SUSTAINABILITY 2017 - Kathmandu Holdings

 
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SUSTAINABILITY 2017 - Kathmandu Holdings
SUSTAINABILITY
REPORT 2017

kathmandu.co.nz
kathmandu.com.au
kathmandu.co.uk
kathmanduoutdoor.com
SUSTAINABILITY 2017 - Kathmandu Holdings
2   SUSTAINABILITY REPORT 2017                                             INTRODUCTION                SUSTAINABILITY REPORT 2017                                3

                                                                           OUR
                                                                           STORY

                                                                           We were born in New Zealand                      Original.
                                                                           —a breathtaking country where                    Sustainable.
                                                                           isolation breeds innovation and                  Engineered.
                                                                           the hunger to explore.                           Adaptive.

                                                                           For 30 years we have designed                    These four principles are the
                                                                           gear to endure the rugged                        foundation of every piece that
                                                                           landscapes of our homeland, and                  carries the Kathmandu logo.
                                                                           to outfit the adventurous spirit of              They’re the basis of the questions
                                                                           our people.                                      we ask ourselves throughout the
                                                                                                                            design and manufacturing process.
                                                                           With Kiwi ingenuity, and an open
                                                                           mind, we continuously adapt our
                                                                           gear to endure different weather
                                                                           conditions, diverse terrain and the
                                                                           ever-changing needs of travellers.

                                                                           We act with people and the planet
                                                                           in mind—from the creative minds of
                                                                           our designers to the careful hands
                                                                           of our suppliers, to the backs of our
                                                                           customers all around the world.

                                                                           We believe that adventure begins
                                                                           when you pack your bag.

                                 Easter in Queenstown, New Zealand, 2016   We are Kathmandu.
SUSTAINABILITY 2017 - Kathmandu Holdings
4                         SUSTAINABILITY REPORT 2017                                INTRODUCTION                 SUSTAINABILITY REPORT 2017                                 5

                           OUR TOP 10
                           SUSTAINABILITY
                           HIGHLIGHTS

                                                                                                                                      5         Launched our 5 Green Star
                                                                                                                                                  AU Distribution Centre

Won the Banksia ‘Large
Business Sustainability
Leadership’ award and
   two APC awards
                                    B+ in the Ethical
                                     Fashion Guide
                                      supporting
                                     workers’ rights
                                                                  Partnered with
                                                                   bluesign® to
                                                                eliminate harmful
                                                                    chemicals
                                                                                     Ranked #2 in the outdoor
                                                                                     and sports category 2017
                                                                                    Textile Exchange Preferred
                                                                                    Fibres and Materials report
                                                                                                                                                     8.5            M
                                                                                                                                        8.5 million bottles of water saved

             3.9           M                                    74         %
                                                                                      Increased recycling rate
                                                                                                                                                   899               kg
         Recycled 3.9 million plastic                    Increased sustainable      from 69% to 72%. 106 stores                                899kg of clothes donated
            bottles into our gear                       cotton from 59% to 74%         now recycling polybags                                     to Red Cross Shops
SUSTAINABILITY 2017 - Kathmandu Holdings
6    SUSTAINABILITY REPORT 2017                                                    INTRODUCTION   SUSTAINABILITY REPORT 2017                                           7

     CONTENTS                                                                      CHAIRMAN’S
                                                                                   & CEO’S REPORT

                                                                                                                               As Kathmandu celebrates our 30th
8    Our Journey                                                                                                               anniversary this year, we’ve had a
     Since 1987, we’ve been building a culture of sustainability and now we’re                                                 chance to reflect on how we’ve
     starting to think even bigger.                                                                                            evolved as a company. This report
                                                                                                                               demonstrates how our aspirations for
                                                                                                                               sustainable practice have matured
                                                                                                                               over the last three decades.
                                                                                                                               As a travel and adventure brand, we
16   Our Suppliers                                                                                                             feel a great responsibility of caring for
     Looking after the people in our supply chain is our number one priority.                                                  our planet. We’re not in it alone. Our
     We’re evolving a new approach to how we do it.                                                                            industry is actively working together
                                                                                                                               to influence change and we are proud
                                                                                                                               to be a part of the global progress.
                                                                                                                               In FY 2017, we were honoured to
26   Our Products                                                                                                              receive the Banksia Large Business
     The materials we choose make a big difference to our impact. We’ve made                                                   Sustainability Leadership Award,
     big strides this year in sustainable textiles.                                                                            recognising the commitment and
                                                                                                                               focus across our team. We were also
                                                                                   DAVID KIRK     XAVIER SIMONET               acknowledged by the Textile
                                                                                   CHAIRMAN       CHIEF EXECUTIVE OFFICER      Exchange ranking our business
                                                                                                                               second globally in the outdoor and
44   Our Footprint                                                                                                             sports category of the Preferred
     Operational efficiency supports environmental sustainability. First we                                                    Fibres and Materials 2017 Report.
     measure and then we act.                                                                                                  We are pleased to have expanded our
                                                                                                                               soft plastics recycling programme to
                                                                                                                               106 of our stores as we progress
                                                                                                                               towards our zero-waste-to-landfill
52   Our Community                                                                                                             target. We have also expanded our
                                                                                                                               customer engagement programmes
     Connecting our communities, customers and causes we care about. Our
                                                                                                                               and community investments.
     strategy focuses on three ways to improve people’s lives.
                                                                                                                               This year, as in previous years, people
                                                                                                                               have been at the heart of our journey
                                                                                                                               to be a responsible corporate citizen —
                                                                                                                               from taking an active role in the
62   Our Team                                                                                                                  personal development of our team
     The three pillars of our People Plan are helping us develop a safe, engaged                                               members to protecting the rights of
     and high performing team.                                                                                                 every person in our supply chain.
SUSTAINABILITY 2017 - Kathmandu Holdings
30     Years of
       OUR JOURNEY

                                                                                      JOURNEY
       First Australian
1987

       store opened

       First New Zealand
1991

       store opened

       50 stores
2007

       total

       Kathmandu was
2009

       publically listed

       100 stores
2009

       total

       Launched our Sustain
2010

       the Dream plan

                                                                                      OUR
       Released our first
2012

       sustainability report

       150 stores
2014

       total

       Launched our international website
2016

       and wholesale partnerships

       Kathmandu was recognised with
2017

       the Large Business Sustainability
                                            Summit Club member Bob McLaughlan in
       Leadership award in Australia —      the South Island of New Zealand for our
       Banksia Foundation                   2007 Winter catalogue shoot.
SUSTAINABILITY 2017 - Kathmandu Holdings
10                                         SUSTAINABILITY REPORT 2017                                                              INTRODUCTION                                SUSTAINABILITY REPORT 2017                                    11

                                                                                                                                   OUR JOURNEY,
     Kathmandu ambassador Tim Jarvis
                                                                                                 What would it
                                                                                                 take for us to
     uses adventure to raise awareness
     for environmental issues.

                                                                                                                                   SINCE 1987
                                                                                                 move beyond
                                                                                                 sustainability
                                                                                                 towards being a
                                                                                                 business that
                                                                                                 puts back more
                                                                                                 than it takes out?

