Social responsibility in the supply chain

In the following section we will provide general information about the management of social standards and will address specific labor standards. In addition, we will report on the collaboration with our producers and on our commitment in high risk countries. All information is related to 2015.

The presence of good labor conditions at our producer’s facilities is very important to us. To ensure this, we support them in implementing our required labor standards and monitor these as well. To accomplish this, we employ a team of four whose sole responsibility is to attend to the management at our suppliers in terms of social standards. This team consists of specially trained employees who are both in our facilities in Tettnang as well as at our main production sites in China and Vietnam. In addition, we have a Quality Control Team from our office in Asia that visits our production facilities regularly. These employees, who have been trained in social standards, assess both the quality requirements and the working conditions of our factories during operation.

It is important for us to have a competent partner at our side for the monitoring and implementation of labor standards. Therefore, we decided to join the multi-stakeholder initiative Fair Wear Foundation (FWF) in 2010. The approach of the FWF fits very well with our company philosophy. We especially appreciate the principle of shared responsibility; we are working with producers to gradually implement improvements with the aim of a holistic management system relating to social standards. Audits do not have "pass" or "fail" ratings, which would have an immediate consequence of severance with producers. This would be inconsistent with our corporate philosophy, because we feel responsible towards every single employee of our producers. In the audit, all relevant findings are recorded and inventoried in order then to work together and to find reasonable solutions. More information in a later section and Monitoring our Suppliers.

We are convinced that it is only possible to achieve sustainable improvements and, in turn, long-term business relationships on this basis.

We see it as our duty to advance this issue in countries where awareness of good working conditions and the observance of human rights is still scarce. So we are committed to continuing our vigorous efforts to make our producers realize how important these standards are.

The FWF provides us with the opportunity to cooperate with other member companies. If, for example, other manufacturers work with the same producer, we can perform a joint audit. This is advantageous in that the producer must be audited only once, reducing the waste of resources – neither the producer’s nor ours. Another positive aspect is that in working together, we have more influence on the producer. For example, after a joint audit or during joint training programs, we can work together with other member companies to enhance the effects of the improvement process. See also Production in Myanmar

The FWF focuses exclusively on sewing producers and, when required, their subcontractors, as the most labor-intensive processes occur in these facilities. This is because sewing processes are currently not automated. Material suppliers are not monitored by the FWF.

As a member of the FWF, VAUDE must also meet specific requirements as an ordering customer. The FWF monitors whether we adhere to these requirements in the annual Brand Performance Check (BPC). From these results, our efforts are evaluated in terms of social standards. More in Leader Status with the FWF

The FWF Code of Labor Practice (CoLP) to which we have committed ourselves, forms the basis for cooperation with our producers. The CoLP is based on eight core labor standards of the International Labor Organization (ILO) as well as on the UN Human Rights Charter.

All of our producers have to sign the Code of Labor Practice as part of the contract. In addition to the VAUDE Quality Manual, the CoLP is an integral part of the contract, which is also a prerequisite for the establishment of a business relationship with VAUDE. Producers are fully educated about the requirements of the CoLP before a business relationship begins.

The CoLP must be posted in every production facility and be available for all employees in their own language. This includes the Complaints Hotline for the workers. More about the Complaints Procedures here

FWF auditors as well as our CSR employees check regularly whether the CoLP is posted in the local language.

In this Sustainability Report, we report extensively on the content and requirements of the CoLP, our requirements of our producers, any discrepancies for each standard as well as our commitment in this regard. The content of the Code of Labor Practice can be found here:

• Employment is freely chosen
• No discrimination in employment
• No exploitation of child labor
• Freedom of association and the right to collective bargaining
• Payment of a living wage
• No excessive working hours
• Safe and healthy working conditions
• Legally-binding employment relationship

At VAUDE 99% of producers have monitoring status which means that almost all producers in high risk countries are audited. More on production in high risk countries here:

Whenever possible, we have new producers audited by the FWF before production starts. In 2015, six initial audits of production facilities took place.

When we need a new producer (for strategic reasons, for example), we evaluate thoroughly in advance whether these suppliers meet our requirements in terms of quality, social standards and emission management. We have developed guidelines and a system for evaluating new partners. For organizational reasons, the FWF is not always able to carry out an audit before production starts. Therefore our CSR employee and quality managers pre-evaluate the conditions of the production facility using detailed checklists that, in addition to the criteria mentioned above, covers the requirements of the CoLP.

We also check whether the producer has been audited and if he has any other environmental or social certificates.

At VAUDE, 99% of producers have the monitoring status. According to the FWF, 90% of producers need to have the monitoring status by the 3rd year of membership. In general, we audit each producer early on, either before the start of production or in the first year of our business relationship.

