Case study: How Ellos Group promotes sustainability across its supply chain
Ellos Group (FNG Nordic AB), which includes Ellos, Jotex, Stayhard, and Homeroom, is the Nordic region’s leading ecommerce group, primarily offering fashion and home interiors through its own brands but also via a number of external brands. Ellos Group seeks to ensure fair working conditions and adherence to human rights in its value chain, and believes that a close dialogue and cooperation with its suppliers is necessary to achieve this.
This case study is based on the 2020 Sustainability Report by Ellos Group, prepared in accordance with the GRI Standards, that can be found at this link. Through all case studies we aim to demonstrate what CSR/ ESG/ sustainability reporting done responsibly means. Essentially, it means: a) identifying a company’s most important impacts on the environment, economy and society, and b) measuring, managing and changing.
Abstract
Ellos Group expects its suppliers and business partners to share its views about business ethics, human rights, fair working conditions and the environment. Tweet This! In order to promote sustainability across its supply chain Ellos Group took action to:
- implement a Code of Conduct for suppliers
- apply a supplier follow-up process
- promote environmental sustainability
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With this case study you will see:
- Which are the most important impacts (material issues) Ellos Group has identified;
- How Ellos Group proceeded with stakeholder engagement, and
- What actions were taken by Ellos Group to promote sustainability across its supply chain
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What are the material issues the company has identified?
In its 2020 Sustainability Report Ellos Group identified a range of material issues, such as anti-corruption, diversity and equality, energy, emissions and waste, community engagement. Among these, promoting sustainability across its supply chain stands out as a key material issue for Ellos Group.
Stakeholder engagement in accordance with the GRI Standards
The Global Reporting Initiative (GRI) defines the Principle of Stakeholder Inclusiveness when identifying material issues (or a company’s most important impacts) as follows:
Stakeholders must be consulted in the process of identifying a company’s most important impacts and their reasonable expectations and interests must be taken into account. This is an important cornerstone for CSR / sustainability reporting done responsibly.
Key stakeholder groups Ellos Group engages with:
| Stakeholder Group |
| Customers |
| Employees |
| Suppliers |
| Owners |
| Society |
How stakeholder engagement was made to identify material issues
To identify and prioritise material topics Ellos Group engaged with its stakeholders through surveys and interviews.
What actions were taken by Ellos Group to promote sustainability across its supply chain?
In its 2020 Sustainability Report Ellos Group reports that it took the following actions for promoting sustainability across its supply chain:
- Implementing a Code of Conduct for suppliers
- Ellos Group’s Code of Conduct for its suppliers is based on the French standard ICS (Initiative Clause Social), which is equivalent to programmes such as the BSCI (Business Social Compliance Initiative), and follows international labour standards, such as the International Labour Organization’s (ILO) conventions and declarations and the United Nations (UN) Guiding Principles on Business and Human Rights. Ellos Group’s Code of Conduct covers important areas such as child labour, forced labour, discrimination, freedom of association, wages and working hours, health and safety in the workplace and environmental aspects. Ellos Group requires all suppliers to adhere to its Code of Conduct prior to starting any business relationship. The Code of Conduct applies to all suppliers and production units that are involved in the manufacture or supply of products to any of the companies included in Ellos Group. The Code of Conduct sets forth the requirements that all suppliers must meet in order to do business with Ellos Group. The suppliers are responsible for ensuring that these requirements are met at all factories involved in the manufacture of products for Ellos Group. Ellos Group also expects its suppliers to follow internationally accepted labour standards, including the ILO conventions, and to continually work on improving the working conditions for those involved in the production of its products.
- Applying a supplier follow-up process
- Ellos Group strives for all of its products to be manufactured in accordance with the Code of Conduct, under fair working conditions and with adherence to human rights. Ellos Group’s suppliers are required to adhere to its Supplier’s Code of Conduct and prior to the first order, all suppliers should have a valid audit protocol. During 2020 there have been cases of denied suppliers due to failure to comply with initial audit. In order to track progress, identify risks and improvement opportunities, and to support its manufacturers, Ellos Group has a control and follow-up system in place with regular audits and inspections. Some of the audits (37%) are done by its main agent Kering Group Sourcing (KGS), and some through the independent audit institute Bureau Veritas. If improvement needs are identified in an audit, the supplier is required to introduce improvements that are outlined in a Corrective Action Plan. As the production of Ellos Group’s products is in high-risk countries from a working condition perspective, there is a need of regular inspections of all suppliers, independent of the sourcing volume Ellos Group has at the supplier. Accordingly, in 2020, Ellos Group continued its work to cover 100% of suppliers to have been audited and externally certified within 24 months by 2020 and reached 100% coverage of all suppliers, manufacturing factories and processing factories. In addition to this, Ellos Group and its agent KGS conduct ad hoc inspections at the suppliers’ factories. Non-compliance identified in 2020 was mainly related to working hours and lack of documentation of wages and working hours. Depending on how serious the non-compliance is, a second audit is scheduled to confirm progress within a set time frame. If serious issues are not rectified, business will be terminated.
- Promoting environmental sustainability
- During 2020, Ellos Group started collecting information from suppliers on their climate impact and created a scorecard on suppliers called the Ellos Group Green Scorecard. The scorecard covers their energy usage, water and wastewater management, preparation and washing, coloration and printing, as well as certificates for sustainable materials. The goal is to collect the information from all factories, and to use the scorecard as input for supplier development.
Which GRI Standards and corresponding Sustainable Development Goals (SDGs) have been addressed?
The GRI Standards addressed in this case are:
1) Disclosure 308-1 New suppliers that were screened using environmental criteria
2) Disclosure 414-1 New suppliers that were screened using social criteria
3) Disclosure 414-2 Negative social impacts in the supply chain and actions taken
Disclosure 308-1 New suppliers that were screened using environmental criteria does not correspond to any SDG.
Disclosure 414-1 New suppliers that were screened using social criteria corresponds to:
- Sustainable Development Goal (SDG) 5: Gender Equality
- Targets: 5.2
- Sustainable Development Goal (SDG) 8: Decent Work and Economic Growth
- Targets: 8.8
- Sustainable Development Goal (SDG) 16: Peace, Justice and Strong Institutions
- Targets: 16.1
Disclosure 414-2 Negative social impacts in the supply chain and actions taken corresponds to:
- Sustainable Development Goal (SDG) 5: Gender Equality
- Targets: 5.2
- Sustainable Development Goal (SDG) 8: Decent Work and Economic Growth
- Targets: 8.8
- Sustainable Development Goal (SDG) 16: Peace, Justice and Strong Institutions
- Targets: 16.1
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References:
This case study is based on published information by Ellos Group, located at the link below. For the sake of readability, we did not use brackets or ellipses. However, we made sure that the extra or missing words did not change the report’s meaning. If you would like to quote these written sources from the original please revert to the following link:
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