Social Impacts, Beyond 2022

Maximising our positive social impacts has always been a top priority for Coats. Over the past few years, through the implementation of several actions across all our sites in addition to robust monitoring and data collection, we have laid excellent foundations. Our aim is to be able to track progress against our KPIs with particular focus on; Diversity, Equity & Inclusion, Health & Safety, Employee and Community Wellbeing, and Supplier Codes.

Looking to the future we have developed a series of new aspirations in these four key areas, detailed through this section of the report. Over the next 12 months, these aspirations will be translated into an updated set of targets for 2030, with shorter term milestone targets, that will provide a refreshed approach towards addressing our social impacts across the business. These new targets will be finalised by the end of 2022 and we look forward to announcing them in our next report.

Health and Safety Management

Despite the ongoing challenges and demands of Covid, over the past year we have been able to successfully regain focus on efforts to reduce risk and prevent future injuries. Objectives and targets were developed from 2020 data insights and each Coats location then aligned with global objectives proactively to prevent injuries before they occurred. We achieved a record for completed improving actions (54,811) which was a 14% improvement over 2020. In addition we saw a significant increase in the number of hazards reported by employees as well as safety training hours carried out. Other actions included global and local campaigns focused on the prevention of slips and trips as well as eye injury prevention campaigns. As a result of all these proactive efforts, we achieved record reductions in injury rates. We continue to benchmark our performance against the latest available (2020) US Occupational Safety and Health Administration data for ‘Fiber, yarn and thread mills’, and our current injury rate of 0.45 continues to compare very favourably with the benchmark level of 2.3.

We also continued to focus on our ‘Journey to Zero’ strategy. This included running our second ‘Journey To Zero’ week, to engage all of our employees worldwide. The theme for the event was ‘Journey to Zero Hero’ which saw more than 300 nominations for employees to be recognised as going above and beyond in the area of Health & Safety. It also incorporated a focus on slips, trips and falls which are our largest causes of accidents.

We have also continued our focus on commuting safety with training given to employees and support to make safer journeys, especially when using motorbikes. We continue to report our commuting accident rate in the Performance Table at the end of this report.

Pandemic Response

We introduced employee safety measures, full job retention and management salary sacrifice schemes very early in the pandemic in 2020 and successfully navigated the storm during that year. In 2021 Covid continued to be an important focus for our health and safety efforts. While in some countries the impact of Covid lessened, in others our teams still faced significant risks. In India there was a very serious second wave and that was later followed in Vietnam. To support our employees and keep them safe from Covid we have put in place several measures across the Coats world flexing our approach based on the location specific circumstances. Our strategy focused on the three pillars of Prevention, Protection & Medical Care, and Education.

In the area of Prevention we have facilitated Covid vaccinations for our employees by delivering them on-site, providing paid time off for those countries where the local government has supplied them and paying for vaccinations in countries where they are not funded. On our sites we have enhanced our protection through contactless systems, social distancing enablement through our webcam system and providing private buses for commuting as an alternative to public transport.

The pillar of Protection & Medical Care saw us continuing to provide the basics such as hand sanitiser and face masks and building on this by expanding our telemedicine provision, private medical inpatient insurance, testing and employee assistance programmes across the globe.

Education focused on mental health and wellness programmes, working from home assistance and broader topics impacted by Covid such as addiction prevention, health and nutrition awareness raising and first aid training. Identification of mental health issue, which have undoubtedly been exacerbated through the impacts of the pandemic, has been supported through the inclusion of a number of relevant questions in our ‘Your Voice Matters’ survey.

Overall company scores have been high in these areas, over 80% positive, but there is a clear differentiation between office-based and plant-based employees, with the former being more challenged. Mental health training interventions have taken place specifically to support employees working from home as well as broader mental health training as part of our broader wellbeing programmes.

Ethics

We are deeply committed to conducting our operations in an ethical, responsible and transparent way, providing a strong foundation to our Sustainability Strategy. We are very risk averse to the potential for poor ethical behaviour, as is explained in the risk management section in our Annual Report because we expect our employees and suppliers to deliver on this commitment we make it our responsibility to provide them with the correct tools to achieve this. As the heart of our business, our employees are highly valued as it is only through their talent, knowledge and commitment that we are able to operate our business in the effective and efficient manner that enables us to remain leaders in our highly competitive industry. To ensure that we can supply high quality and competitive products and services alongside fulfilling high ethical, environmental and social standards our employees must be engaged and fully equipped, and maintain a growth mentality and a thirst for constant improvement. In return for this commitment we are dedicated to ensuring our people have a safe, respectful, fair and inclusive work environment and the ability to develop and progress.

We fully support the United Nations (UN) Guiding Principles on Business and Human Rights in our operations. We uphold the UN Declaration of Human Rights and the Convention on the Rights of the Child, the core International Labour Organisation (ILO) Conventions and the Organisation for Economic Co-operation and Development (OECD) Guidelines for Multinational Enterprises and the related Due Diligence Guidelines for the Garment and Footwear Sector. In line with our biannual cycle, in 2021 we carried out an update to our Human Rights Risk Assessment. As in previous years we used data on child protection from Unicef, the Human Development Index from the United Nations Development Programme, the Freedom in the World Index from Freedom House, the Global Rights Index from the International Trade Union Confederation and the Global Slavery Index from Walk Free. All of these indices were updated in 2020 or 2021 except for the last one where the data has not been updated since 2018. We factor all of these indices by normalising them and weighting them all equally to produce a final score for each country in which we operate and then we apply the employee numbers to weight those scores into a global total. In our latest analysis the analysis is showing a deterioration in the external environment risk level in a number of countries in the Americas and Asia. By drilling into the detail we have identified that the bulk of this deterioration is driven by worse countrylevel child labour risk ratings and is caused by the filling of gaps in the Unicef data sets as they improve their access to reliable data. This indicates that the overall risk level in these countries might not have actually deteriorated in the last two years, but that we are more accurately measuring the risk. We police employee age very rigorously and have had no cases of underage employment in our operations. Nevertheless, this continues to highlight the necessity to ensure very robust application of the policies and procedures that we have in place to ensure that child labour, modern slavery, and human rights violations do not occur in our operations and that where legally permissible, freedom of association and access to collective bargaining are open to all our employees.

