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SUMMARY MESSAGE FROM MANAGEMENT .............................................................................................................. 04 TO READ AND UNDERSTAND ................................................................................................................... 06 ABOUT US .................................................................................................................................................... 08 OUR JOURNEY TOWARDS SUSTAINABILITY .......................................................................................... 20 Entrepreneurship and creation of wealth............................................................................................. 24 Governance and transparency .................................................................................................. 28 Ethics ......................................................................................................................................... 30 Relationship with consumers ................................................................................................................ 32 Omnichannel.............................................................................................................................. 36 E-commerce .............................................................................................................................. 37 Our brands................................................................................................................................. 38 Hering.................................................................................................................................... 38 Hering Kids............................................................................................................................ 42 PUC....................................................................................................................................... 46 DZARM.................................................................................................................................. 50 Attracting and developing people........................................................................................................... 54 Development programs and actions......................................................................................... 55 Talent management........................................................................................................................................ 58 Employee Health and Safety..................................................................................................... 64 Network development.............................................................................................................................. 66 Suppliers................................................................................................................................... 68 Franchisees............................................................................................................................... 78 Multi-brand retail ...................................................................................................................... 80 Communities ............................................................................................................................ 82 Managing environmental impacts.......................................................................................................... 88 Water......................................................................................................................................... 90 Waste ....................................................................................................................................... 92 GRI ANNEXES............................................................................................................................................... 95
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Here, we take on life’s challenges from the very start, keeping an energy like that felt in a first kiss, the joy of a first party with friends, of great achievements. We live in the moments unique to us. We take on a life of affection. An authentic life!
Our way of being was not invented, it was lived, learned, built through relationships with partners who believe in our choices and share our values. From industry to retail, today we are the largest clothing franchises network in Brazil. We manage brands, we know what to make and deliver, because we know our customers.
Here, we dress up life! Today, we are who we are because we work in a large network. We are located all over Brazil and we also take our casual DNA to Latin America. We live the moment, feeling relaxed knowing who we are, being committed to everything we believe in.
We are part of a network of people who dream, believe, perform and know that, no matter what comes our way, we will live through more thrills together!
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MESSAGE FROM MANAGEMENT
With growing sales of all our brands, we ended 2017 with a positive outlook for fashion retail and the Hering Company In comparison with 2016, the gross revenue of our own physical stores and webstores increased by 20.2% and 17.8%, respectively. The Multi-brands channel, one of the most affected by the economic situation of the last years, reached an expansion of 5.2%. Among the franchises, we have also seen good results in the units that have already incorporated new management practices and renovation of the points of sale, pointing out opportunities for expansion of these initiatives.
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GRI 102-1 | 102-14
These indicators, together with factors such as falling interest rates and the control of inflation, indicate that the country may have started on the path of economic recovery and, as such, this allows a new cycle of growth for our company and for the whole network we work with. Facing this scenario, the investments and projects we have developed in recent years, focused on improving our management and our processes, tend to put us in an advantageous position to reap the results of the opportunities that will appear.
Our business model is unique and demands the ability to continually reinvent ourselves. New technologies and digitization are already part of the life of all consumers and our brands are prepared to serve increasingly connected and empowered consumers. Our omnichannel project, which aims to integrate e-commerce to physical
The year was also marked by the restructuring of customer service, with the division of the Board of Directors and, consequently, the creation of the Retail Board, focusing on our own stores, e-commerce and franchises. The Board of Directors was dedicated to the Multi-brands channel and the international market. We have evolved in the deployment of the Multi-brands segmentation project channel, allowing a level of service that is more customized to each customer and in line with our business strategy. We also continued The actions to improve the supply of stores, reduce leftovers and shortages, and improve the brand collections creation process. In our relationship with our suppliers, always motivated by ethics and respect for people, we have taken yet another important step for our network to act in a more sustainable way. We created the Abra Award, which recognizes partners who include good practices in social, environmental and quality management into their business, and thus help us create value for all of society.
stores, has advanced in the last year and will contribute to the satisfaction and shopping experience of our consumers to be even better.
ss up life!
In the management of our employees, we reviewed the competencies expected from our teams and the strategy for leadership development, as well as the mechanisms we use to evaluate. The performance and identification of potential talents. This movement is important so that our professionals correspond to the company’s culture and are prepared to pursue our strategic objectives. Our strategic priorities are defined and we know there are challenges to be overcome in the short term. With the actions we perform, the Hering Company is stronger and more prepared to continue dressing the lives of millions of Brazilians. Ivo Hering - Chairman of the Board of Directors Fabio Hering - President
GRI 102-14
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TO READ
We mobilized various partners and have dressed the lives of thousands of people with our casual and authentic style. In this relationship, which gets stronger every day, we share values and success stories. The satisfaction of those who wear our brands, the development of suppliers, franchisees, representatives and customers of multi-brand retail, and the pride of our staff in being a part of this network are results that we cherish and celebrate. Our Annual Report intends to share the positive impacts of our business model with everyone who dreams and accomplishes with us. The publication also helps us see where the evolution opportunities Are and to empower what we do best. To communicate with total transparency, we adopted GRI Standards, an international standard proposed by the Global Reporting Initiative (GRI) for the reporting of economic, environmental and social
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GRI 102-40 | 102-51 | 102-52
information of organizations. The last edition of the Report, published in 2017, already followed these parameters. The content is divided into chapters that present our material themes. These themes are those that are most relevant to bring into evidence our generation of value and that most influence the decision-making of our audiences. They were identified in 2016, through a survey that involved 770 people, among them staff and managers of the Hering Company, suppliers, franchisees, consumers, business representatives, multi-brand retailers, shareholders and nongovernmental organizations. This process has led us to define five themes that cover the main impacts of our business and that are more capable of influencing the decision of our audiences.
Suspended Garden - Hering
In the next pages, we will show you our main evolutions in 2017 and also the challenges and objectives for the next years.
MATERIAL TOPICS: Relationship with consumers Entrepreneurship and creation of wealth Attracting and developing people Network development
The information and data presented herein refers to the time between January 1 and December 31 of 2017, covering all our industrial, management and own-store operations, as well as reporting our work with partners. The same units are considered in the scope of the Financial Statements and there was no previous data re-presentation, allowing a wide integration with other company documents. The information, collected among the different sectors, was approved by our Board of Directors. Only the economic-financial data were verified by an external audit.
We maintain an open channel to talk to everyone who wishes to share questions, suggestions and impressions regarding the Annual Report through the “contact� menu on our website ciahering.com.br Good reading!
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ABOUT
We are a multi-brand organization based in Blumenau (SC), present in the life of Brazilians for more than 137 years. Throughout this history, woven with authenticity and audacity to reinvent ourselves, we have built lasting relationships with our partners and a unique business model.
We are among the 100 Companies of Best Reputation of the Country, in the Fashion Retail segment, according to a study conducted by the Reputation Institute.
10e0st b Rio Grande do Norte
From industry to retail, we connect entrepreneurs who generate value, create jobs and take our brands to thousands of consumers in Brazil and Latin America. Our industrial units and distribution centers are in Santa Catarina and Goiás. We also have an office in São Paulo and another industrial unit in Rio Grande do Norte. In all these regions, our employees work with commitment, innovation and dedication to create and produce the Hering, Hering Kids, PUC and DZARM brands each year.
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GRI 102-2 | 102-3 | 102-4 | 102-6
Goiás
São Paulo Santa Catarina
We are not alone in this journey. We have a hybrid production model that counts on suppliers to carry out stages of the production process, or to participate in finished products (sourcing), and thus add to the collections to deliver the best product mix to our consumers.
always next to to deliver more value to each new collection.
Our franchisees and customers of the multi-brand channel live life just like us, they have a casual DNA. There are 692 franchise stores in Brazil, 20 in Latin America and around 16,900 multi-brand retailers. People who get things done and who we are
In all these relationships, we believe that an ethical stance, values and transparency must prevail. We look to stimulate the adoption of good management practices, strengthening value generation and sharing sustainable business growth.
7.5
thousand
Staff
2 R$
Our consumers also find our brands in the five webstores that allow a more comfortable purchase, with the support of technology and always safely.
805
own stores and
8
industrial units *
franchises in Brazil and Latin America
distribution centers
1.56
billion net revenue**
5 R$
web-stores
58.8
million
16.9
thousand
retailers served in the multi-brands channel
R$
263.78
Million net profit**
investments**
* In February 2018, we ended the operation of one unit in Santa Helena de Goiรกs (GO), totaling eight industrial units in Brazil, four in the state of Goiรกs. ** In 2017
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Our tory trajec
1880
In Blumenau (SC), the brothers Hermann and Bruno Hering believed in a dream and wrote the first lines of a story full of achievements.
1910
Now we are a Registered brand. This year, Hermann and Bruno Hering registered the mark of the two small fish.
1935
Thinking about well-being and development, in tribute to the centenary passing of Hermann, we created the Hermann Hering Foundation.
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1964
Here, we face the new challenges. 1964 was the year of the opening of capital and of taking the casual DNA out of Brazil, with the beginning of exporting.
1993
1979
To embrace life from the first steps, we launched the children’s brand PUC.
We are entrepreneurs by nature, and here we embark on a new challenge: start retailing with the first store of our own. Soon after, we also launched the first store in the franchise model: the Hering Family Store.
1998
Year in which the brand DZARM. began to be part of our portfolio. It was also when we entered a new challenge: we launched our first e-commerce platform.
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2000 TO 2006
Our way of getting things done was not invented. It was lived and learned. From 2000 to 2003, we underwent a financial restructuring and, between 2003 and 2006, we restructured our operations.
2010
Look who came to be part of our portfolio in a spontaneous and energetic way: Hering Kids, after becoming a brand of the Hering Company in 2005, now it gets its first store of its own.
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2007
We enter the segment of BM&F Bovespa’s New Market.
2013 TO 2015 “Reinvent yourself” always! That is one of our passions. We have improved the management of our brands with a new team structure and with repositioning in the market.
2015
A year full of achievements! We celebrate the 135 years of history of the Company with style. Hering, we inaugurated our new Industrial Unit in SĂŁo LuĂs de Montes Belos (GO) and finalized the implementation of the ERP system, which allowed for evolutions in inventory management.
2016
We finished the deployment of SAP systems and we developed a number of projects to improve the buying experience of our customers.
2017
Sustainability is a serious thing for us and therefore we have evolved our journey, creating guidelines for the theme. We inaugurated the first Hering Kids international store in Paraguay, and we launched a new Hering store model. We also celebrate the 100th anniversary of the Emergency Brigade of the Hering Company, a group currently made of volunteers.
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Our ds bran We are a multi-brand organization with an integrated management and creativity model that allows us to know what to produce and deliver to our consumers. Good Value for Money is our value proposition and means to offer consumers clothes that stand out, which provide comfort, style and well-being. It is the basis of our performance to develop products and brands according to the value perceived by the consumer.
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617
Hering is basic. It is the search for what makes us who we are. The basics are multiple. Your way. Unique. Original.
stores in Brazil 19 stores abroad
br
. m o c . g n i r e h . w w w
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109
stores in Brazil
Collections that combine fun and style, dedicated to the little ones who live childhood to the full. We believe that children’s clothing should be at the service of play and a childhood well lived, rich in discoveries and learning.
