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Case studies

We are committed to our CR programme and around the world our business units are undertaking initiatives and projects that support this.

The case studies below explain some of the activities under way and demonstrate how we are meeting our corporate responsibilities and developing best practice that we can share across our global operations.

Our Standards

Coats operates to the highest business and employment standards wherever we operate.  We maintain a working environment that we can be proud of and this is a shared responsibility.

It is vitally important that everyone who works for Coats (or acts on our behalf) understands their role in upholding our responsible approach to business and abiding by our Ethics Code. Everyone in the business needs to take responsibility for setting, and living by, the highest standards in terms of ethical behaviour, and the laws relating to anti-corruption and fair competition.

Over the past two years we have taken a fresh look at our global standards and policies and in particular those relating to business practices and the way we operate. As a result, in 2017, we reviewed our various ethics and compliance policies, including updating our Whistleblowing Policy which encourages the reporting of non-compliance with our codes of practice and policies.

Our Ethics and compliance training programme

Our ethics and compliance training programme was originally developed in 2011. It covers three main areas:

-          Ethics in general (this includes fraud, conflict of interest and employment amongst other things)

-          Bribery and Corruption

-          Competition Law

This programme is tailored for different roles within the Group. We use targeted online training modules for our senior managers and those with customer facing roles. These online training modules are refreshed for all nominated employees every two years and are mandatory for all senior employees and those with externally facing roles. In addition, more than 700 new starters completed this online training during 2017, bringing the total who have completed this training to more than 4,500. A refreshed version of the training is being rolled out during 2018.

This online training package covers the core themes of our Corporate Responsibility (CR) programme, including anti-corruption, competition, slavery, child labour and ethics. In addition, a number of face-to-face training sessions have been held in key high-risk locations, such as Brazil, Bangladesh, Colombia, India, Indonesia, Turkey and Vietnam, to help ensure that everyone at and associated with Coats continues to understand Coats’ high ethical standards.

During 2016, we developed a new ‘data protection’ training module to reflect our global cyber security programme and upcoming legislation changes. The training has been refreshed and will be re-launched in 2018. Cyber security is an integral part of Coats’ technology strategy and a top priority for our business. Our approach recognises "the 10 steps to the cyber security" framework sponsored by the UK government. During 2017, in addition to the data protection training, all employees with system access had to complete a new cyber security computer-based training module.

We believe that this approach is an effective way to ensure that Coats senior employees, and those engaged in sales and procurement roles, have a clear understanding of our expectations.

Doing the right thing’ campaign

High ethical standards make good business sense and they create value for our company, our shareholders and ultimately for society as a whole. This is why we launched our Doing the right thing campaign in April 2017, which further embeds ethics into our culture. It is coordinated by the Group Legal team and, to deliver it, we have nominated around 20 Ethical Culture Champions across the Group. These champions act as points of contact between local teams and the Group Legal team, to help disseminate information, to support the embedding of ethics-related initiatives in partnerships with local management, and to provide feedback and insights on areas where further support would be helpful.

We continually promote Doing the right thing by raising awareness and embedding our CR policies and our ethical standards across the business. Key to making sure Doing the right thing becomes part of how we behave every day is keeping the values behind the campaign at the front of everyone’s mind.  To help with this, we use our internal communications to showcase teams who do the right thing and demonstrate the highest standards of ethical behaviour, we share best practice via our intranet, and we run a global Ethics Day in October.

The Coats events for Global Ethics Day took place across the world to share views on what doing the right thing means to our employees. Those events saw each Coats site create a Doing the right thing message tree on which team members wrote statements outlining what Doing the right thing means to them. There was also a global ‘virtual message tree’ created on our intranet. Events, including discussions, video productions, competitions and parliamentary-style debates on topical ethical issues took place in countries including Bangladesh, Brazil, Bulgaria, China, Colombia, Egypt, India, Indonesia, Pakistan, Poland, Sri Lanka, Thailand, Turkey, the UK and Vietnam.

 

Our People

At Coats we value our workforce highly and employ over 19,000 people in around 50 countries worldwide. The health and safety (H&S) of our employees is our number one priority in everything we do.

