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SUSTAINABILITY REPORT 2015 / 2016


FOREWORD

CONTENTS The roots of Odlo can be traced back to Norway, a country engulfed in natural wonders, as well as Switzerland, our home base today, and a country with similarly beautiful natural landscapes. Nature is a previous gift, which ought to be cared for and handled responsibly. This is not only the duty of Odlo as a brand, but we all share this responsibility together in our everyday lives. Sustainability is a key factor to ensure that we continue to be able to enjoy nature to the fullest and for the longest time possible, and here at Odlo we feel a particular sense of responsibility towards this issue. At our organization, we engage with sustainability in various ways, starting with material procurement, to internal commitment, and finally to our own staff and their own willingness to get actively involved in our initiatives.

“BIG CHANGE STARTS WITH SMALL STEPS”

For this, we have already build a firm foundation. We are one of the first sports clothing manufacturers to have been members of the Fair Wear Foundation since 2008. Our code of conduct is based on the ILO and is one of the most rigorous in the industry, and we are very proud of our position as a leader in this area.

FOREWORD BY CHRISTOPHE BÉZU

However, we are very aware of the fact that we are only at the beginning of a long journey. This is a big and important endeavor for us as well as for future generations, and big change has to start with small steps – small things like raising our awareness in regard to our use of resources, water, paper, as well as being more conscious of our daily habits and actions by reducing our consumption in general. Those are small steps that all add up to something bigger, and we can all play a role in this process if we pay more attention to our daily actions. At a strategic level, Odlo is placing a stronger focus on sustainability. With new responsibilities and fresh approaches, we aim at developing a comprehensive sustainability strategy that will make a lasting impact in this vital area. It is in our hands. Now is the time to get started and take the next step. Christophe Bézu CEO

FOREWORD

2

ABOUT ODLO

4

ENGINEERS OF ACTIVE LAYERS

4

FACTS & FIGURES

5

CORPORATE SOCIAL RESPONSIBILITY

8

CSR VISION

8

CSR STRATEGY

9

CSR MANAGEMENT SYSTEM

10

FAIR WEAR FOUNDATION MEMBERSHIP

15

THE ODLO CODE OF CONDUCT

16

GOALS 2015/2016

18

MATERIALS

22

MANUFACTURING

24

SOURCING STRATEGY

25

PRODUCTION

27

MONITORING

28

CSR “MANUFACTURING” INITIATIVES 2015/2016

36

TRANSPORT & PACKAGING

40

PRODUCT USE

42

WORKING FOR ODLO

44

CSR “WORKING FOR ODLO” INITIATIVES 2015/2016

47

CONCLUSIONS & OUTLOOK

48

EDITORIAL INFORMATION

50


ABOUT ODLO

ABOUT ODLO ENGINEERS OF ACTIVE LAYERS SINCE 1946

“ONE STEP AHEAD” 1946

1963

1986

“ALWAYS ONE STEP AHEAD” - this was the favourite saying of Odlo’s Norwegian founder Odd Roar Lofterød, a keen sportsman who took a bold and creative approach to setting up the company in 1946. Odlo started out by manufacturing training suits to protect figure skaters from the cold, a concept that proved to be a resounding success. In 1963 the company developed the first high-performance suits for cross-country skiers and speed skaters made from the synthetic fibre Helanca. Just one year later, Norway’s national Nordic skiing team were to be found wearing the revolutionary suits at the 1964 Winter Olympics. At the 1972 Games in Sapporo, 22 national teams were clad in Odlo’s state-of-the-art apparel. In 1986 Odlo moved its headquarters to Switzerland as part its expansion strategy. One year earlier, Odlo had launched its groundbreaking Athletic Clothing System, which guaranteed optimum moisture management, temperature control and protection from the elements thanks to its three separate layers. In 1994 the company diversified still further with the launch of its Running and Outdoor collections. Now sports enthusiasts could feel comfortable in all conditions.

2002

In 2002 Odlo achieved another breakthrough with its “Effect by Odlo” fabric, using it to produce the first underwear range with odour-reducing silver ions.

2006

In 2006 Odlo developed yet another high-tech fabric in the shape of the lightweight “Cubic” material. Its three-dimensional structure ensures excellent moisture and temperature management, all year round. Today, Odlo’s clothing leads the way, with over 550 products that ensure sports fans have the right gear for all conditions. And the future looks exciting. Talking about his vision for the future, Odd Lofterød Jr. comments: “My father’s goal was always to be one step ahead. And that hasn’t changed.”

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FACTS & FIGURES HEADQUARTERS FOUNDED

ODLO International AG, Bösch 47, 6331 Hünenberg, Switzerland 1946 in Norway

RELOCATED

1986 to Switzerland

DIRECTORS

Christophe Bézu (CEO), Knut Are Høgberg (COO), Antoine Sathicq (CSO), Adrian Schürmann (CFO)

EMPLOYEES IN 2016 MARKETS

Total 702 (FTE), of which 100 are based in Hünenberg, Switzerland Odlo's subsidiaries in Switzerland, Germany, France, Belgium/Holland, Austria, England, Norway and China generate the majority of its turnover. The Odlo brand is sold in 25 countries around the world.