                                                                                                                                   We’ve done a lot of growing up in the last 30         INDUSTRY AND INTERNATIONAL FOCUS
                                                                                                                                   years. What would it take for us to move beyond
                                                                                                                                                                                         Sometimes, our impacts are not front of mind
                                                                                                                                   sustainability towards being a business that puts
                                                                                                                                                                                         for our customers. But that doesn’t mean they
                                                                                                                                   back more than it takes out?
     Our 1991 catalogue cover features                                                                                                                                                   are not important. Industry partners give us
     a boat navigating the pack ice of                                                                                             Big dreams like these can only be achieved if         other tools for understanding our impacts. The
     Mowbray Bay, Antarctica.
                                                                                                                                   everyone plays a part. We’ve been building a          Higg Index, a suite of self-assessment tools
                                                                                                                                   culture of sustainability that helps everyone         designed by the Sustainable Apparel Coalition
                                                                                                                                   understand the impact of their role—from the          with its roots in the outdoor industry, helps
                                                                                                                                   factory pressures caused by a late purchase order     brands understand their impacts. It showed us
                                                                                                                                   to the waste we produce every day. At the same        that chemical management is an area we
                                                                                                                                   time, our Sustain the Dream strategy provides a       should focus on. The apparel industry accounts
                                                                                                                                   framework for measuring impacts and driving           for 25% of global chemical use. Yet this was not
                                                                                                                                   change across the organisation.                       at the tops of our customers’ minds.
                                                                                                                                                                                         To reduce our chemical impact, we partnered
                                                                                                                                   HOW WE KNOW WHAT’S IMPORTANT                          with bluesign®, an independent organisation
                                                                                                  A customer hikes through Fox
                                                         Testing hiking gear on the               Glacier in New Zealand.                                                                that guides brands toward better chemistry. We
                                                                                                                                   To understand our impacts and prioritise our
                                                         Tongariro Crossing in 2002.              Credit @brandoyelavichexplorer                                                         see it as part of our role to educate team
                                                                                                                                   action, we look to our stakeholders. They
                                                                                                                                                                                         members and customers about these less-
                                                                                                                                   consistently tell us that human rights in the
                                                                                                                                                                                         obvious impacts.
                                                                                                                                   supply chain should be our top priority. This year,
                                                         The 1994 catalogue commemorated
                                                                                                                                   we’ve evolved our approach in this area—putting       Because sustainability is all about making a
                                                         the 100 year anniversary of the first                                     more emphasis on openly building capability           difference, collaboration is the key to driving
                                                         summit of Mount Cook in 1894.
                                                                                                                                   instead of the cat-and-mouse game of auditing.        industry-wide change. We work with others in
                                                                                                                                                                                         our industry — even our competitors — in our
                                                                                                                                   We undertake detailed assessments and surveys
                                                                                                                                                                                         mission to use business to drive change.
                                                                                                                                   every two years to identify and understand
                                                                                                                                   social and environmental impacts, rather than         Our top five material issues have a strong focus
                                                                                                                                   material issues, but the communication is             on people and are closely aligned to the United
     We’ve partnered with the Australian
     Himalayan Foundation since 2012.
                                                                                                                                   ongoing. We have regular conversations with our       Nation’s Sustainable Development Goals. This
                                                                                                                                   customers on social media and through our             report looks closely at the progress we’ve made
                                                                                                                                   customer service channels. This year, we saw a        this year in these five issues: workers’ rights,
                                                                                                                                   spike in concern about microfibres and this           product innovation, operational footprint,
                                                                                                                                   prompted us to develop clearer communications         community engagement and team
                                                                                                                                   about how we understand this problem and              development.
                                                                                                                                   what we can do about it.
                                                                                                                                                                                         For further information on how we engage with
                                                                                                                                                                                         our stakeholders and prioritise our environmental
                                                                                                                                                                                         and social impacts, please visit
                                                                                                                                                                                         www.kathmandu.co.nz/corporate-responsibility/
                                                                                                                                                                                         reports-and-policies
SUSTAINABILITY 2017 - Kathmandu Holdings
12                               SUSTAINABILITY REPORT 2017                                      OUR JOURNEY                  SUSTAINABILITY REPORT 2017                                 13

BETTER
                                                                                                               TEXTILE EXCHANGE                            AUSTRALIAN HIMALAYAN
                                                                                                                                                           FOUNDATION
                                                                                                               Our membership with the
                                                                                                               Textile Exchange supports our               We have been partners with
                                                                                                               materials strategy, we also                 the AHF since 2012. We work

TOGETHER
                                                                                                               participate in the Preferred                with the AHF to support
                                                                                                               Fibres and Materials report.                communities in Nepal, the
                                                                                                                                                           nation that inspired our brand.

                                                                                                               GREEN BUILDING                              HIMALAYAN TRUST OF NZ
Our partnerships with industry                                OUTDOOR INDUSTRY
                                                                                                               COUNCIL OF AUSTRALIA
                                                              ASSOCIATION                                                                                  We have recently partnered
associations help us measure                                                                                   Our membership with the                     with the Himalayan Trust to
                                                              We participate in OIA’s
and improve our own progress.                                 Sustainability Working Group, a
                                                                                                               GBCA supports our green                     further improve outcomes
                                                                                                               building program. We also                   in education, health and
We’re also able to better work                                collaborative platform of more
                                                                                                               work in collaboration with                  sanitation in Nepal.
                                                              than 300 outdoor brands and
towards global solutions to                                   suppliers working together to
                                                                                                               this organisation in trialling
                                                                                                               new projects.
the challenges faced in our                                   identify and implement better
                                                              business practices.
industry. Our partner
organisations are like
specialist coaches. They guide
                                                              SUSTAINABLE APPAREL                              CARBON DISCLOSURE                           AUSTRALIAN RED CROSS
our strategy and train us to                                  COALITION                                        PROJECT
                                                                                                                                                           We have been partnered with
perform better. They pull us up                               Membership to the SAC gives                      We submit an annual                         Australian Red Cross since
if we go astray and give us the                               us access to the Higg Index                      report to the CDP which                     2011. We support their
                                                              modules. We’ve been using the                    supports our carbon                         humanitarian work and
tools we need to stay on track.                               index since 2014 which                           measurement and reduction                   emergency responses.
                                                              supports our sustainability                      programme. We scored a B
                                                              strategy. The index guides us                    for our 2016 report.
                                                              on the environmental and
                                                              social impacts of our products
“The global supply chain                                      and how we can improve.

of apparel is complex                                         FAIR LABOR ASSOCIATION                           ENVIRO-MARK SOLUTIONS                       NEW ZEALAND RED CROSS
and interconnected.                                           We’ve been members of the                        Our membership with                         We have been partnered with
                                                                                                                                                           New Zealand Red Cross since
The power of the OIA                                          FLA since 2014. This
                                                              organisation supports our CSR
                                                                                                               Enviro-mark Solutions helps us
                                                                                                               to measure our carbon                       2011. We support their

Sustainability Working                                        strategy on our pathway to
                                                              accreditation and ultimately
                                                                                                               footprint as well as facilitating
                                                                                                               carbon offsetting projects.
                                                                                                                                                           humanitarian work and
                                                                                                                                                           emergency responses.

Group is bringing                                             protecting workers rights in our
                                                              supply chain.
outdoor companies
together to share
                                                                                                                                                           OUTWARD BOUND
learnings and find                                            BLUESIGN®                                        AUSTRALIAN PACKAGING
                                                                                                               COVENANT ORGANISATION
                                                              Our bluesign® system                                                                         We have been partners with
solutions as an industry.”                                    partnership supports our                         We submit an annual report                  Outward Bound since 2005
                                                              chemicals management                             to the APC which supports                   to enable growth through
                                                              programme, materials                             our packaging and waste                     outdoor experiences with
BETH JENSEN                                                   and products so that                             strategy. Our 2017 report was               our staff, customers and
SENIOR DIRECTOR OF SUSTAINABLE                                they are environmentally                         our highest score, 4.7 out of 5.            young people.
BUSINESS INNOVATION AT THE                                    and socially friendly.
OUTDOOR INDUSTRY ASSOCIATION
SUSTAINABILITY 2017 - Kathmandu Holdings
14                               SUSTAINABILITY REPORT 2017                                                         INTRODUCTION                                                       SUSTAINABILITY REPORT 2017                                                                                 15

OUR
WORLD

     Manufacturers
                                                                                                                                                                                                                      Russia

     142   FACTORIES
           IN CHINA
                                                                                                                        U.K.
                                                                                                                                  Denmark

     8  FACTORIES
        IN VIETNAM                                            Canada
                                                                                                              Ireland
                                                                                                                                     Germany
                                                                                                                                 Netherlands                      Ukraine

     7 FACTORIES                                                                                                           France                    Serbia
                                                                                                                                                   Bulgaria
       IN TAIWAN                                                                                                                                 Macedonia                                                            China

                                                                                                                        Spain     Italy        Greece    Turkey
                                                                       U.S.A.
                                                                                                                                                                                                                            South Korean                  Japan

     Materials Sourcing                                                                                                                                      Israel             Iran        Afghanistan    Nepal

                                                                                                                                                                                             Pakistan                Laos            Taiwan

                                                                                Nicaragua
                                                                 Guatemala                                                                                                                                Cambodia
     Operations                                                                                                                                                                            India                       Vietnam
                                                                                                                                                                                                                                           Phillippines
                                                                                Costa Rica
                                                                                                                                    Nigeria                           Somalia
     NEW ZEALAND         AUSTRALIA                                                                                                                                                                                                    Indonesia

     47   STORES       116      STORES
                                                                                           Peru
                                                                                                                                                  Tanzania
                                                                                                                                                                                                                                Timor-Leste
                                                                                                                                                                                                                                                                Papua New Guinea

     1 DISTRIBUTION
                       1   DISTRIBUTION                                                                                                                                                                                                                                 Vanuatu    Fiji        Samoa

       CENTRE              CENTRE                                                                                                                  Zimbabwe

                                                                                                                                Namibia

     1                 1
                                                                                   Chile
                                                                                                                                                                                                                                                          Australia
       OFFICE              OFFICE                                                                                                                South Africa

                                                                                                  Argentina

     Community Partnerships                                                                                                                                                                                                                                                               New Zealand