Every year we monitor H&S within our Employee Engagement Survey and our results for 2017 have a “favourable” response of 90%, an increase of 9% since we started the survey in 2011 and very close to the top 10% threshold for the global IBM/Kenexa survey of 91%.

Health and Safety at Coats

We are committed to maintaining high standards of employee safety and engaging with our workforce on issues that matter to them. We have a comprehensive global H&S management system in place which is used in all our sites.  Our global H&S manager and our five regional H&S managers have regular calls and/or face to face meetings to discuss any arising issues and progress made.  The regional H&S managers interact on a regular basis with their respective regional operation managers as well.

During 2017, we reviewed our policy and improved our H&S reporting and investigation procedures. As a result, we have prepared a set of ‘lagging’ and ‘leading’ H&S indicators as well as targets against each of these indicators.  The indicators include: work related incident rates, commuting incidents, close out of corrective actions, near-miss reporting, hazard reporting, improvement actions and training hours.  The data against each indicator is collected and published on a monthly basis, which helps us track performance and action any arising concerns.  Furthermore, we are also monitoring site performance through self-assessment questionnaires, reviews and audits.

Strong engagement with our employees

A global safety campaign

To reinforce our commitment to H&S, we ran a global safety campaign, ‘Be the One’, to stress the importance that we place on keeping our people safe and to encourage our teams to improve their own performance. In July 2017, we launched our new See and Fix Hazard Report (SFHR) asking employees to ‘Be the One’ to prevent incidents, report all incidents immediately and intervene when they see an at-risk act or unsafe condition.

The SFHR process:

·         Employee fills in a SFHR card if they see a near-miss, at risk act or unsafe condition and places the card where the condition was found
·         Shift supervisor or H&S team coordinates corrective actions
·         Supervisor or H&S team logs the cards, tracks actions to completion
·         Supervisor or H&S team feed back to the employee.

#BeTheOne

This campaign was rolled out globally. Each country prepared kick-off meetings and invited their employees to take a photograph of themselves or their team holding up one finger to show their commitment to the new SFHR process and ‘Being the one’ to prevent, report and intervene.

The campaign was very successful with the number of hazards reported increasing by 47.7% compared to previous years.

Global training programmes

In 2017, we continued to roll out our safety leadership programme and launched a new programme (IOSH – Institution of Occupational Safety and Health) for supervisors and line managers.  The latter is a 3-day training course. The main objectives are to give managers and supervisors an understanding of everyone’s H&S responsibility in the workplace and to enable managers and supervisors to recognise how they can influence, control and monitor risk to improve H&S issues in the workplace. Our aim is to have trained all supervisors and line managers by the end of March 2018.

In support of our continual learning imperative, 2017 also saw the launch of Minerva, our new online digital platform which provides over 700 resources, including online learning tools, videos and tip sheets. Minerva is available to everyone who uses Perform (our internal system) enabling them to access content on many aspects of the business and professional excellence including H&S.

Local rewards and initiatives

Beyond our global campaign and training programme, we also have various recognition programmes and initiatives at site level. For example, after initial development in India, vacuum knife tools have been installed at all spinning locations to reduce the risk of hand injuries. The vacuum knife tool helps employees to cut tangled thread without their hands getting too close to the spinning system. The design and operational specifications were available at all spinning sites by mid-August 2017.

In our EMEA region, we’ve had a number of local initiatives to raise awareness around H&S issues, targeting both our employees and our local communities. Coats Estonia has been working with schools in the Viimsi municipality to create reflectors that are hung on trees around the schools to provide a source of light for passers-by, ensuring their safety in the dark. Coats Turkey has initiated a couple of campaigns, including ‘Safety Angel’ (see picture below) which encourages people to use handrails to avoid slips and falls. Coats Poland ran a number of campaigns and training to promote health and wellbeing to their employees. They have sent over 20 safety letters to their employees, ran first aid training, organised meetings with nurses and other health professionals, and delivered fire training and various other safety meetings. The team at Coats Poland also organised and delivered a program called “Safe back from school” to improve the safety of local primary school children on their way back home from school.

