More fit for the future - Nilörngruppen Sustainability Report 2017 by NILORN UK

More fit for the future SUSTAINABILITY REPORT - 2017 NILORN

table of Contents 3

Words from our CEO

About Nilorn

Sustainability at Nilorn

The Global Goals

Strategic direction

Combating modern slavery

Business conduct

Environmental Protection

Microplastics

20 Traceability for sustainability 24 Insight: Working at Nilorn 26 Production and logistics 29 Insight: Dhaka factory 30 Supply chain 32 Employees 34 Social engagement 36 Stakeholders and initiatives 39 Sustainability risks 40 Our way forward

About this report This is Nilornâ&#x20AC;&#x2122;s statutory sustainability report for 2017, prepared in accordance with the requi-

rements in Chapter 6 of the Swedish Annual Accounts Act. It covers all of the Nilorn operations,

unless otherwise stated in relation to reporting of specific indicators from our sites. The report has been submitted by the Board of Directors, together with the Annual Report.

Together we can The world has set goals aiming to create a much better world for everyone, by 2030.

These are the United Nations Global Goals. We see that many of our clients are early

adapters in linking these challenges and opportunities, to their business and the life

cycle of their products. We deliver small parts but we can make a large difference in

what we do. By doing so we can be a part of the shifts required to reach those goals for the whole industry. An important part of achieving more sustainable value chains, both

in terms of e nvironmental and social aspects, is traceability. It’s here we can have an increasingly important role to play as our products often are a link between the brand and the consumer.

This is our second sustainability report, where we report on our work, our progress and the way forward. During 2017, I can proudly say that we have achieved a lot and really

accelerated our sustainability work. To name a few, we have updated our Supplier Code

of Conduct and our Code for Business Conduct and Ethics. Nilorn East Asia in Hong Kong is now also bluesign® certified.

We have a constant focus on finding the most sustainable materials for our customers and continue to learn and improve together with them. In this report we update you on our work with different materials and product certifications.

In April 2017, we opened a completely new production unit in Dhaka, Bangladesh, producing woven and printed labels and paper products.

At the centre of everything we do are our employees - and it is with ourselves we have

to start. We need to offer a workplace where everyone can thrive in their respective roles, without compromising their health and wellbeing. But we also need to ensure that we have a common ground, in our company values - that sustainability and business ethics are an integrated part of our every day work and decisions.

Together with our clients, suppliers and other partners, we will become more fit for the future. Claes af Wetterstedt CEO Nilörngruppen AB

2017

HIGHLIGHTS • Our newly built production site in Dhaka started production • The Nilorn production in Hong Kong became bluesign® certified • We updated our Supplier Code of Conduct and handbook • We implemented a new system for collecting non-financial information from all our sites

About Nilorn Nilorn is an international company, founded in 1977, which

adds value to brands through branding and design in the form of labels, packaging and accessories. Our clients are

mostly found in the fashion and clothing industry, many of which have a presence in international markets. At Nilorn we

strive to increase our clients’ competitiveness by providing services that cover all design aspects, plus a logistics system that guarantees reliable and short delivery times.

NILORN’S COMPETIVE ADVANTAGES IS PRIMARLY DEMONSTRATED IN TWO SPECIFIC AREAS: • Creative expertise in the branding and design of labels, packaging and accessories

• Logistical solutions to ensure deadlines are met in the

market where clients demand an increasingly high level of service.

OFFICES

OFFICES/MANUFACTURING BASES

• Belgium

• Bangladesh

• Denmark

• Germany

• China • India

• Italy • Pakistan • Sweden

• England

• Hong Kong • Portugal • Turkey

• Switzerland • USA

2017 FACTS AND FIGURES • Turnover from 680 (610) MSEK, i.e. an increase of 11 % • Number of employees 444 (358) • 49 % of employees work in production and warehouse • Women/men ratio 47 % / 53 % • Number of labels delivered more than 1.5 billion

Sustainability at Nilorn

Governance

For the past 30 years, we have been supplying our clients

ENVIRONMENTAL POLICY

with customised high-quality designed labels and other

Throughout the whole process, from design to

brand-strengthening products and services. We like and

delivery, we strive to implement our Environmental

want to stay ahead.

Policy. Read more about our environmental focus and performance on page 17.

We acknowledge our clients’ challenge to secure a supply

chain that minimises – and eventually eliminates – all negative impact on people and the environment. Therefore,

CODE OF CONDUCT

working proactively on sustainability is an important value that we add to our clients’ brands.

Our Supplier Code of Conduct serves as a common foundation for us and our suppliers in terms of

Sustainability at Nilorn means working towards meeting

acting in a responsible manner, including focusing

the needs of people and society without compromising

on environmental protection and good working

interests of many people. All in line with the UN Sustainable

the Code of Conduct on page 30.

conditions. Read more about our work to implement

the needs of future generations – acting in the long-term Development Goals.

It means adapting to the limitations of the planet and

protecting the environment. It means promoting a strong,

ANTI-CORRUPTION POLICY

and fulfil their potential.

