restrictions connected to the covid-19 pandemic and hence fewer trips. Both electricity and heating consumption have decreased compared to the same period last year. The electricity consumption has decreased with 20% compared to 2019 and emissions related to heating decreased with 53% during 2020. The decreases have partly been driven by the pandemic and people working from home. The decrease in heating is however also driven by a change in reported data. For example, heating has this year been reported to be included in the electricity consumption for some stores and offices which had estimated district heating last year. The most significant climate impact in Eton’s operations comes from the electricity consumption. To reduce these emissions, Eton could increase their use of renewable energy by changing their energy contracts or by purchasing renewable energy certificates or guarantees of origin. Despite a decrease of total emissions an increase of the key figures emissions per unit sold and per net revenue are identified (44% and 35% respectively). The increases can be explained by the halving of sold units in 2020. Eton should try to increase their amount of actual data in the future for a more correct result. The result still depends on estimations and might therefore be a bit off from reality.”

STICA stands for The Swedish Textiles Initiative for Climate Action. https://www.sustainablefashionacademy.org/STICA The purpose of STICA is to support the apparel and textile industries and their stakeholders in the Nordic region to, at minimum, reduce greenhouse gases in line with 1.5°C warming pathway, as outlined by the United Nations Framework on Climate Change and the Paris Agreement. Ultimately STICA’s aim is to ensure the Swedish and Nordic textile industry does more than its share by becoming the first climate positive apparel and textiles industry in the world well before 2050.

The Swedish Textile Initiative for Climate Action will: » Support apparel and textile companies operating in both Swedish and international markets to set science-based targets and reduce their greenhouse gases in line with 1.5°C warming pathway, as outlined by the United Nations Framework on Climate Change and the Paris Agreement. We will also go further, ensuring we exceed this goal by becoming climate positive. » Provide a neutral, non-competitive platform for companies and organizations to learn best practices for reducing their GHG emissions as well as to track and publically report on their progress on a regular basis. » Support the development of joint projects and cross-sector collaborations in order to reduce the Swedish apparel and textile industry’s GHG emissions while stimulating climate solutions that can also be exported outside of Sweden, thus increasing the Swedish apparel and textile industry’s global competitiveness. » Develop a roadmap and implement an action plan for how the Swedish apparel and textile industry will reduce its GHG emissions beyond the 1.5°C warming target in order to become climate positive.

STICA’s Action Learning Network Companies participating in STICA’s action learning network commit themselves to reducing their greenhouse gas emissions in line with 1.5°C warming pathway, as outlined by the United Nations Framework on Climate Change and the Paris Agreement. Companies also commit to publicly reporting their progress on an annual basis and to working collaboratively in order to develop joint solutions for accelerating GHG reductions.

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ANALYSIS

We extend an invitation to all Etonians to share their skills and ideas for Eton to reach its sustainability goals. » Renewable energy only As STICA’s analysis clearly states, the most significant climate impact in our Scope 1 and 2 operations come from electricity consumption. Eton identified that to lower our emissions from our own offices, stores and warehouses as the most important action we can take the most important action we can take is to use renewable energy only. » Encompass the entire value chain Even more important to our overall CO2 footprint is to map, review and set a strategy for, and implement, actions in Scope 3: Eton’s total value chain. This is where significant impact can and must be made, from production to end-consumer phase and end of life.

» Simultaneous action While we continue to work based on analysis and defined goals to create as big an impact as possible, we recognize the need to act in several areas simultaneously — from low-hanging fruit to long-term goals, from better materials with a smaller footprint and a long lifespan to reduced direct emissions. » All hands on deck In 2020, Eton made sustainability the responsibility of all department managers in order to develop actions and methods in all areas. However, we also know that one of the most efficient ways to encourage change and turn aims into goals through new ideas is for every team and employee to consider sustainability improvements that could be made in their role, big or small – with the first projects started in 2020.

70


Identified Risks & Actions RISK MANAGEMENT (ONGOING AND PLANNED)

RISK As a part of the garment industry, we identify and target a number of general risks with a circular approach in mind – with longevity in quality and design, fibers and production and end-consumer care as key factors. While we do not own our own factories, apart from a small unit at our HQ, we recognize that these risks must be of importance to us, as to the industry as a whole.

Environmental costs, including: • As a company producing physical products, we recognize that producing, selling and owning our products has an environmental impact throughout a garment’s lifecycle. • As is chemical use and wet treatment — with a negative environmental impact, risk of impact on workers’ health and consumer health. • In addition, we realize that the consumer phase contains its own risks and possibilities, from shipping and transportation to store to garment care and longevity.