1 store abroad
r
b . m o c . s d i k g n i r e www.h Annual Report | 16
56 stores
A striking brand that attracts attention and positively influences what is around. For children to be children, in a cheerful, dynamic, fun and very comfortable way.
www.puc.com.br Annual Report | 17
3
A brand that believes in female sensuality and that women are powerful by nature. It helps women to express their full power with sophistication and a dash of attitude.
stores
.br
www.dzarm.com Annual Report | 18
To connect even more with us, also visit: www.linkedin.com/
company/cia-hering www.ciahering.com.br www.ciahering.com.br/ri - Relations with investors www.facebook.com/CiaHeringInstitucional Contact us: Institutional affairs: at www.ciahering.com.br, in the “contact� menu. Customer Services:
sac@ciahering.com.br | 0800 47 3114
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The ability to reinvent and perfect management marks our century-long trajectory. Looking more closely at the themes of sustainability is one more step in this constant evolution, increasingly necessary for our network to grow and generate value for all audiences, with ethics, good practices and respect for people and the environment. In 2012, we created the Sustainable Fashion Program with the objective of developing and encouraging suppliers to strengthen their social and environmental commitments, aligned with our values.
Since then, we have created the Code of Conduct for Suppliers, we have encouraged the adoption of certifications and we narrow the relationship by means of qualifications and meetings to discuss the evolutions in management. To deepen our understanding and direct investments in sustainability, we conducted a study to identify the most relevant sustainability themes for our business model. This process was completed in 2016, following the steps outlined in the table below.
• Pre-classification: we analyzed benchmarkings and sectorial studies, subjects frequently discussed by the press and civil society, agendas of organizations linked to the fashion chain and other referentials, as well as inputs from the Hering Company’s permanent channels of engagement, such as Customer Services (SAC) and the investor relations channel. • Engagement: we prioritize our relationship publics and we promoted an online survey with more than 700 respondents, among suppliers, franchisees, consumers, employees, representatives, multi-brand retailers, shareholders and non-governmental organizations. Then we delved deeper into a panel discussion with franchisees and consumers. We also interviewed managers of the Hering Company, to ensure the agreement on aspects vital to our strategy and operations. • Consolidation: all recordings and analyses were consolidated in a matrix of materiality, which correlates the themes regarding their impact on the company and relevance for public decision making.
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OUR PRIORITY SUBJECTS Relationship with consumers We are a consumer-focused company. Knowing our consumers and building closer relationships every day is how we keep connected to the constant changes of the market. In addition to reinventing and broadening our dialog channels and points of contact with new technologies, formats and languages, we understand the importance of providing differentiated experiences of interaction and engagement with our brands and delivering pieces according to our consumers’ expectations for quality, design and value proposition. We are a centennial company, which has already dressed five generations of Brazilians. We have gone through several movements over the years and we know our role, through our brands, in the positive reflections on new consumer formats and opportunities in the fashion chain.
Entrepreneurship and creation of wealth
Attracting and developing people
Through our business model, we contribute to the generation of wealth in partners who connect with us. Based on the principle of shared value generation, which involves the generation of economic value, we also create value for the society that our network impacts. We work with diverse publics and this impels us to develop capacities and competences for the engagement and strengthening of this network. We know of the important role we play as influencers of entrepreneurship and good management practices. Connecting and impelling a great network of people in a responsible, ethical and transparent manner is the challenge that moves us and keeps us in constant evolution.
We are an organization made up of people and therefore we build relationships committed to ethical conduct, according to labor laws, with internal actions and policies that value our people and that guarantee a safe and healthy work environment. To empower and engage our network and network collaborators, we encourage entrepreneurship and development through the experiences provided by our business model, which goes from manufacturing to retail. Create new challenges in order to have the right person in the right place at the right time combines the objectives of the employees with those of the company and drives the growth of our people and the company.
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Network development
Managing environmental impacts
We are committed to encouraging our partners to adopt good management practices and share the same values and commitments of the Hering Company . Through our strong and solid business and with structured actions and programs for our supply chain, franchisees, multi-brand retailers and representatives, we understand our role as “network influencers� sharing knowledge and contributing to the development of our partners. We believe that our positive influence must go beyond the generation of jobs and income, seeking to be a benchmark of ethical posture, practices and values in each of our relationships.
We live the present committed to everything we believe in and pride ourselves on a story marked by responsibility and care with the environment. We know that the impacts generated by the consumption of water, solid waste and CO2 emissions are global challenges and also the responsibility of every individual and organization. As part of society, we understand our role in the constant search for eco-efficiency, reducing water consumption, waste generation and CO2 emissions in our processes. Therefore, investing in new technologies, rethinking the use and reuse, and evolving processes that are in line with this look are premises for the management of environmental impacts.
In 2017, we advanced the purpose of inserting impact assessment and management of these issues in a strategic way in the Hering Company. We created the Sustainability Committee, composed of managers from different areas of the company and who seeks to strengthen internal engagement with a focus on drawing up action plans for each of the identified themes. This Committee has an important role in the governance and dissemination of material themes, as well as in the promotion of discussions and reflections on the sustainability journey in the organization.
We are convinced that inserting sustainability and managing social and environmental impacts is a key issue for the competitiveness of our business model. There are several opportunities for improvement on these fronts, within our operations and in the value chain, which will be worked on in the short, medium and long term.
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AND WEALTH GENERATION
The Hering Company operates and conducts its business in a large network that generates and shares value for all audiences and for society. We have an important role in this ecosystem: to positively influence all partners for entrepreneurship and wealth generation, with good management practices, always based on responsible, ethical and transparent governance. A member of the New Market, a listing segment of B3, in which are the companies with the best practices of corporate governance, the Hering Company is committed to the continuous improvement of processes and products so that the entire network is impacted by the growth of sales, the generation of wealth and the distribution of economic value. Consumers of our brands are at the heart of our business strategy, which is directed towards the improvement of products and the buying experience of physical stores and e-commerce
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channels. For this, we have priority as fronts that contribute to the efficiency of processes and that guarantee a good experience to our consumer with our brands and products.
In 2017, the gross sales of the Hering Company totaled R$ 1.8 billion, an increase of 5.3% compared to the previous year. The result was influenced by the resumption of sales growth in the multi-brand channel, maintenance of the webstores evolution path and the better performance of our own stores, benefited by the better management of the supply and the opening of new points of sale.
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Gross revenue evolution (R$ thousand)
Internal Market Foreign Market
Distribution of sales by brands in the domestic market
4%
2%
6,7%
13,6%
73.8%
Hering Hering Kids PUC DZARM. Others
Sales distribution by channel in the domestic market* 2,6% 18,2%
43.2%
Multi-brands Franchises Own stores E-commerce
36,0%
*Does not consider the “Others� category in the chart.
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On the same basis of comparison, gross margin increased by 2.6 percentage points, which also reflected EBITDA growth, an indicator that measures the generation of value in our operating activities.
EBITDA
EBITDA (R$ million) EBITDA margin (%)
One of the differentials of the Hering Company is the ability to generate free cash flow, directed at the remuneration of the capital invested by the shareholders. In 2017, the Hering Company generated R$ 140.2 million in freed-up cash, a result of R$ 69.1 million lower than the previous year due to the greater need for working capital, mainly in suppliers and inventories, in addition to the resumption of
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sales growth. Sales growth is the main vector of the Hering Company to promote the generation of wealth and strengthen the network of partners in which it operates. This performance is managed through the Same Store Sales indicator, which measures sales variation for end customers, excluding the effects of opening and closing stores. In 2017, the indicator remained stable (-0.7%)
GRI 103-1 | 103-2 | 103-3
compared to 2016. The added value of the Hering Company in 2017 totaled R$ 832 million, an increase of 15.4% over the previous year, mainly due to higher revenues in the period. Of the total distributed, the salaries, benefits and FGTS of our employees are highlighted, as well as retained earnings and interest on equity and dividends, which accounted for 33% and 32% of the amount, respectively.
Distribution of Added Value (DVA) in 2017 (R$ thousand)
10%
25%
33% 32% Staff Remuneration of own capital Taxes, rates and contributions Remuneration of third party capital
Evolution of the value distributed (R$ thousand)
GRI 103-1 | 103-2 | 103-3 | 201-1
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Governance and transparency Our corporate governance policies and guidelines, addressed at the Hering Company by the management structure, are the elements that support our growth strategy.
sales and value generation. The performance of our leadership is guided by the Code of Conduct, available to all interested stakeholders, at ciahering. com.br/ir
Shareholder composition on 12/31/2017
4.7%
3.4%
5%
5% 7.3%
67.2%
7.4%
The governance structure is composed of the Board of Directors, composed of seven members elected by the Shareholders’ General Meeting for a term of two years. The current Board was elected after the meeting held in 2017 and the board members have the role of defining and approving strategic guidelines for the business. The directors’ choice considers, in addition to their professional trajectory, their skills and knowledge in different areas of activity with the potential to generate value for the company. We seek to compose the Council with representatives who have complementary experiences and knowledge. Five of the seven members of the Board of Directors are independent. The members also have different backgrounds (engineering, administration, economics and law), some of whom have been members of the Board for
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Others Investment and Participation INPASA S/A Ivo Hering Atmos Capital Gestão de Recursos Ltda. Coronation Fund Managers Ltda. Cambuhy Investimentos Ltda. Gávea Investimentos Ltda.
more than a decade, while others have been appointed in recent years. In 2017, Fabio Barbosa was elected to this group, whose trajectory in the management of companies committed to sustainability is recognized in the market. This diversity contributes to the deliberations, insofar as it assures different points of view and perceptions about the subjects discussed. To ensure agreement between governance discussions and operational strategies and activities, our President comprises the highest governance body and all advisory committees. In periodic meetings, the Board of Directors discusses critical aspects of the business strategy. In 2017, 13 Board meetings were held, the minutes of which are publicly available on our Investor Relations website. Among other responsibilities,
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the Council is informed of the levels risk exposure and adherence to the Financial Risks Management Policy on a quarterly basis and approves the audited financial statements of the company. To give more agility and strengthen the management of aspects relevant to the Hering Company’s business, our Board of Directors has Finance, People Management and Strategy advisory committees. The eight-member Board of Directors is responsible for consolidating and disseminating the company’s strategic planning, directing investments for the fulfillment of projects and actions that improve our operational, commercial and financial performance. One of the evolutions of 2017 was the division of Commercial Directorate and the consequent creation of the Retail Directorate, focusing on its own stores, e-commerce and franchises, keeping the Commercial Directorate focused on the performance of the multi-brand channel and in the international market. Thereby, we seek to improve our relationship strategies with each partner by giving greater focus on the demands and expectations of customers according to their profile. With this, we seek to improve our relationship strategies with each partner by giving greater focus to the demands and expectations of customers according to their profile. In relation to our shareholders and investors, we are based on transparency and follow the best practices of the market. In 2017, the company adopted for the first time the voting system for the General Assembly and held the Investor’s Day event again, meeting with market analysts to disclose the evolutions of the business
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Ethics
There are two main documents that express the ethical principles and standards of conduct that conduct our business and the relationship with our public: the Code of Conduct of the Hering Company and the Supplier’s Code of Conduct. Both documents are available on the Investor Relations website ciahering. com.br/ri. Internally, the audit area - divided into internal auditing and supplier audit teams - is responsible for monitoring and evaluating the application of these guidelines. This process includes the analysis of compliance aspects and social regulations,
related to people management and financial resources. Through the performance of the internal audit, we promote the fight against corruption and identify possible risks for which action plans are defined in order to improve the control processes. In the supply chain, with a greater focus on the factions, which perform part of the operations of the production process, we use our own staff to monitor and audit facilities and working conditions, documentation, collection of taxes and labor obligations. With this, 100% of our operations are continuously assessed against the risk of corruption.
Compliance is basic at the Hering Company. Compliance is a word of the English language that is increasingly present in Brazilian vocabulary. In the corporate world, it means being in compliance with ethical and transparency standards, respecting the laws and regulations in all that is done. For us, from the Hering Company, this has been basic for 137 years. The Occupational Safety and Health team presented to the suppliers content on good practices for the management of the theme, contributing to the development of our partners with respect to compliance with regulations and standards. For our managers, we present a specific agenda on the Anti-Corruption Law, a relevant issue for the day-to-day business.