Our Anti-Corruption Policy contains the organisation’s

healthy, inclusive and fair society where people can prosper

rules and restrictions regarding gifts and other forms of appreciation. It also describes the procedures

Nilorn believes in taking a holistic approach - including the

for employees to raise any ethical questions or to

entire design, manufacturing and supply chain.

report any breaches or suspected breaches of the company’s code of conduct. Read more about our

The Sustainability Manager is located at our Head Office

work to implement business ethics on page 15.

and co-ordinates Nilorn’s sustainability work, together with local staff in our sourcing countries. In Nilorn East Asia we

have our Supply, Sourcing and CSR Manager, which enables us to have a closer relationship to suppliers in that region.

HUMAN RESOURCE POLICY Our Human Resource Policy regulates what the company expects of its employees and what employees expect of the company. The HR policy mainly regulates: management responsibility for

• Nilorn’s actions aim to have an overall positive impact on the planet and contribute to protecting biodiversity, animal welfare, sustainable use of resources and the development of a value chain with a low carbon impact.

developing its staff, information supplied to all em-

• Nilorn is committed to having a positive influence on people’s lives impacted by its business, based on respect for human rights, meaningful community involvement and shared values.

ployees, annual performance reviews, payments and IT usage. Read more about our work to implement business ethics on page 15.

THE VALUE CHAIN - FROM A SUSTAINABILITY PERSPECTIVE

Making more detailed decisions on choice of materials, to which factories to place orders etc. We have an important role in giving our clients options to choose more sustainable solutions.

Discussing choice of materials and its implications on sustainability with our client.

Ensuring that the ambitions of the client and our own knowledge, result in products that have an as low Âenvironmental impact as possible.

48h

The conditions under which the products are produced, in terms of environmental performance of the factory and occupational health and safety and other labour conditions for the workers.

h h 4848

48h

By working close to our customers production sites, we can minimise distances, and therefore transport emissions.

48h Our products are a part of other products, so our key role in this part of the chain is to deliver promptly, in order not to cause delays, which in turn could have negative consequences both from an environmental and worker perspective.

We can help our customers reach out to the consumer with messages concerning labelling of products and, in general, help increase the transparency and traceability of products.

The Global Goals AD D R E S S I N G TH E G LOB A L S U S TA I N A B LE D E V E LO P M E N T G OA LS

We are signatories to the UN Global Compact and this

We deliver our products to fashion brands across the

should stand. At the initiative of the UN, the international

opportunities the fashion industry is facing in relation to the

commitment defines the foundation on which our business

globe. Throughout 2017, we looked into the challenges and

community has formulated and adopted 17 global goals

sustainable development goals and their targets. We have

in 2015, aiming to eradicate poverty and malnutrition as

researched how brands have investigated and communicated

well as to ensure a truly sustainable development across

their most material challenges and opportunities. Based on

the social, environmental and economic dimensions. These

that and following a mapping of the issues of utmost priority

are ambitious goals. Nilorn, as a supplier to leading global

for our own business, we have found that a number of the

fashion brands, stands behind the goals and is committed to

goals and targets are of particular relevance. We take a closer

do its share to contribute to reach the goals.

look at these goals at page 10 and 11.

In September 2015, all 193 Member States of the United Nations adopted a plan for achieving a better future for all — laying out a path over the next 15 years to end extreme poverty, fight inequality and injustice, and protect our planet. At the heart of Agenda 2030 are the 17 Sustainable Development Goals (SDGs) which clearly define the world we want — applying to all nations and leaving no one behind. Read more about the goals here: https://www.un.org/sustainabledevelopment/ sustainable-development-goals/ With the launch of the SDGs, business is explicitly called upon to make a contribution to the global sustainability agenda.

Clean water and sanitation ENSURE AVAILABILITY AND S USTAINABLE MANAGEMENT OF WATER AND SANITATION FOR ALL Water scarcity and poor water quality is a daily challenge

less than 1% of total water supply is accessible and fit for

Decent work and economic growth

For many types of apparel and accessories, water is used

PROMOTE SUSTAINED, INCLUSIVE AND

of raw materials, such as cotton, to the washing of a

SUSTAINABLE ECONOMIC GROWTH,

for many people around the world. The fresh water supply chain is already stressed in many countries and human consumption.

all along the life-cycle of the product. From the production garment in the household of the consumer.

FULL AND PRODUCTIVE EMPLOYMENT AND DECENT WORK FOR ALL

One target under this development goal is to improve

water quality by reducing pollution, eliminating dumping

Nearly 2.2 billion people live below the US$2 a day

and minimising release of hazardous chemicals and

poverty line. Sustainable economic growth will require

materials. In our supply chain we can work with w ater

societies to create the conditions that allow people to have

issues directly by being more efficient in the processes that

quality jobs that stimulate the economy while not har-

require water and ensuring proper waste water treatment.

ming the environment.

We also engage indirectly in projects aiming at improving the conditions further upstream, such as through our

One important target for this development goal is to take

engagement with Cotton made in Africa.

immediate and effective measures to eradicate forced

labour, end modern slavery and human trafficking and secure the prohibition and elimination of child labour.

We commit ourselves to implement social standards, such

as living wages and decent working conditions in our

supply chain. There is a screening of new suppliers and we encourage our suppliers to adopt quality, environmental

and occupational health and safety m anagement systems certifications and include certification schemes used by

suppliers in our criteria for choice of suppliers. Four of

our production units are part of Sedex and have a SMETA audit report.