Similarly, in the rest of the world, we have multiple initiatives to show our commitment to provide a safe and healthy environment for our employees and the local community.

Coats Mexico launched a health programme for employees to increase their physical and psychological well being and employee engagement. The programme includes activities such as fitness and massage sessions, bowling, nutrition and health matters. Coats Colombia launched a Mindfulness programme, in June 2017, to help employees manage stress and improve their health, productivity and performance.

A number of initiatives have taken place in Sri Lanka to increase safety awareness, including training sessions on how to handle chemicals for those who work with dyes and chemicals. The team in Bangladesh marked World Health Day, themed ‘Depression, let’s talk!’, with a one-hour interactive session. The event included a discussion with an external professor, who gave tips about stress management, coping with depression and the impact of social media on mental health.

Coats teams in the United States (US), Tunisia and Indonesia have reached key H&S milestones. The team in Toccoa (US) achieved seven years without any recordable incidents, Indonesia celebrated seven million accident free working hours since 2013 and Tunisia achieved 439 days without recordable incidents in October 2017.

 What next for 2018?

For 2018, we are releasing our second instalment of the H&S Climate Survey. The first one took place in 2015/16. The aim of the Survey is to review the organisation’s existing level of safety culture, identify perception gaps, determine positive and negative aspects of our current arrangements and help identify opportunities for improving how we work.

We will also launch a new software tool in 2018 to track H&S deployment plans progress at site level.

Finally, a global manufacturing workshop will take place in early 2018 to define the key priorities for the year. The aim is to focus on reducing the likelihood of an incident that has high potential for a serious injury or fatality.

 

 

We employ over 19,000 people worldwide and we value our workforce highly. Our employees are from 68 different nationalities, representing many different cultures and are based in 50 countries all around the world.

To make sure that we have a consistent approach to Human Resources (HR) across the Company, we continually review our global and local approaches to managing people.  This way we ensure that we have the necessary support structures to enable best practice people management at all our locations. Our global HR team is supported by a network of local HR professionals, who have an understanding of the local culture and norms in the countries in which we operate, and who are helping to achieve our aims.

Creating an inclusive workplace – our global Diversity and Inclusion (D&I) Initiatives

Wherever we operate we aim to create an inclusive culture that enables everyone to thrive.  To support this we have established a global Diversity and Inclusion (D&I) network and each year this continues to grow. Our D&I network ran three virtual meetings in 2017, featuring guest speakers who bring their insights into improving Diversity and Inclusion from their own experiences. At least 150 of our employees from around the world regularly join these calls and we have a dedicated intranet microsite which holds diversity resources and materials, accessible by some 6,500 employees.

We also encourage our teams to develop their own local D&I initiatives. In Turkey, for example, our team started a local D&I project in 2015. The local project team put together a three-year strategy and action plan, including benchmarking, internal spot surveys and unconscious bias training. This is supported by regular communications and events such as activities for International Women’s Day. As a result, our team in Turkey received an award from the Turkish government for being one of the top three companies in Turkey with equal opportunities for women and men (picture below).

To mark International Women’s Day, which took place on the 8th of March 2017, we launched a programme with the theme #BeBoldForChange. This programme helps identify and raise awareness of internal role models who are being ‘Bold For Change’ in their own career choices or in taking action to increase gender diversity at Coats. As part of this, we have received 150 role model nominations across Coats.

Various local events also took place across Coats to celebrate International Women’s Day in countries that included UK, Bulgaria, Brazil, US, China, Colombia, Egypt, Honduras, India, Malaysia, Mexico, Pakistan, Poland, Sri Lanka, Thailand, Turkey and Vietnam. In total, more than 4,000 people joined in.

In 2018, the D&I Working Group plans to focus on the following activities:

-          Organising several more D&I network calls

-          Providing more support for local programmes and actions (e.g. toolkits, facts, presentations and ideas)

-          Continuing to build on the #BeBoldForChange programme that was launched in 2017.

-          Ensuring global activities for International Women’s Day 2018

Learning and Development

We invest in our people by providing equal opportunities for learning, through general training and job-skills programmes and, where appropriate, tailored career planning and leadership development.