CORE BUSINESS

Odlo is a pioneer in the area of functional sports underwear and has 70 years of experience in the sportswear market. Odlo is the inventor of functional sports underwear and the three-layer principle. Odlo offers a wide range of performance sportswear for every season.

PRODUCT SEGMENTS

With its sports underwear, Odlo is the European market leader in the performance sportswear segment. It also has successful collections in the Running, Outdoor Performance, Cycling, Nordic Disciplines, Training/Studio and Accessories categories.

PRODUCTION

Production includes one summer collection (around 446 styles) and one winter collection (around 600 styles) with a total production volume of approximately 4.9 million items.

POINT OF SALE

Odlo products are available in over 5,000 sales outlets around the world, predominantly in specialist sports shops. Customers can enjoy the Odlo experience at more than 1,500 shop-in-shops. The Swiss company runs 17 brand stores and 14 outlets in Europe.

MANUFACTURING LOCATIONS NUMBER OF FACTORIES LOGISTICS

Odlo manufactures 57% of its products in Europe and the Middle East, primarily in its own factories. Odlo has state-of-the-art production facilities in Portugal and Romania. 43% of Odlo's products are produced in Asia. Total of 22 factories: own factories in Romania (1), Portugal (1); external factories in Europe (5), Middle East (3), Asia (12) Own central 26,000 m2 warehouse and distribution centre in Brüggen, Germany,

R&D

Exclusive partnerships with top institutes (Empa and leading fabric manufacturers) and joint product development with world-class athletes.

AMBASSADORS

Swiss Ski Team (Nordic), Dario Cologna (XC), Scott-Odlo MTB Team, Nino Schurter (MTB), Jenny Rissveds (MTB), Ingalena Heuck (running expert), Fédération Française de Ski (Nordic), Ski Association of Slovenia (XC, NC, biathlon) 5


6

7


CORPORATE SOCIAL RESPONSIBILITY

CORPORATE SOCIAL RESPONSIBILITY

CSR VISION

CSR STRATEGY Sustainable action has been anchored in Odlo’s corporate vision from the beginning: “We act with social and ecological responsibility.” The company’s three core values are responsibility, action and transparency and reflect Odlo’s philosophy.

The Odlo CSR strategy defines ambitious goals, responsibilities and milestones. The CSR strategy is an internal and confidential document, which is evaluated and approved by the Executive Board on an annual basis. The following extract provides an overview of its content and focus.

SOCIAL RESPONSIBILITY

RESPONSIBILITY – WE CARE

ACTION – WE ACT

As a high-quality Swiss company with Norwegian roots and a strong family tradition, sustainability is very important to us. We want to perceive our responsibility so that everyone can continue to enjoy sporting activities in nature well into the future.

We take small, specific steps, because we are fully aware of the fact that we have limited resources and have to be economically successful. Therefore, we have developed a series of sensible measures that we can effectively realise.

Be a fair and attractive partner to producers and ensure that they correctly apply the Odlo Code of Conduct Be a fair and attractive employer to employees (headquarter, subsidiary companies, internal production plants)

ECOLOGICAL RESPONSIBILITY Ensure ecological responsibility Ensure stakeholders’ health and safety within Odlo’s scope of capabilities Participate in international working groups & initiatives

Realise the measures stipulated by the Fair Wear Foundation as an outcome of the management system audit Follow up on Corrective Action Plans (CAPs) as the outcome of social audits at the production plants

TRANSPARENCY – WE SHARE

We stand by what we do. We inform our public about the measures we take, about our progress and also communicate any setback we encounter, if and when they arise.

TRANSPARENCY, COMMUNICATION, ORGANISATION Increase transparency internally and externally Develop management and employees continuously Improve CSR process and tools

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9


CORPORATE SOCIAL RESPONSIBILITY

CSR MANAGEMENT SYSTEM

ROLES & RESPONSIBILITIES

Social and ecological responsibility have been a part of Odlo’s core values and thinking since the company was first founded. The company’s standardised CSR management system was introduced in 2009 and has been continuously optimised and improved since then.

EXTERNAL MANAGEMENT TOOLS

Odlo International’s executive bears overall responsibility for CSR. It defines the CSR strategy and any significant strategy decisions are made by the entire Executive Board. The Head of Sourcing & Development is the CSR delegate and is entrusted with implementation of the CSR strategy. The CSR delegate is supported by the CSR team. In 2015/2016, the team was comprised as follows:

The following management instruments were applied in 2015/16 for CSR at Odlo.

ROLES & RESPONSIBILITIES

INTERNAL MANAGEMENT TOOLS

CSR Delegate Administrator Sourcing & Production Training & Projects Material Management Production Representative

INTERNAL MANAGEMENT TOOLS

Daniel Mulvie, Head of Sourcing & Development Ramon Kälin, Inbound Logistics Specialist Andrea Gerber, Product Developer Regina Goller, Head of Material Management Pedro Paiva, Supply Manager

EXTERNAL MANAGEMENT TOOLS

CSR Vision & Strategy

Code of Conduct

CSR Workplan

Questionnaire for producers

CSR Budget

Worker Information Sheet

Monthly CSR Team meeting

Social audits

Report to Executive Board

Corrective Action Plan (CAPs)

Activities to inform staff members

Sustainability Report Activities to inform producers, agents & workers

In addition, all Odlo employees have an obligation to act with social and ecological responsibility within their particular field of work.