We work with social projects, such as for cotton growers

in Africa (Cotton made in Africa), where studies of the social impact of the projects show clear improvements in

social conditions thanks to the training received through the programs.

Responsible consumption and production ENSURE SUSTAINABLE CONSUMPTION AND PRODUCTION PATTERNS Sustainable consumption and production aims at “doing

more and better with less,” increasing net welfare gains

from economic activities by reducing resource use, degradation and pollution along the whole lifecycle, while

Climate action

increasing quality of life. One target for this development goal is to substantially reduce waste generation through prevention, reduction, recycling and reuse.

TAKE URGENT ACTION TO COMBAT

At Nilorn we have already done work in this direction

CLIMATE CHANGE AND ITS IMPACTS

by adopting policies to choose more environmentally

friendly materials, increasing the use of recycled

Climate change is one of the most pressing e nvironmental

materials, and taking action for a sound management

issues of our time and climate change is a global challenge

of chemicals. A lot of work remains to be done for our

that does not respect national borders. Here the issues are

industry to fully align with responsible consumption and

clearly linked to more circular use of materials, as that

production t argets, in particular with regard to addressing

would decrease the impacts all along the value chain.

our impacts throughout the life-cycle of the products. Nilorn has joined the bluesign® system to put the whole

In the case of our industry as a whole - and to our own

production chain in focus and strive to protect health and

business - climate change poses risks. The supply of

the environment across the entire chain of production.

materials is dependent on the ability to grow resources.

The infrastructure of the supply chains along with our own factories is, of course, vulnerable to extreme weather

Partnerships for the goals

events and other potential consequences of climate change.

In 2017, Nilorn began to take action and set out plans to

decrease the greenhouse gas emissions caused by our activities, raising awareness at our sites and preparing to

STRENGTHEN THE MEANS OF IMPLEMENTATION

be involved in adaptation.

AND REVITALISE THE GLOBAL PARTNERSHIP FOR SUSTAINABLE DEVELOPMENT

We measure the impact of business travel and energy

The achievement of the global sustainable development

renewable sources. We also must be aware of the risk

consumption and will increase our use of energy from

goals depends upon the collaboration of many different

of climate change affecting our supply chain located

actors, including businesses. A stronger commitment to

in areas likely to be affected and see how we can be

partnership and cooperation is needed to achieve the goals.

involved in adaptation.

Nilorn is a small global organisation and in our sustainability

work we must cooperate and also rely on the effort of many other organisations, including labels and certifications. Example of co-operations are FSC (read more on page 23), Sedex membership and the Swerea Chemical group.

Strategic direction VISION

GOAL

To be the best label and branding company worldwide.

To exceed our clients expectations in all aspects of our global operations.

BUSINESS CONCEPT Nilorn’s mission is to design, manufacture and sell labels

STRATEGY

and textile industry to strengthen their brand presence

brand presence in international markets. F undamentally, our

and label programmes in order to assist clients in the f ashion

Nilorn provides services to clients that help them to grow their

in international markets. Nilorn offers a complete line of

success is tied to the success of our clients.

branding services, from design to manufacturing, sales,

logistics and service. The process includes branding identity

Nilorn’s strategy is based on achieving growth through

integrated logistics and other services within the supply

attract consumers to our clients’ brands and products.

and differentiation through design, product development,

innovative design, products and services that add value and

chain. Nilorn’s mission can be summarised as ”Adding value to your brand”.

VISION:

To be the best label and branding company worldwide

COMBATING MODERN SLAVERY Modern slavery is a growing concern: an estimated 45 million people were in some form of modern slavery across 167 countries in 2016. The International Labour Organisation estimates that 1 in 4 victims of modern slavery are children, while women and girls account for over 70% of victims. Modern slavery is a term that captures a range of human rights issues, including forced labour, bonded labour, human trafficking and child slavery. The complexity of supply chains increase the likelihood of modern slavery in the global industry. In 2017, Nilorn published its first statement in line with the UK Modern Slavery Act 2015, detailing the steps we are taking to mitigate the risk of modern slavery occurring in the supply chain and business operations. Nilorn has a zero tolerance approach to modern slavery in any form and the different forms of modern slavery are covered by the focus areas of our supply chain audits.

Business conduct The core values are the practices a Nilorn employee should be guided by daily, in all work situations. They form a common platform and strengthen our teamwork. Together with our Code of Conduct and other ethical guidelines, they guide how we conduct our business. NILORN CORE VALUES

BUSINESS ETHICS Nilorn’s anti-corruption policy includes not accepting gifts

• Passion

or other benefits from our partners. If ever gifts are accepted,

• Innovation

it should take place with full transparency and in a manner

• Respect

that follows the organisation’s policy. Employees sign the

• Common Sense

anti-corruption policy, incorporated in the induction of new

• Responsibility

employees.

• Execute

• Teamwork

CODE OF CONDUCT Nilorn’s Supplier Code of Conduct lays out the o verall

ethical approach for us and our suppliers. It is part of

NILORN SUPPLIER CODE OF CONDUCT

the contract that we have with suppliers. However, it is a

• Freedom of association

challenge to e nsure that the values and requirements of the

• Working conditions

Code of C onduct are implemented. We, and our suppliers,

• Wages and working hours

operate in countries with different traditions and legal

• Child labour

requirements. In 2017 we did not terminate any business

• Forced labour

relationship suppliers due to non-compliances.