Worker’s rights, including: • Child labor and bonded labor. • Limited freedom of association and rights to negotiation. Being denied a written contract. • Unfair or insufficient wages (does not cover basic needs for the worker and their family and provide some discretionary income). • Excessive and/or involuntary overtime. • Being denied fair work conditions on company, supplier or subcontractor level. • Hazardous physical work environment, including but not limited to health risks and fire risks. • Being denied the right to a work environment free of abuse in any form, including physical, sexual and emotional, discrimination in any form, including gender, race, age, pregnancy, religion, sexual orientation, caste, political opinions, nationality, ethnic origins, social background, disease or disability on any occasion, such as hiring, compensation, training, promotion, termination and retirement.

Corruption, including: Bribery, facilitation payments and nepotism.

» Our main existing tool is the Eton Code of Conduct, targeting these identified risks and stipulating and defining what Eton requires of its suppliers and employees, including an animal rights policy and an anti-corruption policy. » All production chain suppliers and employees must sign a Code of Conduct. » Supplier compliance is audited by third party auditors as well as by Eton itself. Eton reserves the right to at any time perform unannounced audits. » Eton believes in cooperation and are willing to work with our suppliers and other business partners to achieve sustainable solutions and to promote suppliers and other business partners who are in compliance. » Relevant documentation must at all times be maintained for auditing purposes. » Eton’s audits aim to identify gaps between the requirements in the Code of Conduct and the actual practices and conditions in the workplace. The audited company will always be given the opportunity to propose and implement a corrective action plan. » A supplier failing to undertake sustainable improvements within the stipulated time frame would seriously damage its relationship with Eton. Eton’s mission is to cooperate with suppliers to address the underlying causes to the non-compliance and to implement continuous improvements. Terminating business with existing suppliers will take place in the events of repeated failure or unwillingness to carry out corrective actions. » All fabric suppliers should be Oeko 100 certified, as of 2020, one is not. » All finishing providers should be STeP certified. » In addition, Eton follows EU regulations, REACH, regarding chemical use. » In addition, anti-corruption training is mandatory for all Eton employees. For 2018, 75% had finished the training. We continuously train new employees and aim to resume training existing employees in 2021 » To establish an efficient CSR work we made sustainability the responsibility of all managers and departments, and established a Steering group at Group level and committed to two roles within the quality department managing production-related sustainability issues.


SUMMARY

Previous goals — and results GOALS AND AIMS 2020 – COMPANY

OUTCOME

Delayed (Covid)

Anti-corruption: Training to be rolled out to all new employees and employees who have not yet completed the training. We aim to complete implementation of whistleblower application during this year or in the near future.

Whistleblower: implemented Achieved – but special Covid version

Workplace satisfaction: Great Place to Work biannual survey

Achieved

Community: To continue contributing on a local level. GOALS AND AIMS

2016

2017

2018

2019

2020

TARGET

Total employees, Eton AB

188

234

235

321*

234

Women

52%

49%

46 %

48%

48%

50%

Men

48%

51%

54 %

52%

52%

50%

7

8

7

9

9

43 %

25%

14 %

22%

22%

57%

75%

86 %

78%

78%

Sickness absence, Sweden, Eton AB

4.34%

2.78%

2.66%

2.27%

1,56%

”Great place to work” Index

Other

72

67

Biannual

Management group Women Men

Not comparable due to Covid

*incl c:a 25 temp staff

GOALS AND AIMS RESULT 2019 RESULT 2020 PRODUCT & PRODUCTION

More sustainably sourced Not applicable (2018) Goal was clarifed and split into two parts: 100 % Organic Cotton by fibers 10% (2019) 2025 (main raw material) 100% More 15% (2020) Sustainabily sourced fibers to 2030

Initiated first certification process, first products including organic and recycled cotton (launch 2021) More sustainably sourced fibers 2%

Fabric supplier, Oeko-tex 100 2018: 100% 2019: 100%

100%

Replaced with the Eton Standard. No audit 2020 (Covid)

Finishing providers, STeP 2018: 100% 2019: 100% Audits shirt assembly units 2018: 100% 2019: 100%

100%

No audit 2020 (Covid)

100%

No audit 2020 (Covid)

Audits accessory suppliers 2018: 100% 50% (2017) 2019: 100% 72% (2018)

72

No audit 2020 (Covid)


GOALS AND AIMS 2020 – MATERIALS

OUTCOME

Steps taken: close to first certified cotton products (delayed by COVID)

15% of our articles to be made with, or partly with, more sustainably sourced fibres.

