Supply Chain ESG Newsletter- December 2022
Publication on 01/31/2023


Issue No. 10

December 2022


Supply Chain ESG Newsletter


In this issue:

Ø YTD Audit & CAP Summary & January Audit Plan

Ø Human Rights Exploration:  Code of Conduct & Audit Checklist

Ø Exemplis’ Sustainability Policy is Under Revision

Ø Future Seating Meeting - ExemCare Overview

Ø Audits to Asia Suppliers Out of China Kick-started

Ø Future Seating Top Spend Supplier Hookay Audited

Ø  World Energy Conservation Day – December 14, 2022

Ø 2023 Social Compliance Audit Plans

Ø ESG Q&A Sourcing Spotlight –  Miles Chang

Ø ESG News Around the World

A Note from the Social Compliance Team

Happy Holidays!  While December is well known for its many international holidays and festivals it’s also Universal Human Rights Month.   Human Rights is a pivotal theme in the world of ESG. The United Nations defines Human Rights as:  rights inherent to all human beings, regardless of race, sex, nationality, ethnicity, language, religion, or any other status.  Exemplis’ Supplier Code of Conduct and the ExemCare Social Compliance Audit Checklist are two of the most important documents the Social Compliance Team uses to gauge a Supplier’s commitment to respecting human rights and providing decent working conditions to their Workers. As a responsible organization who conducts business effectively and ethically, it is imperative that we understand who we are doing business with and whether they are equally responsible.  In this month’s publication we include a refresher on Exemplis’ Supplier Code of Conduct and the ExemCare Audit Checklist.  While the Social Compliance Team continues to wrap up 2022 we are eagerly anticipating another successful year for Exemplis in 2023.   A heartfelt thank you to the entire Supply Chain Team for your continuous partnership and support.

Sincerely,

Courtney and Brock


YTD Audits and CAP Updates

Region

Audits

CAP Update

Onsite

Remote

2022 YTD

2021

Closed

Opened

Closed

(in Nov.)

Still Open

N.A.

16

4

48

75

0

3

Asia

13

1

76

185

6

25

Audit Plan for January 2023

Region

Supplier Name

Product

Location

Audit Date

N.A.

Medway

Plastics

LB CA

TBD

Leslie Jee Textiles - HQ

Textiles

HB CA

TBD

Leslie Jee Textiles - W/H

Textiles

LA CA

TBD

Asia

TiMOTION (by 3rd party)

HAT

Taiwan

2022/12/01~02

Omni

Clamp

Yangzhou

2022/11/08

Meijie

Foam

Ningbo

2022/11/10

Patra (by 3rd party)

Chair

S. Korea

2023/01/12~13

I am not here as a public official, but as a citizen of a troubled world who finds hope in a growing consensus that the generally accepted goals of society are peace, freedom, human rights, environmental quality, the alleviation of suffering, and the rule of law.”

- Jimmy Carter, 39th President of the United States and Nobel Peace Prize Recipient  


Human Rights Exploration:  Human Rights: Code of Conduct & ExemCare Audit Checklist 

It is essential that Exemplis understands its business partners in order to avoid serious labor rights abuses, including forced labor, child labor, discrimination, harassment and harmful environmental impacts on communities caused by manufacturing. The Social Compliance Team assesses supplier compliance with human rights through Exemplis' Supplier Code of Conduct and the ExemCare Social Compliance Audit Checklist.   All direct suppliers and freight carriers are required to sign Exemplis’ Code of Conduct. To review the CoC, click [here]… The ExemCare Social Compliance Audit Checklist is used during the audit process, for both onsite audits and remote audits.  To review the checklist, click [here]…

Exemplis’ Sustainability Policy is Under Revision

As you may have noticed, we have a “Sustainability Policy” that is published on our company website. The document serves as a public commitment of social and environmental sustainability from our top management, but it was dated 8 years ago on 7/23/2014, so we think it’s high time to review and update it. Courtney and Brock have made our recommended revisions in our weekly meetings including updates of verbiages, phrases, terms and a major reordering of all the topics to be more logical. The new draft will be submitted to our upcoming ESG committee meeting for review and finalization.

