Issue No. 09

November 2022

Supply Chain ESG Newsletter

In this issue:

Ø YTD Audit & CAP Summary & November Audit Plan

Ø America Recycles Day – November 15, 2022

Ø Sustainable Materials Library Update

Ø Supplier Corrective Action Plan Review

Ø Webinar: How Do You Nail Down Your Company’s Story on ESG?

Ø Q3 Asia Suppliers CSR Highlights

Ø Lant Qingdao Takes the Lead in Automation

Ø Future Seating Suppliers Audit to be Started

Ø ESG Q&A Sourcing Spotlight – Javier Huerta

Ø ESG News Around the World in November

A Note from the Social Compliance Team

Gobble, Gobble, it’s turkey time in the United States! It’s hard to believe that we are in the eleventh month of the year - where has the time gone?! As the year winds down, the Social Compliance Team is working with our Suppliers to close out their Corrective Action Plans. (See below to learn more about CAPs!) We are also starting to map out our 2023 audit plans and goals. As we approach the end of the year, we will also begin to work on the ESG Year-End Summary Report for 2022, which will summarize all of our achievements throughout the year. As a reminder, please be sure to check out the new ESG Q&A section below! Also, if you have any suggestions of specific content you would like to see in a future newsletter publication, please let us know. We hope you enjoy the November Newsletter!

YTD Audits and CAP Updates

Region	Audits		CAP Update
	Onsite	Remote	2022 YTD		2021
	Onsite	Remote	Closed	Opened	Closed (in Oct.)	Still Open
N.A.	16	4	37	75	0	3
Asia	12	1	65	167	7	31

Audit Plan for the Remainder of the Year

Region	Supplier Name	Product	Location	Audit Date
N.A.	McKinley	Packaging	Tijuana	TBD
N.A.	Arc-Com	Textiles	New York	Remote
Asia	Hookay	Chair	Zhongshan	2022/11/3
	Omni	Clamp	Yangzhou	2022/11/8
	Meijie	Foam	Ningbo	2022/11/10
	Patra	Chair	S. Korea	Remote
	Jen Jou	Caster	Taiwan	Remote

“ Look at your business and the activities that you undertake. Then, start to think about not just your economic concerns, but about social and environmental impacts that businesses have.”

- Jerry Greenfield, Co-Founder of Ben & Jerry’s

America Recycles Day – November 15, 2022

America Recycles Day promotes recycling and buying products and packaging with recycled content. People are encouraged to consider what they consume, where and how they recycle, and to pledge to recycle more and recycle right away. America Recycles Day was first observed in 1994, with more than 40 states taking part. America Recycles Day is the only nationally recognized day dedicated to promoting and celebrating recycling in the United States! In order to keep our planet healthy, we must recycle. Keep an eye out for a Team News email detailing specific ways you can recycle!

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Sustainable Materials Library Update

To leverage sustainable materials in the product development process, we are working to develop a Sustainable Materials Library in conjunction with the ESG Framework Development. For a material to be considered sustainable, it must be produced in a way that does not result in harm or destruction to the environment. During November, the Social Compliance Team will schedule working sessions with the Sourcing Commodity Managers to assess the commodity-specific materials that go into Exemplis products to determine sustainability. As a result, Exemplis will have a library of sustainable materials to reference when developing new products.

Supplier Corrective Action Plan Review

In order to hold our Suppliers accountable, we implement Corrective Action Plans (CAPs). If non-compliance issues are identified during an onsite audit, the Exemplis Auditor will provide the Supplier with a Corrective Action Plan (CAP) summary that describes each non-compliance. Suppliers are expected to correct non-compliances and identify the root cause of these issues. This will enable them to not only address non-compliances in the short term but also ensure that they do not happen the future. In most cases, Suppliers should correct items listed on the CAP within 60 days. Exemplis does not expect perfection, but we do expect continuous improvement.

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Diligent Webinar: How Do You Nail Down Your Company’s Story on ESG?

ESG is vital to an organizations success because it helps address issues such as climate change, resource scarcity and social inequality that are affecting its ability to function effectively. Organizations must start by asking itself the right questions: Who are the stakeholders for ESG disclosures? What steps should we take to establish meaning ESG goals that meet stakeholder expectations? How do we measure and communicate progress on ESG goals to stakeholders? Implementing a meaningful ESG story requires transparency, authenticity, and relevance. To view the webinar, click here