• Non discrimination

GLOBAL COMPACT Since January 2017, Nilorn is signatory to the UN Global

NILORN CODE OF ETHICS AND BUSINESS CONDUCT

Compact corporate responsibility initiative and its 10

• Compliance with laws and regulations

principles in the areas of human rights, labour, the environment and anti-corruption.

• Respect in the workplace

In 2017 we updated our Supplier Code of Conduct and

• Professionalism

• Protection of company property

the Code of Ethics and Business conduct applicable for all Nilorn employees, to ensure that they are aligned with the UN Global Compact. We will also continue our focus

on communication of these updated policies and roll-out training, at all locations of Nilorn.

REACH is a regulation of the European Union, adopted to Âimprove the protection of human health and the environment from the risks that can be posed by chemicals, while enhancing the competitiveness of the EU chemicals industry. It also promotes alternative methods for the hazard assessment of substances in order to reduce the number of tests on animals. The REACH regulation specifies a list of restricted chemicals and REACH affects all EU-actors that professionally manufacture, import, sell, buy, distribute or use chemicals as such and in articles. If goods contain restricted chemicals it is mandatory that the manufacturers and importers are informed.

Environmental protection The client, and end consumer, should feel secure in the use of Nilorn’s whole product range. Sustainable products, for us, implies finding better materials. Once chosen and used, those materials should be kept in a recycling loop for as long as possible. For us it is important to work to be genuinely better all round, not only from the product perspective. We are committed to reducing the environmental impact of

understanding and improving the situation in Hong Kong

processes, choosing a supplier, planning the logistics etc. Our

sense that all of us as residents and business people in Hong

everything we do - designing a product, choosing production

with regard to plastic waste. The project was motivated by a

aim is to be a genuinely environmentally-friendly c ompany,

Kong can do more to keep our city greener. Simple statistics,

not just selling eco-friendlier products when we are asked

such as the 5.2 million plastic bottles discarded every day

for them. Both materials and mode of transportation are

by Hong Kongers (that is almost 2 billion bottles per year),

almost always decided by the client. Our role in guiding the

illustrate the seriousness of the situation. Nilorn East Asia

client in finding better alternatives is becoming more and

has signed on to this “No Plastic Waste Challenge” and also

more important and we see an increased interest from our

signed a new agreement for waste handling.

clients to use either certified materials such as FSC paper or made of recycled polyester, for example.

During 2016 we took a first step in collecting information and measuring our emissions. It gave us an initial baseline in our

In our updated Supplier Handbook there are explicit environmental

requirements,

including,

for

work to reduce our environmental impact. We i mplemented

example,

a new system for collecting non-financial information from

chemical handling, environmental management system,

internal and external sources in 2017, with the aim to get

energy and waste handling.

relevant, consistent and transparent reporting.

In 2017, the Sustainability Committee of the Swedish

Nilorn’s operations are located in several different countries

Chamber of Commerce started a project aimed at

and as there are differences in emissions between countries,

especially diverse and wide-ranging for electricity consump-

Nilorn is participating in the Chemicals Group at Swerea IVF.

possibly (Defra/DECC).

related to chemicals and their potential impacts on the

The Chemicals Group exists to disseminate the latest findings

tion and travel, we have used local emission factors where

• •

environment and human health, to its m ember companies. The chemical guidance developed by the i nitiative helps the

Staff travelling 540 tonne CO2e

members to avoid importing products containing unwanted

Energy consumption 1220 tonne CO2e

substances. Nilorn RSL is based on the Chemicals Guidance provi-

Today almost 80% of waste generated by Nilorn operations

ded by The Textile Importers’

goes to landfill - this is an important area for us to improve.

Association in Sweden and Swerea IVF. Bureau Veritas

In our Swedish office and the new European Distribution

Certification Hong Kong is our

Center in Germany we are using energy from h ydropower.

nominated partner for physical and chemical testing.

RESPONSIBLE USE OF CHEMICALS Nilorn produces a variety of products in many different

materials, at our six production sites. We conduct internal

REACH

chemicals used in production. This is also a prioritised issue

that the REACH regulation and Restricted Substances List

audits which include checking the handling and storage of

All Nilorn partners are required to sign an agreement stating

in the audits conducted at our suppliers’ sites.

are complied with. This is a non-negotiable requirement.

MICROPLASTICS In recent years there has been large focus on the micro-sized particles of plastics, so called microplastics and the number of negative consequences for humans and the natural environment they have. Protecting the marine environment from the potential impact of microplastics is an important issue. In marine protection, plastic particles with a diameter of less than 5 mm are referred to as microplastics. These can be fragments created by the breaking up of larger pieces of plastic such as packaging or as fibres that are washed out of textiles. Up to 12 million tonnes of plastic, often single-use items including packaging, end up in the sea every year. Improved waste management and recycling schemes are two areas that can help reduce pollution, alongside increased reuse of materials. Because our products are often made of synthetic fibres such as polyester and polypropylene, we are contributing to pollution by plastics as well. There has to be a reduction of the leakage of plastics into our natural systems and at Nilorn we will look at: • Design for sustainability • Reuse of materials • Waste reduction and secure good handling of waste