Future Seating – ExemCare Overview Meeting 

On Wednesday, November 9th an ExemCare Overview was presented to Future Seating Team Members:  Luke Ringleman, Director of Supply Chain Planning and Analysis / Retail Support and Chad Jackson, Purchasing and Planning Manager, EC Warehouse. A summary of key Social Compliance initiatives was presented, as well as an overview of the ExemCare Program, audit information, and the expectations for new Suppliers.  In addition, the following pertinent ExemCare documents were shared with the Future Seating Team:  ExemCare Audit Checklist, Exemplis Supplier Guidelines, and the Supplier Code of Conduct.  To review the presentation, click [here]…

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Audits to Asia Suppliers Out of China Have been Kick-started

With restrictions from China’s “Zero COVID” policy, international travel is still inconvenient and also costly, so it’s not viable for China team to conduct the onsite audits to suppliers located out of China like we did before. However, our commitment to supply chain ESG remains the same and thus we have scheduled 3rd party audits by using local auditors to two of our top spend and also strategic suppliers for HATs and Office Chairs, Timotion in Taiwan and Patra in Korea. The audit to Timotion will be conducted on Dec. 1st and 2nd by TUV Nord and the Patra audit will be on Jan. 12th and 13th by Elevate. In 2023, we will continue to use 3rd party auditing firms for some of the other top spend suppliers that our internal auditors won’t be able to visit.

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Future Seating Top Spend Supplier Hookay Has been Audited

As mentioned in our last newsletter, we have started audits to suppliers of our acquired brands. In late November, we conducted the onsite audit to Future Seating’s top spend supplier Hookay in China. The supplier received a Red rating due to critical issues of not having environment permit and proper treatment of hazardous waste – they used to have these before they moved to their current location. Besides, they also have quite some other issues in monetary penalty, paid leave, overtime, hearing protection, fire safety etc. We will help Hookay to address root causes and resolve all the issues effectively in timely manner. 

World Energy Conservation Day – December 14th     

World Energy Conservation Day is a day to focus on energy conservation and raise global awareness about climate change that results from using fossil fuels such as oil, coal, and natural gas.  It is observed worldwide on December 14th to bring awareness to the overconsumption of energy throughout the world. Energy use is a major source of global warming, which has the potential of making the earth uninhabitable. Here are some tips on how you can conserve energy at home:

§ Turn off lights when you leave a room

§ Try to use less hot water in general

§ Unplug appliances when not in use

§ Dry clothes in the sun rather than the dryer

§ Replace all your bulbs with LEDs

§ Walk or bike instead of driving if possible

§ Purchase energy-efficient appliances

§ Turn down your thermostat

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2023 Social Compliance Audit Plans

The Social Compliance Team has developed its regional Audit Plans for 2023.   To ensure alignment with next year’s sourcing strategy, the Social Compliance Team will review the tentative audit schedule with the respective Commodity Manager or Sourcing Specialist.

Audit schedules are determined by the following factors:

  • Suppliers who contribute to the top 80% of Spend
  • New Suppliers
  • Suppliers who require re-certification
  • Top Suppliers with Quarterly Scorecards
  • New Acquired Suppliers – Post Acquisition
  • Sourcing Strategy

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November ESG Q&A – Supply Chain Team Member Spotlight 

Following our ESG Q&A interview last month, this month we are featuring another team member Sr. Buyer, Miles Chang, 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?

     Sustainability for me is to be mindful of our consumption of the materials that may impact the environment in the future. Looking at the global warming index and there has yet to be any countries that can achieve the index score that can claim top percentile, there are definitely a lot room for improvement for us to continue strive through including replacement usage and recycling program.

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

      I try my best to bring shopping bag during grocery shopping and I have been bringing my own mug or container to work and reusable straws when getting any coffee or drinks.

3.      What is your favorite thing to recycle?  

      I have been recycling batteries and water bottles and make sure they will get recycled through recycling center.

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

      I am not very familiar with the leaders in the category but I do see companies like Starbucks had integrated their cup to use reusable packaging, and redesign the lid to avoid the use of straws, they do also serve coffee at discount if you bring your own cup. Our own brand Timbuk2 is also using eco fabrics and materials to redesign and produce the backpacks in response to be environmental compliance.