10

All the managers at Odlo are responsible for implementation of the CSR strategy in their own fields of activity, giving the theme the necessary weighting and providing incentives for the continual further development of CSR at Odlo. 11


CORPORATE SOCIAL RESPONSIBILITY

CSR MANAGEMENT SYSTEM The following communication platforms are used by the CSR team to inform internally and to the manufacturer:

ODLO EMPLOYEES

COMMUNICATION PLATFORM

CSR team

CSR team meeting

TIMING

MANUFACTURER

monthly

Management of own production

project-specific yearly

CSR strategy meeting

COMMUNICATION PLATFORM

TIMING

Direct contact

continuously

Management meeting

continuously

Intranet

several times a year

Employees of own production

Executive Board Executive Board meeting

project-specific

Information board

continuously

Intranet

several times a year

Direct contact

continuously

Information meetings to departments

several times a year

Corrective Action Plan (CAPs)

quarterly

Workplace Education Programme

project-specific

Information board

continuously

Workplace Education Programme

project-specific

Odlo headquarter staff

Management of partner production

Employees of partner production

ODLO EMPLOYEES

12

COMMUNICATION PLATFORM

TIMING

TIMING

COMMUNICATION PLATFORM

MANUFACTURER

13


CORPORATE SOCIAL RESPONSIBILITY

FAIR WEAR FOUNDATION MEMBERSHIP Odlo is a member of the Fair Wear Foundation (FWF), which endeavours to improve labour conditions in the textile industry worldwide. FWF verifies that producers abide by its code of conduct and make appropriate improvements. FWF’s independence is guaranteed because it is governed by trade unions, NGOs and business associations. Transparency and accountability are key principles of the organisation.

FWF verifies whether companies comply with the code of labour practices through factory audits and complaint procedures, through audits of its members’ management system and through extensive stakeholder consultations in producer countries. FWF shares its knowledge and (local) contacts with its member companies, providing them with access to information on local legislation, labour legislation and culture.

FWF members work towards improving the labour conditions in factories that produce sewn textiles all over the world. The basis for the collaboration between FWF and its members is its code of labour practices. Eight labour standards form the core of this code of conduct. FWF members are contractually obliged to comply with these standards.

Members are required to set up an effective monitoring system, including factory audits, factory trainings and factory visits. FWF has a complaint procedure that enables factory workers to anonymously report any abuses related to labour conditions. For more information about Fair Wear Foundation: www.fairwear.org

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15


CORPORATE SOCIAL RESPONSIBILITY

THE ODLO CODE OF CONDUCT As early as the 1990s, Odlo signed a code of conduct with its manufacturers. In 2009 it was revised to get in line with the requirements of the Fair Wear Foundation and had it re-signed by each of the manufacturers.

EMPLOYMENT IS FREELY CHOSEN THERE IS NO DISCRIMINATION IN EMPLOYMENT

NO EXPLOITATION OF CHILD LABOUR

FREEDOM OF ASSOCIATION AND THE RIGHT TO COLLECTIVE BARGAINING

16

This most restrictive code on the market is based on the conventions of the International Labour Organisation (ILO) and the Universal Declaration of Human Rights. Its major points are:

There shall be no use of forced, including bonded or prison, labour. (ILO Conventions 29 and 105) Recruitment, wage policy, admittance to training programs, employee promotion policy, policies of employment termination, retirement, and any other aspect of the employment relationship shall be based on the principle of equal opportunities, regardless of race, colour, sex, religion, political affiliation, union membership, nationality, social origin, deficiencies or handicaps. (ILO Conventions 100 and 111) There shall be no use of child labour. The age for admission to employment shall not be less than the age of completion of compulsory schooling and, in any case, not less than 15 years. (ILO Convention 138) There shall be no forms of slavery or practices similar to slavery, such as the sale and trafficking of children, debt bondage and serfdom and forced or compulsory labour. [‌] Children [in the age of 15-18] shall not perform work in which it is carried out, is likely to harm their health, safety or morals. (ILO Convention 182) The right of all workers to form and join trade unions and bargain collectively shall be recognised. (ILO Conventions 87 and 98) The company shall, in those situations in which the right to freedom of association and collective bargaining are restricted under law, facilitate parallel means of independent and free association and bargaining for all workers. Workers’ representatives shall not be the subject of discrimination and shall have access to all workplaces necessary to carry out their representation functions. (ILO Convention 135 and Recommendation 143)

Wages and benefits paid for a standard working week shall meet at least legal or industry minimum standards and always be sufficient to meet basic needs of workers and their families and to provide some discretionary income. (ILO Conventions 26 and 131) Deductions from wages for disciplinary measures shall not be permitted nor shall any deductions from wages not provided for by national law be permitted. Deductions shall never constitute an amount that will lead the employee to receive less than the minimum wage. Employees shall be adequately and clearly informed about the specifications of their wages including wage rates and pay period.