     1,419      SPONSORSHIP
                APPLICATIONS

     214    FREE GEAR
            RECIPIENTS

     Team Nationalities                                                                                                                                                                     Antarctica
SUSTAINABILITY 2017 - Kathmandu Holdings
30     Years of
       OUR SUPPLIERS

                                                                    SUPPLIERS
       First Australian
1987

       store opened

       First Chinese
2001

       supplier

       First Vietnamese
2001

       supplier

       First Taiwanese
2002

       supplier

       Started to audit
2012

       our factories

       Published our supplier
2014

       Code of Conduct

       Joined Fair Labor
2014

       Association

                                                                    OUR
       Scored a ‘B’ in the
2015

       Ethical Fashion Report

       First Indonesian
2016

       supplier

       First Nepalese
2016

       supplier

       Scored a ‘B-’ in the
2016

       Ethical Fashion Report

       Scored a ‘B+’ in the
2017

                                Nepalese women knitting our Khusi
       Ethical Fashion Report   beanie in Bhaktapur, Nepal.
SUSTAINABILITY 2017 - Kathmandu Holdings
18                SUSTAINABILITY REPORT 2017                                                       OUR SUPPLIERS                               SUSTAINABILITY REPORT 2017                                            19

                  PEOPLE FIRST
                                                                                                                                                                                           Our suppliers
                                                                                                                                                                                           2017

                                                                                                                                                                                           140      TOTAL
                                                                                                                                                                                                    SUPPLIERS

                                                                                                                                                                                           100      % NEW
                                                                                                                                                                                                    SUPPLIERS
                                                                                                                                                                                           screened using social
                                                                                                                                                                                           criteria

                                                                                                   Workers sewing DriFill Down Jackets at a

                  Evolved management approach builds
                                                                                                   supplier in Shenzhen, China.
                                                                                                                                                                                           8.5     YEARS
                  on brand values.                                                                                                                                                         average tenure with
                                                                                                                                                                                           suppliers
                  Our customers, shareholders,            them. If we have influence we will       RESPONSIBLE PURCHASING                      AUDITS HAVE LIMITS
                  partners and team members agree —       take the opportunity to work with
                                                                                                   This year, we have also been working        Auditing factories has been the main
                  looking after the people who make       suppliers to solve problems. But when

                                                                                                                                                                                           40
                                                                                                   on a responsible purchasing policy.         method that companies around the
                  our products is the most important      there is a supplier with severe                                                                                                         TOTAL
                                                                                                   The policy outlines the responsibility      world have used to measure conditions              AUDITS
                  thing we can do to be a responsible     problems and an unwillingness to
                                                                                                   we have as a brand to ensure that we        in the supply chain. But after several
                  company.                                improve, and we don’t have any
                                                                                                   are not putting duress on our               decades, it’s clear that, on their own,

                                                                                                                                                                                           2
                                                          influence or ability to facilitate                                                                                                   UNANNOUNCED
                  Corporate social responsibility is a                                             factories through delays to the             audits have failed to improve the lives
                                                          change, our best bet is probably to                                                                                                  AUDITS
                  clunky term and it means different                                               development process and that we are         of workers in global supply chains. Too
                                                          walk away.
                  things to different organisations. At                                            working to best buying practices.           often, they simply promote a game of

                                                                                                                                                                                           35
                  Kathmandu, it’s simple. Our CSR         We’re aware that leaving a factory       Delays during the development               cat and mouse between the auditors
                  team is committed to protecting         impacts the people who work there        process can mean that factories have        and the suppliers. The audit is not               SUPPLIERS
                  human rights and improving              too, so how we leave is also important   less time to produce the product,           designed to identify or address the root    corrective action plans
                  conditions for workers through our      — we can do it in a way that has         which can lead to excessive overtime        causes of issues or prevent them from
                  supply chain. To achieve that, we’re    minimal impact on workers.               work and subcontracting.                    occurring again.
                  evolving our approach to one that is
                  less about risk management and
                                                          Secondly, we adjust audit scores to
                                                          put greater weight on the values that
                                                                                                   “It’s in our interest to get this right,”
                                                                                                    says Group Product Operations              ON THE ROAD TO FLA
                                                                                                                                                                                           2  EXITS
                  more about transparency and                                                                                                                                              equaling 5% of total
                                                          are most important to us such as          Manager Tara Strangwick. “Robust           ACCREDITATION                               suppliers
                  partnership.
                                                          integrity, honesty and openness. By       supply chain management and the
                                                                                                                                               For the last four years Kathmandu has
                                                          investing more in those suppliers who     implementation of initiatives like the
                                                                                                                                               been on the journey towards
                  FROM AUDITING TO                        are transparent about their               responsible sourcing policy will benefit
                                                                                                                                               accreditation with the Fair Labor
                  UNDERSTANDING                           challenges, we believe we can do          us not just from a CSR perspective

                                                                                                                                                                                           100
                                                                                                                                               Association (FLA). Our new approach
                                                          more good for the workers.                but also from a quality and business
                  Our new approach is to move away                                                                                             to working with suppliers is in line with            HOURS
                                                                                                    process perspective.”
                  from cat and mouse towards              Lastly, we are prioritising the                                                      the best practices and
                                                                                                                                                                                           training office staff
                  transparency and understanding. We      challenges. “We can’t solve all of the   To ensure the success of our                recommendations of the FLA.
B+ in the         achieve this in a number of ways.       problems at once,” says Corporate        responsible purchasing initiative we
                                                                                                                                               For more information on our Supplier

Ethical Fashion
                  Firstly, by segmenting our supply
                  chain, we categorise our suppliers
                                                          Social Responsibility Manager Gary
                                                          Shaw. “So we have to focus on
                                                                                                   are including policy requirements and
                                                                                                   key performance indicators in all job
                                                                                                                                               Code of Conduct, please see:
                                                                                                                                               www.kathmandu.co.nz/corporate-
                                                                                                                                                                                           95    %
                  according to the severity of their      addressing those issues that we can      descriptions with purchasing                                                            of support office staff
2017 Report       problems and our ability to influence   immediately impact.”                     responsibilities.
                                                                                                                                               responsibility/reports-and-policies
                                                                                                                                                                                           employees trained
20                                       SUSTAINABILITY REPORT 2017                                                         OUR SUPPLIERS                            SUSTAINABILITY REPORT 2017                                                           21

WORKERS’
                                                                                                                            We’ll continue to                        BEYOND THE AUDIT
                                                                                                                                                                     This year we have partnered with               own corrective action plans (CAPs)
                                                                                                                            look for ways to                         Elevate Limited, a new social                  and then work in partnership to resolve
                                                                                                                                                                     compliance partner that has a wealth           them. In addition we will support

VOICE
                                                                                                                            collaborate with                         of experience in capacity building and         them with targeted eLearning and
                                                                                                                                                                     worker empowerment. We will still              training modules that specifically
                                                                                                                            brands to reduce                         use audits but with the understanding          address the challenges they are facing.
                                                                                                                                                                     that they are just a snapshot in time          We’ll be working with suppliers to help
                                                                                                                            the pressure of                          and provide us with a baseline from            them understand how these

                                                                                                                            audits on our                            which to target improvements.                  improvements can also make their
                                                                                                                                                                                                                    companies more profitable with better
                                                                                                                                                                     We will encourage supplier ownership
                                                                                                                            suppliers.                               by empowering them to create their
                                                                                                                                                                                                                    staff retention and improved efficiency.

Workers in Shanghai sewing the women’s
hooded pullover.

