FitFlop Modern Slavery Transparency Statement - Financial Year 2018

Introduction

FitFlop is absolutely committed to ensuring that there is no modern slavery or human trafficking in our business or supply chains; and to preventing modern slavery and human trafficking in our corporate activities. This is our third statement made pursuant to s.54 of the Modern Slavery Act 2015 and relates to our most recent financial year, which ended on 31 December 2018. This statement sets out the potential risks related to our business, the steps that we have taken during the past 12 months, and the steps that we will continue to take to ensure that modern slavery and human trafficking are not taking place within any part of our organisation and supply chain.

Over the past year we have continued to take active steps across our global business to increase the depth and breadth of our work to ensure we identify any instance of modern slavery practices and eliminate them from our supply base. To this end we have also worked hard to educate and build knowledge in this area within our own teams and those of our suppliers, distributors and partners.

You can find out more below about our business and supply chains, our policies, the due diligence processes we have in place, the steps we took in 2018 to identify and mitigate the risks of modern slavery and human trafficking, and the steps we will take in the coming year.

OUR BUSINESS AND SUPPLY CHAIN

FitFlop is a global, multi-channel brand

Launched in 2007, FitFlop™ is one of the world’s most popular makers of biomechanically engineered shoes, sneakers and sandals, that not only look good, but feel good and are good for you too. We are a global brand, providing footwear and related items to customers and consumers in around 60 territories. Business activities include the design, development, sourcing, manufacture, transport and sale of products. We act as a holding company for subsidiary undertakings in the US and Germany, with our headquarters in London and operational offices in Hong Kong and Ho Chi Minh City.

We source finished footwear (“Tier 1”) from factories in Vietnam, China and Indonesia. We also work directly with a number of component, material and packaging suppliers (“Tier 2”) globally. We carry out testing and development work in the UK, Canada, Vietnam, Indonesia and China. We have established long-term relationships with several of our partners and have built these relationships over many years in most cases. This enables us to gain a deeper understanding of the issues faced by our suppliers.

DUE DILIGENCE

The primary risk for our business is in association with our suppliers in relation to sourcing from countries outside of the UK, particularly those based in Asia-Pacific countries. As part of our initiative to identify and mitigate risk in our supply chains, we have systems in place to:

• Identify and assess potential risk areas in our supply chains.
• Mitigate the risk of slavery and human trafficking occurring in our supply chains.
• Monitor potential risk areas in our supply chains.
• Protect whistle-blowers.

SUPPLIER REVIEWS

We undertake due diligence when considering new suppliers to take on and regularly review our existing suppliers. We assess our supply chain to evaluate particular geographical risks of modern slavery and human trafficking. We work closely with our suppliers to understand their production processes and we make it a contractual requirement that all manufacturers (Tier 1 and Tier 2), major retailers, distributors, franchisees and major suppliers we do business with to sign our Code of Conduct (see below). Employees from our London head office and our regional offices in Hong Kong and Ho Chi Minh City regularly visit all our suppliers. This gives us invaluable insight into working practices, processes and conditions across our supply base, allowing us to spot potential issues relating to modern slavery and human trafficking. In most cases we operate in shared factory environments. We work with our industry partners in spotting and addressing modern slavery and human trafficking issues.

 AUDITS

We work with specialist external auditors to carry out independent, third-party audits every two years in the factories we use in all Tier 1 and all Tier 2 manufacturing locations. We employ a global specialist auditing firm to evaluate our partners using the SMETA (SEDEX Members Ethical Trade Audit) methodology, considered to be the gold standard and used by many other established, responsible brands.

AUDIT OUTCOMES

We analyse the outcome of audits and decide what action, if any, needs to be taken, including providing advice to suppliers through our third-party auditors and our internal CSR team; requiring, where necessary, the factory to implement corrective action plans. Should suppliers fail to take appropriate action on any corrective measures or where they seriously violate our Code of Conduct, we would consider invoking sanctions against them or terminating the business relationship.

EMPLOYEE/WORKER DUE DILIGENCE

In each country where we employ staff, we ensure our compliance with the relevant employment legislation. We recruit and select our own workers, with the help of reputable recruitment agents or in-house recruiters, and determine the terms and conditions of their employment. Employees/ workers are free to accept or reject any employment offers made. As part of our recruitment process we undertake checks on all workers to verify their identity, age and eligibility to work in that country.

We always aim to pay our workers a reasonable and fair wage for the job they are doing, and this will be at or above the legal minimum wage in the country they are employed.

We require the same standards from our suppliers and we confirm this through our audits. We also require the same or equivalent standards from our distributor and franchise partners.

OUR POLICIES AND CONTRACTS

At FitFlop, our core values frame our approach to the prevention of modern slavery and human trafficking and ensure that we are committed to acting ethically and with integrity in all of our business relationships. Our core values are:

BETTER... At what we do, all the time. By continually raising the bar on our product, our communications, customer service, work output, efficiency, respect for ourselves, our co-workers and our customers.

PROUD... Of every shoe we make, of our brand and its energy and of every interaction we have on behalf of our company.

APPRECIATIVE... Of the opportunities we have, the people who work with and support us, the retailers who stock us, the suppliers who supply us and the customers who love us - we never take them for granted.