PAYMENT OF A LIVING WAGE

Hours of work shall comply with applicable laws and industry standards. In any event, workers shall not on a regular basis be required to work in excess of 48 hours per week and shall be provided with at least one day off for every seven-day period. Overtime shall be voluntary, shall not exceed 12 hours per week, shall not be demanded on a regular basis and shall always be compensated at a premium rate. (ILO Convention 1)

NO EXCESSIVE WORKING HOURS

A safe and hygienic working environment shall be provided, and best occupational health and safety practice shall be promoted, bearing in mind the prevailing knowledge of the industry and of any specific hazards. Appropriate attention shall be paid to occupational hazards specific to this branch of the industry and assure that a safe and hygienic work environment is provided for. Effective regulations shall be implemented to prevent accidents and minimise health risks as much as possible (following ILO Convention 155) Physical abuse, threats of physical abuse, unusual punishments or discipline, sexual and other harassment, and intimidation by the employer are strictly prohibited.

SAFE AND HEALTHY WORKING CONDITIONS

Obligations to employees under labour or social security laws and regulations arising from the regular employment relationship shall not be avoided through the use of labour-only contracting arrangements, or through apprenticeship schemes where there is no real intent to impart skills or provide regular employment. Younger workers shall be given the opportunity to participate in education and training programmes.

LEGALLY-BINDING EMPLOYMENT RELATIONSHIP

17


CORPORATE SOCIAL RESPONSIBILITY

GOALS 2015/2016

Odlo sets annual targets along the whole value chain as part of its commitment to continuously improving the existing CSR Management System. For 2015/2016, the main focus is on social audits and training and education.

Better understanding for root causes Social Audits Higher efficiency in monitoring system by keeping quality level

Training & Education

Better interconnection within Odlo staff of existing CSR tools

Transparency

Better dialogue within supply chain

2016 SOCIAL AUDITS TRAINING & EDUCATION TRANSPARENCY

We will now take a more detailed look at tools employed in the CSR Management System. The following sections also include details about actions taken and results achieved over the last financial year. They are divided up in accordance with the various stages of the value chain.

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19


20

21


"ODLO'S UNDERWEAR AND TEC SHIRT RANGES HAVE BEEN CERTIFIED AS COMPLYING WITH THE ÖKOTEX 100 STANDARD".

MATERIALS

Odlo continues to use mainly synthetic fibres, though it also uses natural materials such as wool and down. Odlo is committed to ensuring that these natural products are obtained using fair production methods. Practices such as "mulesing" are strictly forbidden when sourcing wool. The down used is a by-product of the meat production industry and is guaranteed not to involve live plucking or force-feeding.

COUNTRIES, MATERIALS ARE SOURCED FROM:

We do our best to ensure that materials are generally sourced from regions close to the manufacturing site in order to avoid unnecessary transportation.

SOUTH KOREA GERMANY

TURKEY JAPAN CHINA TAIWAN

PORTUGAL GERMANY TURKEY PORTUGAL

ITALY

INDIA

ITALY TAIWAN THAILAND CHINA JAPAN KOREA

THAILAND

Where possible, we avoid the use of PFOA/PFOS in our water-repellent finishes. 95% of Odlo products with a DWR (durable water-repellent) finish are treated using a fluorocarbon-free product, and we are working hard to ensure that we hit the 100% FC-free mark as soon as possible. Odlo only works with material suppliers who are Ökotex and/or bluesign-certified, have their own certified testing facilities or work very closely with an independent laboratory. The company's underwear and Tec Shirt ranges are Ökotex 100-certified. Of course Odlo also avoids the use of PVC and nickel in its components and, here too, only uses products that have been tested for their environmental compatibility. We take great care to select top-quality materials, as this lays the foundation for creating products that are designed to last. Odlo attaches a great deal of importance to building long-term working relationships with suppliers at all levels. As a result, in many areas we have the exclusive rights to particular materials.

INDIA

22

23


MANUFACTURING

MANUFACTURING

SOURCING STRATEGY

COUNTRIES, GARMENTS ARE MADE IN:

The Odlo sourcing is based on a dual-principle strategy. This system allows to cover all the wide range of products in every Odlo collection.

PRINCIPLE 1: OWN PRODUCTION Whenever possible in terms of capacity and know-how, new garments or additional production volumes are manufactured by our own factories in Portugal and Romania.

PRINCIPLE 2: LONG-TERM PARTNERSHIPS

ROMANIA TURKEY

GERMANY

Many other brands use hundreds of different manufacturers, encouraging them to compete with each other and changing them every season. Odlo aims for longterm partnership with a small number of manufacturer and prefers to follow its motto of “less is more”.

PORTUGAL CHINA

ISRAEL

GERMANY INDIA ISRAEL ITALY PORTUGAL ROMANIA SRI LANKA THAILAND TURKEY VIETNAM

24

CHINA

ITALY

VIETNAM INDIA SRI LANKA THAILAND

This policy enables the manufacturers to plan for the long term, which increases their stability and job security.