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In 2017, we received 88 demonstrations, 86 of them related to complaints of activities and conduct outside of the standards and guidelines defined corporately. All cases were investigated, given the availability of data, and the applicable measures have been taken. The growth in the number of contacts is a reflection of the greater confidence in the system of reception and investigation of possible occurrences. We have strengthened our commitment to social and environmental compliance with all our stakeholders, especially in events such as Compliance Week .
With the purpose of disseminating these concepts throughout the network, in 2017 we performed the first edition of Compliance Week. A week with many exchanges of knowledge and learning, involving managers, employees and suppliers, on agendas that addressed very important issues: ethics, transparency and standards to be followed. In order to improve our relationship with all audiences and disseminate good compliance practices , we have also begun restructuring the channel for questioning and complaints about unethical conduct. 1.59 people participated in the first edition of Compliance Week
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Our management structure has practices, controls and instruments that identify, evaluate, monitor and mitigate the risks to the business model. Area managers are responsible for implementing corrective actions that enhance our processes and control mechanisms. Specifically for the risks of market, our governance is based on the guidelines
Event - Compliance Week
of the Financial Risks Management Policy and the Cash Management Policy. The structure of internal controls and risk management of the Hering Company has three instances, which play distinct roles and ensure compliance in all operations.
Values GRI 102-15 | 103-1 | 103-2 | 103-3
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RELATIONSHIP WITH
Getting to know our customers better, their expectations and build relationships closer to them is one of our priorities in the investments and projects we have developed, always focusing on delivering “ Good Value for Money “ for consumers. Our product creation and development process, starting point in the relationship with the consumer, is carried out with the support of a tool called PLM (Product Lifecycle Management). PLM contributes to an even more assertive construction of the collections of each brand, which arrive in stores after an integrated work between the Style, Development and Product Purchase (DCO) and Research and Development (R&D) teams. Our search for improvement in product creation cycles is constant and has been enhanced by the use of new technologies. Our processes of development are improved through analysis of sales performance and consumer perceptions for each collection. This dynamic impacts both the creation of the pieces as the visual merchandising and brand communication. This analysis also allows us to make repositions of sales champion products and, in each collection, bring innovations and new variations to pieces that pleased in full the compliance with our customers’ preferences.
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Reducing the time between the creation of a collection and its arrival in stores, giving more and more speed and flexibility to our collections calendar, besides expanding the availability of innovations to franchisees and customers of the multi-brand channel, is a challenge that moves us to look for evolutions based on technology and improvements in our way of making things happen. Strengthening our relationship with national and international sourcing partners, companies that provide ready-made products, is another aspect that contributes to ensuring the best consumer experience with our brands, as it enables us to compose our collections with a diversified and increasingly assertive mix of products. To continue evolving in the relationship with consumers, it is fundamental to listen to and understand their demands and expectations. Being closer and closer to those who dress life with us is part of our strategy, planned with investments in CRM (Customer Relationship Management) actions for the coming years.
Our consumers recognize us for the quality of our products. Therefore, we work to strengthen and potentiate initiatives and aspects related to this important attribute, from the choice of raw materials, through production and training of suppliers, to delivery to the final customer. The Total Quality program aims to connect all initiatives and disseminate this way of always performing quality work throughout the organization and with partners. In 2017, we promoted 75 quality trainings for staff teams and took the theme to other agendas with vendors in training and meetings.
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With great care and dedication Our raw materials are tested according to the premises of the OEKO-TEX standard, an international reference for the evaluation of products and inputs in the textile chain. Each material category has one or more types of priority risk for analysis: · In the natural yarns used for the manufacture of knitwear, we check for any contamination by insecticides; · In dyes and dyeing pigments, the focus of attention is the presence of allergenic elements or heavy metals, such as chromium; · Auxiliary dyeing and printing inputs are evaluated for formaldehyde limits.
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GRI 103-1 | 103-2 | 103-3 | 416-1
In addition, all these raw materials are duly analyzed in the Safety Data Sheet of Chemical Products (MSDS), which maps the
Our home open to consumers
chemical composition of each product and indicates potential risks in the production process related to its use. Any non-conformity in these evaluations leads to the rejection of the material, which does not enter our factories, avoiding any type of risk to the health or safety of our customers.
For the third consecutive year, we received customers from the Hering Company in Blumenau to share our way of living life. The news of this year was the expansion of the action to involve consumers who buy using the Hering Card in Hering Stores, in the e-commerce and multi-brand retail. During three days, consumers from the cities of São Paulo (SP), Leme (SP), Brasília (DF) and Poços de Caldas (MG) made a road map that included getting to know the sights of Blumenau and the Hering Museum, as well as coffee with the directors and a guided tour of our units.
Colaboradores e consumidores visitantes.
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Omnichannel Allowing a personalized, consistent and integrated experience, regardless of the shopping channel, is the proposal of our omnichannel. This initiative involves five modalities of integration of physical stores among themselves and with e-commerce. In addition to the benefits for consumers, the omnichannel will generate opportunities for online channel consumers to visit physical stores and vice versa. Implementations in pilot form of the different modalities already started in 2017. In November, 23 own stores were included in the pick up store, and in December, three of them also offered the convenience of showrooming. Throughout 2018, we will evolve in the modalities of omnichannel consumption, with the challenge of integrating the entire network of stores, transforming the buying experience of our consumers and continuously strengthening the link between our brands and their audiences.
Omnichannel Concepts Pick up store: the consumer places the order in e-commerce and withdraws in a physical store. Showrooming: in the physical store, if there is availability of the model in stock, the consumer can buy through e-commerce with support from the seller and receive at home. Ship from store: the order made by e-commerce is delivered by a store closer to the consumer, reducing the delivery time. Ship to store: the consumer buys on any channel and withdraws from any physical store. Multi fulfillment: integration between all modalities, allowing the order to be divided into parts and delivered to the customer in a customized way, according to their needs and preferences.
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E-commerce
The new omnichannel reality changes our way of looking at the consumer, integrating e-commerce into our network, boosting its growth and relationships with consumers. More than having a store close to home or even within reach of a click, we know that people want all the comfort and practicality to have access to the brands of their preference wherever and whenever they wish.
The brand on thed! palm of your han In 2017, our virtual stores grew by 120% in mobile accesses, while computer connections grew by around 10%. In keeping with this trend, we have brought new layouts to Hering’s and DZARM’s most modern, intuitive stores and within the mobile first development concept. For 2018, we will be launching new layouts for the brands Hering Kids and PUC and we have the challenge to add functionalities and technologies that
make the experience of our consumers increasingly intuitive through mobile devices.
quality perceived by consumers of the level of this service went from 79% to 89%.
Another innovation was the automation of the processes of exchange or return of products. Now, consumers no longer need to request this operation by the Customer Service Department (SAC). Just access the customer area on the brands’ websites, fill out and print the form and post via Mail. With this facility, the
The agility and practicality of selfservice also guided the “birth” of Hérica, our virtual assistant, who incorporates artificial intelligence to solve an increasing number of consumer doubts. If she cannot answer a question, Hérica herself directs the consumer to an attendant of our Customer Service team.
Partnership with Google The Hering Company is for the third consecutive year among the top 70 e-commerce retailers in Brazil, according to a survey by the Brazilian Society of Retail and Consumer Affairs (SBVC). The Hering Company was also chosen as the Company that most Respects the Consumer in Brazil in 2017, in the Department of Clothing Department category, in the study published by the Consumidor Moderno magazine.
The Hering Store, Hering Kids, PUC and DZARM stores were the first in the apparel industry in Brazil to offer a new type of payment to consumers: by cell phone. The innovation has become possible through a partnership with Google, whose Android Pay platform allows the purchase just by approaching the device to the terminals. The service is already available in all physical stores in Brazil. GRI 103-1 | 103-2 | 103-3
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OUR BRANDS
HERING Hering is basic. But being basic is not anything simple. It is the search for what makes us who we are. By what has always been there. The basics are multiple. Each person has one. Because with basics it means doing what you like. And who you are is the result of those at your side. Of who is part of your origins.
YOUR WAY. UNIQUE. ORIGINAL. We increased by 32% the number of followers on Facebook and practically by 400% the total of followers on Instagram.
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R$
1.32
billion
in revenue in 2017
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Basically this One of the main actions carried out by Hering in 2017 was the “basically this” campaign, which conveys and reinforces the brand’s casual spirit through short films and unfolding at different points of contact. This campaign addresses a number of issues in the lives of our consumers - from commemorative dates such as Mother’s Day to issues debated by society that are part of people’s lives. The films were aired on Hering’s website and on social networks such as Facebook, Instagram and YouTube. Throughout the year, they reached more than 62 million views and marked the first campaign fully realized in the digital environment. There were more than 40 videos published.
Eco Jeans Edition The year 2017 was also marked by the launch of Hering’s ecological fabric line. For the first time in its summer collection, the brand has given consumers a limited edition of seven models made from sustainable fabric, combining recycling, reusing and reducing environmental impacts. This portfolio has been renewed in the following collections.
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News online In its social networks, Hering covered in real time the launch of the two exclusive collections À La Garçonne, with the stylist Alexandre Herchcovitch. With the concept see now, buy now, e-commerce has made the collection inspired in the catwalk collection, for purchases simultaneous to the catwalk, practically depleting stocks in the same week.
Partnership against breast cancer For more than 20 years, Hering has supported the campaign “Breast Cancer in the Target of Fashion”, in partnership with the IBCC Brazilian Institute of Cancer Control. Through the sale of clothes of the campaign, more than R$ 18 million have already been reverted to the Institute throughout the partnership.
Pixel Show Hering was present at the largest festival of creativity in Latin America, the Pixel Show, which had an audience of 33 thousand people. On the occasion, the brand participated in the opening ceremony and set up a booth in the exhibitors area, where it activated the videos of the “basically this” campaign, along with customization workshops. The activation was important to strengthen the rapprochement with the young and opinion forming public. Every creative environment was conducive
g n i r e u q n o c In 2017, the Hering brand won the 18th position in the ranking of Brazil’s Most Valuable Brands, announced by Interbrand, with a brand value of R$ 556 million, up 5% over the 2016 list.
to providing branded experiences that created a connection with the participants.
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HERING KIDS Ideal childhood is one in which the child exercises the freedom to be, to know, to explore. Because for children everything is new. To be a child is to exercise discovery. The fascination. The amazing attempt. Self-knowledge, whenever they wish. Small and great experiences in which the child learns what they like, what makes them happy, what enchants them. Being a child is a unique experience. Unique in time. Unique in life. Unique for each one. And it is this phase of life that will mark in each and every one the personal and untransferable meaning of identity, personality and authenticity. Hering Kids believes that children’s clothing should be at the service of full childhood, allowing the child to be free, discover themselves and discover the world from your skills, respecting their time and pace, always wearing what suits their way to explore and experience the world around them.
HERING KIDS, ENCOURAGING CHILDHOOD DISCOVERIES
We increased Facebook followers by 25% and Instagram followers by 75%.
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R$
243.5
million revenue in 2017
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Campaigns for content In order to reinforce the brand’s values and positioning, Hering Kids invested in campaigns that tell the history of the collections and are connected to the life of parents and children who live life wearing our clothes. In May, the brand celebrated Play Month with the launch of the third edition of the Play Manual and other actions aimed at the children, such as workshops and creative activities in shopping centers. One of the highlights of the 2017 campaign was the partnership with project Grandes Pequinos, created by singer Jair Oliveira and actress Tânia Khalill, about the love between parents and children. The Back to School Month is also a defining moment for Hering Kids. With the theme “Be everything you want to be”, the brand has launched a collection with clothing options ideal for the little ones to have all the comfort while they learn and discover what profession would you like to have when you grow up.