    

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?

 We can further encourage our employees to bring own utensils and containers during company meal gathering.  Switch our light to motion sensor to reserve power and electricity. And design workshop to share the knowledge to sustainability and what industrial leader does as example. And I think we could dedicate a page in our website to share our progress toward sustainability and environment matters.

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

     For overseas suppliers, sometimes the work environment and ethics or even culture are different which makes it harder to engage them. We do need more efforts through marketing, informing and communicating with them on the expectation on material selection, goals to process the wastes and working culture for the employees.


ESG News Around the World – We track clicks so your engagement is highly appreciated J

Profit Over People: Alarming Trend Continues at Dollar General Stores Where Seven Southeast Inspections Again Find Willful Violations

Nov. 1st: Less than 1 month after the U.S. Department of Labor cited Dollar General Corp. and Dolgencorp LLC with more than $1.6M in penalties for putting its workers' safety at risk, federal inspectors have issued citations for similar violations at store locations in Alabama, Florida and Georgia, and added $2,777,640 in proposed penalties now owed by one of the nation's largest discount retailers.  Since 2017, Dollar General Corp. and Dolgencorp LLC have received more than $12.3M in initial penalties for numerous willful, repeat and serious workplace safety violations. [More...]

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UN Talks How to Financially Aid Nations Hit by Natural Disasters

Nov. 6th: Climate change diplomacy is about to get muddy over money.   At the COP27 conference in Egypt, leaders from nations rich and poor will face off over the highly contested notion of climate reparations. Namely, should industrialized nations be financially responsible for environmental catastrophes incurred by developing nations that scientists have linked to climate change?  Despite smaller, poorer countries producing relatively little pollution, scientists say they often suffer the most damage from climate change.  [More...]

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China Passes New Women’s Protection Law: Key Takeaways for Employers

Nov. 8th: The Standing Committee of the 13th National People’s Congress, China’s top legislative body, passed the revised Law on the Protection of Women’s Rights and Interests. The amended Women’s Protection Law, which will take effect on January 1, 2023, added nearly 30 new provisions to enhance women’s protection in areas ranging from gender equality in recruitment and contract negotiation, employer’s obligation in sexual harassment prevention, as well as relief measures to women should their rights and interests being harmed. [More...]

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Climate Change Threatens to Destroy ‘The Things Americans Value Most,’ U.S. Government Warns

Nov. 8th: The U.S. must ramp up efforts to reduce greenhouse gas emissions over the next three decades as climate change worsens disasters and threatens water supplies and public health across the country, according to a major draft report released by the federal government on Monday.  “The things Americans value most are at risk,” the National Climate Assessment authors wrote in the 1,695-page draft. “Many of the harmful impacts that people across the country are already experiencing will worsen as warming increases, and new risks will emerge.” [More...]

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Solar Panels Must Cover Large Parking Lots, Rules French Senate

Nov. 9th:  French senators have ruled that parking lots with 80 or more cars must have at least half of the spaces covered with solar panels. The decision—passed on November 4—still has to gain assent in the Assemblée Nationale upper house. The stipulation could generate up 11 gigawatts, or the equivalent of ten nuclear reactors, says the French government.  The proposal was part of a package urging for the acceleration of renewable energies. Car parks, away from protected areas, with more than 400 spaces must fit solar panels within three years, states the bill.  [More...]

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H&M Commits Nearly $300 Million Annually to Tackle Supply Chain Emissions

Nov. 14th:  Fashion and design brands company H&M Group announced today a series of funding initiatives aimed at decarbonizing its value chain, including support for suppliers to shift to clean energy and improve energy efficiency. The company said that it has implemented an annual budget of around SEK 3 billion (US$287 million) for projects to reduce emissions across its value chain. Targeted areas of investment will include phasing out coal and increasing the share of sustainable materials. H&M has set a goal to achieve net zero emissions by 2040, and the company recently set interim targets to reduce absolute Scope 1, 2 and 3 emissions by 56% by 2030.  [More...]