Breaking ground with                     In our mission to improve conditions     So we’re trying something new. We         CASE STUDY
                                         for workers, hearing and listening to    are developing a communication
a WeChat grievance                       their voice is critical.                 channel for workers on the social         EMBRACING OUR
mechanism.                               Unions and collective bargaining give
                                                                                  media platform, WeChat, to meet           COMPETITION TO
                                                                                  workers where they are and to give
                                         workers in many parts of the world a
                                                                                  them an anonymous way to report           ACHIEVE MORE                                    We partnered with Columbia Sportswear
                                         voice. But 85% of our suppliers are in                                                                                             to educate workers and managers about
                                                                                  problems.
In our mission
                                                                                                                                                                            the importance of contributing to
                                         China, where collective bargaining is
                                                                                                                                                                            Chinese Social Insurance.
                                         almost unheard of. This means we         We’re including a QR code on our          Protecting vulnerable workers is a job
to improve                               need other tools.                        Code of Conduct to be displayed in
                                                                                  the workplace so that workers can
                                                                                                                            that is bigger than any one single
                                                                                                                            brand. To make progress, we have to
                                         One common practice is interviewing                                                                                         We’ll continue to look for ways to             when they shift provinces. Workers on
conditions for                           workers at their workplace as part of
                                                                                  easily connect by scanning the code
                                                                                  into their mobile phone. This new
                                                                                                                            work together. This year, we contacted
                                                                                                                            some of our outdoor industry peers
                                                                                                                                                                     collaborate with brands to reduce the          low wages are not motivated to invest
                                         any audit, but this doesn’t usually                                                                                         pressure of audits on our suppliers.           part of their pay into this government
workers,                                 result in honest communication and
                                                                                  communication channel will also
                                                                                  allow us to conduct anonymous
                                                                                                                            and engaged with them as supply
                                                                                                                            chain partners. With one supplier, we    We also worked with eight other
                                                                                                                                                                                                                    scheme, but without contributions,
                                         feedback.
hearing and                                                                       worker surveys in addition to in-         worked with Columbia Sportswear, REI     international brands this year to help
                                                                                                                                                                                                                    they are not eligible for the benefits,
                                                                                                                                                                                                                    like healthcare and retirement income.
                                         We currently have an email account       factory interviews. This gives us a way   Co-op and MEC to do one audit            educate workers and managers about
listening to                             where workers anywhere in our global     to truly measure change — and find        instead of four. This is more cost       the importance of contributing to              By sharing the costs with eight other
                                         supply chain can contact us. This        out what initiatives are actually         efficient for each of us, but it also    Social Insurance in China. It’s a              brands we were able to implement an
their voice is                           channel of communication hasn’t          making a difference in the lives of       helps relieve ‘audit fatigue’ for the    complex problem, exacerbated by                education programme that will help
                                         worked — we’ve received zero emails      those who make our apparel and            supplier, freeing them to spend more     migrant workers finding it difficult to        increase payments and protect more
critical.                                in the last three years.                 equipment.                                solving the problems.                    contribute or access social insurance          workers.
22                      SUSTAINABILITY REPORT 2017                                                     OUR SUPPLIERS   SUSTAINABILITY REPORT 2017                                                     23

                                                                                                                       “Without a willingness to improve, it
                                                                                                                       is hard to continue to work with a
                                                                                                                       factory that has very different values”

                                                                                                                       TARA STRANGWICK
                                                                                                                       GROUP PRODUCT OPERATIONS MANAGER

KHUSI BEANIE
                                                     By employing Nepalese knitters to create our                      CASE STUDY                               even after two years of failed audits,
                                                     Khusi beanie, we’re helping them find                                                                      we hadn’t seen any change in
                                                     independence in a region where women are                          AUDITS RESULT IN                         attitude. Without a willingness to
                                                     still struggling to match the literacy and                        TWO EXITS                                improve, it is hard to continue to
                                                     employment rates of men.                                                                                   work with a factory that has very
                                                                                                                                                                different values.
A hero product of our winter 2017                    It was important that we didn’t let the feel-
                                                                                                                                                                The second exit was because the
range was a beanie that combines                     good nature of this project wash over the
                                                     details of our supply chain accountability. The
                                                                                                                       We carried out 40 audits this year. In
                                                                                                                                                                audit found forced labour. We had
our product development with our                     beanies were knitted in small home and
                                                                                                                       10 of those, we found significant
                                                                                                                       incidents of non-compliance with our
                                                                                                                                                                little influence in this facility and
                                                                                                                                                                again the supplier was unwilling to
community work.                                      community-based groups but then sent to a
                                                     factory for final touches and packaging. This
                                                                                                                       code of conduct. We followed up on
                                                                                                                                                                cooperate. Although forced labour is
                                                                                                                       eight of these by issuing corrective
                                                     factory had never been audited by an overseas                                                              common in the apparel industry,
                                                                                                                       action plans and ongoing
                                                     company, so we sent auditors in and they did                                                               especially in areas where there are
                                                                                                                       remediation efforts. For the other
                                                     find some issues of non-compliance as we                                                                   lots of migrant workers, this is a deal
                                                                                                                       two, we ended our relationship.
                                                     expected. A corrective action plan (CAP) was                                                               breaker for us. We passed on the
                                                     agreed on to ensure that the entire project has                   Despite the high costs involved in       details to other brands who use the
                                                     integrity and those working at the factory are                    exiting a supplier, the decision was     same supplier and who have greater
                                                     also empowered and protected.                                     made to exit one factory because,        leverage to insist on change.
24                                          SUSTAINABILITY REPORT 2017                                                           OUR SUPPLIERS            SUSTAINABILITY REPORT 2017   25

TEAM PROFILE
Kathmandu now has two full-time people dedicated to improving
conditions in the supply chain. Here’s a look at how they got here and
why they care.

                                                                                        CASE STUDY

                                                                                        PUTTING VALUES
                                                                                        INTO ACTION
                                                                                        In early 2017, we visited a factory in
                                                                                        China and asked to look through
                                                                                        the books. The factory produced a
                                                                                        flawless set of books and our
                                                                                        auditor was suspicious that these        “Human rights is
                                                                                        records were falsified.
                                                                                                                                 our single most
                                                                                        “Some companies have zero
                                                                                         tolerance and this leads factories      important priority
                                                                                         to cook the books,” says Corporate
                                                                                         Social Responsibility Manager Gary      as a brand—and
                                                                                         Shaw. “In this case, we explained to
                                                                                         the factory managers that we’re         that’s because
                                                                                         not looking for perfection, we’re
CSR manager Gary Shaw pointing to
our code of conduct with one of our
Chinese suppliers.
                                                                                         looking for honesty and                 people matter.”
                                                                                         transparency.”
                                                                                        The translators explained this to the    GARY SHAW
                                                                                        factory manager and eventually he        CORPORATE SOCIAL
GARY SHAW                                                                               re-emerged with a completely             RESPONSIBILITY MANAGER
                                                                                        different set of books.
At his interview for the job of             he came home with enough
Corporate Social Responsibility             experience to write a book, and then        “Suddenly, we had a relationship,”
manager, Gary Shaw was clear about          started his own anti-human                   Gary says. “With that trust, we
his role. “If you’re looking for someone    trafficking non-profit organisation.         could move away from us being
to simply minimise your risk, don’t hire                                                 the policeman and them trying to
                                            Gary brings his skills for getting to the
me. But if you want to make an                                                           get away with something. Now
                                            heart of a problem and his passion for
impact as a business, I’m your man.”                                                     that they understand our values,
                                            defending human rights to his role at
                                                                                         we can work together to help the
Gary holds a masters degree in third-       Kathmandu. In his first eight months,
                                                                                         factory to improve.”
world economic development, and is          he’s already using his experience to
particularly passionate about issues of     shake up the company’s CSR
exploitation and injustice. He originally   approach in a way that will drive
imagined working for the UN but             more tangible improvements for
instead followed a childhood dream of       workers.
being a police officer and then a
                                            “Knowing how vulnerable so many
detective in the New Zealand Police.
                                             people in the world are, I really feel
Gary took a leave of absence from            there is an exciting opportunity for a
the police to gather evidence required       great Kiwi company like Kathmandu
to rescue people from human                  to drive change.,” says Gary. “Human
trafficking and prosecute those              rights is our single most important
responsible. He went undercover and          issue as a brand—and that’s because
used a false identity. Four years later,     people matter.”
30     Years of
       OUR PRODUCTS

                                                                             PRODUCTS
       First Australian
1987

       store opened

       First NZ
1991

       store opened

       Started recycling plastic
1994

       bottles into our gear

       Licence agreement
1998

       signed with GORE-TEX®

       Became Fairtrade
2013

       licensee

       Joined the Better
2015

       Cotton Initiative

                                                                             OUR
       100% Responsible
2016

       Down Standard

       Bluesign®
2016

       partnership

       Canopy
2016

       partnership

       Committed to Responsible
2016

       Wool Standard

                                   Summit Club member Bob McLachlan on
       Recycled 3.9 million
2017

                                   the way to Muller Hut in Aoraki Mt Cook
       bottles into fabric         National Park.
28              SUSTAINABILITY REPORT 2017                                                         OUR PRODUCTS              SUSTAINABILITY REPORT 2017                                 29

                TRADE OFFS
                                                                                                   Our priority of preferred materials:

                When comparing the impacts of different                                             1. Responsible Down                                   2. Recycled Polyester

                materials, there’s no easy answer.
                                                                                                                               This year we became
                                                                                                                                  members of the
At the end      Which material is the most
                sustainable? Down or synthetic?
                                                         and with our industry peers in order
                                                         to find solutions that are viable for                                  Textile Exchange. In
of the day,     Cotton or viscose? Polypro or wool? If
                there was an easy answer, our job
                                                         the entire industry at scale. Inform
                                                         means being transparent about what
                                                                                                                              2016 they ranked us #2
                                                                                                                               in the outdoor sports
we are          would be simple.                         we’re doing and where we are in the