Our Group Internal Audit (GIA) team include a series of 30 human resource audit areas in their audit templates. Most of these are related to compliance with our employment policies or directly with human rights issues. During 2021 they completed 11 audits (compared to 13 in 2020) and identified 13 minor issues requiring remediation within a number of people-related process areas, compared to 24 in 2020. They were able to report a sustained positive trend in general.

Following our earlier work on ‘living wage’ analysis across all our units, we completed the small amount of remedial action necessary to ensure that all employees met this benchmark. Our Living Wage Policy which describes our approach is available to download from our website. In addition, we have joined the Fair Wage Network and will continue to use its data to carry out an annual assessment of our remuneration.

We aspire for all our suppliers to be fully compliant with Coats’ health and safety, labour and environmental standards, and will increasingly transfer our operational standards into firm targets for our suppliers. Having updated our Supplier Code in 2020 we have continued our programme of audits that are targeted at suppliers that have a high risk profile. On our behalf Bureau Veritas conducted 285 third party audits in 2021 and these audits raised 4,730 findings. Most of the findings were systems and process based, such as poor preventative procedures. 28% of the findings were related to Health & Safety and 24% were related to Fire prevention and Fire Safety measures. All issues are subject to follow up on remediation with the timing dependent on the type of issue raised. Sourcing from one supplier was halted while issues were addressed and pending re-audit. Since we started with these third party audits in 2019, we have conducted 337 audits, though very few were done in 2020 because of pandemic restrictions. Our full range of ethics and compliance issues are detailed in an extensive range of polices and standards, that outline the expectations we have of our employees, suppliers and other partners. These include but are not limited to Ethics code, Code of business conduct, Competition, Antibribery and anti-corruption and our Supplier code.

We uphold the aims of the California Transparency in Supply Chains Act of 2010 and the UK Modern Slavery Act 2015 and publish a statement on our website on what we are doing to prevent modern slavery in our business and supply chains.

We have a suite of mandatory compliance trainings that are completed by all relevant employees (over 4500) on a biennial basis, and by all new starters. The training was last done in 2020, so not repeated in 2021, but nearly 700 employees completed the training in 2020 on an out-of-cycle basis, mainly being new starters. A full training round will be done in 2022. This year we have also continued to promote open discussions around the importance of ethics by pursuing our global ‘Doing the right thing’ programme, led by members of senior management. Our annual Global Ethics Day took place in October and the theme was sustainability. Both ethics and sustainability are core to how we do business and embedded in our Ethics Code is a commitment to observing environmentally sound business practices throughout the world. To mark Global Ethics Day, local activities took place as well as a global digital live event. In addition all employees were invited to make a pledge and commit to an action they could take at work, and in their personal life to either reduce waste or reduce energy or water usage. The day was a great success with high engagement and many people across Coats either made their pledges on the Coats Link Community Wall or on posters.

Our Whistleblowing Hotline has continued to provide support to our employees and received 98 incidents (compared to 88 in 2020). Of the investigations that have been completed (86%) 30% have been upheld (versus 22% in 2020). Nearly half of the upheld incidents relate to disrespectful behaviour while ethics code violations, health & safety issues and unfair employment practices make up most of the rest. In all cases we take robust action, up to and including dismissal, where an incident is found to be justified. The geographical distribution of incidents by region is broadly aligned with our employee distribution which indicates that our work to broadly publicise the availability of the whistleblowing system is successful. For the past few years we have used an internally managed hotline, and during 2022 this will be complemented by an external web-based channel. We feel this is an important move so as to offer our employees greater confidence that the process is secure and independent.

Save the Children

During the summer months our President Apparel & Footwear embarked on a Coast to Coast challenge in aid of Save the Children, a charity focused on helping children around the world to reach their full potential, by ensuring their safety, maintaining their health & wellbeing and supporting their education.

The Coast to Coast challenge involved a 13 day walk across the North of England, spanned a total of 190 miles, and equalled a combined elevation of 29,135ft, equivalent to Mt Everest. Coats employees were invited to join in the fundraising by pursuing their own individual or team challenge. With many keen to get involved our global community of colleagues from across Coats joined together to contribute to the fundraising efforts for Save the Children through a variety of different challenges from running and various sports activities through to knitted crafts. The combined efforts of our employees raised an amazing total of £18,000. This figure was matched by Coats resulting in a total of £36,000 raised to support the children reached by the charity. Not only was this a fantastic achievement for all those involved but it also brought positive benefits that supported the health and wellbeing of our employees by encouraging them to try something new and in many cases spend more time in nature.

Helen Slee, Regional Fundraising and Engagement Manager of Save The Children, said: ‘This is a fantastic effort from the Coats team. £36,000 can go a long way to giving children a better future… On behalf of Save the Children, a big thank you.’

For more than 250 years, Coats has been working to support local communities in the countries where we operate. This fundraising initiative for Save the Children is the latest example of this. Coats aspires to match 100% of the value of donations of money generated by specific fund-raising activities in future.

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