Traceability for sustainability With our creative labels we help our clients strengthen their brands and products. They are also an important part in enabling brands and consumers to trace their products back in the supply chain. Eco-labels and other certification schemes are a way in which

our labels are also labelled. At Nilorn we can certify our

along the production chain, making the consumer more

product groups. Here we provide you with the latest

our clients can communicate their focus on responsibility

products, such as labels, buttons, accessories and other

aware about their purchases. It may sound confusing, but

insights into some of these certifications.

bluesign® The bluesign® system puts the whole production chain in focus. It has focus both on the product itself, in terms of sound materials, but also the chain of production, from raw materials to finished products. The certification covers: resource productivity, consumer safety, water emissions, air emissions and occupational health and safety. As of 2013, the Nilorn group is a bluesign® system partner.

of chemicals, the working conditions, environmental impact,

Our production facility in Portugal has been certified since

and water and energy consumption.

2012 and, in 2017, Nilorn East Asia in Hong Kong started the screening process and received the bluesign® certificate for

• Based on the detailed assessment, a report on the findings

At Nilorn, we find the increasing focus on bluesign® to be a

•

join this initiative and choose bluesign® approved products.

system. These measures could include: eliminating the use

textile accessories and the article range printed care labels.

and an action plan with necessary measures are drawn up.

very positive trend and we welcome more of our clients to

Once all necessary measures have been implemented,

the products can be approved according to the bluesign®

of hazardous chemicals, changes in operation, installation of

The assessment of a factory entails the following steps:

air and water cleaning systems, improvement of personnel

• An evaluation of the production site, focusing on the use

safety and an overall improvement in house-keeping.

“Labels that help the consumer make better choices”

OEKO-TEX® 100 (class 1) The STANDARD 100 by OEKO-TEX® is an independent test and certification system for textile raw, intermediate and end products at all stages of processing. Examples of products that can be certified are yarns, woven and knitted fabrics, accessories (such as buttons and labels) and readymade articles. The OEKO-TEX® tests for harmful substances are

carry out random checks of companies holding OEKO-TEX®

fundamentally based on the respective purpose of the

certificates, in the form of unannounced inspections.

textiles and materials and they cover: legally banned and controlled substances, chemicals known to be harmful to

Nilorn holds an OEKO-TEX® certificate for textile production

for health p rotection. Testing is geared towards how the

factories. We hold certification for product class 1, the highest

health (but not yet legally controlled) and other parameters

and accessories, produced both in our f actories and s uppliers’

textile will actually be used, the more closely the product is

level. Further to the Nilorn OEKO-TEX® Standard 100 Class

in contact with the skin, the stricter the requirements. Class

1 in appendix 4 we and some suppliers have upgraded to

1 is the highest level.

appendix 6 standard for certain products. The difference

between the two appendices is limit values and inclusion of

The OEKO-TEX® Association conducts annual control

chemicals. The appendix 6 c atalogue was created for those

testing of certified products, at a rate of at least 25% of all

who are either participating in the detox campaign or working

certificates issued. It tests articles bearing the OEKO-TEX®

with customers who have this demand on their products and

label that are available in retail shops and also samples of

supply chain. Nilorn is continually working to improve our

materials from factories. In addition, independent auditors

environmental impact and appendix 6 is one of those ways.

”Adding value to your brand” Recycled Content Standard We are always scouting for new, more sustainable materials for our products. Recycled materials is an important part of our more sustainable offerings. Third party certification of claims of recycled content increases the credibility in the market. At Nilorn we have decided to have recycled materials third

Polyester is the most common synthetic fibre in textile

standard. The standardisation is made by SCS Global

products. The disadvantage of polyester is that it is an

party certified, in accordance with the recycled content

Services. The purpose with the certification is to make claims

of recycled content trustworthy. The SCS Recycled Content Certification evaluates products made from pre-consumer or post-consumer material, coming from waste streams. It

declares the percentage of recycled content for the purpose of making an accurate claim in the marketplace.

We see an increasing interest from our clients to use such

materials and this is an important part in our aim to work with transparency.

Examples of recycled content in Nilorn products are polyester, paper and plastics.

manufacturing and the one we use most for Nilorn’s oil-based material, not from a renewable source. At the same time, the advantage of the oil-based materials is

that it is relatively easy to recycle them and today there is an increased focus on recycled materials to reduce both landfill and littering of oceans.

Polyester has an advantage in that it can be recycled many times. Most of recycled polyester comes from PET bottles, bottles are a clean, easy product to recycle. Using r ecycled materials can be a part of a product liability, but it is of course not only the

choice of materials that affect it. Design, production, waste and transport are all important aspects to consider. Providing recycled materials requires traceability and origin.

2 22 2

Security and anti-counterfeit Naturally, all the companies we work with are proud of their brands and products and they want to p rotect

them. So we prioritise the security of our clients. We have developed and are now producing a number of successful secure techniques. UV-yarn, UV-printed holographic yarn, holograms, sequential numbering, watermarks, Nilorn secure and radio frequencies are

some examples of methods that can be applied to protect the clients’ products.

FSC FSC stands for ’Forest Stewardship Council’, an international non-profit organisation dedicated to promoting responsible forestry. FSC certifies forests all over the world to ensure they meet the highest environmental and social standards.

