OUR COMMITMENT

SCOPE & RESPONSIBILITY

SECTOR SPECIFIC AND COMPANY SPECIFIC RISK ANALYSIS

The textile and fashion industry is not only a major global economic force, it is also the focus of numerous human rights and environmental issues. With this in mind, we carry out a risk analysis of our suppliers and our own business activities both annually and on an ad hoc basis. As a part of this industry, our company is exposed to the associated risks¹. Country risks and the probability of occurrence also are used as assessment criteria in the risk analysis. It's crucial to identify these risks and take proactive measures to safeguard human rights and environmental protection. Our assessment criteria require us to check all social and industry-related risks (minimum employee age, child labour, forced labour, slavery, health and safety in the workplace, freedom of association, equal treatment, fair wages) for our suppliers in each specific company. Environmental risks (harmful water contamination, raw materials derived from illegal forestry/land grabbing, chemical use, disposal of hazardous waste) are assessed for relevant product groups in line with industry initiatives. The same risks are assessed in our own business activities using the same system. The industry risks that we are particularly vigilant about as abstract (potential) risks in our supply chain are outlined below:

1. Unfair wages and working conditions: Working conditions are often problematic in many production countries. Low wages, the lack of trade unions, poor workplace safety and excessive working hours jeopardise the health and well-being of workers.
2. Child labour: Despite international agreements and regulations, child labour is still prevalent in textile production in some areas, raising serious ethical concerns.
3. Discrimination based on age, gender, ethnicity, etc: Many workers, especially women, experience discrimination based on gender, ethnicity or religion, leading to unequal opportunities and unfair treatment.
4. Health hazards for workers: Exposure to hazardous chemicals or unsafe working conditions can cause long-term health problems for workers.
5. Environmental impact: The textile sector is responsible for significant water consumption, use of chemicals and waste generation. This all has a significant impact on the environment and ecosystems. Practices such as single-crop cotton farming or deforestation for viscose production destroy habitats and compromise biodiversity.
6. Hazardous chemicals: The industry uses a wide range of chemicals, many of which are toxic or remain in the environment for a long time. If not handled and disposed of properly, they can harm both people and the environment.
7. Land rights, e.g. land grabbing through illegal forestry: Conflicts over land rights can arise in areas where raw materials are mined or cultivated, often involving indigenous people and local communities.

OUR EXPECTATIONS

Drawing on our analyses of potential risks in the production and distribution of fashion, legwear and accessories, we focus on compliance with 7 principles in two key spheres of activity:

Social Responsibility:

• Principle 1 - Zero tolerance of child and forced labour: We are committed to ensuring that there is no child or forced labour in our supply chain and that all workers are employed voluntarily and in compliance with international labour standards.
• Principle 2 - Equitable wages and working conditions: We make sure that all the workers in our supply chain receive a fair wage and work in safe and healthy conditions.
• Principle 3 - No discrimination: We are committed to equality and fairness in the workplace and will not tolerate any form of discrimination or harassment.
• Principle 4 - Promotion of gender equality: We actively promote gender equality, both in management positions and throughout the workplace.
• Principle 5 - Freedom of association: All employees are allowed to exercise their trade union participation rights in accordance with national laws. We expect our partners to do the same.

Environmental protection:

• Principle 6 - Protection of water resources: We are committed to minimising water consumption and ensuring that no harmful wastewater is released into the environment.
• Principle 7 - Reduction of waste: We are committed to sustainable production methods that avoid overproduction and optimise the use of resources.

As a fourth-generation family business and, above all, as a leading manufacturer of high-quality legwear, these principles are more than just a vision, they are part of our brand and product policy.

With over 90% of our items manufactured in-house for our FALKE and Burlington brands in Germany, Slovakia, Serbia and South Africa, we can always ensure that our employees are employed fairly and in line with our own self-imposed commitments.

• These spheres of activity and principles reflect our FALKE WE CARE philosophy and are also firmly anchored in the FALKE Code of Conduct.

DUE DILIGENCE AND INVOLVEMENT OF THIRD PARTIES

INTERNAL STAFF TRAINING/ AWARENESS RAISING

We share both the FALKE Code of Conduct and the FALKE Policy Statement on Responsible Business Practices to educate and to raise awareness of human rights issues and the environmental responsibility our actions involve. Training for managers and employees is in the pipeline and will be added to the mandatory programme for staff in these groups.

REPORTING PROCEDURE

FALKE KGaA encourages everyone, from employees to customers, to report environmental and human rights risks and violations. In the event of any breaches of this Policy Statement, the Code of Conduct or applicable legislation, reports can be submitted anonymously or disclosing your identity at any time via the official complaints procedure system. The system and the respective procedure can be found here: https://falkegermanylksg.integrityline.com/frontpage. FALKE employees have the additional option of using an internal whistleblower system.

GOVERNANCE

Implementation of the FALKE Policy Statement on Responsible Business Practices is not the responsibility of a centralised body, but is instead the decentralised responsibility of all members of the Executive Board. We see compliance with the voluntary commitment as the collective responsibility of FALKE KGaA. We ensure that each department, from Finance to Supply Chain Management, takes responsibility for implementing our rules and control mechanisms.

CONSEQUENCES OF BREACHES

FALKE takes every complaint and every report from its employees and external whistleblowers seriously. We will not tolerate any violations of applicable legislation or the standards we have imposed. If we become aware of any violation of our own self-imposed principles, we will take appropriate steps and measures.

DOCUMENTATION

As part of our risk management, we document the risk classification of our suppliers and our own sites in relation to our spheres of activity, as well as the measures we have implemented to minimise risk. We also document any breaches of our Policy Statement. The report on the fulfilment of our due diligence obligations will be published on the FALKE website.

FINAL CLAUSE

The FALKE Policy Statement on Responsible Business Practices at FALKE KGaA was adopted by the Managing Partners and the Executive Board on 1 December 2023.

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