Key relevant policies are:

WHISTLEBLOWING POLICY

We strongly encourage all our workers and business partners to report any concerns related to our activities or activities within our supply chains. Our whistleblowing policy ensures that all workers know that they can raise concerns about how workers are being treated, or practices within our business or supply chain. This includes any circumstances that may give rise to an enhanced risk of modern slavery and human trafficking. This policy is designed to make it easy for workers to make disclosures, without fear of reprisals.

CODE OF CONDUCT

We are committed to ensuring that our suppliers adhere to the highest standards of ethics. We require all product, materials and service suppliers, distributors and franchisees to sign our Code of Conduct, which mandates the following: safe and sanitary working conditions;

• no forced labour;
• no child labour;
• no harassment or abuse;
• no discrimination;
• freedom of association and collective bargaining;
• payment of at least minimum legal wage; and
• working hours that are not excessive.

Suppliers are required to demonstrate that they provide safe working conditions, treat workers with dignity and respect, and act ethically and within the law in their use of labour. We work with suppliers to ensure that they meet the standards of the Code and improve their workers' working conditions. Serious violations of our Code of Conduct would lead to the termination of the business relationship.

CORPORATE SOCIAL RESPONSIBILITY POLICY

We continue to build our corporate social responsibility policy, which sets out our commitment to preventing human-rights abuses, minimising environmental damage and assuring fair business practices.

ANTI-BRIBERY POLICY

We have a comprehensive anti-bribery policy, supported by detailed guidance and training.

CONTRACTS

Our standard manufacturer, distributor and franchisee terms require adherence to our Code of Conduct. We also include contractual provisions that help us implement and enforce our controls to identify, prevent and mitigate modern slavery and human trafficking. These include provisions regarding auditing, access to records, treatment of workers, anti-bribery and compliance with laws.

RISK MANAGEMENT/MITIGATION

Reporting on progress made in 2018

In 2017 we committed to take certain steps to further enhance our ongoing efforts to identify, prevent and mitigate the risks of modern slavery and human trafficking. Below we set out the progress we have made in 2018:

• Staff training: To ensure a high level of understanding of the risks of modern slavery and human trafficking in our supply chains and our business, we provide training to our staff. We have extended our formal modern slavery training programme to our entire Asia Pacific factory site-based teams, delivered by our third-party training partners. Our entire Asia Pacific factory team has now been trained in modern slavery and on audit principles, a significant increase on last year. This ensures constant vigilance, to mitigate risks that spot checks may not uncover.
• Processes to encourage detection and reporting: Created new processes and procedures to encourage the reporting of issues spotted at factories. This includes providing all visitors with checklists in their travel packs, translating material into local languages and the creation of a new channel for employees to report concerns. We recognise the limitations of formal audits and have addressed this by supporting our visiting employees with a modern slavery toolkit. Encouraged the reporting of concerns and continue providing appropriate protection for whistle-blowers.
• Strengthened supply chain auditing and verification: An independent third party conducts regular reviews to bring insights on ways to we can tackle slavery and human trafficking. We completed our 2016-2018 modern slavery audit cycle through SMETA. All tier one and tier two factory suppliers were audited. All corrective action plan meetings have been held.
• FitFlop Code of Conduct: Maintained our existing Code of Conduct database and rolled out our new code of conduct to 100% of new retail franchisees and distributors.
• Raising employee awareness: Raised awareness of modern slavery issues to all workers by circulating emails that explain: the basic principles of the Modern Slavery Act 2015; how workers can identify and prevent slavery and human trafficking; what workers can do to flag potential slavery or human trafficking issues to the relevant parties within the company; and what external help is available.
• Supplier relationships: Continuing to review our existing supply chains, evaluating all existing and potential suppliers. Continued to build and maintain long-term relationships with our suppliers and clearly highlight to them our expectations of business behaviour.
• Distributor and franchisee relationships: Adopted updated contract terms with appropriate modern slavery and human trafficking prevention clauses in relation to new distributor and franchisee contracts.

Our future areas of focus

In 2019 we commit to continue and improve our efforts to identify and mitigate the risks of modern slavery and human trafficking. Over the coming year we plan to focus on the following:

• Commence a new modern slavery external audit cycle, starting with the renewal of audits with nine existing factory suppliers and two new tier 2 suppliers in 2019.
• Continue to review our franchisee operations.
• Continue to review our existing supply chains, evaluating all existing and potential suppliers.
• Raise awareness of modern slavery issues to all workers by circulating emails and providing internal posts on our intranet to explain: the basic principles of the Modern Slavery Act 2015; how workers can identify and prevent slavery and human trafficking; what workers can do to flag up potential slavery or human trafficking issues to the relevant parties within the company; and what external help is available.
• Continue to build and maintain long-term relationships with our suppliers and clearly highlight to them our expectations of business behaviour. We will continue to create an environment of trust and transparency with suppliers and develop a deeper understanding of the issues our suppliers face.
• Encourage the reporting of concerns and continue providing appropriate protection for whistle-blowers.

We will not support or deal with any business knowingly involved in modern slavery and human trafficking.

APPROVAL FOR THIS STATEMENT

This statement has been approved by the Board of Directors.

You can view our Modern Slavery statement for previous financial years by clicking here