To ensure objective examination of the working conditions at the production facility, the producers are audited by the independent auditors of the FWF.

During the audit, whether or not the producer is complying with the contents of the Code of Labor Practice and the applicable law is intensively examined. If there are discrepancies to the terms of the CoLP or in terms of laws, these are recorded in a corrective action plan (CAP).

A FWF Audit includes the following checks:

• Complete inspection of the organization from inventory to finished products
• Checking the documentation
• Employee interviews both within and outside of the production facility
• Talks with management

Interviews outside of the production facility are an important source of information, because the employee can answer questions more openly there. These interviews are always conducted anonymously.

In addition, for each of the eight standards, the FWF interviews local stakeholders regarding conditions and implementation of the standard in the country.

After each audit, a binding corrective action plan (CAP) is jointly agreed upon by the audit team and the management of the respective production facility. Any discrepancies with respect to the CoLP and also with regard to the local laws are listed. We discuss this corrective action plan intensively with our producers. Together we develop joint solutions and also a schedule that specifies the date by which the respective discrepancies should be remedied. In most cases, the necessary measures can be implemented quickly and the complaints remedied. The challenge, however, is to systematically and sustainably implement the recommended measures. Sometimes there are also very critical discrepancies that must be stopped immediately while many improvements require more time before they can be implemented. If this is necessary, we give our producers the time needed, since this is the only way to achieve truly sustainable and systematic improvement.

Our CSR employee supports the producers throughout the improvement process. They make their expertise available to the producers and also perform regular follow-up visits, during which the status of corrective actions is tracked.

Moreover, once a year there is a review by the VAUDE CSR employee at all of our producers. We have developed a special checklist in which the all requirements are laid down which are strictly checked. The result is then discussed with the producer.

Re-audits are generally carried out every three years - this also corresponds to the guidelines of the FWF. If a producer does particularly poorly, we initiate a verification audit earlier to check what improvements have been achieved and what issues still need to be addressed.

The CoLP also applies to all subcontractors. Before we begin working with a producer, he must inform us of all production facilities in which he finishes our products. This applies both to his own factory as well as for subcontractors he might possibly use for production. These are, like all other production sites, visited in advance, reviewed and evaluated by us. On this basis we decide whether each subcontractor may be used for our production. All subcontractors who produce for VAUDE undergo the same monitoring as the producers with whom we work directly. This means that subcontractors are audited by the FWF, and if necessary, a corrective action plan is implemented together with the VAUDE CSR team in Asia.

In general, each producer is required at the beginning of the business relationship with VAUDE to inform us in advance and obtain our approval before he uses subcontractors. Our on site quality control system gives maximum transparency as to which production facilities are used for the production of our products.

If a production facility can not internally cover all production steps, such as embroidery, printing or washing, it must disclose its subcontractors. This year, we are beginning to train our production facilities in how they can monitor their subcontractors for the outsourced production steps over the long-term. We will report on this project in the next Sustainability Report.

VAUDE trains its producers on site in order to provide targeted support and close existing knowledge gaps.

For this purpose, the FWF offers a Workplace Education Training (WEP) in a variety of countries. As part of the WEP, workers and managers of the production facilities are trained on the following topics: CoLP content, rights and obligations of workers and managers and local laws. Separate training courses are held for workers and for managers. Firstly, the content is specific for each target group. Secondly, an environment is created in which the workers feel freer to express questions or concerns that they might not say in the presence of their managers.
In addition, the WEP focuses on open communication between workers and managers. On both sides, an awareness should be created that contributes significantly to good internal communication, to meeting the requirements of CoLP and to improving working conditions. A thorough explanation of how the complaint mechanism can be used if internal problem solving does not work is also given. More here at Freedom of Association

Of all of our production countries, the FWF currently only provides WEP training in China and Vietnam. For this reason we have designed and implemented WEP training in Myanmar that is based on the FWF standards. More here at Production Myanmar. In 2015, 15 of our production facilities participated in the WEP and in total, 90% of our producers in the countries where the WEP is offered have already been trained.

Above and beyond the WEP, we recommend that our producers (depending on their deficits) also take part in other training or education programs themselves. See also Production Myanmar or Occupational Health and Safety

We want to anchor our commitment to social standards in the supply chain throughout the organization, particularly in the entire product development and production process. Therefore we provide ongoing information on this issue to our employees at our headquarters in Tettnang, with internal reports, information events and training.

To accomplish this, we use our intranet, our "VAUDE Academy" training program as well as our Collection Presentations that are held twice annually with all international sales representatives. In addition, the issue of social standards and all related issues is an integral part of the internal Update Meetings of all VAUDE product divisions. The theme is also regularly reported on to the company management.