New focus: overstock capsule collection, launched fall 2020. Initiated buttons in recycled polyester 2% of m fabric (if counted as 100% Tencel) Developed new tencel product with more tencel launch 2021. Overstock products and collections. Organic and recycled cotton and polyamide products developed for production 2021.

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Auditor’s report on the statutory sustainability report To the general meeting of the shareholders in Eton Group AB, corporate identity number 556876-2677

Engagement and responsibility It is the board of directors who is responsible for the statutory sustainability report for the year 2019 and that it has been prepared in accordance with the Annual Accounts Act. The scope of the audit Our examination has been conducted in accordance with FAR’s auditing standard RevR 12 The auditor’s opinion regarding the statutory sustainability report. This means that our examination of the statutory sustainability report is substantially different and less in scope than an audit conducted in accordance with International Standards on Auditing and generally accepted auditing standards in Sweden. We believe that the examination has provided us with sufficient basis for our opinion. Opinion A statutory sustainability report has been prepared.

Borås 29 June 2021 Öhrlings PricewaterhouseCoopers AB

MICHAEL BENGTSSON Authorised Public Accountant

MATTIAS PALMQVIST Authorised Public Accountant

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GRI INDEX 1. Organizational profile

DISCLOSURES

PAGE

102-1

Name of the Organization

102-2

Activities, Brand, Products, and Services

7–8

102-3

Location of Headquarters

7

102-5

Ownership and Legal Form

7, AR 2020

102-6

Markets Served

7

102-7

Scale of the Organization

7–8 AR 2020

102-9

Supply Chain

47–50

102-10

Significant Changes to the Organization and its Supply Chain

34

102-11

Precautionary Principle or Approach

11, 16, 19

102-12

External Initiatives

14–15

102-13

Membership of Associations

15

2.    Strategy

102-14

Statement from Senior Decision-Maker

3

3.    Ethics and Integrity

102-16

Values, Principles, Standards, and Norms of Behavior

5, 11–17, 25–28

4.    Governance

102-18

Governance Structure

2, 17

102-43

Approach to Stakeholder Engagement

14

6.    Reporting Practice

102-45

Entities Included in the Consolidated Financial Statements

AR 2020

102-47

List of Material Topics

14

102-48

Restatements of Information

45, 72–73

102-49

Changes in Reporting

102-51

Date of Most Recent Report

15 June 2020

102-53

Contact Point for Questions Regarding the Report

2

102-54

102-54 Claims of Reporting in Accordance with the GRI Stand-

2

102-55

102-55 GRI Content Index

75

NOTE Eton AB

More information in the Financial Annual

MATERIAL TOPICS ECONOMIC GRI 201: Economic

103-1,2,3

Disclosures on Management Approach

AR 2020

More information in the Financial Annual

Performance (2016)

201-1

Direct Economic Value Generated and Distributed

AR 2020

More information in the Financial Annual

103-1,2,3

Disclosures on Management Approach

18, 24–25, 29

205-1

205-1 Operations Assessed for Risks Related to Corruption

25

205-3

205-3 Confirmed Incidents of Corruption and Actions Taken

25

GRI 205: Anti-Corruption (2016)

ENVIRONMENT GRI 301: Materials (2016)

GRI 305: Emissions (2016)

103-1,2,3

Disclosures on Management Approach

16–17, 39–52

103-1,2,3

Disclosures on Management Approach

66–71

305-1

Direct (Scope 1) GHG Emissions

66–71

305-2

Energy indirect (Scope 2) GHG Emissions

66–71

103-1,2,3

Disclosures on Management Approach

39, 51–54

GRI 308: Supplier Environmental Assessment (2016)

SOCIAL GRI 405: Diversity and Equal Opportunity (2016) GRI 414: Supplier Social Assessment (2016)

103-1,2,3

Disclosures on Management Approach

25–28

103-1,2,3

Disclosures on Management Approach

47, 50–54

103-1,2,3

Disclosures on Management Approach

48, 56–58

GRI 416: Customer Health and Safety (2016)

416-1

Assessment of the health and safety impacts of product and service categories 

48, 56–58

GRI 417: Marketing and

103-1,2,3

Disclosures on Management Approach

56-58

labeling (2016)

417-1

Requirements for product and service information and labeling

56-58


Profile for etonshirts.com

Sustainability Report 2020  

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