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Adoption of pets Hering Kids has partnered with two NGOs that encourage the adoption of animals - Vira Latas Club and Dog without Owner. The brand campaign was reinforced in social networks and some puppies got a new family during the activation period.
Licensing of products Hering Kids’ partnership with Cartoon Network was expanded in 2017. Several licensed branded products were first put up for sale in our stores, increasing the collections developed. In addition, the Summer Fun and Dive Cartoon campaigns have impacted our consumers with fun jokes, giveaways and lots of fun. Even an “almost real pool” was installed At Avenida Paulista, in São Paulo.
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PUC Every child carries within themselves an energy that is unique and transforming. Children have a striking and vibrant presence. They have their own shine. Their energy is felt from afar. It radiates happiness. Children symbolize life. It is the joy of living in person. Always with a smile on their face and a curious look. Children are enchantment in the form of people. No matter what was happening before them. Upon arriving, everything changes. PUC believes that children’s clothing should intensify the colors of childhood, leaving this phase even more vibrant and radiant. So it brings a creative, optimistic, and striking look to its pieces so they express all the fervent energy the child carries with them and to the world.
PUC. BECAUSE ALL CHILDREN HAVE A CONTAGIOUS ENERGY
We increased the number of Facebook followers by 35% and the number of of Instagram followers by 200%.
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R$
120
million revenue in 2017
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PUC Lab PUC Lab is a project that highlights the work of creative and connected people, which has everything to do with our brand. The guests unite their expertise and daring with our style to create even more charming pieces and looks for boys and girls. In 2017, we invited the designer Alexandre Herchcovitch, who made two appearances - the Essential Line and the development of the Sportwear items. To tell how the creative process evolved, we produced and spread videos on the brand’s website and on social networks. Our next guest to the PUC Lab in 2018 will be the designer Isabela Capeto.
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Connection with parents To activate the brand in social networks and increase connectivity with families, PUC closed a partnership, in 2017, with youtuber Flávia Rubim, mother of Cora, whose channel “Casa 8” deals with the issues of motherhood. Other campaigns involved actors Henri Castelli and his son Lucas, the actress and presenter Fernanda Rodrigues and her daughter Luísa, as well as the family of designer Alexandre Herchcovitch.
n e r ld i h c ll a e s u a c e PUC. B y g r e n e s u o i g a t n o c a have GRI 103-1 | 103-2 | 103-3
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DZARM. Focused on the female audience, DZARM. is a brand with a strong tradition and quality, which has been repositioned in the market in the year 2015. With the concept that every woman is powerful by nature, it brings options of pieces for all the moments of use of its consumers, that go from work to a party, from the day to day to the most special moments. DZARM. is present in more than 2,500 points of sale in Brazil, in their two own stores in SĂŁo Paulo (Shopping Patio HigienĂłpolis and Eldorado) and through e-commerce (www. dzarm.com.br). All products translate the latest world fashion trends in a sophisticated and yet uncomplicated way, allied to the excellent value for money.
ALL WOMEN ARE POWERFUL BY NATURE.
7% growth in Facebook followers and 46% in followers on Instagram.
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R$
71.5
million revenue in 2017
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Brand experience In 2017, DZARM. focused on special actions to strengthen the positioning / lifestyle and differentiated experiences. The brand has led influencers to live these experiences within various events, such as the Lollapalooza Festival, the Coldplay show and the launch of the Vichy trend. Mariana Rios, Maju Trindade and Thassia Naves were some of the guests that influence fashion in the digital environment. In the two editions of 2017 of SĂŁo Paulo Fashion Week, they were also invited influencers to follow the parades and experience the experience, connected with the DZARM.
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DZARM. Lifestyle To strengthen the positioning of the brand, DZARM. has invested in forming partnerships with creative women that make fashion happen every day. One of the partnerships was the creation of a capsule collection with Caroline Kuchkarian, a designer of a brand specializing in
With the face of the consumer The DZARM. E-commerce, in line with the exclusive profile of its consumers, has launched the DZARM For Me platform, which offered alternatives to customize two pieces of the brand and leave them with their taste. When buying the selected sweater or body for the campaign, the consumers could choose, in this order, a letter or a zodiac sign to be stamped on the pieces. The items had record sales: 10 times more than average of other pieces sold in the collections.
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ATTRACTION AND DEVELOPMENT OF
To reach the planned results, we seek to strengthen the skills that define the behaviors expected of our employees. We are an organization made up of people, and our challenge is to connect the right person, in the right place and at the right time, respecting and strengthening our teams. Therefore, we encourage
the development of our employees and the entrepreneurship in their careers through the experiences, capacities, structured programs and new challenges within the organization, fostering a space for innovation and collaboration. We are proud of the many stories of people who have built their careers, lived and still live life together with us!
“I joined as an intern in the area of Printing and Finishing, everything very new. Two things impressed me while I was a trainee: I could move easily through various areas and the freedom I had to know other processes and people, a fact that I think is unique in the Company” Ricardo is currently our Industrial Manager, with 7 years at the Hering Company.
Employees of the São Luís de Montes Belos Unit (GO)
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Development programs and actions In 2016, we revised our competency model and, in the last year, we dedicated ourselves to disseminating them among our professionals. The competencies guide us in relation to the expected behaviors of all the employees and are important pillars in the strengthening of our organizational culture.
Our Skills
Essentials Sense of ownership: entrepreneurial activity, demonstrated through the sense of ownership, the autonomy in decision-making and constant learning must be present in the behavior of all employees. Collaboration: we believe in the collective and the strength of work together. To collaborate is more than to relate, it means to have clarity of the interdependence between teams, processes and areas for the search for better results. Making it happen: we are proud of our ability to execute throughout the evolution of the The ability to mobilize and execute for the strategy desired is the DNA of the Hering Company.
Besides the essential skills, practiced by all the people of the Hering Company, we have defined specific skills directed towards employees who occupy leadership positions and have, among their duties, the development of their teams.
Customer / Consumer Focus: we are at the service of the consumer, seeking synergy in the areas and processes to enable the best experiences with our brands and channels.
Leadership Specifics Inspiring Leadership: the leader expected by the Hering Company is one that accomplishes integrated management, considering people, processes and business. The search for alternative solutions that guarantee the present and future results, the development of successors and the tireless quest for excellence in processes make this leader a reference for the company.
only achieve superior results by implementing the indicators, rituals, and processes through which the organization operates. Strategic action: our leader creates, implements, and redefines strategy. They are an articulator of all transformations of the Hering Company and does this through a systemic look at the organization, extracting the best of today’s business environment. Innovation: innovation is part of our history and needs to gain traction for the company’s next growth cycles. Our concept is of functional innovation, it has to be at the service of the business and the consumers, being it disruptive or incremental.
Management model: the leader expected by the Company is the one that acts according to The Management Model. They believe that you
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The trainings conducted throughout 2017 had the objective of strengthening the key aspects of each competency. We have seen a considerable increase in investment in education and development, especially in leadership skills. We work on content related to the management and leadership model and, in partnership with the Instituto de Ensino Superior de SĂŁo Paulo (Insper), we formed a program composed by seven modules, whose purpose was to improve the competency of strategic action for managers of the Hering Company. The annual meeting of the directors and managers of the Hering Company, Network Actions, also addressed specific competencies. The event had two editions in 2017 and discussed issues related to Innovation, Inspiring Leadership and Management Model, as well as Focus on the Consumer, one of our core competencies. At these meetings, we shared cases from other companies and brought in specialists and speakers to discuss the issues. There was also a specific training on Inspirational Leadership for 100% of managers and coordinators of the Hering Company.
For coordinators, we worked on topics such as leadership model and process management. We also implemented the program #eucompartilho (#Ishare), whose goal is to spread content related to core competencies, through collaborators who become multipliers and share their knowledge and experiences. This program was a great initiative to develop our audience of assistants, analysts, technicians and specialists.
#eucompartilho
p i h s r e n t Par
In partnership with the Hermann Hering Foundation and with the goal of developing our team of interns involved in the style, communication and visual merchandising processes, we have opted for a learning space to rethink the use of leftovers from fabrics, fabrics and supplies from the Hering Company, stimulating upcycling, the vision of new market opportunities and changes in consumer behavior in relation to social and environmental issues.
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In 2017 we averaged
25.9
hours
of training per
member of staff
21.4
hours
more than in the previous
In the online “Weaving
accesses of the 320
Knowledge� platform, we
employees qualified in
counted of 11 thousand
the use of the platform.
2017
2016
Average per member of staff
Average per member of staff
Board of Directors
60.8
4.6
Manage
63.7
13.4
Coordinator
37.8
4.6
Admin
11.7
2.2
Operational
28.0
4.9
Over
25.9
4.5
2017
2016
Average per employee
Average per employee
Men
26.2
5.6
Women
25.8
4.2
Overall
25.9
4.5
Average hours of face-to-face training per employee by functional level*
Average hours of face-to-face training by employee by gender
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Talent management
Based on the Hering Company’s skills model, we have developed a program of evaluating employees with a focus on development, in line with the strategic objectives of the company. We call this program Integrated Management of Performance (GIP), in place since 2013. The GIP has evolved year by year, expanding the number of participants and improving the mechanisms of analysis. In 2017, in addition to the review of skills, we simplify evaluation
processes while maintaining consistency and quality of the program. In Stores, the GIP became applicable only to employees with more than one year in the company, in order to optimize the invested resources. In its dynamic, the GIP contemplates a first stage in which employees are evaluated by their managers, peers, colleagues from other areas and also perform a self-evaluation.
Equipe de voluntĂĄrios - SC
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Then the evaluations are discussed at a development meeting, which prioritizes a look at the future and the identification of potential talents for the Hering Company. In the next step, employees receive feedback from their direct leaders. In this process, the employee also draws up his Individual Development Plan (IDP), which indicates the path to growth and professional development.
In 2017, we applied the cycle of performance evaluation for 1,944 employees, equivalent to 26% of all employees. We identified the need to evolve the evaluation model for the industrial area and, with the support of all managers, we plan improvements such as the review of competencies and the evaluation form, revision of the eligibility criterion from three months of home to one year and delegation of evaluations to shift leaders, who were specially trained in the practice of feedback.
They are the people who move the network of which we are part and that drive the value generation. As protagonists of their professional trajectory, they are in search of new challenges in the career opportunities within the Hering Company. For this, together with the GIP, we structured a map of successors for the positions of leadership within the company.
This succession map, since the 2017 cycle, covers board, management, and coordination positions. With the support of the competency model and the GIP, we identify potential talents to occupy new positions of the Hering Company and follow the evolution of these professionals. To strengthen this process, we structure a governance with quarterly alignment meetings with managers to update the succession Training with employees
s t n e l a T
map that will be implemented throughout 2018.
61.3
1,944
internal use of
the GIP in 2017
%
is the index of
people assessed by
employees
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New talents to endeavor with us
Our doors are always open to receive people Six young professionals were selected to develop to hold positions of coordinators or experts in the new, entrepreneurial and willing to build a collaborative business model. In 2017, we structured a specific area of Attraction and Selection, with the objective of improving this process and empowering the hiring of new talent connected to our business. The first trainee program of the
Hering Company, the Young Entrepreneurs, is also one of the highlights of this story. innovative projects during a period of 18 months, receiving mentoring and training with specific contents. This group has been active in the commercial and brand areas, in the job rotation model, after going through a period of integration in stores and factories. The program will be finalized in 2018 and the participants are expected to be prepared Hering Company.