DURATION OF MANUFACTURER’S PARTNERSHIP More than 15 years

3 manufacturers

10 – 15 years

7 manufacturers

5 – 10 years

2 manufacturers

Less than 5 years

10 manufacturers

25


MANUFACTURING

MANUFACTURING

SOURCING STRATEGY

PRODUCTION

Selection of new manufacturers

Production cycle

Odlo applies a 7-step plan in the selection of new manufacturing facilities.

Odlo delivers 2 collections per year. The production cycle involves a large number of steps, below illustration is showing the example of winter 2016 in a simplified form.

1st STEP 2nd STEP 3rd STEP 4th STEP

Analysis of procurement spend, supplier performance and company strategy Assessment of the supplier market place, country specific risk and supplier specific risks Prepare a supplier survey Produce a strategy to help us achieve our goals

First planning with manufacturers

March 2015

Order Placement

Final order to manufacturer

January 2016

Production

Production time 3-4 months (incl. material lead time)

February 2016

Delivery to the stores

Transport by sea, land or air

July 2016

5th STEP

Assess all possible suppliers against the following critieria: Cost / CSR / Lead-time / Quality / Reliability / Fit

6th STEP

Select the supplier Proposal is made by the Head of Sourcing and Development and the final decision is approved by the board

In line with our sourcing strategy, our manufacturing operations are divided between in-house production in Portugal and Romania and external production carried out by our long-term partners.

acts as a centre of excellence. 52% of total production volume was manufactured in the company's own production facilities during the 2015/2016 financial year, something that is unique in the textile industry.

7th STEP

Communicate to the new supplier and start planning the first season

The modern production facility in Romania was built in 2004 and by 2012 had been expanded to double its capacity. Significant quantities of Odlo underwear products are now manufactured in our own factories in Romania, while the production facility in Portugal also

Alongside our in-house production, Odlo worked with 20 other manufacturers during the 2015/2016 financial year. All these manufacturers have signed Odlo's strict Code of Conduct.

Pricing policy

Structure of the sourcing team

Odlo calculates its prices using the “open costing” principle. This means that the sales price is calculated individually for every product, taking into consideration the material and work costs, overheads and the profit margin. The prices are negotiated directly with manufacturers.

The sourcing, product development and supply planning processes are all within the operation department, located in Hünenberg (CH) or Porto (P). This allows an efficient internal and external coordination and communication. These teams work closely together with our Category Management and Design team and promotes flexible, informational exchange and efficient decision-making routes.

Odlo does not work on the basis of tenders, i.e. no additional competition is created among manufacturers.

26

Design & Development

27


MANUFACTURING

MONITORING Breakdown of manufacturers by country 2015/2016

An important component of the implementation of the Code of Labour Practices is monitoring. The current monitoring system is comprised of the following instruments

VALUE %

VOLUME %

ODLO Romania ODLO Portugal

1 1

30 6

43 9

TOTAL own production Europe

2

36

52

Germany Israel Italy Romania Turkey

1 1 3 1 2

2 14 1 3 1

2 15 3 1 1

TOTAL Europe and Middle East

8

21

21

China India Sri Lanka Thailand Vietnam

6 1 1 1 3

14 1 6 11 11

6 1 6 10 4

TOTAL Asia

12

43

27

TOTAL

22

100

100

CODE OF CONDUCT ECTIVE ACTION P CORR INSPECTIONS LANS

L DIT A N S

O C O CIAL M P AU D L AI IT S NTS

NUMBER OF PRODUCER

T OR P REP K C S R L WO R N T A U A E ANN U AGEM M AN

COUNTRY OF PRODUCTION

S

Code of Conduct & FWF questionnaire Agents and subcontractors Agents, as opposed to producers, do not have their own manufacturing facilities but commission third-party companies. Odlo has been working with an agent in China for some years. This agent is listed in the above chart as a producer. 28

Some Odlo manufacturer outsource certain processes (e.g. the sewing in of parts or printing) to subcontractors. Others place commissions with subcontractors in case of capacity constraints. In any case, the main contractor vouches for its subcontractors. Odlo is listing the subcontractors in its supplier register to include them in the CSR management system step-by-step.

All manufacturers are required to sign the Odlo Code of Conduct (see “The Odlo Code of Conduct”), confirming that they have filled out the FWF questionnaire accurately and in full. By signing they agree on the labour practices and that they are prepared to implement all necessary measures within their company to fulfil them. 29


30

14 31


MANUFACTURING

MONITORING Social audit by the FWF Odlo commissions an external, independent organisation to perform social audits. The majority of the audit teams are trained by the FWF to carry out company audits and to verify on the local labour conditions.

COUNTRY

PRODUCER ID

China

4591 6115 3803 3811 3819

COMPLETED 2010 2011 X

X

In the 2015/2016 financial year, a total of three audits were conducted by the Fair Wear Foundation (FWF). Odlo has been working with two of the manufacturers for a long time, so it was possible to compare the results with earlier audits. We were delighted to note that this showed an improvement in most of the audited areas. The following audits have been conducted at our manufacturers since Odlo joined the Fair Wear Foundation in 2008:

2012 X

2013 X

2014/15

2015/16

PLANNED 2016/17 X*

X X X X X

India

4833 4835

X X

Israel

3785

X**

X**

X**

X*

Jordan

5141

X**

X**

X**

X*

Romania

X

X

145 3804 2143

Thailand

3039

Turkey

5670 8383

X

5620 7585

X X

Vietnam

32

X*

X**

5608 X

To follow up on these audits, Odlo maintains a corrective action plan (CAP) with all participating manufacturers that lists all of the shortcomings that are found. At regular intervals, manufacturers are required to report any progress made to Odlo by showing evidence of the completion of corrective actions.