We have continued to roll out our Management Capability Development (MCD) and Transcend Leaders programmes. The MCD is a tailored learning programme available in four different languages aimed at strengthening leadership skills throughout the business.  The Transcend Leaders programme is targeted at our senior managers, who are not high potentials, but are too senior for MCD.  The main goal of Transcend is to develop the essential Leadership Competences that will drive success for the company in the coming years.

In support of our continual learning imperative, 2017 also saw the launch of Minerva, our new online digital platform which provides over 700 resources, including online learning tools, videos and tip sheets.  Minerva is available to everyone who uses our Perform platform and enables them to access content on many aspects of business and professional excellence including building teams, managing change and communication skills.

Local actions are also being rolled out around the world to ensure an optimum learning and development environment at Coats sites. In India, for example, close to 100 members of the manufacturing management team took part in workshops about team working principles. This was the first milestone in the team’s journey towards more collaborative working. Through simulation games and practical exercises participants learnt how to build trust and manage conflicts, and how collaboration helps not only the team but also the individual to win. Furthermore, an eight-months long supervisor development training programme concluded in Mexico in May 2017. The training covered a range of modules including time management, communications skills and change management to improve the leadership skills of the participants.

Employee Engagement

It is vital that we listen to what our employees think about Coats to help us create an excellent working environment and to retain and motivate our people across the company.

One of the ways we do this is through our annual employee engagement survey that we’ve been conducting for the last eight years. In 2017 we continued to have a high participation rate – a fantastic 99% of our employees took part (two points higher than last year).

Research has shown that organisations with high employee engagement scores also have better customer service, enhanced performance (productivity, sales, profit), and reduced absenteeism.  Our 2017 overall engagement score (which shows how proud people are to work at Coats and how willing they are to work towards achieving common goals) was 83% (same as 2016 and 2015, and two points higher than 2014).  Such a high engagement score maintains our position in the top 10% of all globally surveyed companies.  These results are testimony to the efforts of the many employees and managers who strive to make Coats a great place to work. Every year each unit develops specific action plans to address the issues raised for their local business during the Engagement Survey. 

We are also proud of the favourable responses to the Corporate Responsibility related questions within the survey – which all remain high.  92% of our employees feel that Coats is socially and environmentally responsible, 94% believe that we are committed to employee safety, and 89% feel that our senior leadership is committed to ethical business practices and conduct.

This is very good news at the group level, but we know there are some areas of the business that need attention.  Furthermore, with a major organisational change taking place in Coats during 2018 we recognise that it will be especially challenging to maintain our high levels of employee engagement in the next year or two, but we believe that our long term commitment to this structured process of survey and response will be especially critical during this period.

Our Products

Our products are part of the fabric of everyday life: from clothing, accessories and furniture to fibre optics and healthcare items.

Our Industrial business is the leading producer of industrial thread for the apparel and footwear industry, we have a leading and expanding position in the performance materials market, and our Crafts business is the largest player in the Americas textile crafts market. Our comprehensive range of products are designed to deliver the desired strength and performance characteristics that make Coats’ products the first choice for manufacturers of high quality textiles.

Back in 2006, we started a new stream of innovative products, developing threads and yarns for use in personal protective products for people working in extreme environments including firefighting, oil and gas, power generation and military combat.

Coats Performance Wear: a growing business for Coats

We started to manufacture and sell these new innovative products in 2006, initially with a focus on sewing threads. In 2011, as our knowledge of the market grew, we moved into innovative yarns, introducing them first in the US. We then started to sell and manufacture these products in Europe and Asia, in 2013 and 2017 respectively.

Our Performance Wear range is used to manufacture a wide variety of garments ranging from protective clothing and workwear to uniforms and gloves. These garments are expected to perform in differing, demanding environmental conditions such as coveralls for various industries, oil and gas protective gear, military wear, and firefighter’s clothing (both station wear and turn out gear). These products are made to provide maximum protection when working under extreme conditions.

The sales of these new performance wear products have grown steadily since 2006, approaching 5% of Coats total revenue in 2017. While used for different purposes in the end product the yarns and thread products are complementary and both continue to develop. We are expecting our sales figures by the end of 2020 to be double those in 2017.