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Q3 Asia Suppliers CSR Highlights
There are 17 suppliers that submitted CSR reports for Q3 2022. Some of the highlights taken from their reports are as follow:
Ø In July, Asber, our top supplier for metals, had an internal factory teambuilding activity for making tasty cakes. There aren’t many choices for holding teambuilding activities as group outing is restricted under the nation’s still strict COVID policy, but the supplier is finding alternative to keep the team together and feel at home.
Ø In August 2022, Zhongtai, our top supplier for mechanism, upgraded two areas in their workers’ dormitory, one is the cooking area, the other one is the shower system. The improvements are aimed out providing workers a better living experience that equals to that of living in the serviced apartments outside the factory in the local area.
Ø September is usually the month for the important traditional Chinese festival of Mid-Autumn Day. This year it’s on September 10^th. Factories across China had different celebrations with their workers, like handing out mooncakes, gift cards, holding luck draw etc.	Zhongtai: Gift Cards & Mooncakes	Samhongsa: Luck Draw

Lant Qingdao Takes the Lead in Automation

Lant Qingdao is a relatively new supplier that specializes in producing gas springs. We started working with them last year and a remote assessment was conducted in 2021, but the site visit was not conducted until two weeks ago when we combined the visit plan with Samhongsa. The site audit turned out well as their people are easy to work with and their labor and environment management system is well developed. Especially impressive is that the supplier takes the lead in automation and manufacturing modernization. One example is their automatic cargo stacking and transferring system. Check out this video for the said operation.

Future Seating Suppliers Audit to be Started

As planned earlier in the year, we will start auditing Future Seating suppliers in Q4 as we have better integrated them into Exemplis. We held the introduction meeting in mid-September with the top supplier Hookay Office Furniture for the initial audit preparation. They are currently in the process of filling out the factory profile information and uploading the required documents to the ExemCare Web system. The site audit is expected to be conducted in early November. In addition, we have also planned the audit to the memory foam supplier Meijie Household after Hookay’s audit.

November ESG Q&A – Supply Chain Team Member Spotlight

Following our first ESG Q&A interview last month, this month we are featuring another Commodity Manger, Javier Huerta, in our ESG Q&A section.

Please continue reading to find out his answers and insights. We hope you enjoy Javier’s perspectives as much as we did!

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1. What does sustainability mean to you?

It means being responsible and respectful to one another and our environment, doing our part to maximize whatever limited resources we have available for us and future generations.

2. How do you practice sustainability in your daily life? Can you provide some examples?

When I am not recycling materials I try to repurpose them, like using plastic bottles as containers or old clothes as cleaning cloths.

3. What is your favorite thing to recycle?

Plastic, having been involved on different process of the plastics world I like the idea of how a plastic bottle will be recycled and transformed into a different product.

4. What companies do you consider leaders in the Environmental/Social Compliance space? And why?

NIKE, IKEA and Toyota are companies that I’ve learned about their Social compliance footprint, there is a thin line on having these programs cause it’s the right thing to do or just doing it to have good marketing, on the last years multiple companies (footwear, electronics, baby consumer products, furniture, etc.) have launched strict programs only after bad propaganda but whatever the reason was to get these programs started having the world to be aware of the importance of environmental and social compliance is a step on the right direction.

5. What barriers do you think Exemplis faces in introducing sustainable practices into our business? Do you have any suggestions on how Exemplis can become a greener company?

I feel we are on the right direction, unfortunately some greener practices are not very cost effective. By using recycled plastic where we can, by recycling our packaging materials, auditing our suppliers such as wood suppliers on their forest controls we are doing our part.

6. How do you think we can better engage the Supplier Community to promote sustainability and compliance in the Supply Chain?

Awareness is key, sustainability and compliance is not only the right thing to do, is also the smart thing to do.

ESG News Around the World

Nestlé Shifts Kit Kat, Quality Street Brands to Recyclable Packaging

Oct. 3^rd: Global food and beverage company Nestlé announced today initiatives to shift two of its confectionary brands in the UK to more sustainable packaging, with Quality Street moving to recyclable paper packaging for its twist-wrapped sweets, and Kit Kat introducing wrappers made with 80% recycled plastic. In total, the moves are expected to eliminate more than three billion pieces of packaging from Nestlé’s supply chain. [More...]

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Maersk Continues Green Transformation with Six Additional Large Container Vessels
Oct. 5^th: Copenhagen, Denmark – A.P. Moller - Maersk (Maersk) announces that it has ordered a further six large ocean-going vessels that can sail on green methanol. The six vessels will be built by Hyundai Heavy Industries (HHI) and have a nominal capacity of approx. 17,000 containers (Twenty Foot Equivalent - TEU). They will replace existing capacity in the Maersk fleet. [More...]

Microplastics Found in Human Breast Milk for the First Time
Oct. 7th: Microplastics have been detected in human breast milk for the first time, with researchers greatly concerned over the potential health impacts on babies. Infants are especially vulnerable to chemical contaminants and the scientists said further research was urgently needed. But they stressed that breastfeeding remained by far the best way to feed a baby. [More...]