AREA OF REPORTING

PRODUCER NUMBER OF COUNTRY NUMBER FINDINGS

AREA OF REPORTING

PRODUCER NUMBER OF COUNTRY NUMBER FINDINGS

Management

China Romania Thailand

4575 145 3039

4 1

Health and safety

China Romania Thailand

4575 145 3039

4 7

Forced labour

China Romania Thailand

4575 145 3039

-

Legally binding

China Romania Thailand

4575 145 3039

-

Discrimination

China Romania Thailand

4575 145 3039

-

Child labour

China Romania Thailand

4575 145 3039

-

Freedom of association

China Romania Thailand

4575 145 3039

1 -

Payment of living wage

China Romania Thailand

4575 145 3039

1 1

Overtime

China Romania Thailand

4575 145 3039

1 2

X*

X

Sri Lanka

Corrective action plans (CAPs)

X

X*

X**

X* X*

X* * In planning / ** non-FWF audits

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MANUFACTURING

MONITORING New findings emerged during the FWF social audits in 2015/2016

Inspections by Odlo staff Odlo staff make regular visits to manufacturers including inspections of their working conditions, e.g.:

AREA OF REPORTING

CLOSED FINDING DURING 2015/2016

OPEN FINDING DURING 2015/2016

Quality Assurance Team, Europe and Asia

Management

4

1

Head of Sourcing and Development

Forced labour

0

0

Discrimination

0

0

Product Development Team Executive Board members

Child labour

0

0

Freedom of association

0

1

During their visits, Odlo employees fill out checklists and report their findings to the CSR team.

Payment of living wage

0

3

Complaints

Overtime

2

1

Health and Safety

6

5

A manufacturer’s employees can file complaints concerning their working conditions with an independent authority designated by the FWF. The authority forwards the complaint anonymously to the FWF which, in turn, informs Odlo.

Legally binding

0

0

Important note: The number of findings makes no statement about their quality. In none of the 3 audits a serious problem was identified.

In January 2016, Odlo resolved a complaint about excessive working hours in a Chinese factory after discussions with management. The FWF confirmed this by a closing report. No new complaints from workers were recorded for the 2015/2016 financial year.

“ODLO IS BACK TO FWF LEADER STATUS” Brand Performance Check The FWF also audits Odlo at regular intervals in order to support the FWF process. The results are published on the FWF’s website and are integrated into the CSR workplan and CSR report. Our concentrated efforts to achieve continuous improvement have paid off, with Odlo once again being awarded Leader status amongst FWF's membership following a Brand Performance Check in October 2015. The improvements made and the systematic implementation of our internal monitoring system were key elements in achieving this status. The full report can be read on the Odlo website. CSR work plan Odlo draws up a work plan once a year (annual planning), which is then submitted to the FWF. This confidential document details the activities planned for the following year. CSR report

CAP Progress Report as of 30th June 2016.

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This report functions as a published controlling instrument and reports the past business year from 1st July 2015 till 30st June 2016.

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MANUFACTURING

CSR “MANUFACTURING” INITIATIVES 2015/2016 Supplier Summit (October 2015) In October 2015, Odlo invited its material suppliers and clothing manufacturers to attend a summit at its Hünenberg headquarters for the very first time. This two-day event provided an opportunity to share knowledge and experience with a view to encouraging direct dialogue in the

OWN PRODUCTION - PORTUGAL: ORGANIZATION OF THE 1ST AVE RUN (OCTOBER 2015)

Last October, Odlo organised the first AVE Run in Trofa in conjunction with two other companies and the town council. The run took place on 18 October with the aim of raising money for charity.

OWN PRODUCTION - PORTUGAL: BLOOD DONATIONS

Donating blood can save lives. Every year Odlo Portugal arranges for the Portuguese Blood Institute's donor bus to set up on the company's premises as part of a special blood donation promotion. Local companies are also invited to join in.

OWN PRODUCTION - PORTUGAL: PROJECT SUMMER 2016

Sport is an essential part of a healthy lifestyle. This is why we provide our staff in Portugal with opportunities to participate in local sports courses led by professional trainers. Sports activities can prevent health problems and improve people's well-being. After a hard day's work, our staff can unwind by doing sport together and building a good team spirit.

OWN PRODUCTION - PORTUGAL: RUN 4 HEALTH (ALL-YEAR 2015/2016)

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supply chain. A series of presentations and workshops covered topics such as innovation and current challenges in the industry. It also provided an opportunity to work with management representatives from the clothing manufacturers on the action plan drawn up after the last social audit.