Coats Performance Wear: both enduring and comfortable products

As a key component supplier in the supply chain for personal protective wear, we need to ensure that our products have the durability to withstand the daily hostile environment while still providing comfort the wearer.

New, innovative materials, such as multi-fibre blends, have revolutionised the performance wear industry. To achieve these new mixtures, we have developed the ability to blend up to five different fibres with very precise proportions and even blending. To speed the development process we have developed the capability to run simulations of the properties of yarns and hence garments without the need to produce physical samples. This is a digital tool that allows us to enter all the properties of multiple fibres and run various models. These models show us the different properties possible for a mixture of fibres. It is these innovative technologies that allow us to continuously grow and improve our performance wear business and ensure that our products are key to protecting people around the world.

Our Manufacturing

Water is a vital resource. Water scarcity is a pressing issue in several parts of the world where we operate.  It threatens ecosystems and communities, and it can be a material risk for businesses like ours that depend on water. Indeed, as a manufacturing business we depend on water as a resource and we are very conscious of using water in a responsible and efficient way.

We are always looking for alternatives to using water to limit the impact on local communities. We are continuously working toward reducing our water consumption and returning it to the natural environment after suitable treatment. We also try to recycle the water we extract so that it is reused in our manufacturing processes, thus reducing the load on the environment.

Overall, in 2017, we used 7.9 million cubic meters of water to manufacture Coats products, which is a 3% reduction compared to 2016. This equates to 112 litres per kilo of dyed product in 2017, which is 5% down from 2016. Over the past few years we have focused particularly on our water consumption and encouraged further use of reusable sources across our operations.

Water used per unit of production (litres per kg dyed product)

Water reduction project in Vietnam

To help address the water scarcity issue, Coats is working hard to reduce water consumption at our manufacturing sites.  Dyeing processes are particularly water intensive.

Our site in Ho Chi Minh City has been continuously reducing water consumption in the last three years. In 2014, they were using 115 litres of water per kilo of thread produced (l/kg) but through careful monitoring and smart investment, it was down to 65 l/kg by the end of 2017. This is a 40% overall reduction in water consumption at this site.

The site is now focussing on the scope for further reductions and has invested in multiple water meters to track precisely where the water is used, and where inefficient use or wastage might be occurring.  A zero based study of processes on the site has identified an absolute minimum requirement of 23 l/kg, and the target is to work closer towards this.

Water recovery plants and Zero Liquid Discharge plants in India and Sri Lanka

Over several years we have been installing water recycling systems in our major plants.  These require the use of reverse osmosis (RO) systems in order to achieve a high level of water recovery from the process effluent.  Our 2 main plants in India and our plant in Sri Lanka are all now achieving or well on the way to recycling over 90% of their effluent.  In the case of the two Indian plants, in Faridabad and Ambassamudrum we are also implementing Zero Liquid Discharge (ZLD) whereby the remaining effluent is dried to make for easier disposal of the residue. The Faridabad system was operational from early 2017 and the Ambassamudrum system started in late 2017 and will be fully functional in April 2018. In these locations ZLD is a regulatory requirement.

As a result of these investments nearly 500 million litres of water was recycled in India and Sri Lanka during 2017.

We are determined to continue using and conserving water in an efficient way and will keep looking for more ways to save water going forward.

Our Environment

We recognise that the Earth’s climate is changing, and as an energy user we have a role to play in reducing our contribution to it.  The burning of fossil fuels for power and heat is the single largest source of greenhouse gas (GHG) emissions globally.

At Coats, we constantly review our manufacturing processes to improve efficiency, not only to minimise the cost to our business, but also to minimise the impact we have on the world around us.  As such, we have focused on reducing our energy consumption and have seen a significant reduction in our carbon footprint since 2011.

The reduction to date was achieved through a combination of investment in energy efficiency – such as using better manufacturing schedules, regular maintenance and optimising building management – as well as investment in new technology.

