Responsible sourcing

Our purchasing decisions have an impact on social, environmental, and
economic conditions in global supply chains. We are especially aware of
human rights risks in our supply chain such as forced labour, child labour and
excessive working hours. Monitoring and addressing sustainability risks in our
supply chain strengthens our stakeholders’ trust in our brand and increases our
preparedness for a rising regulatory focus on due diligence in supply chains.

Ambitions

Focusing on responsible sourcing ensures that we account for the impacts
of human and labour rights on workers and communities. Through our social
compliance process, we work to ensure that factories, selected for production
on our behalf, can meet our requirements and that the people producing our
products are treated with respect and provided with fair and safe working
conditions. Most of our direct suppliers are trading companies who source
from a range of different factories, enabling us to offer a broad array of novel
products across a variety of categories.

Progress in 2023

The Flying Tiger Copenhagen Supplier Code of Conduct sets out minimum
requirements for responsible business practices by our suppliers (most often
trading houses) and sub-suppliers (most often factory production sites),
to operate by responsible business principles like human rights and in full
compliance with all applicable laws and regulations.
The Code is based on international standards as defined by the United
Nations (UN) and the International Labour Organisation (ILO). It defines our
requirements in the areas of workplace health and safety, terms of employment,
working hours, wages, environmental protection, and business ethics.

Social compliance process

Risk assessment and factory audits

new factories are pre-screened before entering our supply chain to ensure
they meet acceptable human rights and responsible business standards.
Existing factories are selected for audit by assessing the risk based on (a)
country of production, (b) purchase volume and (c) product category combined
with individual assessment of (a) brand exposure of product and (b) audit history
and performance of factory, including sub-contracting practices.

We have zero tolerance for child labour and strict rules for young workers
(between 16 and 18 years old). In 2023, we found no cases of child labour. While
the existence of child labour is unacceptable, proactively looking for child
labour in our supply chain means that we can remediate and change things,
one case at a time. The remediation process is handled in partnership with the
Centre for Child Rights and Business. They are experts in these types of cases,
and make sure that every case is handled according to the individual child´s
circumstances. The centre engages in dialogue with the family and ensures
appropriate measures, like enrolment in vocational schools and monthly living
stipends throughout the remediation period.

In 2023, we conducted 279 regular audits in our factories in China, in addition
to the pre-screening of 184 factories, 16 of which required in-person audits.
The most common issues to improve were ensuring a safe and healthy working
environment and reducing overtime.

Supplier performance and training

In 2023, we launched our Supplier Performance Management programme,
which has helped us understand the main points of development that each
of our partners should implement, segmenting our vendors according to
performance levels: Gold, Silver, Bronze, and Red based on results for Quality,
Sustainability, Delivery and Business relationship.

In 2023, we began running large, in person supplier conferences twice a
year, focussing on strategy exchange, learning and development. We have
also maintained our already established Supplier Academy, which runs
frequent sessions on relevant topics within social requirements, sustainability,
compliance, procurement, and quality. This allows us to provide training related
to the ever-changing retail scenario while reaching a broader audience. In 2023,
we had four training sessions with an average of 26 suppliers represented in
each session. All sessions are recorded and shared with new suppliers during
their onboarding.

Anti-corruption

Sadly, corruption is a considerable issue in international supply chains that
prevents free and fair behaviour and limits sustainable development. Our
audits are strict in this aspect, and our whistleblower setup ensures anonymous
reporting if needed.

This year we have furthermore enhanced our training for
employees on the topic and we have informed our suppliers underlining our
zero-gifting policy. In 2024 we plan to further emphasise this policy with our
suppliers. In 2023, no cases of corruption or bribery were identified.