In 2017, we also celebrated 124,665 people connected to the Hering Company through LinkedIn, an online platform in which we publicize and share the opportunities.
Participantes do programa Jovens Empreendedores
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Who makes it happen at the Hering Company.
7.5
thousand
employees
2.275
Employees by gender In 2017
5,245
Women Men
2,696
South Midwest Northeast Southeast
1.159
Employees by region In 2017
1.174
2.491
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To connect and engage our employees, we carry out various actions and programs throughout the year. We also reinforce our purpose and share the company’s important information through the channels and tools of corporate
communication: intranet, e-mail, digital walls and communication agents - volunteer collaborators who play an important role in organizing events and disseminating information in their units and areas.
Coffee with the Manager and Director At the Hering Company, we encourage our employees to be connected to the organization’s strategies and to know our leaders a little more through the Coffee with the Manager, held in the industrial units, and Coffee with the Director, which happens to employees of the admin areas. There were 47 editions of the Coffee with the Manager and 12 editions of the Coffee with the Director in the last year.
Mom on board The Mother on Board program is held twice a year and brings together the future moms and dads of the Hering Company to exchange experiences about pregnancy and newborn care. In 2017, 240 pregnant women participated in the 22 meetings of the program.
Sweet Home Company In October, all units of the Hering Company open the doors to welcome the children and families of our staff. The little ones can know the place where the parents work and we are happy to receive the children in a day with many activities, games and fun.
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#DiadaBásica (Basic’s Day) On the 137th anniversary of the Hering Company, all our employees and our network were invited to meet at work with that white basic shirt that marks our history.
InoVÁr is now The week of InoVÁr was held at the Memory Center of our headquarters in Blumenau. It was the third edition of the event, aimed at employees involved in product development. With the theme “collaboration” on the agenda, the meeting included content presentations from our directors and managers and a fair in which 12 suppliers showed their innovations.
VareJÁr VareJÁr is an initiative that aims to stimulate the retail mindset in the company and focus on the consumer, in addition to strengthening our members of staff as the main consumer of our brands. Among the actions of the program, we invite our employees to spend one or more days in one of the stores of the Hering Company, as a way to bring teams closer together and foster the search for contributions that enhance the shopping experience of our consumers.
WE DO IT Our volunteer program, called WE DO IT, connects our employees with the vision of networking and provides moments of unity in actions in communities close to the operations of the Hering Company. In the last year, there were more than 50 actions of 500 hours, adding more than 5 thousand hours of dedicated volunteers in 10 institutions supported by this hands on group!
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Health and safety of employees
The health and safety of the people who work in the Hering Company always comes first. Its management is carried out based on the Principles of Occupational Health and Safety, which have the objective of preventing risks and avoiding accidents in our units.
Our Principles of Occupational Health and Safety:
· Ensure a safe and healthy work environment · Train and enable · Comply with safety policies and standards · Valuing safe behavior · Communicate, inform and act We created a safe work environment with the awareness of employees and third parties who work with us. Therefore, we have established the goal that each employee must have in the minimum 4.5 hours of training on occupational safety aspects. In 2017, we exceeded this goal by 33.33%. The third parties that provide services in our units also undergo training at the time of integration.
Event - SIPAT
In 2017: *15.87% fewer accidents with leave *46.23% fewer accidents without leave *27.89% fewer days lost due to leave *6 hours, on average, employee safety training
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Leadership awareness is also continuous, through training and communications in our institutional channels. The theme is also highlighted in the Internal Week of Prevention of Accidents at Work (SIPAT) and through the Specialized Service in Safety Engineering and Occupational Medicine (SESMT), a committee that receives and also consolidates the demands of the own stores in aspects of health and occupational safety. As provided in Regulatory Norm 5 of the Ministry of Labor, we have Internal Accident Prevention Commissions (CIPAs), whose members are chosen by employees. It is the duty of the CIPAs to monitor the implementation of health and safety initiatives at work and the investigation of occurrences, contributing to the continuous improvement of company practices and dialog with employees on the subject. Not all units are subject to the CIPAs installation requirement, so the percentage of employees represented by these forums was 90% in 2017. The units that do not have CIPAs installed count on the Designated CIPA, ensuring representation for the remaining 10% of our workforce.
by monthly by the company’s leadership. In the comparison of 2017 compared to 2016, we reduced the frequency rates of accidents and days lost due to accidents between employees by 29% and 25%, respectively. The absenteeism rate, in turn, decreased by 18% over the same period. In addition, we have not reported cases of occupational diseases in the past two years. The safety index, which combines frequency and accident severity rates, was 32% better than the previous year, staying at 1.95.
Accident frequency rate No. of reportable accidents every 200,000 man-hours worked
In the last year, we have maintained the evolution path in the Security Index. This indicator used by the Hering Company combines frequency and seriousness rates of accidents and is accompanied
Security index
Lost Days Rate
(the lower the better)
Days lost every 200 thousand man-hours worked
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DEVELOPMENT OF
Our
Network
Store - Franchise
Stimulating the development of our network and adopting good management practices is how we want to positively influence our partners who dream and realize together with us. More than generating jobs and income, our business model connects people who share our values and commitments in search of positive and transformative impacts on society. The programs, actions and investments we carry out mobilize our chain of suppliers, franchisees, multi-brand retail customers and commercial representatives. The Hermann Hering Foundation (FHH), enhances this ability to
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engage through projects that stimulate entrepreneurship and individual protagonism as pillars in the development of people and businesses.
In addition to training on the
The extension of this concept is connected to our ability to generate and share knowledge. We understand our role as a company responsible for the dissemination of important topics related to sustainability and business management. And, above all, as partners in the joint construction of new solutions and innovations to always be better at what we do.
person training of the Hering
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Weaving Knowledge portal, the teams of franchised stores, along with the teams of own stores, underwent inCompany In 2017. There were more than 7 thousand people trained, an increase of 49% in relation to the 4.7 thousand participants of trainings of the previous year. In all, there were 4.5 thousand classes with more than 30 thousand participations.
Digital Learning Environment One of the main tools that we have to increase the knowledge and promote the development of our entire network is the Weaving Knowledge portal, that promotes a lively and interactive learning environment digital. It was thought to deliver the best solutions in educational technologies, through contents that deal with aspects related to corporate themes, products, service, business management and point of sale operation. The access to the Weaving Knowledge portal was expanded in the last year, to include the commercial representatives of our brands and retail customers of the multi-brand channel selected for their profile and particularities in the relationship with the Hering Company. Franchisees and managers of their stores already used the tool.
The satisfaction index of users with the platform in 2017 reached 96%, above the result of 91% of the previous year. Highlight for the increasingly relevant content and adherence to the skills required for each audience. The group of commercial representatives and retail customers attributed a 98.4% rating to overall satisfaction with the portal. In 2018, the portal will undergo new improvements to bring content with more agility and quality to all. One is the responsiveness of the platform, which will also be accessible through smartphones and tablets, strengthening digital learning experiences so users choose when, where and how they want to learn. The platform registered 44 thousand accesses in 2017 of the publics of franchises, representatives and retail multi-brand, totaling 1.6 thousand users, considering the same public.
Users and accesses to the portal:
219
712
managers and supervisors of franchises with 39.2 thousand accesses
franchisees with 3.7 thousand accesses
413
267
338 accesses
with 562 accesses
retail customers with
commercial representatives
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Suppliers
Our suppliers form an important group in the strategy of growth and development of our business model, which is hybrid, composed of own production, outsourcing
of process steps and purchasing of finished products. Factions, sourcing companies and suppliers of inputs, services and raw materials support the Hering Company.
Who are our suppliers? Inputs, raw materials and services: manufacturers of fabrics, knits, buttons and other materials that we use in the manufacturing of our pieces. They are also service providers that carry out the logistics, act in projects or in areas of support to the Hering Company. Factions: small suppliers that carry out stages of the production process, complementing the processes carried out at the Hering Company. They are factions of sewing, embroidery, packaging or laundries, located next to our productive units in the regions of GO, SC and RN. Sourcing: national and international manufacturers that provide ready-made products to complement our collections. Through these partnerships, we bring to consumers a diversified mix of products, with accessories, footwear, bags and other pieces.
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in the production of the collections we bring to our consumers through our sales channels.
Our network of suppliers:
516 71 Factions
suppliers of national sourcing
100 suppliers of
international sourcing
3,021 suppliers of
inputs, raw materials and services
Supplier Meeting
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Proportion of expenses with local suppliers* (%)
* We consider local all suppliers located in Brazil. In the case of the factions, the suppliers are located in the same regions as the units of the Hering Company. ** The scope of purchases of inputs was expanded in 2017 for all categories. Considering the same basis of previous years (restricted to yarns, fabrics, chemicals, supplies and freight), the percentage of local purchases was 78.4%.
The actions of relationship with our suppliers, are developed within the program Sustainable Fashion, implemented in 2012. Through these initiatives, we encourage our partners to adopt good management practices, minimize risks and enhance positive social and environmental impacts in our value chain.
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Sustainable Fashion has four fronts of action and its strategy is executed and accompanied in a multidisciplinary team by the Suppliers Committee, composed of employees from different areas of the company that are related to this public and are custodians of the relationship management with the partners.
GRI 103-1 | 103-2 | 103-3 | 204-1
Inputs Factions** Total Sourcing
We structured our practices with each of the three groups of suppliers considering factors such as dependence and impact of the Hering Company, besides the risk of precarious work. This way, we have expanded our efforts to work with small partners that carry out stages of our production process.
How Sustainable Fashion Works Formalization: through the Contract and Code of Supplier Conduct, formalize our commitments and reinforce the behaviors we expect from our partners.
Development: the holding of the Meetings of Suppliers, lectures and courses, through of our teams, Hermann Hering Foundation or other institutions, to promote the qualification management of our suppliers.
Monitoring: we operate through face-to-face audits with our own teams and monitoring of faction documentation. For international and national sourcing suppliers , we work with certified partners. In Brazil, for example, ABVTEX. Relationship: we maintain a channel for questions and reports related to the conduct of suppliers. We also understand the importance of maintaining an open dialog, of respect and without favor in daily contacts.
Meetings with suppliers Building strong partnerships with our suppliers is also done with great transparency and dialog. The Supplier Meetings are initiatives carried out throughout the year in our units to discuss with the groups of suppliers important themes for the sustainability and development of this network.
Supplier Meeting
Partnership
In 2017, we held 10 meetings, which involved 1,263 people. At these times, we address issues such as sustainability practices, compliance, quality, standardization of processes and improvements achieved in recent years. In the meetings we also share new technologies and techniques for the production process.
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Suppliers - Factions
In our relationship with suppliers, we are committed to encouraging growth and development of partners. With this purpose, we launched the Open
Supplier Meeting
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Prize in 2017, which translates our way of valuing who wants to build success stories with us.
We are who we are because we act in a great network of people who dream, believe and act!
RA is our way of inviting you to smile and “get together.” Connect more and more and embrace new challenges with us. ABRA is our way of valuing partners who want to grow and build success stories. ABRA is how we want to “OPEN doors” to good practices, good business and good partnerships! The Abra Award recognizes the factions (which assume stages of our production process) that perform best every quarter, classifying them into gold, silver, and bronze. This ranking is based on the ABC Curve, an indicator used by the Hering Company to monitor partners according to three criteria:
Compliance: evaluation of documentation, auditing and social charges of suppliers.
Quality: percentage of rejection and of second quality of production. Confection: evaluates the capacity to produce basic, semi-processed and elaborated articles (flexibility) or considers the delivery time of the service order, according to the rules of each region in which we work with these partners.
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1,161 medals were awarded by the Abra Prize
59
422
gold
silver
680 bronze
The Abra Prize was born to open doors to good practices, good business and good partnerships in our network. In 2017, 428 factions participated in the quarterly awards.