Products carrying the FSC label are independently certified to assure consumers that they come from forests that are managed to meet social, economic and ecological needs.

A properly labelled product shall both carry the FSC symbol and the certificate number.

Nilorn products that can carry this label are products produced with the use of paper or forest based textile

fibres. Nilorn aims to continuously increase the

content of FSC certified paper in our products and we are now able to provide it in all sales markets.

I N S I G HT: WO R K I N G AT N I LO R N D ES I G N D E PARTM E NT

“I find inspiration everywhere. It can be a film, a personality or a piece

“I’m a mother. A wife. An Art Director. A daughter. A friend. And my

inspiring as it makes ideas grow” says Christina Walter.

all of them it is about finding the right balance and about learning as you go

of music that puts me in a special mood. Talking to people is also highly

interest for a more sustainable way of life comes into all those roles. And in along”, says Marie Huber.

Christina has worked as a designer for Nilorn in Germany since 2014 and works on our collections and concepts. “I have high hopes for the future.

It all started with a school visit to Nilorn while studying textile

where safe materials - natural or synthetic - are intelligently cycled and

suit me perfectly” says Marie. She started as an intern at Nilorn in 2001

I believe in a circular economy based on the cradle to cradle concept

purchasing and management. “I felt that their design department would and now holds the position as one of our Art Directors.

manufactured in ways that positively impact p eople and planet”.

I N S I G HT: WO R K I N G AT N I LO R N D ES I G N D E PARTM E NT

It’s not just a trend, it is the future We aim to always discuss the implications on sustainability that a choice of materials has, in the dialogue we have with our clients. It is here, in the idea and design phase, that Nilorn can play an important role, that has effects along the whole life cycle of our products. We want to be in the forefront, scouting for new interesting materials and solutions, because we see this as a really important part of our long term success as a supplier. So the knowledge and innovative skills of our design team is of course a very important success factor for Nilorn. Read some more here about how we work with more sustainable materials at Nilorn and get some direct insights from some of our design team members. A GROWING INTEREST FROM OUR CUSTOMERS “Over the years the interest from customers for more

“Even if the customer makes another final choice, we aim

sustainable materials has had its ups and downs. But this time

to give them a more sustainable option to start with. In that

round I really feel that it is different. The customers are more

way we hope the client keeps the sustainable offer in mind.

knowledgeable about their alternatives and are prepared

And next time they see it as an option for them to change”

to choose a sometimes more costly, but more sustainable

Christina explains.

alternative” Marie explains. “We see an increasing interest

in FSC certified paper products, in recycled polyesters and

THE WHOLE CHAIN NEEDS TO LIVE UP TO OUR STANDARDS

also other alternatives to traditional plastic materials. We

Of course there are also challenges when it comes to choosing

also see customers that are making a complete turnaround,

new materials. It often means changes in our supply chain,

setting targets to have all their labels and trims in sustainable

which in turn requires of us to update risk assessments and

materials within just a few years”.

audit these new suppliers. Transparency is a key issue for us

and therefore we need to ensure that we have those things in

Sustainable materials are definitely a growing market for

order before we sell the product to our clients.

Nilorn. In Germany there has been a strong focus on this from Outdoor brands, but we now see that an increasing number

“It is also easier for us to find alternative materials and new

of fashion companies are asking for these products. “It has

concepts and the suppliers are getting better at delivering on

gone from “nice to have” to being a better choice in the minds

time, with quality and trustworthiness. It is still sometimes

of our clients” says Christina. “I just learned that our recycled

challenging and of course you wish

polybag is one of our bestselling products” she continues.

that it would go even faster. But this is not just a trend, it is the

The range of materials that we can work with is increasing.

future and we will continue to

Recycled materials like polyester, cotton and leathers, just to

be in the forefront and propose

mention a few, and natural fabrics like bamboo and hemp.

new solutions for our clients”,

There are also high-tech fibres made from vegetable fibres or

Marie concludes.

oils. “We have to keep an open mind to future technologies and materials” says Christina.

“Our sustainable design collections have been seen very positively by our clients”

Our production and logistics Nilorn is strategically located in major manufacturing countries around the world, enabling shorter delivery times, lower freight costs and reduced environmental impact. The majority of our production is through external suppliers as it allows us to be flexible and adapt to our clients’ locations. Our own production is an important complement. With this combined approach, we can ensure timely deliveries and high quality. PRODUCTION Of our total purchasing value in 2017, 80% was sourced in

to save time for our clients. When a production order is

Hong Kong, China and India. Most of our European sourcing

a request from the client’s system in a fully automated

sent to the manufacturer, Nilorn simultaneously receives

Asia and 20% in Europe. Sourcing in Asia mainly comes from

process and, depending on location and stock levels, most

is from Turkey and Italy. As a complement to the sourcing

orders are handled within 48 hours.

activity, Nilorn’s own production facilities represented approx. 10-15% of the group turnover in 2017.

The Nilorn Web Solution provides a complete overview of orders, warehousing and distribution, allowing both the

NILORN HAS ITS OWN PRODUCTION SITES IN:

client and manufacturer to order labels and check/control

• Bangladesh

the delivery. The web order system is available in several

• Germany

languages and offers a comprehensive set of follow-up and

• Hong Kong

report generating options. We have warehouses in Dhaka,

• Portugal

Hilden, Hong Kong, Istanbul, Karachi, Keighley, New

• Turkey

Delhi, Recarei and Shanghai.