Odlo Portugal has introduced a regular "Run4Health" initiative. Twice a week, weather permitting, all Odlo employees are invited to go for a run together after work. It is open to everyone, whether they are keen runners or have never run a step in their lives! The goal is to steadily increase the number of participants. All the runners we see in parks, at the beach and around town are a sign that running has come back into fashion. This tells us we're on the right track. Running provides a basis for many types of sport – from football and skiing to ice hockey – and is a key element of top athletes' training regimes. Running is popular because it doesn't require any special equipment, organisation or specific skills, and progress can be made very quickly.

Odlo Romania is committed to creating positive change in society. Every month we supply food to around 150 elderly and needy people. We also provide autistic children from the local "Dolphin Center" with the toys to help them live a normal, active life.

OWN PRODUCTION – ROMANIA: COMMUNITY ENGAGEMENT (ALL-YEAR 2015/2016)

Last year, Odlo Romania helped six members of staff to have comprehensive dental treatment and two hearing aids and helped another employee to cover the costs of an operation and physiotherapy.

OWN PRODUCTION – ROMANIA: HEALTH SUPPORT

Our aim is to inspire people we come into contact with in our personal and professional lives. We are involved in a number of voluntary environmental projects. On one particular volunteer day, 216 people in 12 teams tended the trees in the Roman Park, an initiative that attracted plenty of coverage by the local press.

OWN PRODUCTION – ROMANIA: VOLUNTEERING DAY

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TRANSPORT & PACKAGING

MODES OF TRANSPORTATIONS (GOODS RECEIPT 2015) 55%

LAND

COUNTRIES, GARMENTS ARE SHIPPED FROM AND SHIPPED TO:

4% AIR

RUSSIA NORWAY GERMANY DENMARK NETHERLANDS

GERMANY

SWITZERLAND

INDIA

ITALY

ISRAEL

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ROMANIA

ITALY

AUSTRIA

PORTUGAL

TAIWAN

ROMANIA

NETHERLANDS

SRI LANKA

BELGIUM

THAILAND

LUXEMBOURG

POLAND

TURKEY

CZECH REPUBLIC

FINLAND

VIETNAM

SPAIN

SLOWENIA

FRANCE

GREAT BRITAIN

NORWAY

SWITZERLAND

RUSSIA

DENMARK

SEA

POLAND CZECH REPUBLIC AUSTRIA SLOWENIA

GREAT BRITAIN BELGIUM LUXEMBOURG FRANCE SPAIN PORTUGAL

CHINA

41%

FINLAND

TURKEY CHINA ISRAEL

TAIWAN VIETNAM INDIA SRI LANKA

THAILAND

Wherever possible, Odlo tries to transport goods by sea, as this is the most economical and environmentally-friendly option. Decisions on transportation methods are heavily influenced by the origin of the products in question. In terms of organisation, transporting products from Asia is very different to transporting products from Europe. Through careful planning and order tracking and the regular exchange of information with our manufacturers, last year we were able to keep the percentage of goods transported by air to just 4%. Our central distribution centre in Brüggen (Germany) also makes every effort to sort and recycle its packaging materials. Cardboard from production and product packaging is recycled wherever possible. For example, 70’000 of inner cardboards are reused by exchanging between the central warehouse and own production. Unusable cardboard or plastic packaging is separated for disposal. All Odlo underwear packaging features the «Green Dot”, meaning that it is totally recyclable.

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PRODUCT USE RATE OF RETURNS (PROPORTION RECLAMATION / AMOUNT OF DELIVERED GOODS)

COUNTRIES, GARMENTS ARE SOLD IN (20 MOST IMPORTANT MARKETS):

SS15 & FW15/16:

RUSSIA

0.30 %

The average value of returns is about 0.90 %

NORWAY GERMANY DENMARK NETHERLANDS GREAT BRITAIN BELGIUM LUXEMBOURG FRANCE SPAIN SWITZERLAND GERMANY

ITALY

FRANCE

FINLAND Odlo only manufactures and sells products that are guaranteed to be durable and long-lasting. We believe this makes an important contribution to promoting sustainability in our society. A number of different management systems and measures have been put in place to ensure we continue to provide our customers with this guarantee in the years to come.

POLAND CZECH REPUBLIC AUSTRIA SLOWENIA

The following measures are now standard:

CHINA TAIWAN

WEAR TESTS: During the development phase, new products, materials and technologies are tested by in-house and external sportsmen and women, and by professional athletes. We use the results of these tests to improve our products on an ongoing basis.

SWITZERLAND AUSTRIA

SPAIN

QUALITY INSPECTION:

ITALY

GREAT BRITAIN

TAIWAN

RUSSIA

NETHERLANDS

POLAND

Quality teams in Europe and Asia carry out regular and systemate inspections on-site during manufacturing. This is an important stage in monitoring our production.