With the receipt of this Gold medal, we were assured that the success of any business are partnerships. To be chosen among the best [...] who provide services to the Hering Company, is a source of great pride. We want to take this opportunity to thank each and every one of the people involved in this great process. We have always had the unconditional support of the entire team of the Hering Company. In return for all that trust, we tried to to seek in every way the effort necessary to always serve in the best possible way. Punctuality, flexibility, commitment and quality have been our daily goal. Excerpt from an email received from a Gold partner.
Among the different initiatives we carry out are those related to the monitoring of working conditions and compliance with the environmental legislation of factions that serve our
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industrial units. To evaluate the effectiveness of our process, we follow the indicator of Chain rotation, which reflects the average number of audits performed at each supplier
GRI 103-1 | 103-2 | 103-3 | 414-2
throughout the year - the periodicity of these evaluations varies according to the contracts and the performance evaluation of the companies.
Whenever we hire a new supplier, an initial approval audit is performed. In the last year, all 76 new partners in sewing factions, laundries and packaging suppliers of our products have gone through this type of evaluation.
Audits have the role of reinforcing the social and environmental commitments that we expect from our partners. In addition to social aspects, linked to labor laws, health and safety standards, for example, we conducted
a documentary verification of licenses and environmental issues related to the operation of the partner, as we understand that respect for the environment is a fundamental pillar of a more sustainable journey.
Chain rotation (average audits per sourcing vendor and factions)
Facing compliance , we observe a monthly the fulfillment of the labor obligations and collection of taxes by the factions. These documents are delivered by the suppliers to the Hering Company and are used to compose the Third Party Regularization Index.
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Among the items evaluated in the audits of these suppliers, we have specific aspects related to the risk of child labor, forced or analogous to slave labor. If evidence of this type of occurrence is identified, the partner is immediately failed and has the Terminated contract. In 2017, as in the previous year, we did not identify this type of circumstance in our operations or between our suppliers.
Index of regularization of third parties - factions (November / 16 to October / 17)
The Hermann Hering Foundation (FHH) is a major supplier development partner (read more about FHH on page 82). Through the Productive Chain program, conducted by Sebrae Goiรกs three years ago, the FHH contributes resources and aims to support the development of these micro and small
entrepreneurs. A part of the program is based on Empretec, a methodology of United Nations Organization (UN) focused on the development of characteristics of entrepreneurial behavior. In 2017, the program had the participation of 74 business persons.
The Productive Chaining Project, in 2017:
74
375
2,400
trained in 34 cities of
faction partner of the
training
Goiรกs state
Hering Company.
meetings - 5 in each
small businesses
hours of consultancy in
Jobs generated in the factions: 2017
2016
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Santa Catarina
Nordeste (RN, CE e PB)
Goiรกs
1,368 3,022 4,038 Santa Catarina
Nordeste (RN, CE e PB)
Goiรกs
1,492 3,376 4,106 GRI 103-1 | 103-2 | 103-3 | 203-2 | 408-1 | 409-1
Total
8,428
Total
8,974
Sourcing Suppliers
We work with suppliers of national and international sourcing, which provide finished products such as footwear and accessories. Every year, we apply in part of this group of partners the same audit practices that we perform in the factions. For national suppliers, we require certification in the ABVTEX program, from the
Brazilian Retail Association of Textiles, which also makes face-to-face audits and assesses labor practices, aspects of health and safety and environmental management among its associates. For the hiring of new international suppliers, we request one of four certifications: BSCI, WRAP, SMETA or SA8000. By 2017,
we have reached the milestone of 100% of national partners certified in accordance with ABVTEX and broadened the percentage of international suppliers certified from 22.6% to 37%. For this group of international partners, we seek to work very closely, through our business area, always reinforcing our values of respect for people and the environment.
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Franchisees We are the largest network of clothing franchises in Brazil, with 692 stores, distributed in 25 states and in the Federal District. On the outside, our 20
312
franchises are present in Bolivia, Paraguay and Uruguay. In 2017, Hering Kids’ first store was opened in the Paraguayan capital, Asunción.
Jobs generated in the franchises*
2017
municipalities are served by our franchisees 2016
Brasil
Exterior
6,544 305 Brasil
Total
6,849
Exterior
8,600 180
Total
8,780
* Numbers are estimated based on the average number of employees per store.
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The relationship with franchisees is based on the commitment to build a solid, transparent and win-win partnership based on a business model that generates value and stimulates entrepreneurship. Sharing knowledge and empowering the network part of our channel management strategy. One of the main initiatives we have in this direction is the Franchisee Development Program (PDF), an educational module that addresses issues relevant to business management, including financial management and business management. In 2017, the program had two new classes, with the presence of franchisees from the international market. In the first stage of the course, the participants have face-toface classes. In the second, the concepts are applied in practice, with accompaniment and tutoring of the Hering Company and external
consultancy. In the end, the franchisees return to the room to complete the program and share their learning. In 2018, a new module will be carried out, directed to the topic of people management. We will also have development programs for Franchise Supervisors and development themes for the multi-brand channel. For all audiences, we will promote face-to-face classes throughout Brazil, focusing on the technical training of products and their compositions.
Supply of stores One of our priorities for the instore shopping experience is to ensure that the consumer’s desired parts are always available in the colors and sizes they want. Better supplying the stores in our network and reducing leftovers and shortages of products are strategic priorities for the Hering Company.
To this end, we installed in our distribution center in Anápolis, Goiás, equipment for automated order separation. The system has the capacity to complete up to 780 requests simultaneously with a reduced margin of error to 0.7% previously, with the manual process, this index represented 2%. Further, we have invested in the IT infrastructure to automatically supply the 50 best-selling Hering branded products. The solution ensures the supply of the entire network according to sales history and forecast turnover in the coming months, optimizing logistics costs and the use of store space in the store. The items automatically sent to all stores of the brand represented, in the annual consolidated, R$ 17 million in sell out sales.
Evolution at the Hering Store The franchise of Shopping Pátio Paulista, in the city of São Paulo, was the place chosen for the inauguration of a new architectural concept for the stores of the Hering Store network. With this evolution, we want to highlight the pieces of our collections for consumers within a lighter and more functional environment. Improvements in visual merchandising, smaller equipment that can be arranged in different combinations, more intense lighting, wood flooring and other finishes are the highlights of this new concept, which has also been replicated for the Shopping franchise
GRI 103-1 | 103-2 | 103-3
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Multi-Brand Retail Our brands are present in more than 3 thousand Brazilian municipalities, distributed by all the states of the country. This singular capillarity, one of the major strengths of our business model, is only possible with the partnership of the 284 commercial representatives who work in 16,9 thousand multi-brand retail points. To improve our relationship with this public, we have structured the Multi-brand Segmentation project, which classifies our clients into eight different groups for which we develop differentiated strategies of service and sales, according to the demands and behaviors themselves. Qualified Retail, which represents 582 customers, are partners in which we focus our efforts to apply the concept of brands, differentiated strategies of sales and supply, as well as initiatives aimed at training and qualifying the management of these partners, an important complementary channel in regions or localities without franchising or physical own stores. In 2017, we held three regional meetings for Multi-Brand Retail customers, focusing on Qualified Retail (in Porto Alegre, Campinas and Belo Horizonte). The events brought together about 400 customers who were able to understand our policies and the importance of offering consumers the best shopping experience and relationship with our brands. Our objective for 2018 is to further tighten relations with these store owners, expanding regional meetings and differentiation actions.
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With an integrated management model for the multi-brand channel, customer segmentation and focus on Qualified Retail, we are strengthening the capacity of Value generation. This is how we are going to boost our brand sales, incorporate new technologies and innovations into the business relationship, and become more and more present in our consumers’ lives and closets.
Sales representatives The connection between the Hering Company and the multi-brand clients is made by a network of 284 sales representatives, a group of professionals who know our brands and our casual DNA. In 2017, we continue to invest in the training of this public through specific content and training, available on the website Weaving Knowledge (read more on page 66).
GRI 103-1 | 103-2 | 103-3
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Communities
The Hermann Hering Foundation (FHH), founded in 1935, works on projects of social transformation that enhance the entrepreneurial capacity of people. It participates in the management of the Hering Company, with the purpose of stimulating and promoting a more sustainable, fair and responsible fashion that encourages Affective Economy. The
Hering Museum
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projects developed by FHH are connected to the cause of entrepreneurship in fashion and aim to develop transforming agents that they undertake in their lives and careers. Through the FHH, we have strengthened fashion as a platform for transformation and education for the future that fosters innovation and social and local development.
In 2017, the investment made directly by FHH or the Hering Company, in projects conducted by the Foundation, was R$ 1.05 million. In this amount are included R$ 163 thousand for the Fund for the Elderly, Children and Adolescents, contributed by the Hering Company and which will be allocated to projects conducted by FHH in partnership with educational
Participants of the Art of Sewing course
institutions in 2018.
Here, we . e f i l p u s s e r d GRI 103-1 | 103-2 | 103-3
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Good Declaration To strengthen the space implementation and historical preservation actions of the Ingo Hering Memory Center, FHH conducted the third edition of the Declaration of Goodness campaign in 2017, which encouraged Individuals and Legal
Entities to pass on, respectively, up to 6% and 4% of the income tax due to the government. R$ 82 thousand were raised in resources. The donations were made directly to the project registered by the Foundation in the National Program of Support for Culture (PRONAC 152514).
‘s projects are structured and developed within two lines of action:
MEMORY AND CULTURE
ENTREPRENEURSHIP:
Made through the Hering Museum and the Memory Center, with the objective of preserving the cultural and industrial heritage, of regional and national public interest. It acts with the perspective of seeking references for the construction of memories and identity, as well as communicate the history of the Hering Company, its brands and its staff who took part in this journey.
Responsible Entrepreneurship: It is the main driver of social and economic development, so finding connections that can create a system to accelerate innovation and improve talent is critical. This is how we increase our ability to react in advance to the challenges of the new millennium by building bridges for the future.
Creative Culture: with the universe of fashion as a propeller of knowledge, fostering an innovative and active vision of the young can contribute to new perspectives of value generation in the market.
Retail Connection: projects that are designed to prepare young people for a journey of learning and knowledge, training them to work in the fashion retail segment. From this base of action, we establish connections with consumers, generating synergistic and enriching relationships.
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Our Projects FHH developed, in partnership with SENAI of the states of Goiás and Santa Catarina, the Art of Sewing Project, which was supported by local public agencies. The industrial sewing qualification courses were applied in 2017 in the cities of Itapirapuã and Córrego do Ouro (GO) and Indaial (SC), totaling five classes. In Goiás, students produced 1,800 items of clothing during the course, which were donated to the Department of Social Assistance of Itapirapuã
and Córrego do Ouro, for distribution to families registered in the Reference Center and Social Assistance. In order to carry out the mapping of the public and the region, FHH applied a sociodemographic interview and listened to people’s reports on the conditions of social vulnerability in which they live. The FHH aims to contribute in the long term for the evolution of the Human Development Index of these regions where the project is carried out.