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World Population to Reach 8 Billion on 15 November 2022

Nov. 15th: The global population is projected to reach 8 billion on 15 November 2022, and India is projected to surpass China as the world’s most populous country in 2023, according to World Population Prospects 2022, released today on World Population Day. “This year’s World Population Day falls during a milestone year, when we anticipate the birth of the Earth’s eight billionth inhabitant. This is an occasion to celebrate our diversity, recognize our common humanity, and marvel at advancements in health that have extended lifespans and dramatically reduced maternal and child mortality rates,” said UN Secretary-General António Guterres. [More...]

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Microsoft Will Update Harassment Policy After Report Shows Pitfalls in Handling of Complaints

Nov. 15th:  Microsoft on Tuesday said it would update sexual harassment and gender discrimination policies after a third-party report showed shortcomings in how the company deals with complaints.  The report comes a year after Microsoft shareholders approved a proposal requesting that the board publish a review of workplace sexual harassment policies. In January, the board authorized the company to hire law firm ArentFox Schiff LLP to review policies, submit a report and make recommendations.  The report is significant in an industry that’s making pronounced efforts to improve diversity and ensure that sexual misconduct is taken seriously. [More...]

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California Unveils Plan to Reach Carbon Neutrality by 2045

Nov. 16th:  California air quality officials released a bold climate plan Wednesday that outlines in broad strokes how the state intends to drastically reduce greenhouse gas emissions by the end of the decade and eventually eliminate its carbon footprint.  The so-called scoping plan released by the California Air Resources Board reflects Gov. Gavin Newsom’s accelerated goal of curtailing planet-warming emissions by 48% this decade compared with 1990 levels. State law requires that California’s emissions be reduced at least 40% by 2030 and 85% by 2045, at which point any emissions from human activity would be offset by natural ecosystems and other solutions. [More...]

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Ikea Suppliers Accused of Using Forced Labor in Belarusian Jails

Nov. 17th:  Many products sold by Swedish furniture giant Ikea were for years made using forced labor in Belarusian jails, according to a report by French media outlet Disclose.  According to the investigation, half of Ikea’s major Belarusian suppliers had links with penal colonies run by the authorities of Alexander Lukashenko, the Belarusian strongman and Vladimir Putin ally.  In one of the documented cases, Ikea supplier Mogotex purchased textiles from the IK-2 juvenile detention center in 2019. The head of IK-2 was sanctioned by the EU between 2006 and 2014 because of the “inhumane treatment of political prisoners.”. [More...]

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Beijing Reviews Minor Protection Regulations to Ban Tattoo and Medical Cosmetology Services

Nov. 24th:  Beijing's top legislature reviewed on Thursday a draft amendment of the local regulations on minor protection to prevent school bullying and internet addiction, and ban medical cosmetology and tattoo service to minors. In order to guarantee the campus security, prevention of school bullying was included in the draft amendment which proposed that schools and kindergarten should safeguard the legitimate rights and interests of underage students and children at school and kindergarten.  [More...]

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Apple Supplier Foxconn Offered Protesting Workers $1,400 Each to Quit Their Jobs and Leave 'iPhone City'

Nov. 25th:  The Chinese company that makes iPhones for Apple has offered 10,000 yuan ($1,400) to protesting staff if they quit their jobs and leave its vast factory in Zhengzhou, CNN reported. Videos posted to social media showed violent clashes between workers and security forces at Foxconn's plant in Zhengzhou, the location of a recent COVID-19 outbreak.  Protests erupted at the sprawling factory complex on Tuesday and Wednesday over withheld pay and harsh pandemic-related restrictions. Video footage shows security officers, clad in protective suits, kicking and beating workers.  [More...]

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Protests Erupt in Xinjiang and Beijing After Deadly Fire

Nov. 26th:   Public anger in China towards widening COVID-19 lockdowns across the country erupted into rare protests in China’s far western Xinjiang region and the country's capital of Beijing, as nationwide infections set another record.  Crowds took to the streets on Friday night in Xinjiang's capital of Urumqi, chanting "End the lockdown!" and pumping their fists in the air, after a deadly fire that killed 10 on Thursday triggered anger over their prolonged COVID-19 lockdown according to videos circulated on Chinese social media on Friday night. [More...]


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Thank you for reading!

For questions and suggestions, please email:

bzhang@exemplis.com & ckolste@exemplis.com