                “All materials have trade-offs and
                                                         journey. It’s also about                                              category for how we
motivated        there are no easy answers,” says
                                                         communicating with customers to
                                                         help them make good choices.                                           integrate preferred
                 Kathmandu Textile R&D and
by the finite    Responsible Material Manager Manu       “Material solutions targeting ocean                                       materials into
nature of        Rastogi.                                 plastics” has been added to the list                                  business operations.
                                                          this year at number eight. This is
                Life cycle impact assessments tell us
our world.      that about 85% of the impact of a
                                                          looking at how our materials choices
                                                          can prevent plastics ending up in
                product comes from the material we
                                                          oceans or even develop products that
                choose. So it’s important to look
                                                          remove plastics from oceans with
                closely at each material’s impact on
                                                          recycled plastic components.              3. Sustainable Cotton                                 4. Bluesign® Approved Fabrics/Trims
                climate change, water use, pollution,
                and resource depletion.                  Microfibres also sit in this section.
                                                         The problem of tiny fragments of
                Our approach is to analyse materials
                                                         polyester clothing ending up in
                according to the size of their impact
                                                         oceans has become more important
                and how much influence we can
                                                         over the last year. This material
                have. We’ve ranked them in order of
                                                         problem might sit higher in the list,
                importance into a list that we call
                                                         but as a relatively new problem,
                our Preferred Fibres and Materials.
                                                         there aren’t many clear solutions yet,
                “It’s a fluid list,” says Manu. “It      so our ability to influence it is lower                                                          7. P
                                                                                                                                                              referred Man-
                 changes according to global impacts     than some of the others.                                                                            Made Cellulosics
                 and customer feedback as well as our
                                                         At the end of the day, we are
                 internal priorities as our business
                                                         motivated by the finite nature of our                                                            8. M
                                                                                                                                                              aterial Solutions
                 evolves.”
                                                         world. Raw materials are limited, but                                                               Targeting Ocean Plastics
                The Preferred Fibres and Materials       the pressures on those raw materials
                strategy at Kathmandu has three          continue to increase.
                main pillars: lead, connect and
                                                         “If we don’t make changes, we will
                inform. Leadership is all about
                                                          not have enough resources for both
                driving innovation and setting the
                                                          food and clothing,” says Manu.                                      6. M
                                                                                                                                  aterial Solutions
                bar high. Connection is a strategy for
                                                                                                    5. Responsible Wool          Targeting Water Saving
                building partnerships with suppliers
30                            SUSTAINABILITY REPORT 2017                                                                          OUR PRODUCTS             SUSTAINABILITY REPORT 2017                                                      31

“They are
interested to
hear about how
their product is
being used.”

                                                                                                                                                                           33               %
MANU RASTOGI                                                                                                                                                                                         of our synthetic
TEXTILE R&D AND RESPONSIBLE                                                                                                                                                                          insulation is recycled
MATERIALS MANAGER
                                                                                                                                                                                                     & bluesign® approved

                                                                                    Manu visiting one of our down suppliers in
                                                                                    China, RDS certification in the background.

                                                                                                                                  RECYCLED
                              EVERYDAY                                                                                            SYNTHETIC
                              RESPONSIBILITY                                                                                      INSULATION
                              Responsible down has become business as usual.                                                      As we start our journey toward more
                              We reached the summit, but the journey is far                                                       sustainable synthetic insulation, we’re already
                              from over.                                                                                          one-third of the way.

                              Last year, we achieved our goal of         The work continues with our suppliers                                             When it comes to warmth for weight,       workers and safe for consumers.
                              100% of our down being certified by        too. We will always need to monitor                                               nothing beats down. On expeditions
                                                                                                                                                                                                     Because recycled polyester is number
                              the Responsible Down Standard. This        our supply chain, which includes                                                  where these two factors are make or
                                                                                                                                                                                                     two in our priority of preferred
                              standard, which was developed by           farmers but also processors, agents                                               break, there really is no other choice.
                                                                                                                                                                                                     materials, we are constantly looking
                              global non-profit, the Textile Exchange,   and slaughterhouses. It’s a process of                                            We like down because it’s a natural
                                                                                                                                                                                                     for new innovations in the area of
                              is a way to make sure the down in our      continual engagement and education.                                               product and one that is a waste
                                                                                                                                                                                                     recycled insulation and working on
                              products comes from birds that have                                                                                          material from goose farming.
                                                                         “When we visit these farmers, they are                                                                                      ways to increase its use in our ranges.
                              been treated well—that means no live
                                                                          so glad to meet us,” says Manu. “They                                            Most synthetic alternatives require
                              plucking or force feeding. It means the                                                                                                                                Polartec Alpha and Primaloft Silver
                                                                          are interested to hear about how their                                           more extraction of petrochemicals,
                              animals have enjoyed the five                                                                                                                                          Eco are two types of insulation in our
                                                                          product is being used, who is wearing                                            but when we can use recycled
                              freedoms of animal welfare.                                                                                                                                            range. Both use more than 50%
                                                                          these products. We can talk to them                                              polyester, we can offer a sustainable
                                                                                                                                                                                                     recycled content and are bluesign®
                              The RDS certification is gaining            about what customers expect and                                                  alternative to down that will work in
                                                                                                                                                                                                     approved. Using tiny fibres with
                              traction. There are now 400 million         connect and build trust. It’s important                                          all but extreme circumstances.
                                                                                                                                                                                                     pockets of air to trap heat, these
                              birds under farm certification to the       that we aren’t completely relying on
                                                                                                                                                           Already, 33% of our synthetic             synthetic insulation options are a
                              RDS. This is up from 150 million birds      the standard.”
                                                                                                                                                           insulation is recycled and also           great leap forward for sustainable,
                              last year.
                                                                                                                                                           bluesign® approved, which means it        synthetic insulation.
                              We can’t go beyond 100%, but our                                                                                             has been manufactured in a way that
                              journey is not over.                                                                                                         is safe for the environment, safe for
32                                          SUSTAINABILITY REPORT 2017                                             OUR PRODUCTS   SUSTAINABILITY REPORT 2017                              33

RECYCLED
POLYESTER
We’ve been recycling plastic
bottles into products for 23
years. This year, we recycled
almost 4 million bottles.
                                                                                                                                              3.9 MILLION
                                                                                                                                               plastic bottles recycled into product in 2017

Kathmandu was founded 30 years ago, when fleece
was just hitting the scene as a great-leap-forward
in materials technology. Compared to wool, it was
amazingly light and warm and quick-drying—all
revolutionary attributes for outdoor enthusiasts.
Kathmandu quickly became the largest user of
Polartec fabric in the Southern Hemisphere. In 1994,
after a decade of development by Malden Mills in
the USA, Kathmandu launched Ecofleece, a recycled
fleece fabric.
 A 1996 Kathmandu catalogue declared that
“wearing an Ecofleece garment makes a statement
 of your awareness and concern for the environment.”
Today, polyester has outstripped cotton to become
the world’s most in demand fabric—there is currently
twice as much demand for polyester compared to
cotton and the gap is growing steadily.
With limited fossil fuels available to feed this
demand, and a mounting mountain of post–
consumer plastic waste, recycling is the obvious
answer.
Global demand is reflected here at Kathmandu,
where polyester is our number one fibre in terms of
use. So shifting from virgin to recycled polyester is
an important part of our materials strategy.
For the last few years, we’ve been measuring the
number of plastic bottles we recycle in our
garments.
In 2016, we aimed to recycle 1 million bottles.
We beat our target by 20% to get to 1.2 million.
So we set our sights higher. Our FY2017 goal was
2.5 million bottles. And our actual was a whopping
3.9 million. Next year, we’re upping the ante again.
Our 2018 goal is to recycle 5 million plastic bottles
into products.
Unifi, who makes our Repreve recycled polyester,                         Summit Club member Bec Cotton,
                                                                         who has a PHD in sustainability, wears
was named fibre producer of the year at the 2016                         the new Earthcolours Hoodie at a recent
World Textile Awards.                                                    shoot in Japan.
34                                         SUSTAINABILITY REPORT 2017   OUR PRODUCTS                                 SUSTAINABILITY REPORT 2017                                                        35

                                                                        100% IS IN SIGHT
                                                                        We’re more than two-thirds of the way towards our
                                                                        goal of sourcing 100% sustainable cotton by 2020.