BELGIUM

FINLAND

CHINA

SLOWENIA

LUXEMBOURG

NORWAY

CZECH REPUBLIC DENMARK 42

CARE INSTRUCTIONS: All products are labelled with their material composition and care instructions. This helps our customers to care for their products properly and prolong their active use. 43


WORKING FOR ODLO

COUNTRY OF ORIGIN (95 EMPLOYEES FROM 17 COUNTRIES) 52%

17%

SWITZERLAND

COUNTRIES OF ORIGIN OF ODLO’S EMPLOYEES AT THE HQ IN HÜNENBERG, SWITZERLAND:

OTHERS

3%

FRANCE

6%

ITALY

NORWAY SWEDEN

USA

38%

GERMANY AUSTRIA HUNGARY

BELGIUM FRANCE SPAIN PORTUGAL

GERMANY

GENDER

DENMARK GREAT BRITAIN IRELAND

22%

FINLAND

MALE

ITALY SLOWENIA

62%

FEMALE

SWITZERLAND SWITZERLAND

AGE (AVERAGE: 36)

GERMANY ITALY

33%

FRANCE

19-30

AUSTRIA SPAIN

SWEDEN

PORTUGAL

SLOVENIA

BELGIUM

HUNGARY

DENMARK

UNITED KINGDOM

FINLAND

IRELAND

NORWAY

USA

44

9%

51-64

16%

41-50

42% 31-40

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WORKING FOR ODLO

CSR WORKING FOR ODLO INITIATIVES 2015/2016 Last year brought many changes. Changes were made to products, categories and processes in order to provide our customers with the best possible service and innovative products in the area of sports performance clothing. All these changes have had an impact on our staff, particularly over the last year. Since then we have put in place a totally new management structure, and the company has been reorganised to better meet the needs of our customers. This was challenging for some of our staff, and everyone was required to make some adjustments. But it has also led to some positive stories, including promotions for some employees, new job descriptions, new team structures and the many people who have joined our company from all over the world. Our international subsidiaries are now working more closely with the head office, with increased sharing of knowledge and experience to ensure we are all on the same page and heading in the same direction. New countries and partnerships are being developed, and in July 2016 we established our new subsidiary in the USA. All of this has had a significant impact on our internal structures, processes and procedures and has required a certain amount of flexibility on the part of all our employees. Doing things differently, changing direction, leaving the safety of the harbour to enter uncharted waters – all this has been and remains a major challenge for us all. But we have set out together on an exciting adventure, and still have a long way to go. If we are to conquer the world, we need a strong team that gives its best shot every single day. A team that can adapt to change and pours its heart and soul into staying one step ahead.

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BIKE TO WORK (JUNE 2016) For the 10th consecutive year Odlo International has taken part in the national “bike to work” initiative organized by the association “Velo Schweiz”. For one month, employees commute to work by bicycle, in combination with a team competition about the longest distance taken as a team. In this way, they made a positive contribution not only to their own fitness but also to the environment.

FEEL FIT! (ALL-YEAR 2015/2016) This stands for a health and fitness package available for Odlo employees at the Swiss headquarters in Hünenberg. It offers employees a variety of activities such as indoor fitness centre, inhouse pilates lessons or bike rentals.

SPORTS EVENTS (ALL-YEAR 2015/2016) Odlo supports a variety of internal and external sports events, thus promoting popular sports, employee health and the development of young athletes.

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CONCLUSIONS & OUTLOOK THE SUSTAINABILITY REPORT TAKES A LOOK BACK... The experiences and results of the 2015/2016 financial year show that the CSR Management System tools are now well established in the supply chain. The systematic exchange of ideas and information between Odlo, the manufacturers and the Fair Wear Foundation has led to a steady improvement in working conditions in the factories. We are proud to report this success in our brand's traditional business, sports apparel manufacturing.

... ODLO IS LOOKING TO THE FUTURE... The experiences of recent years have motivated us to intensify our commitment to the future. The textile value chain is long and complex, as is the list of social and environmental challenges that we face. We understand our responsibilities. We believe our contribution to society and the environment is also contributing to Odlo's success as a company. This belief lies at the heart of Odlo's ongoing CSR strategy. We are expanding our sustainability strategy throughout the value chain in terms of the environment and society.

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... AND INSPIRING OTHERS TO JOIN IN!

WE LOOK FORWARD TO WORKING TOGETHER FOR A SUSTAINABLE, INSPIRING FUTURE.

We cannot do it alone. Sustainability affects everyone, whatever their age and wherever they live. We can only make this next step with our products if we work with our stakeholders to find new ways of building successful, sustainable businesses. This is our contribution to society and to a sustainable future. We believe the social and environmental challenges that society is facing harbour the potential for great innovation. We intend to take this opportunity to continue to build the Odlo brand and let our products inspire our customers to ever greater heights in their sporting activities.

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EDITORIAL INFORMATION Publisher Odlo Sports Group, Bösch 47, CH-6331 Hünenberg, Switzerland Editors Daniel Mulvie, Head of Sourcing & Development Regina Goller, Head of Material Management Barbara Hösli, HR Director Pedro Paiva, Supply Manager Andrea Gerber, Sustainability Manager Stefanie Waltenspül, Public Manager

For further information about Odlo’s sustainability, please contact andrea.gerber@odlo.com

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SUSTAINABILITY REPORT 2015 / 2016

Odlo International AG Bösch 47 CH-6331 Hünenberg mail@odlo.com odlo.com


Odlo Sustainability Report 2015/2016