• England LOGISTICS The development of the fashion industry requires that

In December 2017, the new Nilorn Distribution Centre started its

Nilorn is represented in many parts of the world, t hrough

operation in Hilden, Germany. The DC will start to serve the Belgian,

their own companies and a network of strategic partners.

German, Swedish and Swiss market. Total area is 1700m2 and 10

The Nilorn Auto Order System provides control and aims

employees. The energy used is 100 % from hydropower.

LOGISTIC FOCUS • Reliability • Efficiency • Cost effectiveness • Worldwide distribution • Short delivery times

At our production site in Hong Kong we produce printed textile and paper labels. The factory is bluesign® and OEKO-TEX® certified. There are 111 employees.

I N S I G HT: D HAKA FACTO RY

I N S I G HT: O U R FACTO RY I N BAN G LAD ES H

Dhaka factory For a long time, the garment and textile industry in Bangladesh has been of high importance for the supply of apparel all around the world. Considering this, it is natural that Nilorn now has an office and factory in this area. Many of Nilorn’s clients produce their goods in Bangladesh and it is much easier for all parties concerned if the production of labels, hangtags and such are just a hop and a skip away from the garment making - instead of on the other side of the world. With Nilorn’s own production in Bangladesh, time will be saved and we will have a smoother and more efficient operation. It is a sound investment for Nilorn to have a factory and

panel installed and all lighting is low energy. The factory

work and the development of production in this region.

water and there is water meter installed. Waste handling is

be present in Bangladesh. We can more easily influence the

has an Effluent Treatment Plant (ETP) for production waste

The factory is a state-of-the-art facility when it comes to

a challenge in Dhaka, the factory is sorting waste and it’s

machinery and conditions for the workers - something that

taken care of by a waste handler. During 2018, we will work

will have a positive effect for all of Nilorn’s stakeholders.

on reducing waste and also search for end-of-life alternatives The environmental work is an on-going process to better the

Since starting up production in 2017, internal policies, pro-

situation for both employees, products and environment.

cedures and responsible practices, including sustainability

and compliance, have been in focus. Nilorn is committed to

NILORN BANGLADESH DHAKA FACTORY

creating a healthy and productive working environment,and

• STANDARD 100 by OEKO-TEX®, class 1

for this, further training will an important part. Energy

• FSC Chain of Custody Certification

consumption and minimum wastage in the manufacturing

• Sedex Members Ethical Trade Audit (SMETA)

of products are other areas in focus. There is a small solar

Working with our supply chain New suppliers to Nilorn are to be reviewed by the CSR department. The first assessment includes looking at social audits that the factory may have been subjected to previously, as well as other areas such as their production capacity and quality of products. A supplier is preferably visited prior to production. We do our own inspections in combination with relying

supply base by a further 30 suppliers. It is important for us

initiatives. ISO 9001, ISO 14001 and OHSAS 18001 are also

visibility, improved communication and buying power.

on third party audits, through BSCI, SEDEX and other

to continue reducing our supply chain for greater control,

certification schemes used among suppliers, which we take into c onsideration when choosing a supplier.

We seek to continue working with reliable, reputable,

Most importantly we focus on having a very close dialogue

reducing our supply chain we also build on the relationships

environmentally and socially conscious suppliers. Whilst

and frequent meetings with all prioritised suppliers.

we hold with suppliers, some of which have been over 20 years. A stronger relationship equals a better partner.

Reduce to increase has been one focus for supply chain

management in 2017. An analysis was done after the result

SEDEX

our supplier base by around 50. The reason for this reduction

profit membership organisation dedicated to driving

of the supplier evaluation in 2016 and in total we reduced

Sedex, the Supplier Ethical Data Exchange, is a not-for-

was to increase our efficiency in the management of suppliers

improvements in responsible and ethical business practices

and part of our strategy of working closer with the chosen

in global supply chains. Sedex is an online database, used

suppliers. We are pleased to see that in 2017 the production

by more than 50,000 members in over 150 countries, which

with those suppliers has moved to others in the approved list.

allows companies to store and view data on ethical and responsible business practices. Sedex does not set any

For 2017, we conducted the same review, this time extending

standards or determine the policy of its members.

to group companies outside China. The results were again collected and the list reviewed. In 2018, we will reduce our

Sedex provides a place to store any and all ethical a udit

reports, with a summary of non-compliances held in a

common format. However, Sedex has created the Sedex Members Ethical Trade Audit (SMETA) – a common audit

methodology and report format aiming to drive consistency

WHAT HAPPENS DURING A SMETA AUDIT?

of data from the auditing process. The audit checks

The normal process for a SMETA audit would follow these steps:

specifically against the ETI base code and how it is spread

1. Self-Assessment Questionnaire (SAQ) and Pre-Audit Site Profile

to employees and the supply chain, relevant local laws,

2. Audit preparation and quotation to the site

environmental performance, subcontractors/home workers,

3. Actual site visit and audit

eligbility to work and understanding of the ETI base code.

a. Opening meeting with senior management

b. Site tour

c. Document review

d. Worker interviews

e. Closing meeting with senior management 4. Issuing of the the SMETA report and CAPR (Corrective Action Plan Report) 5. Loading up the SMETA / CAPR reports to the SEDEX data base 6. Follow up audits if required within 3-6 months time frames

TH E S E D E X G LOBAL PLATF OR M is an online database which allows members to store, share and report information in four key areas:

LABOUR STANDARDS

HEALTH & SAFETY

ENVIRONMENT

BUSINESS ETHICS

AT NILORN, WE ARE AUDITED AGAINST SEDEX/SMETA IN OUR FACTORIES IN BANGLADESH, HONG KONG, PORTUGAL AND TURKEY - MAKING THE RESULTS AVAILABLE FOR ALL SEDEX MEMBERS TO ACCESS.