“Thank you for what they did: the girls, the friendship that we have ..., the teacher ... there were moments when I almost cried on the machine because I could not do it, and the teacher helped, she helped ... I really appreciate it! I do not know who is going to be hired and who is not going to be, but if I do not stay here, anyway, I thank you because what I learned I will take with me for the rest of my life, wherever I get to work, anywhere! What I learned here, I’ll always take along with me!” Testimony of student Ivonete de Jesus dos Santos from Art of Sewing - Indaial
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The Art Project of Sewing, in 2017:
5
classes
920 65 class hours
students trained by the course
Exposição M.A.D.E
Another important project led by the Hermann Hering Foundation with partners is the Affective Weave, which aims to promote transformation through upcycling, focusing on design, fashion and entrepreneurship, guided by the transformative practices of Affective Economy - a production and consumption model geared towards the social responsibility and the re-definition of processes and products. The results of the project, which was carried out in 2016, materialize solutions in design for textile waste. Last year, the Trama Afetiva was invited to participate in the music and behavior festival MECAInhotim, in Minas Gerais, and has also gained
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GRI 103-1 | 103-2 | 103-3
a touch of appreciation of affective fashion. The project was the only fashion show of the 5th MADE - Mercado Arte Design SP, a design event in the city of São Paulo that had more than 100 exhibitors and 10 thousand visitors. Trama Afetiva was also present at a series of multicultural gatherings in the city of Blumenau, which brought together local artists and producers, promoting the diffusion of the Creative Economy, through practical learning platforms, encouraging collective learning, panel discussions, organizing workshops and open classes. In 2018, the project will have a second edition in São Paulo.
Memory Center In everything we do, whether in the clothes we produce or in the designs we create, we weave a story and build memories. Our future lies in the inspiration of the past and the innovation of the present. Therefore, the 137-year history of the Hering Company are embodied in photographs, documents, books and machinery gathered in the Memory Center. In 2017, investments were made in the infrastructure of the space, through incentive resources. The Memory Center has won a Laboratory of Conservation of collections, destined to receive and to sanitize historical materials that, after documented, compose the collection. Our collection also gained more than 2 thousand new items, through donations and collection of contemporary material. More than 27,000 documents are already organized in a new methodology, which makes them more accessible to research.
Centro de Memรณria
is the source for the exhibitions of the Hering Museum, which was chosen by the public on the digital platform TripAdvisor, as the fifth best attraction to visit in Blumenau, in a list of 62 tourist attractions. In addition, the year 2017 surpassed the public record in the museum, celebrating 100 thousand visitors and, in every month, the public was bigger than the one received at the same time in 2016.
O Museu Hering em 2017:
23,685 2,072 395 spontaneous visitors
students
students
1,926 2,761 tourists
staff people in events
Access fundacaohermannhering.org.br and connect with FHH on social networks. Facebook @fundacaohermannhering | Instagram @fhhconectada
GRI 103-1 | 103-2 | 103-3
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IMPACT MANAGEMENT
Respect for the environment is present in our history and spreads in our network, with partners connected to our way of living life. Our environmental management practices are in line with internal standards and legislation, and have an important role to play in strengthening the search for technologies that allow mitigating the impacts on natural resources. Conscious of the importance of reducing the
consumption of water, waste generation and CO2 emissions in our production process, environmental management is conducted by an Internal Commission (CICE), which analyzes environmental performance indicators and accompanies targets for reducing natural resource consumption. Committed to the legal compliance of our activities, we did not receive fines or non-monetary sanctions related to environmental aspects in 2017.
t n e m n o r i env
Suspended Garden - Hering
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A new energy Reduce CO and minimize our carbon footprint in the industrial process is one of the objectives we pursue continuously. Therefore, investing in clean energy is a priority in our planning. The Blumenau (SC) units - Bom Retiro, Itororó and Matriz - began to be supplied in 2017 with energy purchased in the free market, seeking alternative and renewable sources for making of the pieces of our collections. The perspective, in 2018, is to make the migration also in other industrial units.
· Approximately 80% of consumption of our electricity comes from the Small Hydroelectric Power Plant (PCH), installed in Foz do Chopim, Paraná. · The basis of our fuel matrix is reforestation wood. and natural gas.
In the municipality of Blumenau, where our headquarters is located, the Hering Company maintains 8.5 million m² of green area. Of this total, 750 thousand m² are classified as legal reservation. The area, which we are so proud of, was reforested by the founders of the company. That is why Bruno Hering received the title of “pioneer of
GRI 103-1 | 103-2 | 103-3
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Water
The use of water in the production process is essential to produce with quality, reproduce colors and prints.
Wastewater Treatment Plant - Itororรณ Unit
As a focus on efficiency and reduction of consumption, we invested in new paint machines in 2017, and we have already registered a 45% reduction in use of water in this process.
Water collection
Surface water Groundwater Annual Report | 90
GRI 103-1 | 103-2 | 103-3 | 303-1
In 2017, we captured 1.8 million cubic meters of water in our units. In most localities, this abstraction occurs from artesian wells. At these units, the use is practically all for human consumption and, therefore, reduction actions are focused on awareness campaigns and programs. Only for the Bom Retiro Unit and for the Headquarters we capture dam water. In Itororรณ, we captured this input from the Gato stream and we have a dam for physicalchemical treatment and filtration before use in production. The Itororรณ unit also has, since July 2016, a system to collect rainwater, which prevented the direct withdrawal of 522 cubic meters in 2017. Due to the implantation of the biopolymer process, which positively impacts the perception quality
and durability of the product perceived by the consumer, our water consumption has increased in recent years. The indicator also was impacted by the beginning of rainwater harvesting, besides the accounting of capture in wells in other industrial units. In the last year, we recorded an average of 8.8 thousand cubic meters of water recovered by the reverse osmosis adopted in the Itororรณ unit, where the volume recovered was 105 thousand cubic meters. The water captured from the Gato stream to supply the plant, after being used in industrial activity, is treated at our Tributary and Effluents Treatment Plant and returned to the Ribeirรฃo da Velha stream. There is no significant impact of the river during these processes of abstraction and discharge of effluents.
We have also advanced in the implementation of the project that provides for automations and improvements in the parameters of abstraction and return of water to the environment at our Influent and Effluent Treatment Station. These developments already represent approximately R$ 658 thousand invested in the implementation of the first phase of the project, which will be completed in 2018.
Discharge of effluents (thousand m3)
In 2017, we treated 1.7 million cubic meters of industrial effluents, 99.8% of which is in our own facility, in the Itororรณ (SC) unit, with biological reactors and ozone technology. Another 2.8 thousand cubic meters of effluent was destined for septic tanks.
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Waste Waste generated by industrial activities is controlled through the Management Plan Solid Waste Management (SWMP), which includes monitoring of licensed and certified responsible for proper disposal and recycling of materials.
In addition to controlling waste disposal, we want to be increasingly efficient and decrease the generation of these materials. In 2017, we continue to optimize the processes of development of product and cut of fabric or mesh, with attentive attention to the reduction of leftovers and waste.
The treatment of ozone applied in the ETE reduces by 70% the destination of sludge to landfills.
Rethinking waste and waste disposal is also part of our strategic priorities. Among the initiatives are the reuse of fabrics and fabrics in the production of new parts in an upcycling process, in addition to the resale of leftovers that are transformed into yarns again by partners.
Through these partners, we also contribute to small businesses and local initiatives that add new value to leftovers and waste, impacting the economy, boosting the fashion chain and generating opportunities for inclusion.
Disposal of waste (tons)
Reuse or recycling Landfill
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Non-hazardous waste by destination method (t)* 2017
Landfill
Reuse (sale of trimmings to third parties)
2,746.2 2,816.7 2016
Landfill
1,137.5
Reuse (sale of trimmings to third parties)
2,254.7
Recycling (paper, cardboard and plastic)
808.5
Total
6,371.4
Recycling (paper, cardboard and plastic)
686.5
Total
4,078.7
*We do not generate hazardous waste at significant volumes in our operations.
From 2017, the management also incorporates compactable and contaminated residues, ashes, lees of ink and with characterizations. The volume of waste destined for the year totaled 6.3 thousand tons, with 57% of this volume destined for reuse or recycling.
The variation from the 4.1 thousand tons reported in 2016 is explained by the expansion of the scope of monitoring of this indicator, which previously considered, among the waste sent to landfill, only the sludge from the effluent treatment plant.
GRI 103-1 | 103-2 | 103-3 | 306-2
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Path of our waste and leftovers
Waste and scraps of fabrics and supplies
New parts are developed in the Hering Company. from leftovers of fabrics and supplies.
The leftovers are
The pieces that were born from an upcycling process reach the consumer.
Some leftovers are reprocessed and used for the production of new yarns.
The leftovers gain new value, stimulating the learning of the art of sewing and contributing to the professional training and career of people in the community.
Other leftovers are reused for the production of cleaning cloths and tows.
They are raw materials for creating new products, with differentiated designs, collaborating for a new fashion look.
The partner who receives the scrap of computers and electronics, in addition to recycling and correct disposal, provides new computers for social projects with the objective of social inclusion.
Other materials, such as bulbs and non-recyclable items, are sent to certified and qualified partners to perform the correct disposal, without harming the environment.
sent to partners who guarantee a correct and intelligent
We support community initiatives or Hermann Hering Foundation projects.
destination.
Cardboard, paper, plastics and other administrative
The materials are intended for partners who perform their recycling or reuse.
waste
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e w , e r He ! e f i l p u s s e r d 102-8
| number of part-time employees increased due to the greater hiring of apprentices in 2017. There was also a variation in the total
Number of employees per type of employment and gender*
number of employees hired temporarily, due to the anticipation of the dates of hiring and leaving these professionals, who mostly work in stores at Christmas time.
2017
2016
2015
Full-time
Part time
Full-time
Part time
Full-time
Part time
Men
2,133
142
2,102
14
2,136
3
Women
5,089
156
5,609
23
6,036
7
Total
7,222
298
7,711
37
8,172
10
* The data regarding our employees are monitored by a specialized team of People & Organization Management and registered in a computerized system.
Number of Staff by contract of work
2017 Permanent
2016 Temporary
Permanent
2015 Temporary
Permanent
Temporary
By gender Men
2,207
68
2,029
87
2,101
38
Women
5,084
161
5,405
227
5,918
125
Total
7,291
229
7,434
314
8,019
163
Midwest
2,487
4
2,757
4
2,822
0
Northeast
1,164
10
1,196
12
1,280
4
Southeast
977
182
895
217
857
115
South
2,663
33
2,586
81
3,060
44
Total
7,291
229
7,434
314
8,019
163
By region
* Indicator calculated according to the methodology OHSAS 18001: number of accidents reportable to every 200 thousand man-hours worked.
Annual Report | 96
102-12
| We are co-founders of Santa Catarina Fashion and Culture (SCMC), a Collaborative platform model that connects fashion and design companies and universities to empower people, foster innovation, stimulate pulsating environments, and reignite roles. The partnership is widely publicized on the SCMC website and internally through the participation of our collaborators in lectures and workshops.
102-13
| Brazilian Textile Retail Association (ABVTEX): this is the most relevant sector entity to our business, as it allows the discussion of impacts and risks in the fashion chain, the alignment of interests in the debate with civil society and government agencies, as well as the improvement of the processes of monitoring the chain of our sector, through the Supplier Certification Program. We integrate the Management Committee, the highest level of governance of the entity, and the Suppliers Working Group, which coordinates the certification program. Brazilian Association of the Textile and Apparel Industry (ABIT) and the Institute for Retail Development (IDV): forums relevant to the representation of the sector before the government and to the debate and exchange of practices between companies participants, fostering innovation and anticipating regulatory trends and demands. Associação Pró-Desenvolvimento Industrial do Estado de Goiás (ADIAL) (Industrial Pro-Development Association of the State of Goiás): an important partnership to strengthen our commitment to the development of the regions where our units are located in the state of Goiás. In 2017, the main guidelines discussed were related to tax aspects and state tax benefits.
102-41
| 1100% of the employees are covered by collective bargaining work agreements.
102-54
| This report has been prepared in accordance with the GRI Standards: Essential option.