                                                                        Cotton is a great natural resource but       Kathmandu is one of the top 10 Better        Sustainable
                                                                        conventional cotton production has           Cotton retailers when measured as a
                                                                        serious environmental and social             percentage of total cotton                   cotton breakdown
                                                                        consequences. The cotton industry is         consumption.
                                                                        responsible for 24% of the world’s
                                                                                                                     The BCI programme began
                                                                        insecticide use and 11% of pesticides.
                                                                                                                     implementation in 2010. By the 2015-16
                                                                        We’re on track to meet our goal of
                                                                                                                     season, it had reached 1.5 million
                                                                        sourcing 100% sustainable cotton by
                                                                                                                     cotton farmers across 23 countries in
                                                                        2020. This year we reached 74% — up
                                                                                                                     five continents. Better Cotton was

                                                                                                                                                                          74
                                                                        from 59% last year.

                                                                                                                                                                                      %
                                                                                                                     grown on 3.4 million hectares of land,
                                                                        We source a mix of organic, Fair Trade,      accounting for 12% of global
                                                                        recycled and cotton sourced through          production.
                                                                        the Better Cotton Initiative (BCI) to
                                                                                                                     BCI’s results show that in the 2015-16
                                                                        make up our sustainable cotton mix.
                                                                                                                     season, BCI farmers in India used an
                                                                        BCI makes up the largest part of this        average of 9% less pesticides whilst
                                                                        portfolio. BCI is a global initiative that   achieving 20% higher yields than those
                                                                        aims to find more sustainable solutions      not using BCI techniques. These results
                                                                        for farmers, for the environment and         really are better — better for farmers,
                                                                        for the future of the sector.                better for the environment.
                                                                                                                     The initiative aims to have 5 million
                                                                                                                     farmers producing 8.2 million metric
                                                                                                                     tonnes of Better Cotton by 2020.
                                                                                                                     That’s around 30% of global cotton           49    %
                                                                                                                                                                        BCI       18         %
                                                                                                                                                                                             Organic
                                                                                                                     production. Organic cotton, by

                                                                                                                                                                  5               2
                                                                                                                     comparison, makes up around 1% of                %               %
                                                                                                                     global cotton production.                        Fairtrade       Recycled

                                                                        Our sustainable                                                                                                       100%

                                                                                                                                                                                      2020
                                                                        cotton journey

                                                                                                                                                                      74%

                                                                                                                                                               2017
                                                                               59%                                                    59%
                                                                        2014

                                                                                                                               2016
                                                                                                              38%
Cotton harvesting at a Fair Trade cotton                                                               2015
farm run by our supplier Pratibha Syntex
in India.
36   SUSTAINABILITY REPORT 2017                                                           OUR PRODUCTS                                SUSTAINABILITY REPORT 2017                                                        37

     H2OPE
                                                                                          “Water is at the
                                                                                          core of sustainable
                                                                                          development, healthy
                                                                                          ecosystems and
                                                                                          human survival.”
                                                                                                                                                                       Fair Trade worker at Pratibha Syntex in India.

                                                                                          THE UNITED NATIONS

                                                                                          Recycled cotton: from factory scraps                                     Fairtrade supplier wins
                                                                                          to customers’ backs                                                      award for water savings

     8.5 MILLION
                                                                                          Recycolor cotton is the latest addition to our sustainable cotton        Pratibha Syntex is our supplier of Fairtrade
                                                                                          line-up. It’s biggest win is water savings, says Kathmandu Textile       products. It is a vertical textile manufacturer,
                                                                                          R&D and Responsible Materials Manager, Manu Rastogi.                     meaning it employs everyone from farmers
                                                                                                                                                                   right through to garment sewers. It works
                                                                                          “Cotton’s biggest environmental impact is water use,” says Manu.
                                                                                                                                                                   with 30,000 farmers and 7,000 employees to
                                                                                           Cotton uses water in growing, production, and dyeing.
                                                                                                                                                                   deliver garments to global apparel brands
                                                                                           Conventional dyeing has other negative effects too. In China,
                                                                                                                                                                   from more than 20 countries. The business is
                                                                                           where around 65% of the world’s clothing is produced, the World
      bottles worth of fresh water saved in 2017*                                          Bank estimates 17 to 20 percent of industrial water pollution
                                                                                                                                                                   built around sustainable practices all the way
                                                                                                                                                                   through the supply chain.
                                                                                           comes from textile dyeing and treatment.
                                                                                                                                                                   Based in India, Pratibha’s owners, employees
                                                                                          To make Recycolor cotton, scraps are gathered up from factory
                                                                                                                                                                   and families have faced an intensifying water
                                                                                          cutting tables, sorted by colour, and then fed into huge stripping
                                                                                                                                                                   crisis for more than a decade. The company
                                                                                          machines that break the fabric back down into their original fibres.
                                                                                                                                                                   decided that business-as-usual was not an
                                                                                          These broken-down fibres are usually too short to spin, so they are
                                                                                                                                                                   option and they began to develop water-
                                                                                          mixed with virgin cotton to create a stronger finished yarn. The
                                                                                                                                                                   efficient farming practices, fabric production
     The textile industry is a big water-user so                                          resulting fabric has a distinctive marle-look that needs no dyeing.
                                                                                                                                                                   and manufacturing. Along the way, they
     innovations here can make a big difference.                                          The recycled cotton portion of Recycolor fabric uses about 70%           have also been able to support economic
                                                                                          less water.                                                              development for thousands of farmers and
                                                                                                                                                                   workers.
     It’s not hard to understand why clean     Textile R&D and Responsible Materials
     water is important. The United            Manager, Manu Rastogi.                                                                                              Last year, Pratibha reduced fresh water
     Nations says, “Water is at the core of                                                                                                                        consumption by 14% and total water
                                               The textile industry is not only one of
     sustainable development, healthy                                                                                                                              consumption by 21%.They did this by using a
                                               the largest polluters but is also one of
     ecosystems and human survival.” It is                                                                                                                         raft of measures from moving to drip
     complex because it is linked to
                                               the largest consumers of water and
                                                                                          Water-saving dyeing process                                              irrigation, using low-water dyeing processes,
                                               energy. The industry has high levels of
     everything — from food production                                                                                                                             installing water meters on all equipment, re-
                                               wastewater discharge, about 600
     to climate change to human health                                                                                                                             using water onsite and re-capturing steam.
                                               litres of wastewater per kg of textile
     to war.
                                               on average. It is estimated that           Ecoya is a nylon fabric dyeing process that puts the colour in at        They are on track to reduce their dependence
     More than a billion people currently      around 25% of the chemical                 the beginning to save water. The pigment is added to the                 on water by a further 1 billion litres, which will
     live in water-scarce regions, and by      compounds produced world-wide are          polymers before the yarn is spun. So you have coloured yarn and          reduce risk for at least 30,000 farmers and
     2025 an additional 3.5 billion people     used in the textile industry and it also   no need to dye the fabric.                                               their families.
     may be affected.                          takes up to 40,000 litres to irrigate
                                                                                          Traditional dyeing methods require an inefficient process that           Pratibha’s work was recognised in 2015 by a
                                               the cotton to maturity and provide
     The UN’s Sustainable Development                                                     applies colour to the surface of the fibre after it is produced. This    Global Award in Sustainable Apparel (GLASA).
                                               finishing for 1 kg textile (Asano and
     Goal 6 calls for improved water                                                      is water and energy intensive.
                                               Visvanathan, 2001).
     quality and water-use efficiency
                                                                                          The result is big savings on water, energy and CO2 emissions.
     by 2030.                                  We’ve identified some areas where we
                                                                                          And, because the yarn is dyed all the way through, this Ecoya
                                               can start reducing water use and will
     “We’re aware that water is one of the                                                process also improves the colour fastness of the garment.
                                               continue to grow our water-saving
      world’s biggest environmental
                                               measures over the next five years.         Ecoya has been introduced this year into some of our travel shirts.
      priorities — so we’re making it one of
      our priorities, too,” says Kathmandu     *based on 500ml bottles                    We also use solution dyeing in our Polypro baselayer range.
38                                    SUSTAINABILITY REPORT 2017                                                        OUR PRODUCTS                                SUSTAINABILITY REPORT 2017

                                      BLUESIGN                                                                          THE UNSEEN PLASTIC
                                                                                 ®