Waterdrop Founder Won’t Pursue “996” Work Culture Outside China, Triggering Controversy

Oct. 9^th: Shen Peng, the founder of Beijing-based insurance tech platform Waterdrop Inc., said at the FutureChina Global Forum in Singapore on October 7 that many Chinese companies see Singapore as the first stop for overseas expansion, and that localization is key for them to gain a regional foothold. By this logic, Shen said, they cannot copy China’s prevailing “996” work culture – a 12 hours per day, six days per week working schedule. [More...]

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The Companies Combining Profit and Purpose on Fortune’s Change the World list
Oct. 10^th: If a company can generate revenue and produce creative solutions to solve societal problems, it can have a lasting impact. This morning, Fortune’s annual Change the World list honors companies—from global corporations to startups (some with less than $1 billion in revenue)—meeting this challenge. PayPal earned the No. 1 spot on the list. [More...]

Hyundai, Kia Auto Parts Supplier in Alabama Fined for Child Labor Violations

Oct. 11^th: Authorities found children as young as 13 working at a Korean-operated parts supplier to automakers Hyundai Motor Co and Kia Corp, and have fined the company and a labor recruiter, the U.S. Department of Labor and the Alabama Department of Labor said on Tuesday. In August, authorities accused Alexander City, Alabama-based SL Alabama in federal court of violating child labor laws. [More...]

Trade Unions Adopt Conclusion for Just Economy, Decent Work in South-East Asia

Oct. 13^th: At a sub-regional conference held in the Philippines, workers organizations from 10 South-East Asian countries adopted a joint resolution to revitalize in a changing world of work and outlined concrete measures to collaborate and create a just, sustainable and fair economy, that enables decent work for all workers. In a sub-regional conference, they charted and identified common and concrete policies for collaboration in a joint conclusion. [More...]

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Shein Factory Employees are Working 18-Hour Days for Pennies Per Garment & Washing Their Hair On Lunch Breaks Due to Little Time Off

Oct. 16^th: Fast-fashion company Shein sells clothes at dirt-cheap prices, and a new undercover investigation shows the human cost of maintaining that business model. Workers at factories in China that supply clothes to Shein frequently work up to 18 hours a day with no weekends and just one day off per month, according to an undercover investigation from Channel 4 and The i newspaper in the UK. [More...]

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Protection Plan Issued to Further Conserve Wetlands Across China

Oct. 19th: By 2025, 50 new wetlands will be established, and the national wetland protection rate will reach 55%, according to the National Wetland Protection Plan (2022-2030), jointly issued by China's Forestry and Grassland Administration and the Ministry of Natural Resources in October. The plan clarifies the overall requirements, spatial layout and key tasks of China's wetland protection put forward by the development goals. [More...]

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China’s Environment Authority: China to Move from Carbon Peak to Neutrality in the Shortest Time of History

Oct. 21^st: China will actively implement its policies to work toward the goals of reaching peak carbon emissions by 2030 and carbon neutrality by 2060, Vice Minister of Ecology and Environment Zhai Qing said Friday. China made the pledges at the United Nations General Assembly in 2020. To achieve the goals, China will accelerate the low-carbon transition in key areas and vigorously push the synergy of pollution reduction and carbon cut, Zhai said. [More...]

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US Only Recycled 5 Percent of Plastic Waste in 2021: Greenpeace Report

Oct. 24^th: Only about 5 percent of 51 million tons of U.S. plastic waste was recycled in 2021, according to a study from environmental advocacy group Greenpeace. The report, issued Monday, determined that only a little more than 2 million tons of plastic waste was recycled last year. Moreover, after reaching a high of 9.5 percent in 2014 and an only slightly lower 8.7 percent in 2018, the number has been steadily declining in the last few years. [More...]

Apple Calls on Global Supply Chain to Decarbonize by 2030
Oct. 25^th: The company accelerates work with suppliers to decarbonize Apple-related production, and expands investments in clean energy and climate solutions around the world. Apple today called on its global supply chain to take new steps to address their greenhouse gas emissions and take a comprehensive approach to decarbonization. [More...]

At least 153 dead, 133 injured in stampede during Halloween festivities in Seoul

Oct. 29^th: A mass of mostly young people celebrating Halloween in Seoul became trapped and crushed as the crowd surged into a narrow alley, killing at least 153 people and injuring 133 others in South Korea's worst disaster in years. Emergency workers and pedestrians desperately performed CPR on people lying in the streets after the crush in the capital's leisure district of Itaewon on Saturday night. [More...]

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This material is intended for internal use only.

Thank you for reading!

For questions and suggestions, please email:

bzhang@exemplis.com & ckolste@exemplis.com