Reducing our energy usage

In 2017 we used 823 million kWh of energy (electricity and fossil fuels) in manufacturing our products, which is an overall reduction of 1% in total energy use from 2016 (829 million kWh), 1.2 % from 2015 (833 million kWh), and 4% from 2014 (858 million kWh).  During this same period, we increased production by 9%, so our use of energy per unit of output has dropped by 13%.

The total carbon footprint of our manufacturing operations in 2017 (Scope 1 and Scope 2*, **) was 311 thousand tonnes, down 2% compared to the previous year (319 thousand tonnes).  In terms of the products we manufacture, we have decreased our GHG emissions per unit of dyed product to 4.3 kg CO2e per kg (compared to 4.6 in 2016).

Although we have consistently used less energy year on year, our CO2 footprint in 2016 was slightly higher than the preceding and subsequent years' because of a shifting balance of production between countries and an increase in in-house electricity generation in Bangladesh due to shortages in grid supply.  

Global GHG emissions (k tonnes CO2e)*,**

*Based on IEA CO2 Emissions from Fuel Combustion, OECD/IEA, Paris, 2017 and the 2017 UK DEFRA GHG reporting guidance and conversion factors. Includes Scope 1 – direct emissions from the combustion of fuel (gas, coal and oil) and Scope 2 – indirect emissions from the purchase of electricity.

**Emissions reported are from energy consumption in our global operations and exclude emissions from refrigerant usage and business air travel, which each have historically represented less than 2% of GHG emissions resulting from our manufacturing operations.

Investing in renewable energy

Over the past 5 years, we have actively sought to increase the amount of energy that we generate or purchase from renewable sources and we are pleased to see that the proportion of energy sourced from renewables has now increased to 29%.

Our India team, for example, have setup solar generation agreements with energy suppliers, at both our Faridabad and Ambas sites. As part of these agreements, we provide the space for the energy suppliers to install the solar panels and we buy the electricity generated whilst they are responsible for carrying out operation and maintenance of the solar plants. At our Ambas site, we have now two solar generation agreements, the latest one was made in February 2017.  The new solar plant will likely be completed in March/April 2018. Once completed this solar plant is expected to generate 13,800 to 15,000 kWh per day.

Energy saving initiatives

Wherever possible, we are investing in energy efficiency programmes and new technology to reduce our footprint, and encourage our units to undertake local initiatives that, if successful, can be adopted elsewhere.

The team in Romania, for example, made a number of modifications to the existing technology to reduce power consumption and implemented a trial of a new energy monitoring system. This new monitoring system allows them to track energy usage in detail across the plant over time as well as the related costs. It also tracks the changes in energy efficiency and generates key energy performance reports. This helped them understand where energy losses could be reduced as well as monitor energy consumption before and after implementing solutions.

As a result of this increased focus on efficiency they have:

·         switched all their lighting systems to LED

·         increased the energy efficiency of their steam driers by controlling the electrical frequency used during the drying cycle. This reduced the electrical  energy consumption by 27% and

·         launched a solar energy pilot

By the end of 2017, the team in Romania had successfully met their monthly average rate target of 5.01kWh/kg and reduced their yearly average rate from 5.15 in 2016 to 5.11 kWh/kg.

The success of the new monitoring system in Romania is such that we are reviewing extending the use of this system across the group.

 

Our Partners

As the leading global manufacturer of threads, zips and related products, Coats plays a key role in the apparel and footwear supply chain. Our success in the marketplace relies on responsible behaviour and good corporate citizenship. We also want to extend this to our customers and suppliers.

In 2015, Coats developed a detailed Supplier Code. The Code describes the standards and values we expect from our suppliers in terms of labour practices, human rights, environmental management, responsible sourcing and business conduct. That same year, Coats China successfully rolled out the Code to 75 of its key suppliers.

Taking the experience of the China workshops into consideration, we decided to roll out the Code to the rest of the world.   We segmented our supplier base to identify who the key suppliers were and then designed a face-to-face rollout programme to introduce them to our standards and expectations. 

Our key suppliers were introduced to the Supplier Code at a one-day workshop, hosted by our local Coats site. This gave suppliers an opportunity to study the requirements of the Code and open up communication channels for further questions and support after the workshop. By the end of 2016, the Supplier Code was rolled out globally to all of our key suppliers located in our primary markets.