Our employees The success of Nilorn is directly linked to the ability to empower and invest in our employees to be ambassadors for our brand. Nilorn aims to be an employer of choice by offering a more

Capacity building and training is arranged locally in each

2017 several Nilorn offices invested in better ergonomics by

Safety training. We see a benefit in setting a structure for

sustainable, caring and safe working environment. During

country, for example First Aid and Occupational Health and

providing foot rests in the desk areas. Some other examples

capacity building across our locations. One area in which

from Nilorn:

we will train and further inform employees is concerning sustainable materials. It is important that our employees feel

• Belgium - focus on energy efficient IT-equipment, all TCO

that they can develop as individuals and in their roles. All

certified, allowing sales staff to work remotely

employees are offered a nnual performance reviews.

• Hong Kong – improved health insurance and increased

Employee headcount increased 24%. This growth is due prin-

dental costs provided

cipally to recruitment in Bangladesh, China and Hong Kong.

• Portugal – renewed cooling system, new floor and soundproofing doors installed all in order to improve working conditions in the production area

DATA

• Sick leave: 3,7%*

• Sweden – with a close cooperation with the local gym

• Number of work related injuries: 4

employees are encouraged to work out, new adjustable sit-stand desks

• UK - recognition of attendance with one extra day holi-

* Absenteeism is tracked locally in accordance with regulations applicable in the different countries where Nilorn operates. The Company does not have a harmonised system for managing absenteeism throughout its subsidiaries.

day for 100% attendance. Access to a telephone helpline for health issues is provided

GENDER DISTRIBUTION

Number of employees: 444

ALL EMPLOYEES

WOMEN 47%

MEN 53%

MANAGEMENT

WOMEN 14%

MEN 86%

BOARD

WOMEN 50%

MEN 50%

Employees - per country WOMEN

MEN

MR SIMON LEPPICH:

”It was a fantastic experience to meet and learn from the farmers what sustainable cotton growing means”

Social engagement There is a focus on a more sustainable production of materials for the garment industry. Cotton is one of the resources where there are many challenges to overcome. To ensure supply, we must work together to train and help cotton producers make the transition from traditional cultivation methods to more sustainable practices. This is precisely what the “Cotton made in Africa” (CmiA) initiative does. CmiA is an Aid by Trade Foundation initiative that was established in 2005.

textile value chain from cultivation of cotton to textiles

Its objective is to help smallholder

made in Africa.”

farmers help themselves through trade and to improve

the social, ecological and economic living conditions

The cotton farmers involved in CmiA work exclusively

Sub-Saharan Africa.

important requirements for improving the living condi-

of smallholder cotton producers and their families in

in smallholder structures. Education is one of the most

tions of African cotton farmers and combating causes of

To put this aim into practice, an alliance of international

migration. Therefore, CmiA puts a focus on training the

textile companies built up by CmiA buys the sustainably

participating cotton farmers in business and agriculture. The

grown cotton, integrates it into its textile value chains

farmer trainings established by CmiA support the farmers

and pays a license fee to the foundation. Today there are

in implementing the CmiA sustainability criteria. In the

more than 30 brands and retailers participating in CmiA.

so-called farmer business schools participants learn a great

More than one million smallholder farmers (of which

deal about efficient and sustainable farming methods. As a

17% are female farmers) and some 11,000 factory workers

consequence, it enables them to increase yields and thereby

in the s o-called cotton ginneries are currently part of the

income. The CmiA-trainings not only convey knowledge

CmiA p rogram. CmiA is active in Cameroon, Burkina

about how to manage a cotton farm more economically and

Faso, E thiopia, Ghana, Ivory Coast, Mozambique, Zambia,

more environmentally friendly, but also raise awareness

Tanzania and Uganda.

among the rural population for topics such as child labour. The participating smallholder farmers gain an understan-

In October 2017, a group of CmiA retailers, brands and part-

ding about why their children should go to school instead of

ners traveled to Uganda to meet cotton farmers in the CmiA

doing demanding work on the farm

growing regions of Uganda. The group met African cotton

that is harmful for them. They learn

farmers, learned from them how to grow sustainable cotton,

that good schooling helps the en-

listened to a female farmers group who presented projects

tire family in the long run.

they initiated as a group and observed how the cotton is

ginned and processed to textiles. One of the participants was

Nilorn is a partner of CmiA and

Nilorn Germany’s Managing Director Mr Simon Leppich.

we provide all standard CmiA hangtags and woven labels.

Simon says: ”It was a fantastic experience to meet and learn

from the farmers what sustainable cotton growing means