                                      A new partnership helps address one of our
                                      industry’s biggest impacts.
                                                                                                                        POLLUTION PROBLEM
                                      The apparel industry accounts for         IF YOU KNOW WHAT GOES IN, YOU
                                      25% of global chemical use. Only 10%      KNOW WHAT COMES OUT
                                      of the chemicals that go into a textile
                                                                                The aim of the bluesign® system is
                                      factory, come out in the fabric. The
                                                                                responsible use of resources, clean
                                      rest is either recycled or ends up in
                                                                                processes with controlled air and
                                      the air, the water, the land—and the
                                                                                water emissions, safe processes for
                                      people.
                                                                                the workers and safe products for
                                      We’ve partnered with bluesign®, an        consumers. To achieve this, the
                                      independent chemical auditor that         system defines criteria for
                                      works with producers, manufacturers       ingredients, for the manufacturing
                                      and brands to reduce harmful              process and for finished products. By
Our restricted                        chemicals in the textile industry.        making sure all the ingredients are
                                                                                approved, it’s much easier to make
substance list                         Bluesign®, which was founded in
                                                                                sure the finished products are
                                       2000 and is headquartered in
                                                                                approved.
                                       Switzerland, continually pushes for
                                      “better chemistry”.                       Bluesign® also works with a growing                                                                                                  Toxin-absorbing plastic microfibres
Kathmandu published its                                                                                                                                                                                              (inset) shed from polyester clothing are
                                                                                number of brands, who need a way                                                                                                     being discovered in waterways all around
restricted substance list online at   Bluesign® partners like Kathmandu
                                                                                to navigate the complex textile                                                                                                      the world.
the end of July 2017. This is         have access to the extensive
                                                                                industry and give customers
important because it give             bluesign® database of more than 900
                                                                                assurance that materials have been
customers a transparent look at       chemicals, which are rated as blue
                                                                                manufactured responsibly.
what substances we will not           (clear to use), silver (use with good
allow in our products going           management) or black (never use).         As more brands sign up as system
forward. As we grow into a            Bluesign® helps factories manage          partners, it creates more demand        Tiny plastic fragments from clothes have been found in oceans all
global company, this will be          silver chemicals with good practice       for bluesign® approved materials and
important for compliance. While       and replace black chemicals with          puts pressure on the whole industry
                                                                                                                        around the world. What we can do about it is not yet clear.
Australia has only three              bluesign® approved.                       to improve.
restricted substances, there are
                                      Customers know that a bluesign®                                                   Microfibres are tiny fragments of           WHAT IS THE INDUSTRY DOING?               WE’RE ALSO EDUCATING
more than 3000 chemicals
                                      approved fabric has been                  KATHMANDU SIGNED UP AS A                fabric (smaller than 5mm) that shed                                                   CUSTOMERS.
restricted globally.                                                                                                                                                The first step is to understand more.
                                      manufactured in a way that is safe        BLUESIGN® SYSTEM PARTNER IN             from clothing when it’s washed. They
                                                                                                                                                                    Luckily, we’re not alone. Our entire      Most microfibres are released by
RSL: www.kathmandu.co.nz/             for the environment, safe for workers     DECEMBER 2016                           are so small that many of them are
                                                                                                                                                                    industry needs to face the microfibres    home washing machines, so
corporate-responsibility/reports-     and safe for consumers.                                                           not caught by washing machines or
                                                                                “Becoming a bluesign® system                                                        problem and we can be more                customers can also have a role in
and-policies                                                                                                            wastewater treatment filters and so
                                                                                partner is a significant step in our                                                effective in partnership than in our      finding solutions. Initial research
                                                                                                                        they end up in rivers, lakes and,
                                                                                sustainable materials strategy,” says                                               own brand silos.                          shows that top loaders shed seven
                                                                                                                        eventually, the ocean.
                                                                                Textile R&D and Responsible                                                                                                   times more fibres than front loaders.
                                                                                                                                                                    The Outdoor Industry Association
                                                                                Materials Manager Manu Rastogi.         Microfibres, being plastic, absorb
                                                                                                                                                                    Sustainability Working Group have set     There are also a few home-based
                                                                                “We see bluesign® as the gold           toxins and, unlike natural fibres, they
                                                                                                                                                                    up a Microfibres Task Force to            microfibre-catching products making
                                                                                standard for ensuring that our          do not break down. The biggest
                                                                                                                                                                    investigate the problem further and       their way onto the market. We’re

        25
                                             The apparel                        products are free from hazardous        concern is that marine life are

                         %
                                                                                                                                                                    look for industry-wide solutions.         educating customers about these
                                                                                chemicals and are made as               ingesting these tiny, toxin-filled fibres
                                             industry accounts                  responsibly as possible. When we        and that the plastics (and toxins) are      Early research shows that high quality
                                                                                                                                                                                                              options and also the idea of washing
                                                                                                                                                                                                              less and making their voice heard.
                                             for 25% of global                  choose bluesign® certified fabrics,     making their way back into our food         fabrics shed fewer fibres, so there
                                                                                we are assured that the raw             cycle.                                      may be some choices we can make
                                             chemical use.                      materials we use help protect not                                                   when choosing fabrics that will make
                                                                                only the environment, but also those                                                a difference. As an industry, we may
                                                                                who come in contact with them:                                                      also be able to put pressure on textile
                                                                                textile workers, factory workers and                                                manufacturers to develop fabrics that
                                                                                ultimately, our end consumers.”                                                     shed fewer microfibres.
40                                        SUSTAINABILITY REPORT 2017   OUR PRODUCTS              SUSTAINABILITY REPORT 2017                                                          41

                                                                                                        PROTECTING
                                                                                                        ENDANGERED
                                                                                                        FORESTS
                                                                                                        A growing demand for viscose is
                                                                                                        threatening fragile habitats.

                                                                                                        Man-made viscose comes from            communities have been evicted
                                                                                                        wood fibres. It sometimes goes by      from their lands—sometimes even
                                                                                                        the names of rayon, modal or           violently intimidated by
                                                                                                        lyocell. The textile industry,         aggressively expanding logging
                                                                                                        especially the fashion industry, is    companies.
                                                                                                        using more and more of it every
                                                                                                        year. This growing demand is
                                                                                                                                               THERE ARE ALTERNATIVES.
                                                                                                        putting pressure on endangered
                                                                                                        forests.                               Trees might not be the best source
                                                                                                                                               of pulp. The current process wastes
                                                                                                        Kathmandu has joined
                                                                                                                                               approximately 70% of the tree and
                                                                                                        CanopyStyle to be part of the
                                                                                                                                               uses a lot of chemicals to
                                                                                                        solution.
                                                                                                                                               manufacture. One of
                                                                                                       CanopyStyle was formed in 2013 to       CanopyStyle’s solutions is to
                                                                                                       protect endangered forests from         support development of
                                                                                                       being culled by the textile industry.   alternative pulp sources from
                                                                                                       Every year, between 70 and 120          agricultural waste.
                                                                                                       million trees are felled for fabric.
                                                                                                                                               CanopyStyle is now the fastest-
                                                                                                       That’s enough to circle the equator
                                                                                                                                               growing environmental initiative in
                                                                                                       seven times.
                                                                                                                                               the global fashion industry. In the
                                                                                                                                               last three years, more than 100
                                                                                                        GLOBAL HOTSPOTS                        brands, representing more than
                                                                                                                                               $100 billion in revenues, have
                                                                                                        Canada, Brazil and Indonesia are
                                                                                                                                               signed on to CanopyStyle.
                                                                                                        the biggest exporters of pulp.
                                                                                                        Indonesian rainforests are home to     By working with both producers
                                                                                                        pygmy elephants, Sumatran tigers,      and consumers (brands),

                                                                       40
                                                                                                        orangutans, rhinoceros and             CanopyStyle has locked in the

                                                                                       %
                                                                                                        thousands of bird, animal and          manufacturers responsible for 70%
                                                                                                        insect species.                        of global viscose production to
                                                                                                                                               take steps to make sure they aren’t
                                                                                                       Indonesia ranks as the third largest
                                                                                                                                               sourcing material from
                                                                                                       global emitter of greenhouse gases
                                                                                                                                               endangered forests.
                                                                                                       (behind the US and China)—mostly
                                                                                                       because they are logging these          All Kathmandu viscose is supplied
                                                                       of Indonesian                   high carbon peatland forests. In        by Lenzing. A recent audit of
                                                                                                       the last 50 years, over 40 percent      Lenzing confirmed that its supply
CanopyStyle is working to protect
Indonesian rainforests that provide
                                                                       rainforests lost in the         of Indonesia’s rainforests have         chains are at low risk for sourcing
habitat to orangutans from the pressure
of growing demand for viscose fabric
                                                                       last 50 years                   been lost.                              from ancient and endangered
                                                                                                                                               forests.
from wood fibres.                                                                                       Species have been pushed to the
                                                                                                        brink and forest-based
42                                        SUSTAINABILITY REPORT 2017                                                         OUR PRODUCTS                          SUSTAINABILITY REPORT 2017                                               43

RESPONSIBLE WOOL                                                                                                             Care and Repair                                                    Keeping an eye on quality

Helping grow demand for a traceable standard
that protects animals and the land.
                                                                                                                             86        PLANNED
                                                                                                                                       INSPECTIONS
                                                                                                                                                                                                High quality products last longer and have
                                                                                                                                                                                                less impact. To make sure products meet
                                                                                                                                                                                                our quality standards, we carry out