Engaging with our key suppliers

Although the scope of the Supplier Code extends to all Coats suppliers, particular attention was given to key suppliers who:

-          Have high spend volume with us

-          Operate in a country which is perceived to be ‘high risk’ in relation to business, human rights, employment or environmental practices

-          Supply goods or services which could be considered potentially high risk.

The Supplier Code was presented to our key suppliers in the setting of a workshop hosted by Coats. Following these workshops, suppliers were required to conduct a gap analysis of their own procedures and practices against the Supplier Code.  They were asked to report back to Coats with their analysis, denoting areas of non-compliance and providing an action plan for improvement. Our procurement teams are now monitoring the implementation of the plan and providing hands-on advice and support for each of our key suppliers.

Thirteen workshops were held in strategic locations throughout 2016 (Turkey, India, Vietnam, Indonesia, Sri Lanka, Brazil, Mexico, Hong Kong, Hungary, Germany, Italy, USA and UK). Procurement Managers from the larger neighbouring units attended one of these workshops and were trained to host a workshop in their own country, where the Procurement Managers from smaller neighbouring countries also attended.

Following these initial workshop and review of non-compliance by our procurement teams, the suppliers with the largest number of declared non-compliances were visited first. The initial visit took the form of a post-workshop follow-up meeting rather than an investigative audit. All suppliers who attended the workshop will receive a visit to discuss their understanding of our requirements.   This will then become a regular part of our supplier performance review process.

In 2017, we undertook 12 follow-up workshops in 5 high-risk countries: Bangladesh, India, China, Indonesia and Vietnam. 276 (95%) of the key suppliers in these countries attended the follow-up workshops.  Key focus areas for these follow-up workshops were Modern Slavery and Human Rights.

In addition, during 2017 we have also carried out third-party supplier audits with 111 suppliers spread across 5 high risk countries; Vietnam, China, India, Indonesia and Egypt.  These were done with a mix of internal and external resources.  For example, all the audits done in China were done by Coats auditors while in the case of Vietnam the 39 audits were conducted by Bureau Veritas, using the Coats Supplier Code audit template. Results showed that 20 suppliers were graded ‘Good’, 16 were ‘Acceptable’ and 3 required improvement. Since these audits we have engaged with the 3 suppliers that required improvement to assist them in developing their policies and processes. They will be audited again in early 2018 to check on progress. The suppliers rated ‘Acceptable’ will be re-audited within two years of the date of their previous audit and suppliers rated ‘Good’ will be re-audited within three years of the date of their previous audit.  We will continue to work on a country by country basis with internal or external audit teams as is appropriate for the local conditions.

Reaching out to all Suppliers

In addition to the engagement with our key and ‘high risk’ suppliers, the Supplier Code was also communicated to medium size/ medium risk suppliers verbally, either by phone or at a face-to-face meeting. Small size/ small risk suppliers have been sent the Supplier Code by email.

By the end of 2017, 97% of our suppliers have been informed about our Supplier Code and suppliers representing over 45% of our total spend have attended the one-day workshops.

A review of Supplier Code adherences also forms an integral part of our routine reviews of supplier performance. We have reserved the right to audit our suppliers and partners, to the furthest extent permitted by law and any contract we have in place, to ensure compliance with the Supplier Code.

If we become aware of any supplier company acting in contravention of the requirements in our Supplier Code, we reserve the right to demand corrective actions or ultimately to terminate the agreement.

What next?

During 2018 and onwards, we will continue our engagement with our suppliers, providing support and guidance to ensure adherence with our Supplier Code. To this effect, we will be revisiting our processes to continue raising awareness within our supply chain and to ensure our suppliers have the most effective measures in place.

Our procurement teams, who are reviewing the self-assessment questionnaires completed by suppliers, will receive further training to ensure that any non-compliances have been assessed and followed up appropriately. Any ‘critical’ non-compliances will be dealt with as a priority by the procurement teams. We will collect key performance metrics from supplier audits to keep track of the number of non-compliances and ensure those are resolved and closed as soon as possible.

 

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