308-2 E 414-2
| In 2017,
516 factions were evaluated in audits by the area of Compliance - Auditing of Suppliers. We have not identified any significant environmental impacts. In relation to social criteria, especially those related to health and safety conditions, records and controls of labor documentation, we identified nonconformities in 365 suppliers. In 100% of cases, we recommend an action plan and verified compliance with these measures in subsequent audits. In 74 suppliers (14% of the total), we terminated the labor contract because we found that the necessary improvement measures were not implemented and the practices of these partners did not meet the standards we set.
Brazilian Franchising Association (ABF): with 20 years of operation and more than 1,000 members, this entity strengthens the alignment of issues regarding the performance and relationship with franchisees, such as legal aspects and conflict management, as through the franchise channel.
Annual Report | 97
204-1
| Our supplier selection process balances aspects related to the quality of products, agility of the partners in the supply and prices, in order to meet the business demands of the Hering Company. In general, the geographical location of suppliers is not a priority criterion in the competition process. In the specific case of factions, the location
of companies is considered as a contracting criterion, as it offers gains in logistics operations and promotes regional development in the states and municipalities where our industrial units are located. In addition, the proximity of the factions optimizes the audit activities we perform at these suppliers’ facilities, the continuous monitoring of our supply hain and the agility in decision making.
Proportion of faction suppliers’ expenses by region (%)
2017
2016
2015
Midwest
60.8
55.0
53.3
Northeast
23.3
27.3
28.0
South
15.9
17.7
18.7
403-2
|
Accident frequency rate among employees* 2017 2016 2015
2017
2016
2015
Men
2.0
2.9
4.4
Women
0.8
1.1
2.1
Geral
1.1
1.6
2.7
Midwest
1.5
1.6
1.2
Northeast
0.4
1.6
8.7
Southeast
0.3
0.6
0.1
South
1.5
2.1
2.5
Overall
1.1
1.6
2.7
By gender
By region
* Indicator calculated according to the methodology OHSAS 18001: number of accidents reportable to every 200 thousand man-hours worked.
Annual Report | 98
Rate of days lost due to accidents among employees*
2017
2016
2015
Men
14.0
21.3
18.0
Women
3.8
4.5
7.6
Overall
6.8
9.1
10.4
Midwest
7.5
14.2
6.5
Northeast
10.9
6.1
11.4
Southeast
2.6
0.6
2.8
South
6.0
7.9
16.6
Overall
6.8
9.1
10.4
2017
2016
2015
Men
0.6%
0.6%
1.0%
Women
2.1%
2.6%
3.8%
Overall
2.7%
3.3%
4.8%
Midwest
1.4%
1.9%
2.2%
Northeast
0.3%
0.3%
0.7%
Southeast
0.2%
0.2%
0.3%
South
0.7%
0.9%
1.6%
Overall
2.7%
3.3%
4.8%
By gender
By region
Indicator calculated according to the methodology OHSAS 18001: days lost every 200 thousand man-hours worked.
Employee absenteeism rate*
By gender
By region
* Indicator calculated by the total hours of absences, justified leave and attestations, on the total man hours available.
413-1
| FHH initiatives include 100% of the regions of influence of our industrial and management operations. The Foundation’s operations in the territories in which our own stores are located, and even those of franchisees, have been advancing as the maturity of the initiatives of the Retail Connection axis mature. In addition to the programs developed by the Foundation, we promote dialog and local engagement through our volunteer program, called WE DO IT, in 11 of the 12 units of the Hering Company active in 2017 (91.7%).
419 -1
| Throughout 2017, we received two infringement proceedings in the Distribution Center of Anápolis (GO) related to day-care assistance, overtime, holidays and time-off, which totaled R$ 35,960. In addition, a public civil action of the Public Ministry of Labor of Goiás against the Hering Company, related to the fulfillment of the quota of apprentices, was definitively judged, implying the payment of R$ 180 thousand as compensation for collective moral damages.
Annual Report | 99
GRI CONTENT SUMMARY GRI Standard
Indicator
Page / Remarks
Omissions
GRI 101 | Fundamentals 2016 General indicators
GRI 102 | General indicators 2016
Organizational Profile 102-1 | Name of Organization 102-2 | Activities, brands, products and services 102-3 | Location of headquarters 102-4 | Location of operations 102-5 | Legal nature and property 102-6 | Markets served 102-7 | Organization size 102-8 | Information on employees and other workers 102-9 | Supply chain 102-10 | Significant changes in the organization and / or its supply chain 102-11 | Approach or precautionary principle 102-12 | External Initiatives 102-13 | Participation in associations Strategy 102-14 | Statement of the highest executive 102-15 | Main impacts, risks and opportunities Ethics and integrity 102-16 | Values, principles, standards and standards of conduct 102-17 | Mechanisms for guidance and complaints related to ethical conduct Governance 102-18 | Governance structure 102-22 | Composition of the highest governance body and its committees 102-24 | Appointment and selection process for the highest governance body 102-32 | Role of the highest governance body in the sustainability report 102-33 | Communication of critical concerns
Stakeholder Engagement 102-40 | List of stakeholder groups 102-41 | Collective bargaining agreements 102-42 | Process of identification and selection of stakeholders 102-43 | Approach to stakeholder engagement 102-44 | Key topics and concerns raised by stakeholders Reporting practices 102-45 | Entities included in the consolidated financial statements 102-46 | Process of defining the content of the report and limits of the material themes 102-47 | List of material topics 102-48 | Resubmission of information 102-49 | Changes in the reporting process Annual Report |100
GRI 102-55
4 8 and 9 8 8 24 8 and 9 9
-
61 and 96
-
68 and 69
-
28
-
88 and 91 97 97
-
4 and 5
-
31
-
30
-
30
-
28
-
28
-
28
-
7
-
28
-
6 97
-
21
-
21
-
22 and 23
-
7
-
21
-
22 and 23 7 21
-
102-50 | Reported period 102-51 | Date of the most recent report published 102-52 | Reporting Cycle 102-53 | Contact point for issues related to the report 102-54 | Forward-looking statements in accordance with GRI Standards 102-55 | GRI content summary 102-56 | External Assurance Theme material | Entrepreneurship and wealth generation
Indicator 103-1 | Explanation of the material theme and its limits
GRI 103 | Type of management 2016
103-2 | Type of management and its components 103-3 | Evaluation of the type of management
GRI 201 | Economic performance 2016 GRI 205 | Anti-Corruption 2016 Material theme | Management and environmental impacts
201-1 | Direct economic value generated and distributed 205-1 | Operations subject to corruption risk analysis Indicator 103-1 | Explanation of the material theme and its limits
GRI 103 | Type of management 2016
103-2 | Type of management and its components
103-3 | Evaluation of the type of management
GRI 303 | Water 2016
GRI 306 | Effluents and waste 2016 GRI 307 | Environmental Compliance 2016 Theme material | Relationship with the consumer
GRI 103 | Type of management 2016 GRI 416 | Customer Health and Safety 2016 GRI 419 | Socioeconomic Compliance 2016 Theme material | Attraction and people development
GRI 103 | Type of management 2016
303-1 | Water capture by source 303-2 | Water sources significantly affected by water capture 303-3 | Reused and/or recirculated water 306-1 | Discharge of effluents by quality and method of disposal 306-2 | Waste by type and method of disposal 307-1 | Non-compliance with environmental laws and regulations
7
-
6
-
6
-
7
-
97
-
100, 101 and 102 7
-
Page / Observations
Omissions
22, 24, 25, 26, 27, 28, 29, 30 and 31 24, 25, 26, 27, 28, 29, 30 and 31 24, 25, 26, 27, 28, 29, 30 and 31
-
27
-
30
-
Page / Observations
Omissions
23, 88, 89, 90, 91, 92, 93 and 94 88, 89, 90, 91, 92, 93 and 94 88, 89, 90, 91, 92, 93 and 94 90 and 91
-
91
-
91
-
91
-
92 and 93
-
-
88
-
Page / Observations
Omissions
103-1 | Explanation of the material theme and its limits
22, 32, 33, 34, 35, 36, 37, 38, 39, 40, 41, 42, 43, 44, 45, 46, 47, 48, 49, 50, 51, 52 and 53
-
103-2 | Type of management and its components
32, 33, 34, 35, 36, 37, 38, 39, 40, 41, 42, 43, 44, 45, 46, 47, 48, 49, 50, 51, 52 and 53
-
103-3 | Evaluation of the type of management
32, 33, 34, 35, 36, 37, 38, 39, 40, 41, 42, 43, 44, 45, 46, 47, 48, 49, 50, 51, 52 and 53
-
Indicator
416-1 | Evaluation of products and services in relation to health and safety impacts 419-1 | Non-compliance with socioeconomic laws and regulations
34 and 35
-
99
-
Page / Observations
Omissions
103-1 | Explanation of the material theme and its limits
22, 54, 55, 56, 57, 58, 59, 60, 61, 62, 63, 64 and 65
-
103-2 | Type of management and its components
54, 55, 56, 57, 58, 59, 60, 61, 62, 63, 64 and 65
-
103-3 | Evaluation of the type of management
54, 55, 56, 57, 58, 59, 60, 61, 62, 63, 64 and 65
-
Indicator
GRI 102-55
Annual Report |101
403-1 | Representation of workers in formal and shared committees (employeremployee) health and safety
65
The frequency rate of third-party accidents is not available in the company's control system,
GRI 403 | Health and safety at work 2016
403-2 | Types of injuries and injury rates, occupational diseases, lost days and absenteeism; and number of fatalities
65 and 98
because it depends on the availability of information by contracted companies. The Hering Company promptly accompanies any accident that comes to occur in our dependencies, but without formalized monitoring.
GRI 404 | Training and Education 2016 Theme material | Network development
GRI 103 | Type of management 2016 GRI 203 | Indirect economic impacts 2016 GRI 204 | Purchase Practices 2016
GRI 308 | Environmental supplier evaluation 2016
404-1 | Average annual hours of training per employee 404-3 | Percentage of employees with regular performance and career appraisals
59
-
Page / Observations
Omissions
103-1 | Explanation of the material theme and its limits
23, 66, 67, 68, 69, 70, 71, 72, 73, 74, 75, 76, 77, 78, 79, 80, 81, 82, 83, 84, 85, 86 and 87
-
103-2 | Type of management and its components
66, 67, 68, 69, 70, 71, 72, 73, 74, 75, 76, 77, 78, 79, 80, 81, 82, 83, 84, 85, 86 and 87
-
103-3 | Evaluation of the type of management
66, 67, 68, 69, 70, 71, 72, 73, 74, 75, 76, 77, 78, 79, 80, 81, 82, 83, 84, 85, 86 and 87
-
76 and 78
-
70 and 98
-
Indicator
203-2 | Significant indirect economic impacts 204-1 | Proportion of spending on local suppliers 308-1 | New suppliers whose selection process included environmental criteria
GRI 408 | Child labor 2016
308-2 | Negative environmental impacts in the supply chain and measures taken in response 408-1 | Operations and suppliers where there is a significant risk of occurrence
GRI 409 | Forced labor or that analogous to slave labor 2016
of child labor 409-1 | Operations and suppliers where there is a significant risk of occurrence of forced labor or that analogous to slave labor
GRI 413 | Local communities 2016
GRI 414 | Social Supplier Assessment 2016
Annual Report |102
GRI 102-55
57
75 97 76 76
413-1 | Operations with formal community engagement, impact assessment and / or development programs
99
414-1 | New suppliers whose selection process included social criteria
75
414-2 | Negative social impacts in the supply chain and measures taken in response
74, 77 and 97
-
s t i d e r C Coordination Director of People Management Corporate Responsibility Team GRI and editorial Consultancy usina82 Graphic design and layout Johnny Cipriani Photography Collection of the Hering Company. Hermann Hering Foundation Collection
Annual Report |103
Annual Report |104