                                                                                                                             39
                                                                                                                                                                                                inspections in our distribution centres. We
                                                                                                                                      REACTIVE
                                                                                                                                      INSPECTIONS                                               do proactive inspections with products that
                                                                                     way down our supply chain—from                                                                             might be high risk—maybe they are from a
This year, Kathmandu has continued        the extra cost involved in signing up
                                                                                                                                                                                                new supplier or maybe there were quality

                                                                                                                             0
its collaboration with the Responsible    to the certification is worthwhile. This   farmer groups, topmakers, spinners,          PRODUCT
                                                                                     knitters and our garment factories to                                                                      concerns in the prototype stage. Reactive
Wool Standard, a voluntary global         doesn’t mean that farmers aren’t                                                        RECALLS
                                                                                     support them through the transition                                                                        quality inspections happen when a shop or
standard that addresses the welfare       doing the right thing by their land and
                                                                                     and let them know that this                                                                                a customer raises a quality concern.
of sheep and the land they graze on.      animals, it just means they can’t see

Progress has not been as quick as we
had hoped. Our aim was to introduce
                                          the value in tracking it to the level
                                          that the standard requires.
                                                                                     assurance of animal welfare is
                                                                                     important to us.
                                                                                                                             1,007               REPAIRS IN
                                                                                                                                                 NEW ZEALAND
                                                                                                                                                                                                Customer health & safety
RWS products to stores by winter 2018,    There are some certified sheep out
but we’ve had to revise that to
summer 2019.
                                          there now, growing their woolly coats
                                          over winter ready for shearing in
                                                                                                                             1,750               REPAIRS IN
                                                                                                                                                 AUSTRALIA                                      Ensuring our products are safe for our
                                                                                                                                                                                                customers is critical so that they are safe in
                                          August/September. We’re looking                                                                                                                       the outdoors. When we introduce any new
Part of the problem is that there is an
                                          forward to being able to identify                                                                                                                     product into the market, we ensure we’ve
18-month cycle from the birth of a
                                          those sheep on the tags of our wool                                                                                                                   researched the compliance requirements.
certified lamb to its wool arriving in
                                          products in a few seasons.                                                                                                                            We had one incident of noncompliance
stores as a jumper.
                                          In the meantime, we’re                                                                                                                                which resulted in a fine. This one incident
There are lots of challenges along the                                                                                                                                                          occurred because the product was still
                                          communicating with people all the
way. One is convincing farmers that                                                                                                                                                             within the registration process. In the future,
                                                                                                                                                                                                we will not release products into the market
                                                                                                                                                                                                until compliance checks are complete.

                                                                                                                                                                                                Privacy

                                                                                                                                                                                                We have a stringent policy and processes to
                                                                                                                                                                                                protect the privacy of our Summit Club
                                                                                                                                                                                                members and online account customers.
                                                                                                                                                                                                Last year, we received 12 customer
                                                                                                                                                                                                complaints relating to online breaches of
                                                                                                                                                                                                privacy.
                                                                                                                                                                                                The complaints resulted from a technical
                                                                                                                                                                                                issue after a change to our website. A full
                                                                                                                                                                                                audit of our website was conducted
                                                                                                                                                                                                immediately. We found two pages with
                                                                                                                                                                                                personal customer information that should
                                                                                                                                                                                                have been excluded from our cache service.
                                                                                                                                                                                                The problem was rectified within 24 hours
                                                                                                                                                                                                and a full explanation was provided to all
                                                                                                                                                                                                affected customers.
                                                                                                                                                                                                We received no complaints from external
                                                                                                                                                                                                organizations or any regulatory body
                                                                                                                                                                                                regarding privacy and no leak, theft or loss
                                                                                                                                                                                                of customer data was identified.

                                                                                                                             Summit Club members Goodwin
                                                                                                                             Williamson and Johanna Thuvesson at
                                                                                                                             the head of Lake Pukaki.
30     Years of
       OUR FOOTPRINT

       First Australian
1987

       store opened

       New Zealand’s first
1991

       store opened

       Replaced plastic bags with recycled paper
2012

       bags in our store network

                                                                                             FOOTPRINT
       Became a signatory to the Australian
2012

       Packaging Covenant (APC)

       Released our first annual
2012

       sustainability report

       Received Australian Packaging
2014

       Covenant award

       Joined the Green Building
2014

       Council of Australia

       Committed to a zero waste
2014

       to landfill by 2018 target

       Committed to reducing our carbon
2014

       emissions by 20% by 2020

       Won an award with the
2014

       Carbon Disclosure Project

       Melbourne CBD flagship store designed
2015

       to target 5-Star Green Building rating

                                                                                             OUR
       Began our first carbon offset
2016

       project at the Hinewai Reserve

       Christchurch support office opened
2016

       as second 5 Star Green Building

       Received Australian
2016

       Packaging Covenant award

       Melbourne distribution centre opened
2017

       as third 5 Star Green Building

                                                   Our carbon credits go towards
       Received two Australian
2017

                                                   developing this native habitat at
       Packaging Covenant awards                   Hinewai Reserve on the Banks Peninsula.
46                                         SUSTAINABILITY REPORT 2017                                    OUR FOOTPRINT                              SUSTAINABILITY REPORT 2017                                     47

GOOD                                                                                                     GREEN
HOUSEKEEPING                                                                                             BUILDINGS

Operational efficiency supports environmental
sustainability.

We think of managing our                    Financial Officer Reuben Casey.
environmental footprint a bit like         “Waste and energy usage affect
good housekeeping. It helps us              everyone at Kathmandu, so we are
operate more efficiently and makes us       excited to be integrating solutions to
feel proud of our role as corporate         reduce our impact.”
                                                                                                         The new Melbourne Distribution Centre is
citizens in a finite world.
                                           We use the Higg Index, a ground-                              our third 5 Green Star building.

We are very clear what our priorities      breaking suite of self-assessment tools
are — developing our green building        developed by the Sustainable Apparel
programme and our recycling                Coalition, to measure our impacts and
strategy as well as reducing our           find areas where we can improve.
energy usage. We know these things
are important because our customers
                                           When measuring our footprint, the
                                           Higg Index helps us measure and
                                                                                     “There’s no         This year, we opened our second
                                                                                                         5 Green Star rated building. Our
                                                                                                                                                    building programme helps us reduce
                                                                                                                                                    our operational footprint as well as
                                                                                                                                                                                              “We built for
and partners tell us. This year, we
partnered with Conscious Consumers,
                                           prioritize how we manage our
                                           operational footprint. It also helps us
                                                                                     question that       Australian distribution centre joins our
                                                                                                         New Zealand Support office with this
                                                                                                                                                    enhancing staff health, wellbeing and
                                                                                                                                                    productivity.
                                                                                                                                                                                              the future.”
which allows customers to link
environmental and social concerns to
                                           understand our port-to-port carbon
                                           emissions, where we see dramatic
                                                                                     operational         distinction.
                                                                                                                                                    Building materials are chosen for their   STUART DAY
                                                                                                         The 25,000 square metre building is        lower life cycle impacts. Stormwater is
purchases. Their 10,000 members said
waste and packaging was their
                                           differences between sea freight and air
                                           freight. The Higg Index also helps us
                                                                                     efficiency          three times the size of the previous       captured to supply amenities and to
                                                                                                                                                                                              COMMERCIAL MANAGER

                                                                                                         distribution centre but uses the same      irrigate surrounding landscaping.
biggest environmental concern.             manage packaging and waste.               supports            amount of energy. The incoming             Solar panels and insulation reduce the
So how do we shift the dial? First we
measure, then we set goals and
                                           We also measure ourselves against
                                           the United Nation’s Sustainable           environmental       goods platform faces east to avoid
                                                                                                         bad weather while the office area is
                                                                                                                                                    amount of energy needed.
                                                                                                                                                    Ventilation, natural light and noise
develop action plans to achieve them.
These strategies minimise our impact
                                           Development Goals (SDGs). SDG 12 is
                                           about responsible consumption and
                                                                                     sustainability.”    orientated to the north to capture
                                                                                                         natural light.
                                                                                                                                                    control all help make the indoor
                                                                                                                                                    environment more pleasant.
and also boost our bottom line.            production. Our waste management
                                                                                                         The Green Star standard looks at
                                           strategy is a big part of our                                                                             Stuart Day, commercial manager of
“There’s no question that operational                                                REUBEN CASEY        innovation, water use, energy and
                                           contribution in this area. SDG 13 is                                                                      Kathmandu’s distribution centre says,
 efficiency supports environmental                                                                       emissions as well as indoor
                                           about taking action on climate            CHIEF OPERATING &                                              “We built for the future and want to
 sustainability,” says Chief Operating &                                                                 environmental quality. Our green
                                           change.                                   FINANCIAL OFFICER                                               use this space for the next 20 years.”
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